G R O U P L T D
AN N UAL R E P O RT 202 2
Annual Report for the year ended 30 June 2022
PPK Group Limited
ABN 65 003 964 181
G R O U P L T D
Contents
Chairman’s Report
2
6 Directors’ Report
35 Auditor’s Independence Declaration
36 Consolidated Statement of Profit or Loss
and Other Comprehensive Income
37 Consolidated Statement of Financial Position
38 Consolidated Statement of Cash Flows
39 Consolidated Statement of Changes in Equity
41 Notes to the Consolidated Financial Statements
112 Directors’ Declaration
113
120 Shareholder Information
122 Corporate Directory
Independent Auditor’s Report
1
PPK Group Limited CHAIRMAN’S REPORT
Chairman’s
Report
3. the decision to demerge the
– Once a BNNT application
mining business, which we hope
will be a long-term benefit for
shareholders who remain with the
mining business.
This position was further updated
with progress in my December 2021
Executive Chairman’s Report.
THE PRIORITY IS TO
COMMERCIALISE THE
TECHNOLOGY
While this year we have successfully
achieved the above three key
objectives outlined in my 2021
Executive Chairman’s report, the next
major objective is to commercialise
the technology. The last six months
of this financial year have been a
difficult one for our shareholders
with the significant disruption to
the global investment markets,
particularly the technology sector,
and the large decline in PPK’s
share price.
Major changes in strategy sometimes
brings unforeseen opportunity,
challenge and complexity.
Perseverance is standing PPK in
good stead to succeed. We believe
we have the right strategy for PPK
going forward and acknowledge that:
– BNNT is a relatively new
product. Purity and quality were
initial challenges that we have
addressed and are confident
have been met. The extension of
the opportunity and challenge is
how to best combine BNNT with
other composites (for example
metal and ceramics) to achieve
the desired outcomes. The cost
of producing BNNT is always
relevant, and we continue to
make solid progress through
production flow, scale, and
increased automation.
– Once BNNT has been successfully
combined into composites,
industry and best practice
requires further testing to prove
the product qualities (for example
tensile strength, hardness,
durability)
performs as expected, there is a
need and opportunity to make
a market, through our BNNT
application companies, or by
identifying potential customers or
partners who see the opportunity.
We are committed to work with
those third parties to commence
and complete their own extensive
testing programs.
PORTFOLIO STRENGTH
We have an outstanding application
portfolio across multiple industries,
segments, and geographies.
The total addressable market is
significant. For some applications
we have sufficiently proven the
science and production -we must
now increase the focus on marketing
and sales, acknowledging the time
required in line with the latter points.
MAJORITY POSITIVE
SCIENTIFIC RESULTS AND
TARGETED WORK WILL
CONTINUE
Last year we communicated
significant results for White
Graphene with polymer and resin
projects (22nd March 2022) and
gelcoat updates (22nd August 2022).
The Precious Metals preliminary
results are positive, and we are
awaiting the final research project
results so we can make a formal
announcement.
LIS continues to substantially
increase cycle life in its lithium
sulphur batteries with test cells
now demonstrating sustained
performance over 1,000 charge/
discharge cycles whilst retaining
a specific capacity almost three
times that of a typical commercial
lithium-ion battery. It has extended
its innovation to another high energy
density technology, lithium-metal
batteries, with early results showing
improved capacity retention and
dendrite reduction. Increase from
single layer pouch cells to ten-layer
cells, and finally twenty-layer cells
that are currently being prepared
for testing.
Dear fellow shareholder,
It is my pleasure to provide an update
on the progress your company has
made in the last financial year, which
included key scientific highlights, as
evidenced with the White Graphene
and Li-S market announcements, but
also some investment lowlights. We
thank you for your continued support
and before I comment on this
financial year, I would like to briefly
reflect on the last two years.
In my 2020 Executive Chairman’s
Report, I informed shareholders
of the change in PPK’s strategy
to become a technology
commercialisation business. The
actual production of high quality 95%
pure BNNT, the advancement of the
Li-S Energy Limited battery project,
and PPK’s ongoing joint venture
relationship with Deakin together
combined to create a step change in
future opportunities for PPK.
In my 2021 Executive Chairman’s
Report, I noted several important
milestones on PPK’s transformation
to a technology incubation and
commercialisation business,
particularly:
1.
2.
significant progress in automating
the BNNT manufacturing process
and becoming the leading global
manufacturer of BNNT;
the IPO of Li-S Energy Limited,
the first IPO of a BNNT
application project to move from
research to the commercialisation
phase, including material
distribution to shareholders; and
2
PPK Group Limited Technology
Energy
White Graphene
Manufacturing Boron
Nitride Nanotubes (BNNT),
commercialisation of Lithium-
Sulphur Batteries, White
Graphene, Precious Metal
Products & cutting edge
Artificial Intelligence.
Precious Metals
Advanced Mobility
Analytics
3
PPK Group Limited CHAIRMAN’S REPORT (CONT’D)
Chairman’s Report
As with any scientific testing, it is
not feasible nor expected to achieve
success with every test. The 3D
Dental Project objective was to
infuse BNNT into dental materials
including zirconia and lithium
disilicate ceramics. The project has
been halted to consider alternative
approaches.
Two other projects did not progress
substantially last year and will be part
of a strategic portfolio review for the
upcoming financial year: (1) to blend
BNNT into bullet resistant glass, and
(2) to blend BNNT into ceramic and
polymer materials for body armour.
What is important is that we take the
learnings from each of these projects
and apply them moving forward
through a continual learning loop.
AMAG now has three products
available – SMART Survey,
Operations and Safety. There is
significant global interest, including
the USA with the approved
infrastructure legislation, which has a
first ever Safe Streets and Roads for
All program to support projects to
reduce traffic fatalities.
NEW LEADERSHIP TEAM
The executive team that supports
the portfolio has been built out and
significant systems and technologies
have been put in place to amplify
that support.
IMPACT OF A CHANGING
HEALTH LANDSCAPE
The Survivon investment has not
progressed as we would have liked,
with approval by the Therapeutic
Goods Administration of the “new”
masks taking months longer than
expected. When combined with the
reduction in mask mandates and
high rates of local vaccinations, this
resulted in a reduction of demand.
The combination of these negatively
impacted PPK financially as
expanded later in the Annual Report.
4
FINANCIAL RESULTS
With PPK now predominantly
structured as a holding company,
its revenues will be realised
in returns from its subsidiary
companies or associates as
dividends, managements fees
or some similar arrangement.
With the subsidiary companies
and associates at various stages
of generating profits, the financial
results on PPK’s profit or loss
statement as summarised in Note 4
Segment Information showing:
– Revenue from contracts with
customers of $1.647 million
– Gain on re-measurement
equity interest at fair value
of $11.648 million
– Share of loss of associates and
a joint venture of $4.039 million
– Other operating income
of $0.254 million
– Technology expenses
of $9.646 million
– Corporate expenses
of $6.888 million
SHAREHOLDER SUPPORT
I am pleased that the PPK Group
continues to receive support from its
wide shareholder base as is evident
from the Li-S Energy $34 million
IPO capital raise in September 2021,
the White Graphene $1.96 million
capital raise in September 2021
and the White Graphene capital
raise of between $3.575 million to
$8.575 million that is currently in
progress. While global investment
markets are extremely difficult, it is
reassuring to see investors support
good opportunities presented
by the Group aligned to our new
strategic focus.
ESG UPDATE
This is the first year PPK Group
has published an ESG report,
which includes achievements for
last financial year and planned
objectives for this financial year.
Our Environmental objectives relate
to practical waste and energy
consumption given our small office
footprint, and partnering with
organisations such as Deakin who
have clear sustainability values;
Social objectives on diversity,
inclusion, and thriving people
underpinned with a strong cyber
security foundation; Governance
objectives include new board
members, remuneration committee
and risk committee, which leverages
the new risk Software-as-a-Service
platform across PPK Group.
OUTLOOK AND PRIORITIES
It is important to reiterate the
belief your Board and management
team have of the strength of
the application portfolio, and
the size of the opportunity. This
will require a careful balance of
the right capabilities focused on
scientific work versus driving the
commercialisation.
As each application becomes fully
funded, we need to strengthen
the commercialisation capabilities.
We expect White Graphene and
Precious Metals to be the next two
commercialisation opportunities that
will return value to PPK shareholders,
assuming market conditions are
favourable. AMAG has a healthy
pipeline to convert, and its safety and
operational solutions with artificial
intelligence are receiving widespread
positive interest and feedback. The
CIB aerospace autoclave has been
installed, will be operational for the
2023 year and is expected to provide
significant new opportunities for
future growth at CIB.
We will continue to assess our
portfolio composition, and
importantly be prepared to make
decisions to pause or shut down,
where the facts support the
decision. We will be selective of new
opportunities and seek to introduce
an Advisory Committee to aid with
early-stage assessment.
Acknowledging this is our inaugural
ESG report, we will stay attuned to
the changing ESG needs and deliver
our commitments.
The Company expects to hold its
Annual General Meeting in Brisbane
on Wednesday, 23 November 2022.
Nominations from persons wishing
to be considered for election as
a director is expected to close on
Wednesday, 5 October 2022.
Robin Levison
Chairman
PPK Group Limited FINANCIAL REPORT
Financial
Report
FY22
For the year ended 30 June 2022
Contents
6 Directors’ Report
35 Auditor’s Independence Declaration
36 Consolidated Statement of Profit or Loss and Other Comprehensive Income
37 Consolidated Statement of Financial Position
38 Consolidated Statement of Cash Flows
39 Consolidated Statement of Changes in Equity
41 Notes to the Consolidated Financial Statements
112 Directors’ Declaration
113
Independent Auditor’s Report
5
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 100% owned subsidiaries (“PPK”) and its controlled entities (the “Group”) for the financial year ended
30 June 2022.
DIRECTORS
The names of directors in office at any time during or since the beginning of the financial year and up until the date of
this report are:
– Robin Levison
– Glenn Robert Molloy
– Dale William McNamara
– Anthony John McDonald
– Anne-Marie Birkill
Resigned 9 June 2022
Appointed 1 July 2022
Directors have been in office since the start of the financial year to the date of this report, unless otherwise noted.
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 64)
Chairman
Member of the PPK Group Limited Board since 22 October 2013.
Executive Chairman from 22 October 2013 to 29 April 2015 and re-appointed from 28 February 2016 to 30 June 2022
and as Chairman and Non-Executive Director from 1 July 2022 onwards.
Non-Executive Chairman from 29 April 2015 to 28 February 2016 and since 1 July 2022 onwards.
Member of the Audit Committee from 14 August 2017 to 25 January 2018 and since 1 July 2022 onwards.
Member of the Remuneration and Nomination Committee since 21 December 2021.
Robin Levison has more than 25 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
ASX listed Li-S Energy Limited, unlisted public companies White Graphene Limited, BNNT Technology Limited and
BNNT Precious Metals Limited and private companies including 3D Dental Technology Pty Ltd, Ballistic Glass Pty Ltd,
Strategic Alloys Pty Ltd, AMAG Holdings Australia Pty Ltd, Mask Innovation Pty Ltd and Craig International Ballistics
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)
– Non-Executive Director of Li-S Energy Limited (appointed 12 July 2019)
Glenn Molloy (Age 67)
Executive Director
Member of the PPK Group Limited Board since listing on 21 December 1994.
Chairman of the Audit Committee since 14 August 2017, resigned as Chairman on 21 December 2021 but continued as a
member of the Audit & Risk Committee until 30 June 2022.
Founder of the former entity Plaspak Pty Limited in 1979, appointed Executive Director in September 2009.
6
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 Executive Chairman of PPK’s unlisted public companies
BNNT Technology Limited and White Graphene Limited and a Non-Executive Director of PPK’s related companies
BNNT Precious Metals Limited, 3D Dental Technology Pty Ltd, Ballistic Glass Pty Ltd, Mask Innovation Pty Ltd and Craig
International Ballistics Pty Ltd.
Other listed public company directorships held in the last 3 years: Nil
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
Anthony John McDonald LL.B, (Age 64)
Non-Executive, Independent Director
Member of the PPK Group Limited Board since 13 September 2017.
Member of the Audit Committee since 25 January 2018, Chairman of the Audit & Risk Committee from 21 December 2021.
Chairman of the Remuneration and Nomination Committee since 21 December 2021.
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 20 years has held senior management roles in this sector. He is a Non-Executive
Director of a number of PPK’s related companies including ASX listed Li-S Energy Limited, unlisted public company
White Graphene Limited and private company Strategic Alloys Pty Ltd.
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)
– Li-S Energy Limited, Non-Executive Director (Appointed 12 July 2019)
Anne-Marie Birkill BSc (Hons) MBA GAICD, (Age 58)
Non-Executive, Independent Director
Member of the PPK Group Limited Board since 1 July 2022.
Member of the Audit & Risk Committee since 1 July 2022.
Member of the Remuneration and Nomination Committee since 1 July 2022.
Anne-Marie is an experienced Executive and Non-Executive Director with private, public, industry and government
boards and committees that support and finance technology companies. She has more than 30 years’ experience in
commercialising and developing products for the innovation and investment sectors.
Anne-Marie is a co-founder and director for OneVentures, a venture capital firm that invests in technology companies
with global potential. Her previous executive roles have included CEO for i.lab, a technology incubator, and General
Manager for UniQuest, the University of Queensland’s technology commercialisation company. She is an active
participant in the innovation community, speaking at a wide range of events, and is a mentor for women working in the
finance sector.
Other listed public company directorships held in the last 3 years: Nil
Dale McNamara (Age 64)
Executive Director
Member of the PPK Group Limited Board since 30 April 2015, resigned 9 June 2022.
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
INFORMATION ON COMPANY SECRETARIES
Will Shiel BA (Hons) in Law FGIA (Age 40)
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.
7
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) Liam Fairhall Blaw (Hons); Bmed Rad Sci; Grad Dip ACGRM; (Age 41)
Appointed Company Secretary on 30 June 2022.
Liam is the Deputy General Counsel for PPK Group Limited. He specialises in all aspects of corporate law and
governance and has acted on a wide range of complex transactions, assisted multiple companies list on the ASX and
advised Boards on a diverse range of regulatory and compliance issues. Before joining PPK, Liam was Head of Legal
and Company Secretary at a technology focussed bank that specialises in the provision of payment products and
financial crimes services. Before this, he was a Senior Associate in the Corporate Advisory Group of one of Brisbane’s
largest independent law firms.
Pat Rogers (Age 50) Blaws, Bbus Accy, FGIA
Appointed as General Counsel and Company Secretary on 4 May 2021, resigned on 26 July 2021.
Tony McDonald acted as Company Secretary for regulatory purposes for the period from 26 July 2021 to 16 August 2021.
PRINCIPAL ACTIVITIES
With the restructuring of the Group over the past two years, PPK has become a technology incubation and
commercialisation company with its main focus on the manufacture and sale of BNNT and as an incubator for BNNT
application companies and other innovative university or externally sourced science and technologies.
PPK’s initial focus was to produce BNNT of a high quality in a single furnace using Deakin’s patented technology. Once
achieved, the next step in 2021 was to increase the production volume of BNNT which was achieved using a multi-furnace
configuration (modules) and innovative design to semi-automate the process. This year we have significantly increased
production volume, enhanced automation and moved to larger premises at Deakin’s Waurn Ponds campus to expand
the number of modules operating.
Over the past two years, we have worked with Deakin to identify commercial opportunities to use BNNT’s unique
characteristics to develop new products, in particular where Deakin has done previous research. We have also identified
industries which BNNT could have a significant advantage and formed partnerships with companies to work with
Deakin and us to develop new products.
These BNNT application projects are initially funded by debt from PPK and/or its development partner with the debt
to be repaid through future profits from the BNNT application. Once the science is developed to a stage where testing
is completed, production capabilities (ie quality, cost, production rates, etc) confirmed and price points validated
in the industry then the opportunity can be determined. At this point, PPK spreads its risk by raising capital from
sophisticated investors or institutions to fund the next stage to a pre-IPO. At the pre-IPO stage, the BNNT application
project is corporatised with business plans and budgets finalised, specialists identified, directors appointed/confirmed
and a capital raise and/or IPO is planned.
As an example, the Li-S Energy battery project was identified as a BNNT application project and PPK followed the
above process to take it to an IPO with PPK retaining a controlling percentage and creating a potential sales channel for
BNNT sales.
White Graphene (boron nitride nanosheets or BNNS) is a new application product for which Deakin has provided
10 years of research. Last year PPK provided an update of the preliminary results of initial testing for a number of
industrial applications. PPK has followed the same corporatisation approach as mentioned above and has informed the
market of the recent positive results of further testing. PPK is now in a pre-IPO capital raise where funds will be used for
the construction and commissioning of the commercial scale plant, further research and development of new materials
for transport and storage of hydrogen, new high-performance coatings, and commercialising new White Graphene
products.
PPK is also a technology incubation partner with AMAG, a project presented to PPK from the University of Queensland,
in which PPK has a 35% interest. PPK is also a commercial partner for CIB and Survivon in this financial year.
Below is a summary of these companies.
BNNT Technology Limited (“BNNTTL”)
BNNT Technology Limited (BNNTTL) continued expanding the BNNT manufacturing plant and believes it to be the
lowest cost producer of BNNT globally. On 7 March 2022, BNNTTL signed a 3-year lease with two 3-year options for
approximately 1,000m2 at Deakin’s Waurn Pond campus thus providing capacity to expand and operate two new
6 furnace modules (SM6 modules) and the two existing 4 furnace modules (SM4 modules). Once fully commissioned,
BNNTTL’s production capacity is expected to increase to around 500 kilograms per annum with > 95% purity. BNNTTL
will be well placed to meet future BNNT demand.
8
With the significantly larger production facility, we will look to further enhance the automation processes to optimize
production and further lower the cost of production.
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) BNNTTL holds 30 million shares in Li-S Energy (4.69%), which are escrowed until 27 September 2023, and holds
8 million shares in White Graphene Limited (WGL), which after the pending capital raise by WGL discussed below will
still be a minimum of 7.7%.
Precious Metals
The principal activity of Precious Metals is the development of metal matrix composites (including silver, gold and
copper) incorporating BNNT. Adding BNNT to these metals is intended to increase their strength, toughness and
durability, and make them more useful in a host of industrial applications and jewellery.
Research completed to date has been very positive and we await completion of the final research project before
PPK will be in a position to make an announcement. Pending further positive results, management has commenced
preliminary discussions with potential manufacturing partners.
PPK has a 45% interest.
Strategic Alloys
Strategic Alloys is a joint venture with Amaero International Limited (ASX:3DA), with the aim of combining very
small quantities of BNNT with aluminium and titanium alloys to create super materials for the defence and aerospace
industries. The project focuses on developing new super strength aluminium and titanium alloys using BNNT in their
formulation, which acts as a grain refining, nano-reinforcement and strengthening agent, significantly improving
mechanical properties.
Scientific testing of various alternative methods of introducing BNNT into the alloy continue.
PPK has a 45% interest.
White Graphene
White graphene is another nanomaterial which we intend to manufacture and provided an update in our half year
report. The pilot production plant is now producing close to 500 grams of white graphene per day, it has confirmed the
manufacturing process is working, and plans to scale to around 2 kilograms per day as we build the commercial scale
plant over the next six months.
Some of the unique properties of white graphene are:
138 times stronger than steel and 4 times lighter
–
– 3 times more thermally conductive than copper
– Can bend millions of times without fracture
– Resistant to corrosion from acids/alkalines and salt water
– Highly impermeable to hydrogen
– Acts as a radiation shield
Of the eight fast-track application projects, we have had very good success with the two completed polymer and resin
projects and announced these results to the market. These results demonstrate the opportunity for significant and
viable large scale industrial use of boron nitride nanomaterials in the manufacture of everyday products and we have
had preliminary discussions with potential partners to combine white graphene into their products.
Last year we anticipated that WGL could be the next IPO and progressed the process in the first six months of the
financial year, however, with the negative investment markets in the last six months this plan has been put on hold. In
September 2021, WGL completed a capital raise of $1.960 million and is now in the process of a further capital raise
which will value WGL at around $75 million. The funds are intended to be used for the construction and commissioning
of the commercial scale plant, further research and development of new materials for transport and storage of
hydrogen and new high-performance coatings and commercialising new White Graphene products.
After the capital raise, PPK will own a minimum of 51.8% and BNNTTL will own a minimum of 7.7%.
Li-S Energy Limited (“LIS”)
LIS’s objective is to utilise BNNT and Deakin’s existing technology and research in lithium-sulphur batteries 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
9
Improve cycle life when compared to conventional lithium-sulphur batteries.
LIS completed an Initial Public Offer, raised $34.000 million and listed on the ASX on 28 September 2021.
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) LIS has recently provided an update to the ASX in which it has:
– Successfully completed numerous drone flights using LIS’s proprietary 10-layer lithium sulphur and lithium metal
pouch cells.
– Produced and commenced testing of 10-layer lithium sulphur pouch cells, with BNNT in the cathode construction
and Li-nanomesh protecting the lithium anode. The cells utilise “lean” electrolyte loading consistent with the volume
of electrolyte typically used in commercial cells. Minimising the electrolyte loading is important to reduce the weight
and increase the energy density of the cell.
– Produced and commenced testing of 10-layer lithium metal pouch cells using Li-nanomesh to mitigate dendrite
formation on the lithium metal anode.
– Received delivery of the Phase 2 pouch cell production equipment in June 2022 including cathode coaters, cathode
material preparation machines, cell stacking, welding and pouch cell production equipment. Once installed and
commissioned, this equipment will increase the number and capacity of cells the Company can produce, including
initial test cells for partner collaborations.
LIS continues to expand its international reputation by:
– becoming a cornerstone partner in the Recycling and Renewable Energy Commercialisation Hub and will receive up
to $5m in co-investment over the next four years;
– partnering with the Future Battery Industry Cooperative Research Centre focused on accelerating the development
of advanced next generation polymer and solid-state electrolytes for lithium sulphur and lithium metal batteries;
–
attending the International Meeting on Lithium in Sydney, with 800 delegates, and the Battery Show Europe, with
550 exhibitors and presenters from the world’s leading auto manufacturers and battery manufacturers; and
– proactively manage its IP and patent portfolio, with core IP proceeding through the phases of global protection and
appropriate systems and processes in place to secure data and trade secrets.
This is the first of what the Board of PPK expects might be a number of spin-offs arising the application of BNNT to
create new products and business ventures.
PPK owns 45.43%, Deakin owns 13.02% and BNNTTL owns 4.69%, PPK’s direct and indirect interests hold 50.23%.
3D Dental
The purpose of this project was to infuse BNNT into dental materials including zirconia and lithium disilicate ceramics.
The project has been halted to consider alternative approaches to 3D printing BNNT into the dental materials.
A $0.356 million write-off for the research and development costs has been incurred. The project has provided
learnings for infusing BNNT, which has been used for other projects with similar methodologies.
This project has been reviewed and an alternative project using different dental materials and approach to blend
BNNT with these dental materials has been proposed by the scientists, but a decision has not been made to progress.
3D Dental will be part of a strategic portfolio review for the upcoming financial year.
PPK has a 45% interest.
Ballistic Glass
There are two separate projects in progress; firstly, to blend BNNT into bullet resistant glass and secondly to blend
BNNT into ceramic and polymer materials for body armour.
Neither project has progressed substantially this year and will be part of a strategic portfolio review for the upcoming
financial year.
PPK has a 40% interest.
10
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) OTHER TECHNOLOGY UPDATES
CIB
CIB is a leading supplier of body armour to the Australian Defence Force and Police Forces. CIB’s revenues were almost
$16 million at the end of the reporting period, representing an increase of more than 80% from the previous year.
Despite continuing to experience supply chain issues, the company delivered an EBITDA of more than $0.5 million after
paying management fees of $3.6 million to its shareholders, of which PPK received $1.6 million.
Russia’s ongoing invasion of Ukraine, and uncertainty of further military actions against neighbouring countries in
Eastern Europe, has heightened global uncertainty with defence forces increasing their expenditure in the defence
sector. CIB has seen increased inquiries from a broad range of customers and is well positioned to meet their needs.
While supply chain issues still occur, the main impact comes from some international suppliers which can’t be sourced
locally but this is compensated by holding more stock for these materials. The aerospace autoclave has been delivered
and is being commissioned and will be a welcome asset in the future.
PPK has a 45% interest.
AMAG
AMAG developed the world’s first Safe Mobility Alert Real Time (SMART) Artificial Intelligence (AI) delivered via a
Software-as-a-Service (SaaS) model. It enables governments to achieve Vision Zero and Safe Systems policy objectives
leveraging the efficiencies and scalability of SaaS and offering analytics and insights horizontally.
AMAG released its third product in March 2022, SMART OPERATIONS, a world-first platform using video analytics
and AI to detect and proactively manage risk amongst road users via real time alerts. The company is focused on
generating enterprise solution sales from its comprehensive platform designed for traffic management centres.
PPK provided ongoing capital for the company during the year for the development of its software platform and
now has an interest of 35% in AMAG. Since the year end, PPK continues to provide capital support. AMAG is running
a capital raise for new investors to provide a broader capital base to increase its revenues from 2022 actuals of
$0.6 million towards a breakeven cash position in the next 12 months.
PPK has a 35% interest.
Mask Innovations - formerly Survivon
PPK invested $4.5 million in Survivon in September 2021 as a joint venture to manufacture anti-viral, antibacterial face
masks using a new technology based on an ultra-thin / nano-scale coating of 99.95% pure copper, applied to the
surface of the fabrics using a vapour deposition process.
This investment has not progressed as we would have liked, with approval by the Therapeutic Goods Administration of
the “new” masks taking months longer than expected. When combined with the reduction in mask mandates and high
rates of local vaccinations, this resulted in a reduction of demand.
As a result, mask sales were low and Survivon incurred an operating loss of $1.9 million for the year. At year end,
Survivon further impaired the intellectual property for the copper technology acquired and the associated equipment
and inventories for use with this technology for $5.6 million. The total loss was $7.6 million of which PPK recognised
$3.6 million.
As a result of a strategic review, the shareholders agreed that Survivon would buyback PPK’s interest in Survivon
and simultaneously PPK would purchase back the Mask Innovations (MI) mask manufacturing business that it had
sold into Survivon initially (effectively demerging the businesses). Mask Innovations has entered into a distribution
agreement with Survivon to receiving finished materials made using the copper technology for incorporation into its
masks (Note 37.1.5). PPK is now evaluating the commercial opportunities for MI and will report back in its half year
commentary.
PPK held a 47.62% interest in Survivon at year end and nil after the share buyback by Survivon after year end. After the
purchase of MI, and a pending corporate restructure, PPK will hold a 90% interest in MI.
Demerger of the mining services business
We successfully demerged the mining business but this was not achieved by way of the anticipated trade sale. With the
negative sentiment in the coal industry, it was difficult to find a buyer willing to offer a fair and reasonable price for the
mining business. Investor advice was that the mining business needed scale to list on a stock exchange in the current
investment environment. Hence, the directors determined the best decision was to give existing PPK shareholders the
opportunity to own shares in both the technology sector and the mining business themselves. As a result, the demerger
of the mining business via a tax-free dividend and capital return of 17.92 cents per share to existing PPK shareholders
was a good outcome.
11
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) OPERATING RESULTS
With PPK now predominantly structured as a holding company, its revenues will continue to be realised in returns
from its subsidiary companies or associates as dividends, managements fees or some similar arrangement. With the
subsidiary companies and associates at various stages of generating profits, the financial results on PPK’s profit or loss
statement as summarised in Note 4 Segment Information showing:
– Revenue from contracts with customers of $1.647 million, being the CIB management fee of $1.620 million and
revenue from external sales of BNNT of $0.027 million.
– Gain on re-measurement equity interest at fair value of $11.648 million as explained in Corporate below.
– Share of loss of associates and a joint venture of $4.039 million as explained in Associates and Joint Ventures below.
– Other operating income of $0.254 million as identified in Note 3.2 and consisting of:
– $0.311 million of rental income;
– Foreign exchange gain on financial assets at FVTPL of $0.251 million being the recognition of the foreign
exchange movement for LIS’s investment in Zeta Energy;
– Loss on sale of financial assets at FVTPL of $0.419 million reflects the share price movement of investments held
in ASX listed companies;
– Gain on sale of FVTPL of $0.049 million reflects the profit from the sale of investments held in ASX listed
companies;
– Finance income of $0.174 million is the interest earned from PPK’s loans and from subsidiaries cash deposits;
–
Impairment of a loan of $0.112 million is the write off of a loan made to a venture acquired in conjunction with the
acquisition of BNNTTL.
– Technology expenses of $9.646 million as identified in Note 4 and explained in Subsidiary Companies below.
– Corporate expenses of $6.888 million as identified in Note 4 and explained in Corporate below.
Associates and Joint Ventures
The loss of $4.039 million from associates and joint ventures in Note 22.3 is predominantly related to the loss from
Survivon of $3.629 million, which includes PPK’s share of an operating loss of $0.945 million for the financial year
and $2.684 million for impairment of the intellectual property associated with the copper technology, inventories
and equipment. As a result, subsequent to the year end, PPK made the decision to exit from direct involvement in the
copper technology business and sold its interest in Survivon back to the company for written down book value of
$0.864 million and purchased the mask manufacturing business for $0.864 million.
The loss from BNNTTL of $0.234 million is for the period before it became a subsidiary. The BNNTTL results include
the fair market value of BNNTTL’s investment in LIS of $14.000 million, however, under the accounting standards PPK is
required to eliminate this as LIS is a subsidiary and will realise the actual movement only when the shares are sold.
The CIB loss of $0.107 million is our share of its financial results for the year after it paid a $3.600 million management
fee to its shareholders. Hence, our return from 45% interest in CIB is actually $1.513 million for the year, a return of 30%
on PPK’s initial investment.
The loss from AMAG of $0.069 million, after revenues of more than $0.600 million, was expected as most of its costs
are being capitalised while it develops its software.
Corporate
Corporate results in Note 4 Segment Information show a profit of $6.291 million, which doesn’t include management
fees of $1.887 million for subsidiaries that are eliminated on consolidation.
The $1.620 million is our management fee from CIB.
The rental income is from the property investment which provides an annualised return of 7.0%.
The $11.648 million re-measurement of equity interest at fair value is an accounting adjustment required to recognise
the inherent fair value of our investment in BNNTTL at the time it became a subsidiary which it can’t recognise as a joint
venture. This transaction also creates a goodwill of $29.271 million which is recognised as an asset on the statement of
financial position being the difference between the fair value of BNNTTL adjusted for PPK’s 51% in the identifiable net
assets acquired as at the date of becoming a subsidiary.
12
The unrealised loss of $0.419 million was in relation to strategic holdings in ASX listed companies resulting from the share
market movements late in the financial year. The $0.049 million is a gain from the sale of ASX listed companies. The
interest of $0.129 million was from secured loans made in the previous year and maturing this year. The impairment loan
of $0.112 million was in relation to a business opportunity, which was acquired as part of the BNNTTL acquisition for nil
consideration, and which PPK loaned funds to continue to develop while it was evaluated as a commercial opportunity.
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) The $6.888 million of corporate expenses includes $5.080 million of administration expenses which is made up of
$3.378 million of employee related costs, $0.754 million of directors’ salaries and fees, $0.231 of technology costs,
$0.220 million of occupancy cost and $0.497 million of other costs. The other costs are self-explanatory.
Enhancements to PPK’s Corporate Support Services
PPK has increased its internal resources with the appointment of a full-time Legal Counsel and Chief Information
Officer/Chief Risk Officer. The legal department now consists of 2 full-time lawyers who provide legal services and
company secretarial support to the Group. The appointment of our Chief Information Officer/Chief Risk Officer, who on
1 July 2022 was appointed as Chief Operating Officer, was made to address cyber security and other risks, and ensure
we have a best of breed technology and risk management framework in place for the Group. While both functions have
increased the cost of operating a corporate office, they are partially recovered from the shared support service PPK
charges other Group entities.
The demerger of PPKMEG required the Group to find alternative business systems to meet current and future needs
of the Group. During the year, we commenced implementing a new general ledger and HR/payroll system, which will
support the more than 20 entities and 4 separate payroll companies that make up the Group. We also implemented
new systems to support our legal/company secretarial, risk management functions, and invested in new cyber security
technology controls.
Demerger of the mining services business
The Corporate office also was responsible for the demerger of the mining equipment business. While direct costs
attributable to the mining equipment business were charged to them during the period, PPK did not charge for finance,
legal, secretarial, information technology and other corporate costs that previously had been incurred on behalf of the
mining equipment business.
DIVIDENDS PAID OR DECLARED
Dividends paid or recommended for payment are as follows:
Dividends paid in the year:
2.81 cent per share special ordinary dividend, which was fully satisfied by an in specie
distribution of shares in PPK Mining Equipment Group Limited (PPKMEG)(1) . PPK has
received advice from its tax advisers that the special dividend should qualify as
non-assessable non-exempt income for tax purposes for Australian residents.
Cents
$000
2.81
2,509
(1) PPK also completed a tax-free return of capital of 15.11 cents per share totalling $13,490,000. The combined effect of the above is
that PPK shareholders (other than foreign shareholders) received 1 share in PPKMEG for every 1 share held in PPK.
REVIEW OF OPERATIONS
The review of operations is outlined in the Chairman’s Report set out on pages 2 to 4 and which forms part of
this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The 2022 Chairman’s Report highlighted that PPK has become a technology incubation and commercialisation
company with its main focus on the manufacture and sale of BNNT and as an incubator for BNNT application
companies and other innovative university sourced or externally sourced science and technologies. A detailed update
on these initiatives is provided in the Chairman’s Report and is summarised earlier under Principal Activities.
BNNT Manufacturing Technology
As noted earlier, BNNTTL’s expansion of its manufacturing plant, the signing of a 3 year lease with two 3-year options
for approximately 1,000m2 at Deakin’s Waurn Pond campus providing capacity for its existing production modules and,
once commissioned, production capacity is expected to increase to around 500 kilograms per annum with > 95% purity.
BNNTTL is now well place to meet future BNNT demand.
LIS IPO
During the year, PPK took LIS from PPK’s first BNNT application project to our first IPO listing on the ASX on
28 September 2021.
13
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) White Graphene Manufacturing Technology
White Graphene is an advanced nanoscale 2D material consisting of hexagonal arrays of boron and nitrogen atoms that
can be an incredibly strong tensile reinforcement in other materials. It has some of the characteristics of BNNT but can
be produced at a much lower cost.
During the year, WGL completed the build of a small-scale production pilot plant, which is producing about 500g of
white graphene per day, and received encouraging test results on the first two of eight application projects. PPK now
has another application material in its portfolio which has demonstrated that the addition of relatively small amounts of
White Graphene can significantly improve the mechanical performance of other materials thus new products that can
potentially be commercialised.
Enhancements to PPK’s Corporate Support Services
PPK has increased its internal resources with the appointment of a full-time Legal Counsel and Chief Information
Officer/Chief Risk Officer, the latter assuming the role of Chief Operating Officer from 1 July 2022. The legal department
now consists of 2.5 full-time lawyers who provide legal services and company secretarial support to the Group. The
appointment of our Chief Information Officer/Chief Risk Officer was made to address cyber security and other risks
and ensure we have a best of breed technology and risk management framework in place for the Group. While both
functions have increased the cost of operating a corporate office, they are partially recovered from the shared support
service PPK charges other Group entities.
The demerger of PPKMEG required the Group to find alternative Enterprise Resource Planning systems to meet
current and future needs of the Group. During the year, we commenced implementing a new general ledger and HR/
payroll system which will support the more than 20 entities and 4 separate payroll companies that make up the Group.
The systems not only provide more advanced functionality, thus improving productivity for our current corporate
resources, but will reduce the risk of managing and reporting the more complex financial information that our new
operating model presents. We also implemented new systems to support our legal/company secretarial and risk
management functions.
Demerger of the Mining Equipment Segment (PPKMEG)
The demerger of the mining business was completed on 29 June 2022 with PPK shareholders receiving a total return
of $0.1792 per share being a tax-free dividend of $0.0281 per share and a return of capital of $0.1511, which should also
receive tax-free rollover relief. PPK also provided a $2.000 million unsecured loan to assist PPKMEG with its growth
aspirations and a short-term loan of $0.600 million in July 2022 to assist financing of assets, which is secured against
the inventory acquired.
Capital Management
PPK purchased an investment property for $4.210 million and leased the property to a subsidiary of Survivon for
$0.240 million plus ongoing costs per annum. The purchase was partially financed by a loan of $2.250 million from a
major Australian bank. The Group has no other fixed term debt to external parties.
PPK continues to provide unsecured loans to related parties with the intent the loan funds will be recovered from the
profits these related parties hope to generate in the future. PPK has provided an unsecured $2.000 million loan to
PPKMEG to assist with working capital as PPKMEG was demerged from PPK.
In previous years, the Group had provided a guarantee and indemnity for a loan to PPKMEG from a major Australian
bank. Subsequent to the year end, PPK assisted PPKMEG to refinance this facility and, as a result, the Group’s guarantee
and indemnity was terminated.
PPK continues to provide a guarantee and indemnity of approximately $0.175 million in relation to the vehicle fleet of
PPKMEG for the run-off of the existing fleet only.
REVIEW OF FINANCIAL CONDITION
The consolidated balance sheet reflects the strength of the underlying subsidiaries and is consistent with the research
and development programs that are underway. The $53.008 million of cash is predominantly in relation to LIS due to its
capital raise in September 2021, and once WGL completes its capital raise this month, all the subsidiaries will be
self-funded based on their current projects and budgets.
The increase in fixed assets from $0.530 million to $5.439 million and intangibles and goodwill from $1.622 million
to $37.475 million reflects the growth in the underlying subsidiaries, in particular LIS and WGL as they advance their
research and development programs and move to commercialisation over the coming year or two.
14
The Group continues to maintain a strong balance sheet as evidenced by:
– $53.008M of cash of which PPK has $4.810M of cash;
– PPK has $1.620M of managements fees owing from CIB and $0.600M of secured loans from PPKMEG to be repaid
in the next financial year;
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) – PPK will receive at least $1.278M of management fees from non-wholly owned subsidiary companies and associates
for providing shared support services in the next financial year;
– PPK has strategic ownership in ASX listed companies which have a market value of approximately $0.892M and
would be available for sale, if required;
– LIS, a subsidiary which PPK owns 290.849M shares listed on the ASX on 28 September 2021. The shares are
escrowed until 27 September 2023 and would be available for sale, if required;
– WGL, of which PPK owns 81.000M shares, is in the process of a capital raise at $0.50 per share. On successful
completion of the capital raise, the value of PPK’s shares is $40.500 million and they would be available for sale,
if required;
– The only fixed interest debt required to be paid is $2.250M loan secured against the property investment that a
Director estimates has a value of more than $5.500M.
– PPK has a loan of $2.000M with PPKMEG to be repaid within two years;
– All subsidiaries will have sufficient funds to finance their planned research and development programs, once WGL
completes its capital raise which is in progress;
– Current assets have increased from $32.196M to $55.658M and working capital has increased from $31.306M to
$52.261M;
– Subsequent to the year end, the guarantee and indemnity provided to PPKMEG was terminated.
The Group has increased its net tangible assets per share from 72.34 cents to 81.83 cents.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
PPK
On 1 July 2022, PPK appointed Anne-Marie Birkill as an Independent Non-Executive Director of the Company.
On 14 July 2022, PPK loaned $0.600M to PPKMEG for a period of 12 months at 8.0% interest. The loan is secured
against inventory of mining equipment assets purchased from a competitor in the mining equipment industry.
In August 2022, PPK made an advance facility of up to $1.000 million should WGL require the funds. The facility
remains open for a period of one year or upon WGL completing a capital raise of a minimum of $3.575M, whichever is
earlier.
PPK has invested $0.335M in AMAG’s equity, loaned $0.125M to Survivon and $0.015M to Precious Metals.
On 2 August 2022, Survivon assigned the debt owing to PPK of $0.645M and the debt owing to the other shareholder
of $0.083M to MI. Survivon then completed a selective share buyback from its shareholders with both shareholders
selling 100% of its shareholding to Survivon. PPK received $0.864M for its interest in Survivon and used these funds
to acquire 91% of the shares in MI from Survivon. The shareholders then terminated the Shareholder Agreement on the
same date.
The summarised financial information of MI is provided below. This information is based on provisional management
information and is before inter-company and consolidation eliminations.
Summarised Statement of Financial Position
Assets
Cash
Inventories
Other current assets
Plant and equipment
Security deposit
Total assets
Liabilities
Trade and other payables
Provisions and lease liabilities
Total liabilities
Total identifiable net assets
$000
16
513
42
489
60
1,120
456
26
484
638
15
MI will be consolidated from 2 August 2022, being the date of the acquisition. The acquisition accounting for the
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) business combination is provisional financial information and will be disclosed at the half year.
In August 2022, PPKMEG restructured its $4.000M finance facility from a major Australian bank and the guarantee and
indemnity previously provided by the Group was terminated.
LIS
On 14 July 2022, LIS loaned $1.400M to PPK Mining Equipment Group (PPKMEG) for a period of 12 months at 8.0%
interest. The loan is secured against a property in Mt Thorley, NSW which was independently valued at $2.000M.
WGL
On 21 July 2022, WGL approved a 1 for 2 bonus issue and, on completion of the bonus issue, it approved a capital
raise of a minimum of $3.575M and a maximum of $8.575M at $0.50 per share with the issuance of between 7.150M to
17.150M shares.
On 3 August 2022, WGL incorporated a 100% subsidiary called WGL Plans Pty Ltd which will be the trustee for the
WGL long term incentive plan. On 9 August 2022, WGL issued 1,000,000 WGL fully paid ordinary shares to WGL Plans
Pty Ltd which resulted in WGL having 92.900M shares issued. On the same day it completed the 1 for 2 bonus issue
resulting in an increase of 46.450M shares issued for a total number of shares on issue to 139.350M. At the time the
Directors have signed off on this report, the capital raise is in progress.
In August 2022, PPK made an advance facility of up to $1.000M should WGL require the funds. The facility remains
open for a period of one year or upon WGL completing its capital raise, whichever is earlier.
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 2022 are included in the Chairman’s Report set out on pages 2 to 4 and which
forms part of this report.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
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 Group 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. PPK’s approach to
environmental sustainability is outlined in its Environmental Policy at www.ppkgroup.com.au.
PPK is pleased to set out its inaugural sustainability report.
Visibility of environment, social and governance metrics is becoming of ever increasing importance to investors and
stakeholders. PPK welcomes the opportunity to contribute to these discussions and sets out the key measurements
against which it has assessed its performance in the 2021/2022 financial year. The Company envisages that this
inaugural report will set the baseline against which further future improvements can be measured.
For clarity, given the extraordinary general meeting held on 31 May 2022 in respect of the proposed demerger of PPK
Mining Equipment Group Limited, PPK Group has made the decision to exclude the mining services businesses from the
scope of this report.
Environmental
PPK operates from one Brisbane head office with a small direct environmental footprint. The Company’s current
environmental focus is on minimising energy consumption and non-essential business travel.
16
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) Lowering climate change and carbon emissions
PPK is committed to continually reducing our on-premise energy consumption by:
– using cloud technology for our information and platform services where practical;
– using Microsoft Azure as our platform partner and seeking other services we can use from Microsoft. Microsoft has
been carbon neutral since 2012 and is committed to becoming carbon negative by 2030; and
–
leasing office space in a building with a 5-star NABERS (excellent) energy rating for energy, water, waste, and indoor
environment and 5-star green star rating.
The Group is committed to reducing emissions associated with our business travel by:
– booking online meetings where practical and possible. Where travel is necessary, we combine meetings and extend
the time away so that more can be achieved to avoid repetitive trips; and
– providing flexibility for our employees to work from home where business needs allow. While this was originally
initiated as part of our COVID-19 response, we have continued the practice which we consider is likely to have had
the effect of reducing carbon emissions from employees commuting to/from the office.
Waste management
PPK is committed to further improving our recycling methods by:
–
–
–
recycling paper, cardboard, glass, hard plastic, aluminium and tin cans through the services provided by our
landlord;
recycling IT equipment and printer cartridges using recycling companies that seek to recycle responsibly; and
re-using IT equipment and parts, where possible.
Deakin University’s Waurn Ponds Campus
The Group seeks to ensure that its important business relationships are with partners that have sustainability plans in
place, where practical. One of PPK’s key relationships is with Deakin University, particularly the Waurn Ponds Campus
in Geelong, Victoria where the group operates a number of its BNNT and White Graphene application projects at the
laboratory and manufacturing facilities.
The campus was established as a ‘living laboratory’ for sustainable development and has a number of commitments
to be achieved by 2025 for procurement and supply, travel and transport, energy and emissions, waste management,
water, built environment and natural environment. For example, Deakin University are working to achieve carbon
neutrality with 100% of its electricity supply coming from renewable sources. All strategic suppliers will also need to
meet Deakin’s sustainable procurement principles.
Social
PPK seeks to attract, employ, and retain people with a diverse background of culture, gender, experience, and intellect.
Our business model requires people to be agile, curious and roll their sleeves up to work together to get the job done.
Diversity, inclusion, and equality – our objective is to promote equal employment opportunities and increase female
representation across the group, including at the board level.
This year PPK:
– Reviewed salary equity
– Female representation of > 45% of all employees
Next year PPK will:
– Review of employee policies and values
–
25% female representation on the board
Thriving people – our objective is to ensure people can perform to their potential and we manage the employee
performance lifecycle
This year PPK:
–
–
Integrated people risks into the risk management process and reports to board
17
Introduced flexible working arrangements
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) Next year PPK will:
Implement a HR information system to record and manage performance objectives, talent and succession planning
–
– Support staff ongoing development
Strengthen cyber foundations – we acknowledge the cyber threat landscape is ever changing and we have a
responsibility to educate and protect our people, partners and data.
This year PPK:
– Renewed focus on our cyber insurance policy
– External cyber penetration test and intelligence report
–
– Leveraged Yammer to share cyber insights, examples, hints and tips
Implemented Mimecast for email phishing protection
Next year PPK will:
Implement data loss prevention controls
– Deploy new endpoint and cloud protection solutions
–
–
– Work with key third party suppliers on how we share cyber insights and processes
Internal awareness campaign and phishing test
Governance
The Company has structured its approach to corporate governance around the principles of ensuring effective
contributions by the Board and its sub-committees that add value.
Risk
In late 2021, as part of an annual review of its risk management framework, PPK made the strategic decision to invest
in building an internal risk function for the Group to categorise, manage and mitigate risks across the company and its
investments.
The arrival of Mr Fenton has been a critical addition to the company’s capabilities in connection with a periodic review
and update of the risk oversight and management framework. In January 2022, the Board resolved to expand the
existing audit committee to encompass audit and risk and an updated charter was made available on the company’s
website. The expanded audit and risk committee held its first meeting in February 2022, with further meetings currently
scheduled on a quarterly basis.
PPK purchased a market leading Software-as-a-Service risk platform aligned to the ISO 31000 framework. The platform
provides a single integrated view of risk with heatmaps, control library and action tracking and our risk management
and framework is being implemented across the Group.
The Group is currently in the process of defining and assessing the inherent and residual risk profile with a focus on
significant business risks as the Group continues its strategic transformation with the exit of the Mining Equipment
business and the continued focus on technology. A comprehensive account of the investment entity businesses has
been provided in this report.
Remuneration
PPK Group retains its historical commitment to fair and responsible remuneration practices sufficient to attract, retain
and motivate suitably qualified individuals. In January 2022, the Board resolved to establish a Remuneration and
Nomination Committee chaired by a non-executive director (Mr McDonald) who is not the chair of the Board.
The Remuneration and Nomination committee is empowered under its charter to bring independent judgement to
all remuneration decisions, in particular remuneration packages, short-term incentives and long-term incentives. The
charter is available on the company’s website.
Board refresh
The demerger of the mining services business and the resignation of Mr McNamara has provided the opportunity for
a re-examination of the structure, skills, size and composition of the company’s Board. With input and advice from
the Remuneration and Nomination Committee, the Executive Chairman oversaw an exhaustive search of qualified
candidates. A board skills matrix was used to assist with this process, as well as considerations of gender diversity in
succession planning, resulting in the appointment of an experienced and highly qualified candidate.
18
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) The Board believes that Ms Birkill will provide invaluable input into the work of the Board and its sub-committees. The
Company used this appointment as an opportunity to review and refresh its process for onboarding and inducting new
directors. The appointment of Ms Birkill brings the female composition of the Board to 25%, being still slightly below the
company’s stated target of 30% pursuant to the ASX Corporate Governance Principles and Recommendations.
The Company anticipates that many of the above improvement to governance structures will be rolled out across its
portfolio of investee companies over the coming years.
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 previous Annual Reports, the Company does not believe the vesting
conditions were met and still maintains this position. The Company has incurred $0.839M 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.
REMUNERATION REPORT (AUDITED)
The Directors of PPK present the Remuneration Report for non-executive directors, executive directors and other key
management personnel, prepared in accordance with the Corporations Act 2001 and the Corporations Regulations
2001. The Directors have determined that they and the Chief Financial Officer are the key management personnel.
Remuneration Policy
The remuneration policy of the Company is 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 indicators affecting PPK’s financial results and Long
Term Incentives (LTIs) based on vesting conditions designed to measure enhancement of PPK’s shareholders’ value.
The Board reviewed the existing remuneration policy and adopted amendments and updates in December 2021.
The PPK Board believes the revised 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 Company sought advice from a remuneration consultant namely Denis Godfrey of Godfrey Remuneration Group
(GRG) in September 2021 concerning the structure of a new long-term incentive plan. That plan was put to the
shareholders of the Company at the AGM in November 2021. The advice included guidance on the advantages and
disadvantages of certain structures, along with observations on common vesting conditions.
On 29 June 2022, the Company purchased a copy of the 2022 GRG KMP Remuneration Guide to assist the
Remuneration and Nomination Committee in the salary review cycle for key management personnel.
The combined expenditure by the Company on this advice was $23,500 (ex GST).
The Remuneration and Nomination Committee was established on 21 December 2021 and acts as the primary safeguard
to ensure proper governance on remuneration matters, including an absence of undue influence by members of the
key management personnel. The General Counsel undertook certain preparatory work on the long-term incentive
plan in connection with the AGM prior to the establishment of this committee. The Company managed this situation
in two ways. Firstly, the General Counsel acted in consultation with a Non-Executive Director during these preliminary
discussions with a focus on the structural information required for the upcoming AGM. Secondly, the Company deferred
adoption of the long-term incentive plan and the resultant grant of performance rights until after the establishment of
the Remuneration and Nomination Committee, namely until March 2022. For these reasons, the Board has determined
that the advice provided by GRG was made free from undue influence.
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 recommended by the Remuneration & Nomination Committee and
approved 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 $0.800M per annum in aggregate as approved by shareholders at the
Annual General Meeting on 30 November 2021.
19
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.
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) Non-executive directors are remunerated by means of cash benefits. They are not entitled to participate in performance
based remuneration practices unless approved by shareholders. The Company will not generally use options as a means of
remuneration for non-executive directors and will continue to remunerate those directors by means of cash benefits. PPK
does not provide retirement benefits for its non-executive directors. Executive directors do not receive director’s fees.
The Remuneration & Nomination Committee 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
Remuneration & Nomination Committee. The committee will seek feedback from executives on the compensation
arrangements for managers where appropriate to do so. The committee will also seek independent advice from a third
party remuneration consultant where the committee believes it to be necessary.
The Remuneration & Nomination Committee was established in December 2021. The committee will conduct its review
annually between June and September 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 program in place which is paid as salary and superannuation above their normal contracts and aligned
with key performance indicators (KPIs) as recommended by the Remuneration and Nomination Committee and
adopted 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 delivery of sustainable value to the Company, its shareholders and its
customers. Participation in the STI is considered on an annual basis. Any STI awards are ordinarily paid in September
or October reflecting performance in the previous financial year. Any STI awards to participants that join the company
mid-year will be appropriately pro-rated.
Long Term Incentives (LTI)
PPK has reviewed and modified its LTI Plan consistent with the change in its business strategy and the role in which it
performs going forward. The new plan is called the Executive Rights Plan. The Executive Rights Plan was approved by
shareholders at the annual general meeting held in November 2021.
Executive Rights Plan
The Remuneration & Nomination Committee will, on an annual basis, make recommendations to the Board on who
should be offered Performance Rights, the number of Performance Rights to be offered and the vesting conditions that
should attach to each Performance Right. The Board will consider those recommendations and seek further information
as required.
As disclosed in the 2021 notice of meeting, for this financial year only, there were two tranches issued; being a Special
Catch-Up Grant of Performance Rights and the ordinary FY22 Performance Rights. The two tranches reflect a
one-off situation arising out of the move from a so-called ‘cliff-edge’ structure to a ‘rolling’ structure. Thereafter, grants
of Performance Rights will only occur once each financial year. The terms and conditions of each Performance Right are
identical except for the Measurement Period. A summary follows:
Plan Structure
The Executive Rights Plan is managed by a Trust. The Board has appointed PPK Plans 2
Pty Ltd as the Trustee.
Term
20
Each Right has a Term of 15 years and, if not exercised within that Term the Rights will
lapse.
Performance Rights
Each vested Right can be exercised for one share in PPK Group Limited.
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) Measurement Period
The Measurement Period for the Special Catch-Up Grant is a period of 2 years ending on
30 June 2023.
Vesting Conditions
The Measurement Period for the FY22 Performance Rights is a period of 3 years from 1 July
2021. All future grants of Performance Rights under the Executive Rights Plan will have a
3 year measurement period.
The nature and weighting of the vesting conditions are broadly consistent for each
Participant but are tailored for the role that each Participant performs. The Remuneration
and Nomination Committee will use their judgement to assess and recommend to the
Board whether the vesting conditions have been met. As disclosed in the 2021 notice of
meeting, the company will move from internal measurements to a blend of internal and
external measurements.
The internal measurements used for the Special Catch-Up Grant and the FY22 Performance
Rights grant are as follows:
Nature
Weighting
Strategic Goals
Operational Goals
ESG Goals
40%
40%
20%
The Remuneration and Nomination Committee has recommended to the Board that any
FY23 grants of Performance Rights contain an external ‘total shareholder return’ metric and
the Board currently expects this to be the case for all grants going forward.
Gates
No Gates have been attached to these Tranches of Rights.
Vesting and Vesting Date Rights will typically vest following the completion of the Measurement Period based on
an assessment of the Vesting Conditions, however Rights may vest before the end of the
Measurement Period in some limited circumstances.
Exercise Restrictions
No Exercise Restrictions have been attached to these Tranches of Rights.
Disposal Restrictions
Rights may not be disposed of at any time but they may be exercised following vesting.
No additional Restrictions have been attached to the Shares that may be acquired when
vested Rights are exercised. Thus, the Disposal Restrictions that apply to the Shares will
arise from the Company’s Securities Trading Policy and the insider trading provisions of the
Corporations Act.
Exercise and
Exercise Price
The Exercise Price is nil (no amount needs to be paid by the Participant in order to exercise
the Rights).
Termination of
Employment
Vested Rights may be exercised at any time after the Vesting Date and before the end of
their Term. In order to exercise vested Rights, a Participant must validly submit an Exercise
Notice.
On exercise of Vested Rights, the Board will issue a Settlement Notice and ensure that
there are a sufficient number of Shares available to satisfy the exercised Rights. The Board
will not settle the exercised Performance Rights in cash, in whole or in part.
If a Participant’s employment with the Company ceased during FY22, the FY22
Performance Rights would have been forfeited in the proportion that the remainder of the
FY22 bears to the full FY22. If a Participant’s employment ceases prior to 30 June 2023, all
Special Catch-Up rights are forfeited in full.
Remaining unvested Rights will be retained by the Participant, subject to the Malus
and Clawback provisions, with a view to testing for possible vesting having regard to
performance during the Measurement Period up to the date of cessation of employment.
The Remuneration and Nomination Committee will be convened to consider any such
off-cycle assessment of vesting conditions.
Vested Rights held following a termination of employment will be exercised pursuant to a
Power of Attorney, if not exercised earlier, 90 days after the date on which the Participant
holds only vested Rights which are not subject to Exercise Restrictions.
21
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) Malus and Clawback
Rights may be forfeited at any time, including during and subsequent to a Participant’s
employment with the Company, should the Malus and Clawback provisions come into play.
No Hedging
Participants must not enter into an arrangement with anyone if it would have the effect
of limiting their exposure to risk in relation to Rights (vested or unvested) or Restricted
Shares. This is a Corporations Act requirement.
Change of Control
If a de-listing is imminent
Vesting will automatically occur at the level derived from application of the following
formula:
Number of
Performance
Rights in
Tranche to Vest
Unvested
Performance
Rights in Tranche
=
% of First Year
of Measurement
Period Elapsed
X
X
(Share Price at Effective
Date – Share Price at
Measurement Period
Commencement)
Share Price at
Measurement Period
Commencement
Additional vesting will occur to the extent, if any, determined by the Board and any
remaining unvested Rights will lapse; and
Restricted Shares will cease to be subject to Specified Disposal Restrictions, and any
CHESS holding locks will be removed if applicable, unless otherwise determined by the
Board.
In other cases of a change of control the Rights will remain on foot, subject to possible
modification of Vesting Conditions, for testing for vesting at the end of the Measurement
Period.
As at 30 June 2022, the Trust for PPK Plans 2 Pty Ltd held nil shares in PPK to satisfy the 144,210 unvested performance
rights under the Executive Rights Plan.
Previous LTI Plan
For 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 PPK. The Directors determined 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
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.
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 via an
exercise notice to have the shares sold or transferred to the applicable participant.
All performance and vesting conditions were met on 1 July 2021 and all performance rights were vested.
Two directors, D McNamara and A McDonald, participated 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.
A McDonald was offered 50,000 performance rights due to the time and services provided in connection with the
BNNTTL 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.
All performance and vesting conditions for D McNamara and A McDonald were met on 1 July 2021 and all performance
rights were vested. D McNamara exercised his performance rights during the year.
22
As at 30 June 2022, the Trust held 0.090M shares in PPK to satisfy the 0.090M relevant vested performance rights. 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.
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) Li-S Energy Directors
R Levison and T 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).
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.
Consequences of company performance on shareholder wealth
Net profit (loss) after tax ($000)
Earnings per share (cents)
Full year ordinary dividends (cents) per share
Year end share price
Shareholder return (annual)
2022
2021
2020
2019
2018
($2,564)
($5,479)
$8,254
$1,800
($1,561)
(8.0)
2.81
(6.4)
3.5
$2.04
$15.95
-86%
414%
9.8
2.0
$3.11
13%
2.6
1.0
(2.3)
–
$2.77
823%
$0.30
50%
The above table shows the annual returns to shareholders calculated to include the difference in percentage terms
between the dividend yield for the year (based on the average share price during the period) and changes in the price
at which shares in the Company are traded between the beginning and the end of the relevant financial year.
23
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) Remuneration Details for the year ended 30 June 2022 for Directors’ and Key Management Personnel
Details of the nature and amount of each element of the remuneration of each director and key management personnel
(‘KMP”) of PPK Group Limited are shown in the table below:
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post-
employment
Super-
annuation
($)
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(1)Share
Based
Payments
($)
Perfor-
mance
Related
%
Total
($)
2022
Directors
Non-Executive
A McDonald
75,000
Executive
R Levison
G Molloy
211,883
240,000
D McNamara(2)
200,000
Total Directors
726,883
Other KMP
–
–
–
–
–
K Hostland(3)
406,250 260,000
Total Other
406,250 260,000
Total KMP
1,133,133 260,000
–
–
–
–
–
–
–
–
–
27,500
–
–
27,500
27,500
27,500
55,000
–
–
–
–
–
–
–
–
–
–
–
–
–
75,000
–
–
– 239,383
– 240,000
– 200,000
– 754,383
–
–
–
–
–
– 275,900 969,650
– 275,900 969,650
55
55
– 275,900 1,724,033
31
(1)
All equity settled share-based payments for the LTI Plan fully vested on 1 July 2021. K Hostland also participates in the Executive
Rights Plan and received 34,704 performance rights in both the Special Catch-Up Grant and the FY Performance Rights.
(2) D McNamara also has use of a fully maintained motor vehicle.
(3)
The cash bonus includes a bonus from PPK of $160,000 for the 2021 financial year and $100,000 paid by WGL to PPK this
financial year for his involvement in a pre-IPO process.
The above table presents the Directors and key management personnel of PPK and the amounts they have been
remunerated in respect of their management of the Group.
For clarity, the $260,000 cash bonus for K Hostland includes the $100,000 shown in the White Graphene remuneration
table. Amounts are not included in the table above for other KMPs that are shown in the White Graphene table on the
basis that payments to A McDonald, R Levison and G Molloy were paid directly to them by White Graphene whereas the
payment to K Hostland was paid to PPK who then paid K Hostland.
24
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
Directors and key management personnel were also remunerated by Li-S Energy and White Graphene for the year
ended 30 June 2022 as follows, in addition to the above table:
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post-
employment
Super-
annuation
($)
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(1)Share
Based
Payments
($)
Perfor-
mance
Related
%
Total
($)
–
–
–
196,000
–
196,000
196,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
157,122
157,122
157,122
157,122
– 314,244 314,244
–
–
–
– 196,000
–
–
– 196,000
– 314,244 510,244
–
–
–
–
–
–
–
2022
Li-S ENERGY
LIMITED
Directors
Non-Executive
R Levison
A McDonald
Total Directors
Other KMP
G Molloy(2)
K Hostland(3)
Total Other
Total KMP
(1)
Equity settled share based payments. Each tranche of the service rights granted are expensed over the vesting period from the
date of granting to the date that the last tranche vests resulting in a proportionally larger expense recognised in the earlier years.
Share based payments for directors are not performance related but are in lieu of salary and fees.
(2) Remunerated through a consulting agreement on 12 June 2021 at an agreed hourly rate for work undertaken on behalf of LIS
(3) Remunerated by PPK Group Limited
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post-
employment
Super-
annuation
($)
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(1)Share
Based
Payments
($)
Perfor-
mance
Related
%
Total
($)
2022
WHITE GRAPHENE
LIMITED
Directors
R Levison
G Molloy
20,000 100,000
20,000 400,000
A McDonald
20,000 100,000
Total Directors
60,000 600,000
Other KMP
K Hostland
Total Other
Total KMP
– 100,000
– 100,000
60,000 700,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 120,000
– 420,000
– 120,000
– 660,000
83
95
83
– 100,000
100
– 100,000
– 760,000
(1)
The cash bonus was for services provided during the reporting period by each KMP working extended hours in connection with
their involvement in a pre IPO process which fall outside their normal roles and duties. The KMPs reinvested the cash bonus
into the capital raise in the year and the payments are included in professional fees in the statement of profit or loss and other
comprehensive income. The IPO was deferred due to changes in investment markets this calendar year.
Directors and key management personnel also provided services to the other subsidiary companies, the associated
companies and the joint venture for which they were not remunerated.
25
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
Remuneration Details for the year ended 30 June 2021 for Directors’ and Key Management Personnel
Details of the nature and amount of each element of the remuneration of each director and key management personnel
(‘KMP”) of PPK Group Limited are shown in the table below:
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post-
employment
Super-
annuation
($)
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(1)Share
Based
Payments
($)
Perfor-
mance
Related
%
Total
($)
2021
Directors
Non-Executive
A McDonald
G Webb
Executive
R Levison
G Molloy
D McNamara(2)
50,000
43,333
215,000
240,000
200,000
–
–
–
–
–
–
Total Directors
748,333
Other KMP
K Hostland(3)
325,000 150,000
Total Other
325,000 150,000
Total KMP
1,073,333 150,000
–
–
–
–
–
–
–
–
–
–
–
25,000
–
–
25,000
25,000
25,000
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
88,057
138,057
43,333
–
–
– 240,000
– 240,000
70,701
270,701
158,758
932,091
64
–
–
–
26
–
56,561
556,561
37
56,561
556,561
–
215,319 1,488,652
–
–
(1)
Equity settled share based payments. Performance rights granted are expensed over the performance period, which includes the
year to which the bonus relates and the subsequent vesting period of rights. All performance rights fully vested on 1 July 2021.
(2) D McNamara also has use of a fully maintained motor vehicle.
(3) The cash bonus relates to the 2020 financial year.
The above table presents the Directors and key management personnel of PPK and the amounts they have been
remunerated in respect of their management of the Group.
26
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
Directors and key management personnel were also remunerated by Li-S Energy and White Graphene for the year
ended 30 June 2021 as follows, in addition to the above table:
2021
LI-S ENERGY
LIMITED
R Levison
G Molloy
A McDonald
K Hostland
WHITE GRAPHENE
LIMITED
R Levison
G Molloy
A McDonald
Short Term Benefits
Salary &
Fees
($)
(5)Cash
Bonus
($)
Non-
Monetary
($)
Post-
employment
Super-
annuation
($)
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(4)Share
Based
Payments
($)
Perfor-
mance
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
Performance Income as a Proportion of Total Remuneration
In FY22, K Hostland received an STI award of $160,000 for work undertaken prior to 30 June 2021 (FY21: $150,000)
from PPK and a bonus of $100,000 from WGL in connection for his involvement in the pre-IPO process undertaken
by WGL during the year. The WGL bonus was paid to PPK who then paid it directly to K Hostland who reinvested the
bonus into the WGL capital raise. The PPK STI was based on an assessment of annual performance, for achieving
targets noted below as set by the Directors for the 2022 financial year representing 92% of his targets. No other
bonuses were paid by PPK to Key Management Personnel during the year.
Targets
Results
Performance of Technology ventures
Achieved at Board’s discretion
LIS IPO and additional responsibilities
Achieved at Board’s discretion
STI
Allocation
Outcome
20%
80%
80%
95%
27
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
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 $240,000 per annum.
Duties: Executive Chairman for this financial year.
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 $240,000 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.
G Molloy also has a consultancy agreement with Li-S Energy (see Note 35.1).
D McNamara
A consultancy agreement was 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 $200,000 per annum plus a fully maintained motor vehicle.
Duties: Director of Global Mining.
Termination: Mr McNamara terminated the agreement and left the employment of the Company on 9 June 2022.
K Hostland
Employment agreement is in place between the parties on the following terms:
Term: Commenced 1 June 2016 – no fixed term.
Remuneration: Base remuneration of $450,000 per annum was changed effective 1 September 2021. 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, and the LTI.
Duties: Chief Financial 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 or A Birkill.
28
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D) Shareholdings and Rights
PPK Group Limited
As at the end of the financial year, the number of ordinary shares in PPK Group Limited held by directors and Key
Management Personnel (“KMP”) during the 2022 and 2021 reporting periods is set out below:
2022
Directors
Non-Executive
R Levison(1)
G Molloy(2)(3)
Share
Balance at
Start of Year
Shares
Transferred
from PPK
LTIP
Shares
Acquired
Shares
Acquired
Shares
Sold
Adjust for
Director
Ceasing in
the Year
Shares Held
at the End of
the Reporting
Period
4,100,153
14,468,121
–
–
–
–
(50,000)
50,000
7,014,866
(255,000)
–
–
4,050,153
21,277,987
D McNamara(4)
3,043,332
400,000
A McDonald
409,120
–
–
–
–
–
–
–
(3,443,332)
–
–
409,120
Total Directors
22,020,726
400,000
50,000
7,014,866
(305,000) (3,443,332) 25,737,260
Other KMP
K Hostland
Total Other
Total
428,692
244,000
428,692
244,000
–
–
–
–
(113,192)
(113,192)
–
–
559,500
559,500
22,449,418
644,000
50,000
7,014,866
(418,192) (3,443,332) 26,296,760
(1)
Shares sold to a family member.
(2) Share movement of 7,014,866 was as a result of appointment as a Trustee from a Trust.
(3) Share movement of 255,000 was as a result of retirement as a Trustee from a Trust.
(4) Removes D McNamara share holding as he ceased to be a Director during the year.
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)
D McNamara(4)
A McDonald
G Webb(6)
4,433,572
11,581
14,582,610
37,035
4,530,461
407,924
11,834
1,066
9,749,399
25,467
–
–
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
Total Directors
33,703,966
86,983
Other KMP
K Hostland
Total Other
Total
254,878
254,878
665
665
56,649
125,000
(8,500)
56,649
125,000
(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 which shares were 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.
29
(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 shareholding as he ceased to be a Director during the year.
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
As at the end of the financial year, the number of Performance Rights in PPK held by directors and Key Management
Personnel during the 2022 and 2021 reporting periods is explained and summarised below:
2022
Executive Rights Plan
Name and
Grant Dates
Balance
at Start
of the Year
Granted
During
Year
Vested
Exercised
Forfeited
Vested Unvested
No.
No.
%
No.
No.
%
No.
Balance at
End of Year
Unvested
Maximum
$ value to
vest(3)
K Hostland
Special Catch-Up
Grant(1)
FY22 Performance
Rights(2)
–
–
– 34,704
– 34,704
–
–
–
–
–
–
–
–
– 34,704
91,967
– 34,704
–
(1) The performance rights fully vest on 30 June 2023.
(2) The performance rights will be assessed against the KPI’s by the Directors on 30 June 2024.
(3)
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 granted.
The fair value of the rights issued was $5.30. There is no exercise price for the executive rights which will expire in
March 2037.
2022
Executive Rights Plan
Name and
Grant Dates
Balance
at Start
of the Year
Granted
During
Year
Vested
Exercised
Forfeited
Vested Unvested
No.
No.
%
No.
No.
%
No.
Balance at
End of Year
Unvested
Maximum
$ value to
vest(3)
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
100,000
100,000
100,000
100,000
12,500
12,500
12,500
12,500
75,000
75,000
75,000
75,000
(1) The performance rights fully vested on 1 July 2021.
30
(100,000)
(100,000)
(100,000)
(100,000)
–
–
–
–
(75,000)
(75,000)
(75,000)
(75,000)
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
Li-S Energy Limited
As at the end of the financial year, the number of ordinary shares in LIS held by directors and Key Management
Personnel during the 2022 and 2021 reporting periods is set out below:
2022
Directors
Non-Executive
R Levison
A McDonald
Total Directors
Other KMP
G Molloy(1)
K Hostland
Total Other
Total KMP
Share
Balance at
Start of Year
Shares
Acquired
Shares Sold
Share
Balance at
End of Year
2,776,917
13,632
866,961
–
3,643,878
13,632
6,440,784
504,295
6,945,079
–
24,771
24,771
10,588,957
38,403
–
–
–
–
–
–
–
2,790,549
866,961
3,657,510
6,440,784
529,066
6,969,850
10,627,360
(1) Entered into a consulting agreement on 12 June 2021.
2021
Directors
Non-Executive
R Levison
A McDonald
Total Directors
Executive Director
G Molloy(1)
Total Executive Director
Total KMP
Share
Balance at
Start of Year
Shares Issued
via PPK's
In-specie
Dividend
Shares
Acquired
Shares Sold
Share
Balance at
End of Year
–
–
–
–
–
–
1,576,917
1,200,000
166,961
700,000
1,743,878
1,900,000
5,640,784
800,000
5,640,784
800,000
7,384,662
2,700,000
–
–
–
–
–
–
2,776,917
866,961
3,643,878
6,440,784
6,440,784
10,084,662
(1) Resigned as a Director on 11 June 2021.
As at the end of the financial year, the number of Service Rights in LIS held by directors and Key Management
Personnel during the 2022 and 2021 reporting periods is set out below:
2022
Balance
at Start
of Year(1)
Granted
During the
Year
Vested Exercised Forfeited
Vested &
Unexercised
Unvested Unvested
No
%
No
No
%
No
Balance at
End of Year
Unvested
Maximum
$ Value to
Vest(2)
Directors
R Levison
480,000
– 160,000 100%
A McDonald
480,000
– 160,000 100%
Total Directors 960,000
– 320,000
–
–
–
–
–
–
– 160,000 320,000
– 160,000 320,000
64,251
64,251
– 320,000 640,000
128,502
(1) There were nil vested and unexercised rights at the beginning of the year.
31
(2)
The maximum value of service rights to vest has been calculated as the amount of the grant date fair value of the service rights
yet to be expensed.
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
2021
Balance
at Start of
Year
Granted
During the
Year
Vested Exercised Forfeited
Vested &
Unexercised
Unvested
Unvested
No
%
No
No
%
No
Balance at
End of Year
Unvested
Maximum
$ Value to
Vest(1)
Directors
R Levison
A McDonald
Total Directors
–
–
–
480,000
480,000
1,440,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 480,000 240,000
– 480,000 240,000
– 1,440,000 720,000
(1)
The maximum value of service rights to vest has been calculated as the amount of the grant date fair value of the service rights
yet to be expensed.
White Graphene Limited
As at the end of the financial year, the number of ordinary shares in WGL held by directors and Key Management
Personnel during the 2022 and 2021 reporting periods is set out below:
2022
Directors
R Levison
G Molloy
A McDonald
G Pullen
Total Directors
Other KMP
K Hostland
Total Other
Total
Share
Balance at
Start of Year
(1)Shares
Acquired
Shares Sold
Shares Held
at the End of
the Reporting
Period
250,000
250,000
–
–
–
1,000,000
250,000
–
250,000
1,500,000
–
–
250,000
250,000
250,000
1,750,000
–
–
–
–
–
–
–
–
500,000
1,000,000
250,000
–
1,750,000
250,000
250,000
2,000,000
(1)
Shares were acquired at $0.40 per share as part of the capital raise process.
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)
32
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
MEETINGS OF DIRECTORS
During the financial year, meetings of directors (including committee meetings) were held. Attendances were:
DIRECTORS’ MEETINGS
AUDIT & RISK COMMITTEE
MEETINGS
REMUNERATION &
NOMINATION COMMITTEE
MEETINGS
Number
Eligible to
Attend
Number
Attended
Number
Eligible to
Attend
Number
Attended
Number
Eligible to
Attend
Number
Attended
13
13
13
13
13
13
12
13
–
5
–
5
–
5
–
5
–
–
–
2
–
–
–
2
R Levison
G Molloy
D McNamara
A McDonald
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 2022 Corporate Governance Statement can be found in the
corporate governance section of PPK’s website at www.ppkgroup.com.au.
RISK & CONTROL COMPLIANCE STATEMENT
The Board has:
–
–
received and considered reports from management regarding the effectiveness of the Company’s management of
its material business risks; and
received assurance from the people performing each of the Chief Executive Officer and Chief Financial Officer
functions regarding the consolidated financial statements and the effective operation of risk management systems
and internal controls in relation to financial reporting risks.
Material associates and joint ventures, which the company does not control, are not dealt with for the purposes of this
statement.
AUDIT & RISK COMMITTEE
The details of the composition, role and Terms of Reference of the Audit & Risk Committee(1) are available on the
Company’s website at www.ppkgroup.com.au.
During the reporting period, the Audit & Risk Committee consisted of the following:
G Molloy (Appointed Chairman: 14 August 2017)(1)
A McDonald (Appointed: 25 January 2018)(1)
Executive Director
Non-Executive Independent Director
(1)
On 21 December 2021, Mr McDonald was appointed as the Chairman of the Committee and the responsibilities were extended to
include risk management. Mr Molloy continued as a member until 30 June 2022, but ceased to be the Chairman.
The Company’s lead audit signing and review External Audit Partner, Chairman, Chief Financial Officer and selected
consultants attend meetings of the Audit and Risk Committee by standing invitation. The Chief Risk Officer attends
meetings of the Committee as a guest, unless substantive risk matters are being discussed.
REMUNERATION & NOMINATION COMMITTEE
The details of the composition, role and Terms of Reference of the Remuneration and Nomination Committee are
available on the Company’s website at www.ppkgroup.com.au.
During the reporting period, the Remuneration & Nomination Committee consisted of the following:
R Levison (Appointed: 21 December 2021)
A McDonald (Appointed Chairman: 21 December 2021)
Executive Chairman
Non-Executive Independent Director
The Company’s General Counsel, Chief Financial Officer and selected consultants attend meetings of the Remuneration
and Nomination Committee by standing invitation. The Chief Risk Officer attends meetings of the Committee as a
guest, unless substantive risk matters are being discussed.
33
PPK Group Limitedfor the year ended 30 June 2022Directors’ ReportDIRECTORS’ REPORT (CONT’D)
DIRECTORS’ 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:
Each of the Directors, the Company Secretaries and other Executive Officers of PPK have entered into a deed whereby
the company has provided certain contractual rights of access to books and records of PPK to those Directors, the
Company Secretaries and other Executive Officers. The company has insured all its Directors and Executive Officers.
The contract of insurance prohibits the disclosure of the nature of the liabilities covered and amount of the premium
paid. The Corporations Act 2001 does not require disclosure of the information in these circumstances.
No Directors, Company Secretaries or other Executive Officers have sought leave under Section 237 of the
Corporations Act.
AUDITOR’S INDEMNIFICATION
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, 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 Ernst & Young during or since the financial year.
NON-AUDIT SERVICES
Non-audit services provided by the Group’s auditor, Ernst & Young, in the current financial period and prior financial
year included taxation advice and other advisory services to either the Company or other entities within the Group. The
Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided to
the Group means that auditor independence was not compromised.
During the year, the following fees were paid or payable for non-audit services provided by the auditor of the Group
and its related practices:
Taxation advice and other advisory services
Total remuneration
2022
$
276,325
276,325
2021
$
247,805
247,805
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 2022 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
Chairman
Glenn Molloy
Executive Director
Brisbane, 29 August 2022
34
PPK Group Limitedfor the year ended 30 June 2022Directors’ 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 2022, 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;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene 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
29 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
3535
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 2022
Continuing operations
Revenue from contracts with customers
Gain on re-measurement of equity interest at fair value
Share of profit (loss) of associates and joint ventures
Other operating income (loss)
Technology expenses
Corporate expenses
PROFIT (LOSS) BEFORE TAX EXPENSE FROM CONTINUING OPERATIONS
Income tax (expense) benefit
PROFIT (LOSS) AFTER TAX EXPENSE FROM CONTINUING OPERATIONS
Discontinuing operations
PROFIT (LOSS) AFTER TAX EXPENSE FROM DISPOSAL GROUP
Notes
3.1
22.1.3
22.3
3.2
4.1
4.1
4.1
13
PROFIT (LOSS) FOR THE YEAR
PROFIT (LOSS) IS ATTRIBUTED TO:
Owners of PPK
Non-controlling interests
OTHER COMPREHENSIVE INCOME
Consolidated Entity
2022
$000
2021
$000
1,647
11,648
(4,039)
254
(9,646)
(6,888)
(7,024)
503
–
–
(198)
(571)
(2,243)
(3,163)
(6,175)
599
(6,521)
(5,576)
(649)
(7,170)
(742)
(6,318)
(2,564)
(4,606)
(7,170)
–
(5,479)
(839)
(6,318)
–
OTHER COMPREHENSIVE INCOME (LOSS) FOR THE YEAR
(7,170)
(6,318)
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR IS ATTRIBUTABLE TO:
Owners of PPK Group Limited
Non-controlling interests
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.
36
(2,564)
(4,606)
(7,170)
(5,479)
(839)
(6,318)
(8.0)
(8.0)
(7.3)
(7.3)
(0.7)
(0.7)
(6.3)
(6.3)
(5.4)
(5.4)
(0.8)
(0.8)
11
11
11
11
11
11
PPK Group LimitedCONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Consolidated Statement of Financial Position
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Current Disposal Group assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investment
Interest-bearing loans to related parties
Investment property
Investments in associates and joint ventures
Property, plant and equipment
Right-of-use assets
Intangible assets and goodwill
Deferred tax assets
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease and other liabilities
Interest-bearing loans and borrowings
Provisions
Taxes provision
Disposal Group liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings
Lease liabilities
Provisions
Deferred tax liability
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)
Capital and reserves attributable to owners of PPK
Non-controlling interests
TOTAL EQUITY
The accompanying notes form part of these financial statements.
Consolidated Entity
2022
$000
2021
$000
Notes
14
15
16
17
13
18
19
20
22
23
24
25
7
17
26
27
28
29
7
13
28
27
29
7
30.1
30.4
31
53,008
2,177
313
160
–
55,658
3,402
2,000
4,102
10,762
5,439
1,256
37,475
785
97
65,318
120,976
1,672
171
–
382
1,172
–
3,397
2,756
1,129
80
1,039
5,004
8,391
112,585
62,175
(109)
38,969
–
(19,525)
81,510
31,075
112,585
30,365
1,721
–
110
28,734
60,930
4,472
–
–
28,126
530
–
1,622
922
–
35,672
96,602
357
–
399
134
–
7,435
8,325
–
–
13
–
13
8,338
88,264
75,348
(203)
19,068
350
(17,915)
76,648
11,616
88,264
37
PPK Group Limitedas at 30 June 2022Consolidated Statement of Financial PositionCONSOLIDATED STATEMENT OF FINANCIAL POSITION Consolidated Statement of Cash Flows
Consolidated Entity
2022
$000
2021
$000
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers
Cash payments to suppliers and employees
Interest received
Interest paid
Income taxes refunded (paid)
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for purchases of plant and equipment
Payment for purchase of investment property
Proceeds from sale of property and equipment
Proceeds from sale of treasury shares
Proceeds from sale of financial assets at FVTPL
Payments for intangibles
Payments for loans advanced
Proceeds from loans repaid
Payments for investments in associates and joint ventures
Payment for acquisition of investment
Increase in cash from a change in accounting from an associate to a subsidiary
Increase in cash from demerger of disposal group held for sale
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
Payment of dividend by BNNTTL to non–controlling interests
Finance costs
Net cash provided by (used in) financing activities
Net increase (decrease) in cash held
Cash at the beginning of the financial year
10(d)
10(d)
42,498
38,916
(49,880)
(41,596)
197
(176)
(709)
60
(129)
–
(8,070)
(2,749)
(2,929)
(4,179)
–
3,208
950
(4,774)
–
1,569
(7,488)
–
8,672
1,164
–
298
(817)
–
446
2,025
–
(2,271)
(1,914)
273
(1,500)
(2,597)
–
–
(57)
362
(3,509)
(6,050)
2,335
35,160
–
(2,003)
(184)
–
–
(1,029)
(57)
34,222
22,643
30,365
395
38,206
(150)
(1,722)
(1,995)
(376)
7
–
–
34,365
25,566
5,344
38
Cash attributable to discontinued operations
Cash at the end of the financial year
13
6.2
–
(545)
53,008
30,365
The accompanying notes form part of these financial statements
PPK Group Limitedfor the year ended 30 June 2022Consolidated Statement of Cash FlowsCONSOLIDATED STATEMENT OF CASH FLOWS Consolidated Statement of Changes in Equity
for the year ended 30 June 2022
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 2021
75,348
(203)
(17,915)
19,068
350
76,648
11,616 88,264
Total comprehensive
income (loss) for the
year
Profit (loss) for the
year
Total comprehensive
income (loss) for the
year
Issue of share capital
for Long Term
Incentive Plan
Issue of performance
rights
Issue of performance
rights in a subsidiary
company
Reserves attributable
to non-controlling
interests
Transaction costs for
issue of share capital
–
–
–
331
–
–
–
31.1
31.1
32.1
32.1
30.2
(14)
–
–
–
–
Treasury shares sold
30.4
Reserves of a Disposal
Group held for sale
13
Dividends paid by in
specie distribution
10(d)
Dividends paid
Return of Capital –
Demerger
30.1
(13,490)
Issue of capital in a
controlled entity
21.1
Change in a non-
controlling interest
held by a controlled
entity, net of costs
Non-controlling
interest arising in
BNNTTL’s business
combination
22.1.3
–
–
–
–
–
–
(2,564)
–
(2,564)
–
–
–
–
–
–
–
–
–
–
94
3,113
–
(2,509)
–
350
–
–
–
–
–
–
–
–
–
–
(331)
600
821
(886)
–
–
–
–
–
–
–
16,680
–
–
3,017
–
At 30 June 2022
62,175
(109) (19,525)
38,969
The accompanying notes form part of these financial statements
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,564)
(4,606)
(7,170)
(2,564)
(4,606)
(7,170)
–
600
821
–
–
–
–
600
821
(886)
886
–
(14)
3,207
–
(2,509)
–
–
–
–
(14)
3,207
–
(2,509)
–
(1,029)
(1,029)
(350)
(13,490)
(13,490)
–
–
–
–
16,680
18,174 34,854
3,017
191
3,208
–
5,843
5,843
81,510
31,075 112,585
39
PPK Group Limitedfor the year ended 30 June 2022Consolidated Statement of Changes in EquityCONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONT’D)
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
40
PPK Group LimitedConsolidated Statement of Changes in EquityCONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
NOTE 1 CORPORATE INFORMATION
The financial statements of consolidated entity, being PPK
Group Limited and its 100% owned subsidiaries (“PPK” or
“the Company”) and its controlled entities (“the “Group”)
for the year ended 30 June 2022 were authorised for
issue in accordance with a resolution of the Directors on
29 August 2022 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 and domiciled 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.
With the restructuring of the Group over the past two
years, PPK has become a technology incubation and
commercialisation company with its main focus on the
manufacture and sale of BNNT and as an incubator
for BNNT application companies and other innovative
university or externally sourced science and technologies.
Thus, the nature of PPK’s principal activities are the
manufacture and sale of BNNT and as an incubator
for BNNT application companies and other innovative
technologies.
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 consolidated financial statements provide
comparative information in respect of the previous
period. 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
There were no first time standards and amendments
effective for the financial period ended 30 June 2022
that are material to the Company. The Company has
not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
AASB 2020-3 Amendments to AASB 3 – Reference
to the Conceptual Framework
When the revised Conceptual Framework was issued in
2018, its application to AASB 3 was excluded requiring
entities to apply the definitions of an asset and liability
(and supporting concepts) in the previous Framework.
In some cases, the revised definitions might change
which assets and liabilities qualify for recognition in a
business combination. As a consequence, post-acquisition
accounting required by other standards could lead to
immediate derecognition or such assets or liabilities,
causing “day 2 gains or losses” to arise, which did not
depict economic reality.
The IASB has assessed the impact of the revised
definitions of assets and liabilities in the Conceptual
Framework to business combinations, concluding that
the problem of day 2 gains or losses would be significant
only for liabilities that an acquirer accounts for after
acquisition by applying IAS 37 Provisions, Contingent
Liabilities and Contingent Assets or IFRIC 21 Levies.
The IASB updated IFRS 3 in May 2020 for the revised
definitions of an asset and liability and excluded the
application of the Conceptual Framework to liabilities
and contingent liabilities within the scope of IAS 37 or
IFRIV 21. The AASB released the equivalent amendments
to AASB 3 in June 2020. When the amendments are
first adopted for the year ended 30 June 2023, the
amendments are not expected to have a material impact
on the financial statements.
IAS 16 Amendment to Property, Plant and
Equipment: Proceeds before Intended Use
The amendment prohibits entities from deducting from
the cost of an item of property, plant and equipment,
any proceeds of the sale of items produced while
bringing that asset to location and condition necessary
for it to be capable of operating in the manner intended
by management. Instead, an entity recognises the
proceeds from selling such items, and the costs of
producing those items, in profit or loss. An entity applies
this amendment for annual reporting periods beginning
on or after 1 July 2022 and the amendment is applied
retrospectively but only to items of property, plant
and equipment that are “ready to use” from the date
of application. When this amendment is first adopted
for the year ended 30 June 2023, the amendment
is not expected to have a material impact on the
financial statements.
41
PPK Group Limitedfor the year ended 30 June 2022 NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.2 New and revised standards that are effective
for these financial statements (continued)
AASB 2021-2 Amendments to AASB 7, AASB 101,
AASB 134 Interim Financial Reporting and AASB
Practice Statement 2 Making Materiality Judgements –
Disclosure of Accounting Policies
The amendments to AASB 101 Presentation of Financial
Statements require disclosure of “material” accounting
policy information, instead of “significant” accounting
policies. Unlike material, significant is not defined
in Australian Accounting Standards and leveraging
the existing definition of material, with additional
guidance, is expected to help preparers make more
effective accounting policy disclosures. The guidance
illustrates circumstances where an entity is likely to
consider accounting policy information to be material
and entity-specific accounting policy information is
emphasised as being more useful than generic information
or summaries of the requirements of Australian
Accounting Standards. The amendments to AASB Practice
Statement 2 supplement the amendments to AASB 101
by illustrating how the four-step materiality process can
identify material accounting policy information. When the
amendment is first adopted for the year ended 30 June
2024, the amendment is not expected to have a material
impact on the financial statements.
AASB 2021-2 Amendments to AASB 108 – Definition
of Accounting Estimates
An accounting policy may require items in the financial
statements to be measured using information that is
either directly observable or estimated. Accounting
estimates use inputs and measurement techniques that
require judgement and assumptions based on the latest
available reliable information. The amendments to AASB
108 clarify definition of an accounting estimate, making
it easier to differentiate it from an accounting policy. The
distinction if necessary as their treatment and disclosure
requirements are different. Critically, a change of an
accounting estimate is applied prospectively whereas a
change in accounting policy is applied retrospectively.
The new definition provides that “Accounting estimates
are monetary amounts in financial statements that are
subject to measurement uncertainty”. The amendments
explain that a change in an input or a measurement
technique used to develop an accounting estimate is
considered a change in an accounting estimate unless it
is correcting a prior period error. When the amendments
are first adopted for the year ended 30 June 2024, the
amendments are not expected to have a material impact
on the financial statements.
42
AASB 2021-5 Amendments to AAS – Deferred Tax
related to Assets and Liabilities arising from a Single
Transaction
The amendment requires entities to account for income
tax consequences when economic transactions take place,
rather than when income tax payments or recoveries are
made. Accounting for such tax consequences means
entities need to consider the differences between tax rules
and accounting standards. Deferred taxes representing
amounts of income tax payable or recoverable must
be recognised on temporary differences unless
specifically prohibited by AASB 112. An entity applies
this amendment for annual reporting periods beginning
on or after 1 July 2023 and applies the amendment
from the beginning of the earliest comparative period
presented for all transactions occurring on or after that
date and for deferred tax balances arising from leases and
decommissioning, restoration and similar liabilities existing
at that date. The cumulative effect of initial application
is recognised as an adjustment to the opening balance
of retained earnings or other component of equity, as
appropriate. When the amendment is first adopted for the
year ended 30 June 2024, the amendment is not expected
to have a material impact on the financial statements.
AASB 2020 – Amendments to AASs – Classification
of Liabilities as Current or Non-current
A liability is classified as current if the entity has no right
at the end of the reporting period to defer settlement for
at least 12 months after the reporting period. The AASB
recently issued amendments to AASB 101 to clarify
the requirements for classifying liabilities as current or
non-current, specifically:
–
the amendments specify that the conditions which
exist at the end of the reporting period are those
which will be used to determine if a right to defer
settlement exists.
– management intention or expectation does not affect
the classification of liabilities.
–
in cases where an instrument with a conversion
option is classified as a liability, the transfer of equity
instruments would constitute settlement of the
liability for the purpose of classifying it as current or
non-current.
A consequence of the first amendment is that a liability
would be classified as current if its repayment conditions
failed their test at reporting date, despite those
conditions only becoming effective in the 12 months
after the end of the reporting period.
The AASB has proposed further amendments:
–
–
–
specifying that conditions with which an entity must
comply after the reporting period do not affect the
classification at the reporting date;
adding presentation and disclosure requirements
for non-current liabilities subject to conditions in the
next 12 months;
clarifying specific situations in which an entity does
not have a right to defer settlement for at least
12 months after the reporting date; and
– deferring the effective date of the original
amendments to no earlier than 1 July 2024.
The amendments are applied retrospectively and early
adoption is permitted. When the amendments are first
adopted for the year ended 30 June 2025 or earlier, the
amendments are not expected to have a material impact
on the financial statements.
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.2 New and revised standards that are effective
for these financial statements (continued)
AASB 2014-10 Amendments to AAS – Sale or
Contribution of Assets between an Investor and its
Associate or Joint Venture
The amendments address a current inconsistency
between AASB 10 Consolidated Financial Statements
and AASB 128 Investments in Associates or Joint
Ventures. The amendments clarify that, on a sale or
contribution of assets to a joint venture or associate
or on loss of control or significant influence is retained
in a transaction involving an associate or joint venture,
any gain or loss recognised will depend on whether the
assets or subsidiary constitutes a business, whereas
gain or loss attributable to other investors’ interests
is recognised when the assets or subsidiary do not
constitute a business.
This amendment effectively introduces an exception
to the general requirement in AASB 10 to recognise
full gain or loss on the loss of control over a subsidiary.
The exception only applies to the loss of control over a
subsidiary that does not contain a business, if the loss of
control is the result of a transaction involve an associate
or a joint venture that is accounted for using the equity
method. Corresponding amendments have also been
made to AASB 128.
When the amendments are first adopted for the year
ended 30 June 2026, the amendments are not expected
to have a material impact on the financial statements.
2.3 Basis of consolidation
The Group financial statements consolidate those of the
Parent Company 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 (Note 2.24). 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. When a business combination arises
and no consideration is paid, the fair value of the
Group’s investment prior to acquisition is used in lieu of
consideration paid. 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 unless
otherwise required by the relevant accounting standard.
Where there is no consideration transferred, the Group
attributes to the owners of the acquiree the amount of
the acquiree’s net assets recognised in accordance with
the relevant accounting standard.
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.
43
PPK Group Limitedfor the year ended 30 June 2022Notes 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)
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.
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.
44
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 and all subsidiaries,
associates and joint ventures.
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 or 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
To determine whether to recognise revenue, the
Company follows a 5-step process:
Identify the performance obligation;
Identify the contract with a customer;
–
–
– Determine the transaction price;
– Allocate the transaction price to the performance
obligations; and
– Recognise 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 Company 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 arises from the sale of BNNT and is recognised
at a point in time when they leave the manufacturing
plant 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.
Management fees
Revenue is recognised as it accrues on a monthly
basis for the performance of services provided under
agreement.
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.8 Revenue and revenue recognition (continued)
Interest income
Revenue is recognised as it accrues using the effective
interest rate method. The effective interest method uses
the effective interest rate which is the rate that exactly
discounts the estimated future cash receipts over the
expected life of the financial asset.
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.
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 that have a maturity of no more
than three months, 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.
45
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.14 Property, plant and equipment (continued)
The depreciable amount of all fixed assets, including
buildings and capitalised leased assets but excluding
freehold land, is depreciated over their useful lives to the
consolidated entity commencing from the time the asset is
held ready for use. Leasehold improvements are amortised
over the shorter of either the unexpired period of the lease
or the estimated useful lives of the improvements.
The gain or loss on disposal of all fixed assets is determined
as the difference between the carrying amount of the asset
at the time of disposal and the proceeds of disposal, and is
included in the profit before income tax of the consolidated
entity in the year of disposal.
Class of Fixed Asset
Depreciation Rate
Leasehold Improvements
Straight Line over the term
of the lease
Plant & Equipment
Building
2.15 Intangible assets
10-50 %
4%
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.
Intellectual Property
Intellectual Property is recognised when it is probable
that it will generate future economic benefits and its
costs can be measured reliably. Intellectual Property has
a finite useful life and is carried at cost less accumulated
amortisation and impairment losses. The asset is tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that the carrying
value may be impaired.
For intellectual property in BNNTTL, amortisation is
calculated on a straight line basis over the number of
years of its expected benefit being the expiration of the
exclusive global licence over the BNNT manufacturing
technology on 31 May 2038.
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 Group’s investments are 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).
46
PPK Group Limitedfor the year ended 30 June 2022Notes 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)
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.
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 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:
– The rights to receive cash flows from the asset have
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.
ii) Financial liabilities
Initial measurement and recognition
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.
47
PPK Group Limitedfor the year ended 30 June 2022Notes 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)
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
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
borrowings)
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.
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.
48
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 classified a disposal group as held for sale
when the carrying amounts of their assets were realised
through a demerger of the assets by a return of capital
to shareholders 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 demerge. Costs to demerge 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 was available for immediate sale in its
present condition.
Property, plant and equipment and intangible assets
were not depreciated or amortised once classified as
held for sale.
Assets and liabilities classified as held for sale were
presented separately as current items on the statement
of financial position in the previous year.
The disposal group qualified as a discontinued operation
as it was a component of an entity that has been
classified as held for sale and represents a separate
major line of business or geographic area of operations.
Held-for-sale assets were excluded from the results of
continuing operations and were presented as a single
amount as profit or loss after tax from discontinued
operations in the statement of profit or loss.
The Disposal Group identified in the 30 June 2021
finance year is the Mining Equipment. Additional
disclosures are provided in Note 13. All other notes to
the financial statements include amounts for continuing
operations, unless indicated otherwise. The Disposal
Group was demerged from the Group on 29 June 2022.
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.
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
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 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.
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 and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based on
the tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
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.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit will
be available to allow or part of the deferred tax asset
to be utilised. Unrecognised deferred tax assets are
re-assessed at each reporting date and are recognised
to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be
recovered.
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 funding agreement
and 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.
49
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
2.21 Income tax (continued)
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
2 to 9 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.
50
2.23.2 Lease liabilities
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.
PPK Group Limitedfor the year ended 30 June 2022Notes 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
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,
51.02% owned by the Group and 28.57% owned by
Deakin, which is the supplier of BNNT to the entity, and
whether there is a long term supply agreement in place.
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.
The Group has the option, under the property leases
with BNNTTL, to lease the properties for two additional
terms of three years each. 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 include the two
renewal periods as part of the lease term.
Capitalisation of 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 fully automate the
BNNT 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 either:
estimated future cash flows from the investment; or
–
– Using a market capitalisation to determine the implied
value of the company and its assets was well in excess
of the carrying value of the intangible assets.
Based on the information available to support the
estimates made, Management concluded there was no
impairment charge of the intangibles at the reporting
date (2021: 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 recognition of the investment on the
30 June 2022, 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 22.1).
51
PPK Group Limitedfor the year ended 30 June 2022Notes 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)
Investment in equity instruments
Management has used significant judgement to
determine the fair value of the investment in Zeta Energy
LLC which LIS has made an investment in (see Notes 18
and 21.1).
Recognition of goodwill and subsequent assessment
for impairment
Management has used significant judgement to identify
and determine the fair value of the assets and liabilities
acquired when PPK gained control of BNNTTL and
accounted for the change as a business combination
Note (22.1.3).
Management has used significant judgement to evaluate
the conditions specific to the Group that goodwill may
be impaired. Based on the information available to
Management, no impairment expense was required to be
recorded at the reporting date.
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.
PPK has a new long term incentive plan called the
Executive Rights Plan which is managed by a Trust
on behalf of executives and senior managers who are
offered Performance Rights which can be converted to
PPK shares on a one-for-one basis subject to meeting
the vesting conditions. There were two tranches issued
during the financial year; Special Catch-Up Grant and
FY22 Performance Rights.
Management has reviewed the terms and conditions of
each tranche to determine the value of each Right, the
service period for which each Right pertained to, the
vesting period for each Rights and the period for which
the Rights are expensed (Note 5.1).
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.
52
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.
2.25 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to owners of PPK, 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 Investment properties
Investment properties are initially measured at cost
including transaction costs. Subsequent to initial
measurement, investment properties are carried at cost,
less depreciation and any impairment losses. Subsequent
costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only
when it is probably that future economic benefit
associated with the item will flow to the Group.
Depreciation on investment properties is calculated on
a straight-line basis over the estimated useful life of the
asset of 25 years. Land is not depreciated.
The assets’ residual values and useful lives are reviewed
and adjusted, if appropriate, at each balance sheet date.
Gains and losses on disposals are calculated as the
difference between the net disposal proceeds and
the asset’s carrying amount and are included in the
statement of profit or loss in the year that the item is
derecognised.
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.28 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 29 August 2022, 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:
– $53.008M of cash of which PPK has $4.810M of cash;
– PPK has $1.620M of managements fees owing from CIB and $0.600M of secured loans from PPKMEG to be repaid
in the next financial year;
– PPK will receive at least $1.278M of management fees from subsidiary companies and associates for providing
shared support services in the next financial year;
– PPK has strategic ownership in ASX listed companies which have a market value of approximately $0.892M and
would be available for sale, if required;
– LIS, a subsidiary which PPK owns 290.849M shares listed on the ASX on 28 September 2021. The shares are
escrowed until 27 September 2023 and would be available for sale, if required;
– WGL, of which PPK owns 81.000M shares, is in the process of a capital raise at $0.50 per share. On successful
completion of the capital raise, the value of PPK’s shares is $40.500 million and they would be available for sale, if
required;
– The only fixed interest debt required to be paid is $2.250M loan secured against the property investment that has
an estimated value of more than $5.500M.
– PPK has a loan of $2.000M with PPKMEG to be repaid within two years;
– All subsidiaries will have sufficient funds to finance their planned research and development programs, once WGL
completes its capital raise which is in progress;
– Current assets have increased from $32.196M to $55.658M and working capital has increased from $31.306M to
$52.261M;
– Subsequent to the year end, the guarantee and indemnity provided to PPKMEG was terminated.
– 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.
The Group has increased its net tangible asset per share from 72.34 cents to 81.83 cents.
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 operating segments 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
Timing of revenue recognition
Goods transferred at a point in time
Services rendered over time
Total revenue from contracts with customers
Geographic location of Customers
In the 2022 financial year, the operating segments operate only in Australia.
Consolidated Entity
Notes
2022
$000
2021
$000
27
1,620
1,647
27
1,620
1,647
–
–
–
–
–
–
53
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 3 REVENUE AND OTHER OPERATING INCOME (continued)
3.1 Revenue from contracts with customers (continued)
Customer Concentration
In the 2022 financial year, segment revenues were earned from subsidiary companies and eliminated on consolidation
or from an associate or a joint venture and recognised in the rendering of services category of revenue. Hence,
customer concentration was predominantly from related parties.
3.2 Other Operating Income (Loss)
Rental income
Foreign exchange gain (loss) on financial assets at FVTPL
Gain (loss) on financial assets at FVTPL
Gain (loss) on sale of financial assets at FVTPL
Finance income
Impairment of a loan
Grant income
Notes
4.1
6.1
6.1
Consolidated Entity
2022
$000
311
251
(419)
49
174
(112)
–
254
2021
$000
44
(289)
(383)
–
55
–
2
(571)
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.
With the restructuring of the Group over the past two years, PPK has become a technology incubation and
commercialisation company with its main focus on the manufacture and sale of BNNT and as an incubator for BNNT
application companies and other innovative university or externally sourced science and technologies. As these
companies mature into commercial operations, independent board and management are appointed to manage these
companies on behalf of the various shareholders.
These companies are differentiated by the amount of involvement PPK has with their operations. As either the
major shareholder or having responsibilities to commercialise the technologies, PPK maintains an active role in the
management of these companies through the appointment of directors and other key management personnel.
As a result, the reportable segments for 30 June 2022 are as follows:
PPK deems that it controls these companies and accounts for them as subsidiary companies and includes:
– BNNT Technology Limited
– Li-S Energy Limited
– White Graphene Limited
– BNNT Precious Metals Limited
– Strategic Alloys Pty Ltd
– 3D Dental Technology Pty Ltd
For those companies which PPK does not control the operations of the business and is reliant on the management to
operate the business, PPK equity accounts these entities and they includes:
54
– Advanced Mobility Analytics Group Pty Ltd
– Craig International Ballistics Pty Ltd
– Ballistic Glass Pty Ltd
– Survivon Pty Ltd
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 4 SEGMENT INFORMATION (continued)
4.1 Year ended 30 June 2022
Reportable Segments
Revenue from contracts with customers(2)
Rental income
Gain on re-measurement of equity interest at fair
value
Foreign exchange gain (loss) on financial assets
at FVTPL
Gain (loss) on financial assets at FVTPL
Gain (loss) on sale of financial assets at FVTPL
Finance income
Impairment of a loan
Share of profit (loss) of an associate and a joint
venture
Total revenue and other income
Segment expenses include
Administration expenses
Share based payment expense
Costs to defend a dispute of a business
acquisition
Short term leases
Interest expense
Depreciation and amortisation
Total expenses
Segment profit (loss)
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total net assets
Technology
Subsidiary
Companies
$000
Associates
and Joint
Ventures
$000
Notes
3.1
3.2
(1)Corporate
$000
1,620
264
Total
$000
1,647
311
11,648
11,648
–
(419)
49
129
(112)
251
(419)
49
174
(112)
–
–
–
–
–
–
–
–
(4,039)
(4,039)
–
(4,039)
13,179
9,510
27
47
–
251
–
–
45
–
–
370
21.4.1
5.3
(7,884)
(821)
–
(70)
(36)
(835)
(9,646)
–
–
–
–
–
–
–
(5,080)
(12,964)
(600)
(1,421)
(839)
(220)
(43)
(106)
(839)
(290)
(79)
(941)
(6,888)
(16,534)
(9,276)
(4,039)
6,291
(7,024)
48,118
49,190
97,308
1,875
7,522
9,397
87,911
–
10,762
10,762
7,540
5,366
55,658
65,318
12,906
120,976
–
–
–
338
(3)(1,344)
(1,006)
2,213
6,178
8,391
10,762
13,912
112,585
(1)
Does not include $1.887M in management fees charged by the corporate office to provide shared support services to the
subsidiary companies, eliminated on consolidation.
(2) Does not include $0.119M of intercompany sales in subsidiary companies, eliminated on consolidation
(3)
Includes adjustments eliminating interest in related party transactions.
55
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) Technology
Subsidiary
Companies
$000
Notes
Associates
and Joint
Ventures
$000
Corporate
$000
NOTE 4 SEGMENT INFORMATION (continued)
4.2 Year ended 30 June 2021
Reportable Segments (Restated)
Revenue from contracts with customers
Rental income
Foreign exchange gain (loss) on financial assets
at FVTPL
Gain (loss) on financial assets at FVTPL
Finance income
Grant income
Share of profit (loss) of an associate and a joint
venture
Total revenue and other income
Segment expenses include
Administration expenses
Share based payment expense
Costs to defend a dispute of a business
acquisition
Short term leases
Interest expense
Depreciation and amortisation
Total expenses
Segment profit (loss)
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total net assets
3.1
3.2
3.2
3.2
–
44
(289)
–
55
2
–
(188)
21.4.1
5.3
(2,050)
(127)
–
–
–
(66)
(2,243)
(2,431)
20,337
25,521
45,858
470
–
470
45,388
Total
$000
–
44
(289)
(383)
55
2
(198)
(769)
–
–
–
(383)
–
–
–
(383)
(2,444)
(4,494)
(139)
(266)
(361)
(219)
–
–
(361)
(219)
–
(66)
(3,163)
(5,406)
–
–
–
–
–
–
(198)
(198)
–
–
–
–
–
–
–
(198)
(3,546)
(6,175)
–
(1)–
–
–
–
–
–
11,849
7,353
19,202
420
13
433
32,186
32,874
65,060
890
13
903
18,769
64,157
The presentation for the previous period has been restated to conform to the current year. The above excludes
non-current assets and liabilities held for sale.
(1) Does not include $28.126M of PPK Investments in Associates
56
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 5 SHARE BASED PAYMENT EXPENSE
5.1 PPK Share Based Payments
PPK has two share payment programs for employee remuneration; the Executive Rights Plan and the Long Term
Incentive Plan.
Executive Rights Plan
For this financial year, there were two tranches issued; Special Catch-Up Grant of Performance rights and FY22
Performance Rights. The terms and conditions of each Performance Right are identical except for the Measurement
Period. A summary follows:
Term
Each Right has a Term of 15 years and, if not exercised within that Term the Rights will
lapse.
Performance Rights
Each vested Right can be exercised for one share in PPK Group Limited.
Measurement Period
The Measurement Period for the Special Catch-Up Grant is a period of 2 years ending on
30 June 2023.
The Measurement Period for the FY22 Performance Rights is a period of 3 years from
1 July 2021.
Vesting Conditions
The nature and weighting of the vesting conditions are consistent for each Participant
but the KPIs are tailored for the role than each Participant performs. The Remuneration &
Nomination Committee will use their judgement to assess whether the KPIs have been met.
Nature
Strategic Goals
Operational Goals
ESG Goals
Weighting
40%
40%
20%
Special Catch-Up Grant
FY22 Performance Rights
Total
No of Rights
Share Price Rights Value
2022
Expense
2023
Expense
61,913
82,298
$5.30
$5.30
$328,138
$164,069
$164,069
$436,180
$436,180
–
$600,249
$164,069
The Rights for both Tranches were granted by the Board effective on 11 March 2022, the share price was determined
based on a 20 day VWAP being $5.30 per share and all the employees accepted the Rights on or about 10 March 2022
being the grant date. There are no exercise prices for these rights.
The Special Catch-Up Grant Rights are expensed on a straight-line basis from 1 July 2021 to 30 June 2023 being the
service period for each Participant.
The FY22 Performance Rights were fully expensed this financial year in line with their service period condition as they
are in relation to the Participant’s June 2022 remuneration, although the assessment of the KPIs are determined over a
three year period.
57
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 5 SHARE BASED PAYMENT EXPENSE (continued)
5.1 PPK Share Based Payments (continued)
LTI Plan
For 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 determined 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
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.
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.
All performance and vesting conditions were met on 1 July 2021 and all performance rights were vested.
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.
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.
All performance and vesting conditions for D McNamara and A McDonald were met on 1 July 2021 and all performance
rights were vested.
PPK had an Exempt Employee Share Plan which offered $1,000 worth of fully paid PPK ordinary shares. In February
2020 0.024M shares were allotted to employees for which they were restricted in selling, transferring or otherwise
dealing with their shares for three years while they were employees of the Company. The employees were employed by
PPK Mining Equipment Pty Ltd and the restrictions were removed with the demerger of this company on 29 June 2022.
5.2 Group Share Based Payments
Group companies also have share based payments. While the purpose and approach of each plan are consistent with
that of PPK, the plans are tailored of the requirements of each individual entity and the directors and executives that
participate may not be key management personnel of PPK.
5.2.1 LIS Share Payments
LIS has two share payment programs, one for non-executive directors and one for executives.
NED Equity Plan
The Non-Executive Directors were granted 2,160,000 Service Rights on 1 May 2021 under the LIS NED Equity Plan.
Each Service Right converts to one ordinary fully paid Share in the Company. These Service Rights were granted in lieu
of the Directors taking remuneration as directors fees for the three years ending 30 April 2024 and 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. All NEDs met the vesting requirements for
Tranche 1.
The number of Service Rights are 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. 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.
58
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 5 SHARE BASED PAYMENT EXPENSE (continued)
5.2 Group Share Based Payments (continued)
Executive Rights Plan
On 12 November 2020, the CEO of LIS was granted 1,000,000 Service Rights which vest in four equal tranches on 30
April 2022, 2023, 2024 and 2025, subject to continuity of his engagement during the Measurement Periods. The Service
Rights at the time that they were granted have been independently valued at $0.065 each and have a nil exercise price.
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. Each consecutive tranche commences
annually on the vesting date of the prior tranche and, if the CEO ceases his employment during a tranche, then Service
Rights for that tranche will vest in proportion to the time elapsed as served in the tranche and all subsequent tranches
will lapse. The vesting requirements for Tranche 1 were met.
On 15 June 2022, the CTO of LIS was granted 200,000 Service Rights which vest on 30 June 2022 providing he
continued to be employed up to and including that date. The Service Rights were valued at $0.425 each, being the
closing share price at the date of the grant and have a nil exercise price. The CTO met the vesting requirements for this
Tranche and $65,000 has been recorded in the profit and loss for this financial year. Service Rights that have vested
may be exercised any time after 30 June 2024.
Each Service Right or Performance Right is an entitlement, upon vesting and exercise, to an ordinary fully paid Share in
the Company. Any unvested Service Rights that do not vest will lapse. 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 .065 cents was determined to
be the share price at date of issue based on approximate capital raisings completed to the grant date.
5.3 Share Based Payments
Subsidiary Companies
PPK Parent Company
Disposal Group
Notes
4.1
4.1, 5.1
13
Consolidated Entity
2022
$000
821
600
–
1,421
2021
$000
127
139
152
418
59
PPK Group Limitedfor the year ended 30 June 2022Notes 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
Realised (gain) loss on sale of financial assets at FVTPL
Amortisation
Depreciation
Impairment of a loan
Share of profit of associates and a joint venture, after tax
Share based payments expense
Gain on re-measurement of equity interest at fair value
Accounting loss on demerger of disposal group held for sale
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
Consolidated Entity
Notes
2022
$000
2021
$000
(6,521)
(649)
(7,170)
(5,576)
(742)
(6,318)
7
4.1
4.1
4.1
4.1
4.1
4.1
4.1
5.3
22.1.3
13
(503)
(251)
419
(49)
835
106
112
4,039
1,421
(11,648)
4,391
–
–
(1,663)
9
697
448
737
(599)
289
383
–
121
2,354
–
198
418
–
–
89
85
1,648
(144)
(508)
112
(877)
(8,070)
(2,749)
–
53,008
53,008
1
30,364
30,365
14
60
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 7 INCOME TAX EXPENSE
(a) The prima facie tax payable (benefit) on the profit (loss) before
income tax is reconciled to the income tax expense as follows:
Profit (loss) before tax – Continuing Operations
Profit (loss) before tax – Disposal Group
Profit (loss) before tax
Prima facie tax payable (benefit) at 25.0% (2021: 26.0%)
(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)
Consolidated Entity
Notes
2022
$000
2021
$000
(7,024)
(649)
(7,672)
(1,918)
(7)
2,124
(346)
242
(598)
(503)
(6,175)
(742)
(6,917)
(1,798)
135
–
650
(35)
449
(599)
The applicable weighted average effective tax rates are as follows:
6.6%
8.6%
All income tax expense/(benefit) is attributable to continuing operations in
2022 and 2021.
(b) The components of tax expense comprise:
Current tax
Deferred tax
Share of associates tax expenses
(Over) under 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
1,172
(1,729)
–
54
(356)
(243)
–
–
(503)
(599)
410
624
2,536
1,719
(1,288)
(3,333)
(254)
922
61
PPK Group Limitedfor the year ended 30 June 2022Notes 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
2022
$000
2021
$000
Tax losses
Temporary differences
Total
Movements
Opening balance
Tax losses not recognised current year
Adjustment for change in applicable tax rate
Reversal and de-recognition of deferred tax assets and liabilities
Temporary differences not recognised current year
Adjustment related to transfer of losses from acquisition
7,274
1,364
8,638
3,003
2,062
(131)
2,853
791
60
3,022
–
3,022
3,003
64
(45)
–
–
–
Closing balance
8,638
3,022
A deferred tax asset of $0.785M was recognised during the year in LIS. A deferred tax liability of $1.039M was
recognised during the year in BNNT.
The unrecognised tax loss asset is based on the Group’s estimated available tax losses in the parent and its tax
consolidated group and controlled entities. These losses are subject to the finalisation of 2022 statutory income tax
returns. The benefit of these losses will only be available in future periods should the Group a) continue to comply with
the requirements of relevant legislation to carry these losses forward; b) generate sufficient taxable income to utilise;
and changes to relevant legislation do not cause the losses to be lost.
NOTE 8 AUDITORS’ REMUNERATION
Remuneration of the auditor of the Company for:
Audit Services
Group audit fee per Financial Statements (including all subsidiaries)
400,701
316,856
Audit-related Services
Independent Limited Assurance Report for LIS IPO
43,350
–
Non-audit Services
Tax compliance services and general taxation advice
Total fees for services provided
232,975
677,026
247,805
564,661
62
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 9 PPK KEY MANAGEMENT PERSONNEL REMUNERATION
9.1 Key management personnel remuneration
Short-term benefits
Share-based payments
Post-employment benefits
Consolidated Entity
2022
$
2021
$
Notes
2,249,133
2,118,334
590,144
264,207
55,000
50,000
2,894,277
2,432,541
The above table discloses remuneration for the Group. 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.
9.2 Equity Instruments
PPK’s Chief Financial Officer participates in the PPK Executive Rights Plan, subject to retention of his services to meet
the vesting conditions. A PPK Director participates in the PPK LTI Plan and all his Rights have vested.
9.3 Loans
There were no loans or advances to PPK’s key management personnel or their related parties in the current financial or
previous financial years.
NOTE 10 DIVIDENDS
(a) Dividends paid
2022 2.81 cent per share special ordinary dividend, which was fully satisfied
by an in specie distribution of shares in PPK Mining Equipment Group Limited
(PPKMEG)(1) PPK has received advice from its tax advisers that the special
dividend should qualify as non-assessable non-exempt income for tax purposes
for Australian residents.
2021 2.5 cent special ordinary fully franked was paid by a distribution in specie of
shares in LIS held by PPK on the basis of 0.3846 LIS share for every 1 PPK share
held
2022 nil interim ordinary fully franked dividend was declared or paid (2021:
1 cent ordinary fully franked dividend)
2022 No final ordinary dividend was declared or paid (2021: nil)
(b) Dividends declared after balance date
(c) Franked dividends
2,509
2,509
–
–
–
–
–
–
–
2,220
859
–
3,079
–
Franking credits available for subsequent financial years based on a tax rate of
25% (2021 – 26%)(2)
234
14
(1)
PPK also completed a tax-free return of capital of 15.11 cents per share. The combined effect of the above is that PPK shareholders
(other than foreign shareholders) received 1 share in PPKMEG for every 1 share held in PPK.
(2) The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
–
–
–
–
franking credits that will arise from the payment of the current tax liability;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
63
franking credits that may be prevented from being distributed in subsequent financial years.
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 10 DIVIDENDS (continued)
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of
subsidiaries were paid as dividends.
(d) reconciliation of dividends paid
2022
2.81 cent per share special ordinary dividend, which was fully
satisfied by an in specie distribution of shares in PPK Mining
Equipment Group Limited (PPKMEG)(1)
2021
2.5 cent special ordinary fully franked was paid by a
distribution in specie of shares in LIS held by PPK on the basis
of 0.3846 LIS 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
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
2,509
2,220
–
–
2,220
17
2,203
–
–
–
376
376
7
369
–
–
–
483
483
–
483
$000
Total
2,509
2,220
–
859
3,079
24
3,055
Consolidated Entity
2022
2021
(8.0)
(8.0)
(7.3)
(7.3)
(0.7)
(0.7)
(6.3)
(6.3)
(5.4)
(5.4)
(0.8)
(0.8)
$000
$000
(6,521)
(649)
(7,170)
(4,737)
(742)
(5,479)
No.
No.
(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
89,244,396
87,621,784
64
(c) Weighted average number of potential ordinary shares outstanding during the
year used in calculation of diluted EPS)(1)
89,244,396
87,621,784
The weighted average number of ordinary shares outstanding used in calculating diluted earnings per share has not
been adjusted for the 61,913 Special Catch-Up Grant performance rights and the 82,298 FY22 Performance Rights
issued during the financial right as they are anti-dilutive.
PPK Group Limitedfor the year ended 30 June 2022Notes 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 2022. 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]
Impairment relating to demerger of disposal group held for sale(3)
Dividends received
Dividends paid
Other comprehensive income (loss) for the year
Notes
2022
$000
151
43,844
43,995
3
–
3
2021
$000
1,000
59,945
60,945
172
–
172
43,992
60,773
62,173
75,348
(18,251)
(14,575)
43,992
(1,666)
(6,813)
7,381
60,773
3,160
–
–
10
(2,509)
(3,079)
–
–
(1)
In addition to the Parent Entity contributed equity, the Group’s consolidated Contributed Equity includes Treasury Shares of
$0.109M (see Note 30.4).
(2) Non-current asset balances include investments in subsidiaries which are held at cost or net recoverable value after impairments.
(3)
The impairment is the difference between the book value of the disposal group held for sale and the fair market value of $16.000M
as determined by an independent third party.
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 (PPKMEG) was disclosed in the
Chairman’s Report and on 29 June 2022 and PPKMEG was demerged from PPK on that date.
At 30 June 2021 PPKMEG was classified as Disposal Group assets held-for-sale and the Mining Equipment segment
was no longer presented in the segment note. The information presented in Note 13 includes the revenues, expenses
and cashflow that were consolidated in PPK’s financial results for the period to 29 June 2022, being the date that the
demerger was effected.
65
PPK Group Limitedfor the year ended 30 June 2022Notes 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
Accounting loss on demerger of disposal group held for sale
2022
$000
36,659
1,200
37,859
12
2021
$000
32,651
1,381
34,032
66
37,871
34,098
(28,567)
(26,765)
(2,586)
(2,463)
5.3
–
(152)
(2,560)
(2,349)
–
(319)
–
–
(97)
34,129
3,742
–
3,742
(4,391)
(649)
(146)
(359)
(86)
(2,392)
(128)
34,840
(742)
–
(742)
–
(742)
If PPKMEG was not classified as a disposal group held for sale, the depreciation and amortisation of the fixed assets,
right-of-use assets and intangible assets would have been $2.459M in this period.
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.
66
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 Disposal 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:
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
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.
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:
–
–
the Disposal 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 Disposal Group’s performance does not create an asset with an alternative use and the Disposal 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 Disposal 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 Disposal 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 Disposal Group recognises revenue over time by measuring
the progress towards complete satisfaction of the performance obligation. The Disposal 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;
67
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.
PPK Group Limitedfor the year ended 30 June 2022Notes 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.
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 Disposal 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 Disposal 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 Disposal 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 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 28
February 2022 and the carrying amount of the disposal group was more than the fair value less costs to sell so a net
adjustment of $4.391M was made on the date of the demerger.
68
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
Determining the lease term of contracts with renewal and termination options – Group as lessee
The Disposal 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 Disposal Group has the option, under the property leases, to lease the assets for an additional term of five
years. The Disposal 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 Disposal Group did
not include the renewal period as part of the lease term.
The renewal option for leases of motor vehicles are not included as part of the lease term because the Disposal 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 Disposal 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– prior period judgements
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:
– 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.
– 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.
– 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 2022 financial year resulted in no write down of inventory as a result of fair value measurement
required for assets held for sale (2021: $0.085M).
69
PPK Group Limitedfor the year ended 30 June 2022Notes 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– prior period judgement
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:
– 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;
– 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– prior period judgement
The Disposal 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 date of
initial classification as held for sale.
Provision for expected credit losses (ECL) of trade receivables and contract assets– prior period judgement
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:
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. At 30 June 2021 no significant provision was determined
to be required for these customers as at the date the assets were classified as held for sale.
70
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 13 DISPOSAL GROUP HELD FOR SALE (continued)
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 major classes of assets and liabilities of the Disposal Group classified as held for sale are:
Statement of Financial Position
30 June 2022
$000
29 June 2022
$000
30 June 2021
$000
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
The net cash flows incurred by PPKMEG 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
(620)
12,018
6,419
4,486
2,080
545
11,427
6,947
6,363
3,452
24,383
28,734
(6,383)
–
(6,383)
18,000
(5,358)
(2,077)
(7,435)
21,299
2022
$000
545
3,584
(1,281)
(3,467)
(619)
2022
cents
(0.7)
(0.7)
2021
$000
974
2,040
(746)
(1,723)
545
2021
cents
(0.8)
(0.8)
PPKMEG was independently valued as at 28 February 2022 and the carrying amount of the disposal group was more
than the fair value less costs to sell so a net adjustment of $4.391M was made on the date of the demerger.
71
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 14 CASH AND CASH EQUIVALENTS – CURRENT
Cash at bank and on hand
Total
NOTE 15 TRADE AND OTHER RECEIVABLES - CURRENT
Trade receivables
GST receivable
Loans – secured
Loans – unsecured
Less: allowance for expected credit losses
Total
Notes
6.2
15.1
15.2
15.3
Consolidated Entity
2022
$000
53,008
53,008
2021
$000
30,365
30,365
1,829
348
–
–
2,177
–
2,177
45
–
1,569
107
1,721
–
1,721
15. 1 Trade receivables
Current trade receivables are non-interest bearing and are generally 30 to 60 day terms.
15.2 Loans - secured
In the previous financial year, loans were 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. All loans and interest have been repaid.
15.3 Loans - unsecured
Loan is short term to an associated entities with interest capitalised at 4.52% (2021: nil) per annum.
NOTE 16 INVENTORIES - CURRENT
Inventories
Net realisable value
Raw materials
Finished goods
Work in progress
313
–
–
313
–
313
–
–
–
–
–
–
72
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 17 OTHER ASSETS
CURRENT
Prepayments
NON-CURRENT
Deposits
Consolidated Entity
Notes
2022
$000
2021
$000
160
110
97
–
NOTE 18 INVESTMENT – NON – CURRENT
Financial assets at FVTPL
3,402
4,472
Listed equity investments
Unlisted equity investment
2.16
2.16
892
2,510
3,402
2,214
2,258
4,472
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 2022.
On 13 May 2022, Zeta Energy was converted from an LLC “taxed as a partnership” to a C Corporation, LIS’s interest
was converted to 1,729,000 shares of Class B common stock and Zeta Energy has confirmed the shares are valued at
USD1.00 per share at 30 June 2022. The valuation of the investment at USD1,729,000 equates to AUD$2.510M at the
prevailing exchange rate on 30 June 2022 of $0.6889.
NOTE 19 INTEREST BEARING LOANS – NON- CURRENT
Interest bearing loan - unsecured
2,000
As a consideration of the demerger of PPK Mining Equipment Group Limited, PPK provided an unsecured loan.
Interest is fixed for the period of the loan at 4.52%, capitalised monthly against the loan, and due for re-payment on
30 June 2024.
NOTE 20 INVESTMENT PROPERTY – NON – CURRENT
Investment Property
Land
Buildings – at cost
Less: Accumulated depreciation
4,102
1,663
2,516
(77)
2,439
4,102
–
–
–
–
–
–
73
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 20 INVESTMENT PROPERTY – NON – CURRENT (continued)
The purchase price of the land and building of $4.102M, including transaction costs, was apportioned between the land
and the building based on an estimate of the cost to purchase development land in the same location and the cost to
build a comparable building at the time the investment property was purchased. Subsequent costs are included in the
assets carrying amount only when it is probable that future economic benefits associated with the asset will flow to the
Company.
The building is being depreciated on a straight-line basis over the estimated useful life of 25 years.
The investment property is leased to Mask Innovation (Note 37.1.5), a subsidiary of an associated company, for
$240,000 per annum, plus outgoings, with CPI increases on an annual basis and market reviews at the beginning of an
option period. The lease expires on 26 August 2024 and has two three-year option periods at the option of the tenant.
NOTE 21 SUBSIDIARY COMPANIES
During the 2022 financial year, PPK had three subsidiaries that had material transactions which were consolidated in the
PPK financial statements; LIS, WGL and BNNTTL.
21.1 LIS
Li-S Energy (LIS) 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.
LIS was listed on the ASX on 24 September 2021 and commenced trading on 28 September 2021.
The Company has had significant development successes through this financial year, including scaling their lithium
sulphur test cells from single layer to the 20-layer cells under construction, building its first 10-layer lithium metal test
cells and successfully completing its first drone test flights.
On the commercial side LIS has acquired three strategic collaboration partners, Boeing’s Insitu Pacific in the drone
target market, Janus Electric in the heavy EV target market and Magnix in the electric aviation target market. These
partnerships will enable LIS to hone in on the battery requirements of each product category, while it continues to test
and optimise its cell chemistry and scale up the size and volume of its cell production capability.
The company continues to pursue its business and development strategies, as outlined in its IPO Prospectus, and has
achieved significant technical successes enabling it to refine these strategies.
The summarised financial information of LIS is provided below. This information is based on amounts before inter-
company eliminations. At the beginning of the year, PPK’s direct interest in LIS was 48.46% and BNNTTL held 6.7%.
After the completion of the capital raise of $34.000 million in September, as part of the IPO, PPK’s direct interest was
45.43% and BNNTTL was reduced to 4.69% after a sale of 10.000 million shares in July at $0.85 per share, resulting in
direct and indirect control of 50.12% of shares on issue.
74
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 21 SUBSIDIARY COMPANIES (continued)
21.1 LIS (continued)
Summarised statement of financial position
Notes
2022
$000
2021
$000
Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Property, plant and equipment
Intangible assets
Investments
Deferred tax asset
Other non-current assets
Total asset
Liabilities
Trade and other payables
Lease and provisions
Total liabilities
Total identifiable net assets
Non-controlling interest
Net assets attributable to the Group
Summarised statement of profit or loss
Revenue from contracts with customers
Other income
Administration expenses(1)
IPO expenses(1)
Professional fees(1)
Management fees
Directors’ fees(1)
Finance costs
Share based payments expense
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
43,853
18,607
157
63
1,092
3,317
2,510
785
240
226
68
121
992
2,258
921
–
52,017
23,193
(743)
(281)
(1,024)
50,993
26,647
24,346
–
90
(1,679)
(2,382)
(891)
(600)
–
(7)
(821)
(232)
251
(444)
–
(444)
22,749
10,769
11,980
–
–
(277)
(1,193)
(218)
(200)
(50)
(1)
–
(55)
(289)
(6,271)
(2,283)
–
599
(6,271)
(1,684)
(3,193)
(3,078)
(1,231)
(1,053)
(1) Total of $4.952M (2021: $1.738M) disclosed as Administration expenses in Note 21.4.1
75
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 21 SUBSIDIARY COMPANIES (continued)
21.2 WGL
WGL was incorporated on 24 August 2020 as an application project under the Joint Venture Research Agreement with
Deakin University (“Deakin”) and PPK Group Limited (“PPK”). The principal activity of WGL is to establish the world’s
first pilot plant for large scale production of white graphene by the ball milling method (“project”) and to commercialise
revenues from white graphene.
This project was under research at Deakin University for more than 10 years and WGL has an exclusive global license to
commercialise products for a period of twenty years. Deakin has two patents pending, which are licensed to WGL and
WGL has lodged a further two patents itself. It is intended that all intellectual property developed will vest in WGL.
During the year Deakin commenced an eighteen-month research and development program to further the work
previously undertaken to determine the most efficient industrial processes including automation, and to ultimately
design, manufacture and test the pilot plant. This year Deakin has completed the build of a small-scale production pilot
plant which is producing more than 100g of white graphene per 7 hour shift. The next phase is to build the larger scale
production plant capable of producing 1 kg of white graphene per shift. The equipment for this has been ordered and
should be completed this calendar year.
WGL has also entered into further research and development projects with Deakin to:
–
–
–
fast track eight applications for the use of white graphene mixed with other composites;
test white graphene and polymer composites for hydrogen pipeline coatings; and
test the anti-corrosion/erosion coatings using white graphene in various composites.
The first two of the eight application projects provided highly encouraging results with the addition of relatively small
amounts of white graphene significantly improving polymer coating mechanical performance in a number of areas,
including water resistance/hydrophobic improvements, moisture impermeability, wear resistance and anti-bacterial
properties. A further three application projects will be conducted during this calendar year.
The testing of white graphene and polymer composites for hydrogen pipeline and anti-corrosion/erosion coatings will
also be conducted later this calendar year.
The Company raised $1,960,000 by issuing 4,900,000 shares at $0.40 per share in September 2021 from Sophisticated
Investors. WGL intended to use these proceeds to further advance an IPO but with the weakness experienced in
the investment markets this calendar year, the IPO was deferred pending an improvement in market sentiment.
In the meantime, WGL will continue to further advance the research and development projects and seek revenue
opportunities from the sale of white graphene.
The summarised financial information of White Graphene is provided below. This information is based on amounts
before inter-company eliminations. At the beginning of the year, PPK’s direct interest in WGL was 59.8% and BNNTTL
held 9.2%. After a $1.960 million capital raise at $0.40 per share in September, which PPK invested $0.800 million,
PPK’s direct interest was 58.8% and BNNTTL was 8.7%.
76
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 21 SUBSIDIARY COMPANIES (continued)
21.2 WGL (continued)
Summarised statement of financial position
Notes
2022
$000
2021
$000
Assets
Cash and cash equivalents
Trade and other current assets
Property, plant and equipment
Intangible assets
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(1)
Professional fees(1)
Management fees
Directors’ fees(1)
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
422
58
563
1,675
2,718
(87)
(87)
2,005
46
384
–
2,435
(8)
(8)
2,631
2,427
940
1,691
864
1,563
–
(229)
(1,275)
(120)
(60)
(72)
–
(1,756)
–
(1,756)
(1,033)
(723)
–
(55)
(15)
(100)
(50)
(11)
(3)
(234)
–
(234)
(154)
(80)
(1) Total of $1.564M (2021: $0.120M) disclosed as Administration expenses in Note 21.4.1
21.3 BNNTTL
BNNTTL’s principal activity is to manufacture and sell boron nitride nanotubes (BNNT) and during the year it expanded
its manufacturing plant and became the lowest cost producer of BNNT globally. On 7 March 2022, BNNTTL signed
a 3 year lease with two 3-year options for approximately 1,000m2 at Deakin’s Waurn Pond campus thus providing
capacity to expand and operate two new 6 furnace modules (SM6 modules) in addition to the two existing 4 furnace
modules (SM4 modules) already in production. Once commissioned, BNNTTL’s production capacity is expected to
increase to around 500 kilograms per annum with > 95% purity. BNNTTL is now well place to meet future BNNT
demand.
With the significantly larger production facility, there is a requirement to take the existing automation processes and
enhance these across the complete production facility so that significant labour and cost savings can be achieved.
77
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 21 SUBSIDIARY COMPANIES (continued)
21.3 BNNTTL (continued)
The summarised financial information of BNNTTL is provided below. This information is based on amounts before
inter-company eliminations. At the beginning of the year, PPK’s interest in BNNTTL was 51% but as a result of changes
in control on 4 August 2021, BNNTTL became a subsidiary. PPK accounted for the change as a business combination in
accordance with AASB 3 Business Combinations (Note 22.1.3).
Summarised statement of financial position
Notes
2022
$000
Assets
Cash and cash equivalents
Other current assets
Property, plant and equipment
Intangible assets
Investments
Other non-current assets
Total asset
Liabilities
Current liabilities
Other current liabilities
Deferred tax liability
Total liabilities
Total identifiable net assets
Non-controlling interest
Net assets attributable to the Group
Summarised statement of profit or loss(1)
Revenue from contracts with customers
Cost of sales
Gross profit
Other income
Gain (loss) on financial assets at FVTPL
Gain (loss) on sale of financial assets at FVTPL
Employee benefit expense(1)
Administration expense(1)
Management fees
Depreciation and amortisation expense
Finance costs
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:
78
Equity holders of parent
Non-controlling interest
(1) Total of $1.172M (2021: nil) disclosed as Administration expenses in Note 21.4.1
For the period from 4 August 2021, previously BNNTTL was a joint venture and equity accounted (Note 22.1.3).
3,912
2,182
1,932
2,629
16,400
1,037
28,092
(893)
(1,172)
(4,656)
(6,721)
21,371
10,519
10,852
82
(58)
24
2
(787)
(385)
(1,052)
(531)
(29)
(2,758)
698
(2,060)
(1,051)
(1,009)
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 21 SUBSIDIARY COMPANIES (continued)
21.4 Summary of Subsidiary Expenses
21.4.1 Administration Expenses
LIS
WGL
BNNTTL
Other
Total
Notes
21.1
21.2
21.3
2022
$000
4,952
1,564
1,172
196
7,884
2021
$000
1,520
120
–
530
2,050
NOTE 22 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE - NON – CURRENT
Investment in associates and a joint venture
10,762
28,126
22.1 Investment in a joint venture
22.1.1 Investment in Survivon
1,492
1,492
20,735
–
Survivon owns the intellectual property for the copper mask technology and the mask manufacturing company Mask
Innovations (MI). PPK has a 47.62% interest which is accounted for using the equity method in the consolidated financial
statements.
Summarised Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s share in equity – 47.62%
Adjustment for loan from PPK
PPK’s carrying amount of the investment
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
PPK’s share of profit (loss)
879
5,611
(4,381)
(294)
1,816
864
628
1,492
923
(7,634)
–
(7,634)
(7,634)
(3,636)
7
(3,629)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
79
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 22 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE - NON – CURRENT (continued)
22.1.2 Investment in BNNTTL
Consolidated Entity
Notes
2022
$000
2021
$000
–
20,735
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(1)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s share in equity – 51.0% (2021: 51%)
Adjustment of investment in LIS at fair value
Adjustment of investment in WGL at fair value
Adjustment for share buyback
Adjustment for interest charged by PPK
Recognition of Group’s share of the profit (loss)
Intangibles
Reclassify as a subsidiary from business combination
PPK’s carrying amount of the investment
Summarised statement of profit or loss(1)
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)
80
10,418
34,278
(3,338)
(7,420)
33,938
17,315
(9,490)
(1,183)
1,000
(4)
(395)
16,466
23,709
(23,709)
–
–
–
–
2,787
28,122
(935)
(6,281)
23,693
11,847
(7,341)
(1,183)
1,000
(4)
(50)
16,466
20,735
–
20,735
478
(42)
436
14,000
24,951
(70)
(331)
(58)
–
–
–
(488)
(319)
(583)
(9)
(24)
–
13,541
23,964
(3,200)
10,342
(6,268)
17,696
10,341
17,696
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 22 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE - NON – CURRENT (continued)
Consolidated Entity
Notes
2022
$000
2021
$000
Adjustment for investment in LIS at fair value
(14,000)
(21,750)
Adjustment for tax effect of investment in LIS at fair value
3,200
Adjustment for investment in WGL at fair value
Adjustment for tax effect of investment in WGL 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)
PPK’s share of profit (loss)
–
–
–
–
–
(459)
(234)
5,655
(3,198)
832
(420)
109
(6)
(1,082)
(541)
(1) For the period ending 4 August 2021 when the investment was a joint venture and equity accounted.
Subsequent to this, BNNTTL became a subsidiary as a result of a business combination (Note 22.1.3).
See Note 2.24 for more detail.
On 16 July 2021 sold 10,000,000 shares in Li-S for $8,500,000.
22.1.3 Change in Accounting for BNNTTL
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 the above changes, PPK gained control of BNNTTL on 4 August 2021 and accounted for the change
as a business combination in accordance with AASB 3 Business Combinations. PPK was required to re-measure its
previously held equity interest in BNNTTL at fair value as at 4 August 2021 and recognise the resulting gain or loss in
profit or loss. Following the business combination, PPK consolidates BNNTTL as a subsidiary and no longer accounts
for its interest as a joint venture (Note 21.3).
To determine the resulting gain or loss and the value of the goodwill recognised, PPK performed the following three
step process:
Step 1 – Re-measure previously held equity interest in a joint venture at its acquisition fair value and recognise
the resulting gain or loss:
Fair value of equity interest in BNNTTL(1)
Less: Carrying value of investment in a joint venture
Gain on re-measurement of equity interest at fair value
Notes
4 August 2021
$000
35,357
(23,709)
11,648
81
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 22 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE - NON – CURRENT (continued)
Step 2 – Identify the fair value of identifiable net assets:
Notes
4 August 2021
$000
Assets
Cash and cash equivalents
Trade and other current assets
Property, plant and equipment
Intangibles
Total assets
Liabilities
Trade and other payables
Income tax payable
Deferred tax liability
Total liabilities
Fair value of identifiable net assets acquired
Step 2 – Calculate the amount of goodwill acquired:
Consideration transferred
Less: Fair value of BNNTTL’s identifiable net assets acquired
Non-controlling interest in BNNTTL, based on proportionate share of identifiable
net assets
Goodwill
8,677
1,741
2,798
2,780
15,996
(643)
(2,715)
(709)
(4,067)
11,929
35,357
(11,929)
23,428
5,843
29,271
(1) Where the Group owns an associate or joint venture which has a holding in a subsidiary, the Parent’s interest in
the subsidiary is determined based on both the directly held interest and the effective interest indirectly held by
the associate or joint venture (a look through approach). Accordingly, in accounting for the business combination of
BNNTTL, the fair value of the previously held equity interest in BNNTTL, the identifiable net assets of BNNTTL acquired,
and non-controlling interest in BNNTTL will be adjusted to exclude BNNTTL’s interest in LIS and WGL.
If BNNTTL had been acquired on 1 July 2021, revenue for PPK to 4 August 2021 would have been nil and PPK would
have recognised a pre-tax loss of $0.234M (Note 22.1.2).
See Note 36.4 for related party balances.
22.2 Investment in associates
82
19.2.1 Craig International Ballistics Pty Ltd
19.2.2 AMAG Holdings Australia Pty Ltd
19.2.3 Ballistic Glass Pty Ltd
Consolidated Entity
2022
$000
9,270
5,417
3,791
62
9,270
2021
$000
7,391
5,831
1,500
60
7,391
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 22 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE - NON – CURRENT (continued)
22.2.1 Investment in CIB
CIB 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. PPK has a 45% interest CIB and which 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
Notes
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
PPK’s share in equity – 45% (2020: 45%)
Adjustment of investment in LIS at fair value
Adjustment for interest charged by PPK
PPK’s carrying amount of the investment
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)
PPK’s share of profit (loss) for the year(1)
Adjustment of investment in LIS at fair value
Adjustment for interest charged by PPK
PPK’s share of profit (loss)
After management fees paid to PPK of $1.620M.
Consolidated Entity
2022
$000
7,877
14,284
(5,953)
(3,869)
12,339
5,553
(127)
(9)
5,417
15,943
(536)
234
(302)
(302)
(136)
20
9
(107)
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
22.2.2 Investment in AMAG
3,791
1,500
AMAG developed the world’s first Safe Mobility Alert Real Time (SMART) and released three modules during the year
and is signing contracts with cities and government departments in a number of countries for the SMART services. PPK
had a 20% interest in AMAG at 30 June 2021 and increased its investment to 35% at 30 June 2022 which is accounted
for using the equity method in the consolidated financial statements.
For the previous year, the Group’s share of fair values of the identifiable assets and liabilities of AMAG were as at the
date of the acquisition, being 16 December 2020, on a provisional basis. The provisional financial information has not
required to be re-stated, reflecting the final acquisition accounting:
83
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 22 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE - NON – CURRENT (continued)
Assets
Cash
Non-current assets(1)
Current liabilities
Total identifiable net assets at fair value
Purchase consideration transferred
Purchase consideration transferred
Cash
Consolidated Entity
2022
$000
2021
$000
1,083
6,521
(104)
7,500
1,500
1,500
AMAG is developing software for new markets and recognises software development as an intangible asset. AMAG
financial results for the year is as follows:
Investment in AMAG
Current assets
Non-current assets(1)
Current liabilities
Non-current liabilities
Equity
PPK’s share in equity – 35% (2021: 20%)
PPK’s carrying amount of the investment
Summarised statement of profit (loss)
Revenue from contracts with customers
Profit (loss) for the year before income tax (continuing operations)
Income tax expense (benefit)
Profit (loss) for the year after income tax (continuing operations)
Total comprehensive income (loss) for the year after income tax (continuing operations)
PPK’s share of profit (loss) from current year
Adjustment for PPK share of profit (loss) from previous year
PPK’s total share of profit (loss)
(1)
Includes $3.972M of intangible assets for software development.
1,083
6,521
(104)
7,500
1,500
130
–
–
–
–
–
1,097
11,264
(520)
(1,009)
10,832
3,791
3,791
595
(272)
68
(204)
(204)
(67)
(2)
(69)
22.2.3 Investment in Ballistic Glass
62
60
Ballistic Glass is developing manufacturing processes for incorporating BNNT into transparent materials to enhance
ballistic performance in bullet resistant glass. During the financial year Ballistic Glass Pty Ltd has continued is research
into this project. PPK has a 40% interest and CIB has a 20% interest in Ballistic Glass Pty Ltd which are accounted using
the equity method in the consolidated financial statements.
84
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 22 INVESTMENTS IN ASSOCIATES AND A JOINT VENTURE - NON – CURRENT (continued)
Summarised Statement of financial position
Notes
2022
$000
2021
$000
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s share in equity – 40% (2021: 40%)
Adjustment for loan from PPK
PPK’s carrying amount of the investment
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
PPK’s share of profit (loss)
22.3 Share of profit of an associate and a joint venture
2
57
(5)
(66)
(12)
(4)
66
62
–
(5)
–
(5)
(5)
2
(2)
–
10
45
(64)
–
(9)
(3)
63
60
–
8
–
8
8
3
(3)
–
PPK’s 47.62% interest in Survivon’s profit (loss) for the period as a joint venture
before income tax (continuing operations)
22.1.1
(3,629)
–
PPK’s 50% interest in BNNTTL’s profit (loss) for the period as a joint venture
before income tax (continuing operations)
22.1.2
(234)
(541)
PPK’s 45% interest of CIB’s profit (loss) for the year before income tax
(continuing operations)
22.2.1
(107)
343
PPK’s 34% interest in AMAG’s profit (loss) for the year before income tax
(continuing operations)
22.2.2
(69)
PPK’s 40% interest of Ballistic Glass’s profit (loss) for the year before income tax
(continuing operations)
22.2.3
–
–
–
PPK’s share of profit (loss)
(4,039)
(198)
85
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 23 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
Total property, plant and equipment of continuing operations
Consolidated - 2022
Carrying amount at start of year
Revaluation
Additions(1)
Realised as a change in accounting for a business combination 22.1.3
Disposals
Transfers
Depreciation & amortisation expense
Carrying amount at end of year
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
Notes
2022
$000
–
–
–
–
–
7,771
(2,333)
5,439
–
5,439
Land &
Buildings
$000
Plant &
Equipment
$000
530
–
3,108
2,798
(1)
–
(466)
5,439
2021
$000
1,500
(67)
1,433
(1,433)
–
9,450
(6,059)
3,391
(2,861)
530
Total
$000
530
–
3,108
2,798
(1)
–
(466)
5,439
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)
Included in additions of Plant and Equipment of $3.108M is $0.118M of employee costs capitalised for the work undertaken in
relation to equipment being built.
86
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 24 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
Notes
Consolidated Entity
2022
$000
1,420
(164)
1,256
–
1,256
–
–
1,427
–
69
(240)
1,256
–
1,256
2021
$000
5,395
(3,327)
2,068
(2,068)
–
3,628
–
119
–
–
(1,679)
2,068
(2,068)
–
The subsidiaries have leases with Deakin at commercial rates of between 2 and 9 years on the premises at Waurn Ponds
campus in Geelong. The Group have determined that it is reasonably certain that the optional periods will be exercised
and have included these within the lease term.
The Group recognised expense from short-term leases of $0.252M for the period ended 30 June 2022 (2021: $0.219M.
BNNTTL has received three months rent concessions on its new leases.
NOTE 25 INTANGIBLE ASSETS AND GOODWILL – NON - CURRENT
Intangibles
37,475
1,622
BNNT application projects – at cost
Less: accumulated amortisation and impairment
WGL application projects – at cost
Less: accumulated amortisation and impairment
Goodwill
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
Not yet ready for use
Other
6,912
(383)
6,529
1,675
–
1,675
29,271
–
29,271
–
–
–
–
37,475
5,575
31,900
37,475
1,682
(60)
1,622
–
–
–
–
–
–
3,515
(63)
3,452
(3,452)
1,622
1,622
–
1,622
87
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 25 INTANGIBLE ASSETS AND GOODWILL – NON - CURRENT (continued)
Consolidated - 2022
Carrying amount at start of year
Additions(2)
Disposals
Transfers
Realised as a change in accounting for a business
combination(1)
22.1.3
Amortisation and impairment expense
Carrying amount at year end
Development
Costs White
Graphene
Applications
$000
Development
Costs BNNT
Applications
$000
Notes
Goodwill
$000
–
1,675
–
–
–
–
1,675
1,622
2,510
–
–
2,780
(383)
6,529
Total
$000
1,622
4,185
–
–
–
–
–
–
29,271
–
32,051
(383)
29,271
37,475
(1)
(2)
Goodwill has been recognised on the change in accounting for BNNTTL from a joint venture to a subsidiary. The goodwill will be
tested against impairment on an annual basis.
Included in additions of Development Costs BNNT Applications of $2.510M is $0.311M of additions for intangibles of employee
costs capitalised for the work undertaken in relation to intangible assets being developed.
Consolidated - 2021
Carrying amount at start of year
Additions
Disposals
Transfers
Amortisation and impairment expense
Carrying amount at year end
Refer Note 2.15 and Note 2.24 for more detail.
Development
Costs BNNT
Applications
$000
Notes
446
1,176
–
–
–
Total
$000
446
1,176
–
–
–
1,622
1,622
Impairment Testing
The Group has two cash generating units (CGU) being a) BNNT Applications and b) White Graphene Applications.
All other assets are not significant and are considered to be of a corporate nature. All goodwill ($29.271M) has been
allocated to the BNNT Applications CGU.
Impairment Testing of BNNT Applications CGU
The Group under took impairment testing of this CGU using a fair value less cost to sell model. The fair value less cost
to sell was determined based on a share buyback undertaken during the period of a portion of the share capital related
to these activities to imply an enterprise value. Given the early stage of this technology no other adjustments were
made. No impairment was noted as a result of this testing.
As the value of goodwill and assets held in the BNNT Applications CGU was determined (apart from current period
additions) as a result of business combination accounting which included the allocation of fair value to these assets, any
movements in the assumed recoverable value in a negative sense would cause there to be impairment.
White Graphene Applications CGU
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 the equity raising price recently achieved by the operations in the CGU which implied a
value for the CGU in excess of the recorded assets. No adverse events were noted post this equity raising to indicate a
decline in recoverable value to 30 June 2022
88
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 26 TRADE AND OTHER PAYABLES – CURRENT
Trade payables – unsecured
Sundry payables and accruals – unsecured
Total
NOTE 27 LEASE AND OTHER LIABILITIES
Current
Non-current
Reclassified to Disposal Group – Current
Reclassified to Disposal Group – Non-current
Total
See Note 2.23.
Notes
Consolidated Entity
2022
$000
787
885
1,672
171
1,129
1,300
–
–
1,300
2021
$000
23
334
357
–
–
–
(1,681)
(1,998)
–
The subsidiaries have leases with Deakin at commercial rates of between 2 and 9 years on the premises at Waurn Ponds
campus in Geelong. The Group has assumed that it is reasonably certain that the option periods will be exercised and
have included these in the measurement of the lease liability.
NOTE 28 INTEREST-BEARINGS LOANS AND BORROWINGS
Current
Other loans - unsecured
Total current
Other loans - unsecured
Other loans - secured
Total non-current
Total
See Note 33.
–
–
506
2,250
2,756
2,756
399
399
–
–
399
Per the Shareholders Agreements with the BNNT application projects, shareholders may provide financing in the
form of loans to the entities responsible for the application projects. In 2022, loans were charged interest at 4.52%
(2021: 3.0%) per annum, are unsecured and payable within three years from the date 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.
PPK has a $2.250M loan with a major bank which is secured against the investment property (Note 20). Interest is paid
monthly at a floating rate calculated at 2.0% above the bank’s business lending rate, which at the year end, was 4.98%
per annum in total. The loan is required to be repaid on 31 October 2024.
89
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 29 PROVISIONS
Current
Annual leave
Long service leave
Total current
Non-Current
Long service leave
Make good
Total Non-current
Consolidated Entity
Notes
2022
$000
2021
$000
311
61
372
–
80
80
134
–
134
13
–
13
Annual leave and current long service leave comprise amounts payable that are vested and could be expected to be
settled within 12 months of the end of the reporting period.
Non-current long service leave comprises amounts that are not vested at the end of the reporting period and the
amount and timing of the payments to be made when leave is taken is uncertain.
Make good provision comprise estimated costs to return leased premises and assets to their contractual agreed
condition on expiry of the lease.
NOTE 30 SHARE CAPITAL
30.1 Issued capital
89.289M (2021: 89.052M) ordinary shares fully paid
75,348
75,348
Movements in ordinary share capital
Balance at the beginning of the financial year
Capital reduction on demerger of PPKMEG
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
75,348
(13,490)
–
–
–
–
317
62,175
59,500
–
14,597
–
479
–
772
75,348
90
PPK Group Limitedfor the year ended 30 June 2022Notes 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
2022
$000
2021
$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
New shares issued for cash, net of transaction costs
Issued from dividend reinvestment plan
Less transaction costs for issued share capital
10(d)
Issue to Long Term Incentive Plan Trust Account
Less transaction costs for issued share capital
–
–
–
–
–
–
331
(14)
317
15,400
(803)
14,597
483
(4)
479
784
(12)
772
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
Transaction costs attributable to PPK
For the raising of cash in LIS and WGL
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
–
(14)
–
(14)
(342)
(356)
(803)
(12)
(4)
(819)
(1,176)
(1,995)
No. of Shares No. of Shares
89,051,793
85,620,743
237,500
3,431,050
89,289,293
89,051,793
2022
2022
2021
No. of Shares
$000 No. of Shares
Opening balance of treasury shares
454,367
(203)
696,771
Shares purchased in the Dividend Reinvestment Plan
Shares purchased
Shares sold
Closing balance of treasury shares
–
–
–
–
–
4,367
(204,367)
250,000
94
(246,771)
(109)
454,367
2021
$000
(227)
–
(57)
81
(203)
91
During the year ended 30 June 2022, shares with a cost of $0.094M (2021: $0.081M) were sold for a cash consideration
of $3.114M (2021: $2.025M). The gain on this transaction was recorded as an increase in equity attributable to members
of the parent.
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 30 SHARE CAPITAL (continued)
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 2022 financial year, the Group’s policy is to maintain its gearing ratio within the range of 0% - 20%
(2021: 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
2022
$000
2021
$000
2,756
(53,008)
(50,252)
112,585
112,585
0%
399
(30,365)
(29,966)
88,264
88,264
0%
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.
NOTE 31 CAPITAL RESERVES
Reserves
Share options reserve
Share premium reserve
Dividend revaluation reserve
Movement in reserves
31.1 Share options reserve
Opening balance
Issue of performance rights
Shares transferred to trust
Issue of performance rights in a subsidiary company
Reserves belonging to non-controlling interests
Closing balance
31.1
31.2
31.3
38,969
19,068
600
36,430
1,939
38,969
396
16,733
1,939
19,068
396
600
(331)
821
(886)
600
869
311
(784)
–
–
396
92
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.
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 31 CAPITAL RESERVES (continued)
31.2 Share premium reserve
Opening balance
Increase in PPK’s and related entities interest in LIS’s issued capital and reserves
Increase in PPK’s and related entities interest in WGL’s issued capital and reserves
Closing balance
Notes
Consolidated Entity
2022
$000
16,733
19,257
440
36,430
2021
$000
2,924
12,102
1,707
16,733
The share premium reserve is used to recognise gains and losses on the change of PPK’s interest in subsidiaries that do
not result in a change of control. During the period, PPK’s interest in LIS and WGL has decreased due to capital raises
and share disposal transactions to non-controlling interests. As these changes did not result in PPK losing control, the
corresponding gains were recognised in the share premium reserve.
31.3 Dividend revaluation reserve
Gearing Ratios
Opening balance
Revaluation of LIS’s shares distributed as an in specie dividend
LIS’s shares distributed as an in specie dividend to minority interests
LIS’s shares distributed as an in specie dividend to treasury shares
Closing balance
1,939
–
–
–
1,939
–
2,219
(263)
(17)
1,939
The dividend revaluation reserve is used to recognise the internal profit generated from the issue of LIS 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.
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 9
Years
$000
Non-
Interest
Bearing
$000
Consolidated 2022
Financial assets
Loans
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
4.52%
0.0%
0.0%
5.0%
0.0%
7.2%
19
15
14
28
26
27
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,000
–
–
–
560
53,008
2,000
53,568
2,756
–
–
1,672
171
171
1,129
3,885
–
1,672
93
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 32 FINANCIAL INSTRUMENTS RISK (continued)
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
Lease liabilities
Total financial liabilities at amortised cost
Weighted
Average
Interest
Rate
Floating
Interest
Rate
$000
Notes
Within 1
Year
$000
1 to 9
Years
$000
Non-
Interest
Bearing
$000
8.5%
0.0%
0.0%
4.5%
0.0%
19
15
14
28
26
27
–
–
–
–
–
–
–
–
1,569
–
–
1,569
–
–
–
–
–
–
–
–
–
152
30,365
30,517
399
–
–
399
–
356
–
356
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 $0.892M and the unlisted equity investment
was $2.510M 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 pre-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%
94
Notes
2022
$000
2021
$000
340
(340)
447
(447)
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 32 FINANCIAL INSTRUMENTS RISK (continued)
32.1 Market risk (continued)
(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 entities.
Loans to and from related parties and other entities are at fixed rates. The Group has performed sensitivity analysis
relating to its interest rate risk based on the Group’s year end exposure. This sensitivity analysis demonstrates the effect
on pre-tax results and equity which could result from a movement of interest rates of +/- 1%.
Change in profit before tax
- increase in interest rates by 1%
- decrease in interest rates by 1%
Notes
2022
$000
2021
$000
530
(530)
–
–
(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 (2021: 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
$0.6889 at 30 June 2022.
Change in profit before tax
- increase in USD currency rate by $.05
- decrease in USD currency rate by $.05
(125)
125
(23)
23
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/or 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.
For related party loans, the Group has oversight to the operations of the business through Directors appointed to the
Board of these entities, and regular operating and financial information being provided to the Group. As a result, the
Group can influence the financial performance of the related parties and take appropriate actions to protect its loans.
The Group also has a credit risk exposure in relation to cash at bank. The Group’s policy is to ensure funds are invested
with Tier 1 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
100%
100%
–
–
95
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 32 FINANCIAL INSTRUMENTS RISK (continued)
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 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 32.
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 2022
Financial liabilities (current & non-current)
Trade and other payables
Interest-bearing loans and borrowings
Lease liabilities
Total financial liabilities
Consolidated 2021
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
1,669
2,000
1,300
4,969
1,669
–
95
1,764
356
399
–
755
356
–
–
356
–
–
101
101
–
–
–
–
–
2,180
298
2,478
–
–
806
806
1,669
2,180
1,300
5,149
–
399
–
399
–
–
–
–
356
399
–
755
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).
–
96
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 33 FAIR VALUE MEASUREMENT (continued)
Fair value (continued)
Assets
Group 2022
Non-current assets
Listed securities
Unlisted equity securities
Group 2021
Non-current assets
Listed securities
Unlisted equity securities
Notes
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
18
18
18
18
892
–
892
2,214
–
2,214
–
–
–
–
–
2,510
2,510
892
2,510
3,402
2,258
2,258
2,214
2,258
4,472
The level 3 fair value assessment of unlisted equity securities has been based on advice provided by the investee
company. On 13 May 2022, Zeta Energy was converted from an LLC “taxed as a partnership” to a C Corporation, LIS’s
interest was converted to 1,729,000 shares of Class B common stock and Zeta Energy has confirmed the shares are
valued at USD1.00 per share at 30 June 2022. The valuation of the investment at USD1,729,000 equates to AUD$2.510M
at the prevailing exchange rate on 30 June 2022 of $0.6889.
NOTE 34 CONTINGENT ASSETS AND LIABILITIES
The Group’s 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. The Group’s guarantee
and indemnity was terminated in August 2022.
the lease motor vehicle fleet provider for discontinuing operations has a guarantee and indemnity from PPK Group
Limited in relation to the run-off of the existing leased motor vehicle fleet in the amount of $0.175M
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.
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 $0.500 of share plus
interest and costs for continuing operations. As advised in the 2016 Annual Report, the Group does not believe the
vesting conditions were met and still maintains this position.
See Note 35 for additional contingent assets and liabilities.
97
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 35 RELATED PARTIES
For details on transactions between related parties refer to Note 9, Note 21, Note 22 and Note 34.
35.1 PPK Group Limited
Details of the nature and amount of each element of the remuneration of each director and key management personnel
(‘KMP”) of PPK Group Limited are shown in the table below:
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post
employ-
ment
Super-
annuation
($)
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(1)Share
Based
Payments
($)
Perfor-
mance
Related
%
Total
($)
2022
Directors
Non-Executive
A McDonald
75,000
–
–
–
–
–
75,000
Executive
R Levison
G Molloy
D McNamara(2)
Total Directors
Other Key
Management
Personnel
K Hostland(3)
Total Other
Total Key
Management
Personnel
–
–
–
–
–
211,883
240,000
200,000
726,883
406,250 260,000
406,250 260,000
–
–
–
–
–
–
27,500
–
–
27,500
27,500
27,500
–
–
–
–
–
–
–
239,383
240,000
– 200,000
–
754,383
275,900 969,650
275,900 969,650
55
55
–
–
–
–
–
–
–
–
–
–
–
–
–
1,133,133 260,000
–
55,000
–
275,900 1,724,033
31
(1)
All equity settled share-based payments for the LTI Plan fully vested on 1 July 2021. K Hostland also participates in the Executive
Rights Plan and received 34,704 performance rights in both the Special Catch-Up Grant and the FY Performance Rights.
(2) D McNamara also has use of a fully maintained motor vehicle.
(3)
The cash bonus includes a bonus from PPK of $160,000 for the 2021 financial year and $100,000 paid by WGL to PPK this
financial year for his involvement in a pre-IPO process.
The above table presents the Directors and key management personnel of PPK and the amounts they have been
remunerated in respect of their management of the Group.
For clarity, the $260,000 cash bonus for K Hostland includes the $100,000 shown in the White Graphene remuneration
table. Amounts are not included in the table above for other KMPs that are shown in the White Graphene table on the
basis that payments to A McDonald, R Levison and G Molloy were paid directly to them by White Graphene whereas the
payment to K Hostland was paid to PPK who then paid K Hostland.
98
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 35 RELATED PARTIES (continued)
35.1 PPK Group Limited (continued)
Directors and key management personnel were also remunerated by LIS and WGL for the year ended 30 June 2022 as
follows, in addition to the above table:
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post
employ-
ment
Super-
annuation
($)
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(1)Share
Based
Payments
($)
Perfor-
mance
Related
%
Total
($)
–
–
–
196,000
–
196,000
196,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
157,122
157,122
157,122
157,122
314,244
314,244
–
–
–
196,000
–
196,000
314,244
510,244
–
–
–
–
–
–
–
2022
Li-S ENERGY LIMITED
Directors
Non-Executive
R Levison
A McDonald
Total Directors
Other KMP
G Molloy(2)
K Hostland(3)
Total Other
Total KMP
(1)
Equity settled share based payments. Each tranche of the service rights granted are expensed over the vesting period from the
date of granting to the date that the last tranche vests resulting in a proportionally larger expense recognised in the earlier years.
Share based payments for directors are not performance related but are in lieu of salary and fees.
(2) Remunerated through a consulting agreement on 12 June 2021 at an agreed hourly rate for work undertaken on behalf of LIS
(3) Remunerated by PPK Group Limited
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post
employ-
ment
Super-
annuation
($)
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(1)Share
Based
Payments
($)
Perfor-
mance
Related
%
Total
($)
2022
WHITE GRAPHENE
LIMITED
Directors
R Levison
G Molloy
20,000
100,000
20,000 400,000
A McDonald
20,000
100,000
Total Directors
60,000 600,000
Other KMP
K Hostland
Total Other
Total KMP
– 100,000
– 100,000
60,000 700,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
120,000
– 420,000
–
–
120,000
660,000
83
95
83
–
–
–
100,000
100
100,000
760,000
99
(1)
The cash bonus was for services provided during the reporting period by each KMP working extended hours in connection with
their involvement in a pre IPO process which fall outside their normal roles and duties. The KMPs reinvested the cash bonus
into the capital raise in the year and the payments are included in professional fees in the statement of profit or loss and other
comprehensive income. The IPO was deferred due to changes in investment markets this calendar year.
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 35 RELATED PARTIES (continued)
35.1 PPK Group Limited (continued)
Directors and key management personnel also provided services to the other subsidiary companies, the associated
companies and the joint venture for which they were not remunerated.
Remuneration Details for the year ended 30 June 2021 for Directors’ and Key Management Personnel
Details of the nature and amount of each element of the remuneration of each director and key management personnel
(‘KMP’) of PPK Group Limited are shown in the table below:
Short Term Benefits
Salary &
Fees
($)
Cash
Bonus
($)
Non-
Monetary
($)
Post
employ-
ment
Super-
annuation
($)
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(1)Share
Based
Payments
($)
Perfor-
mance
Related
%
Total
($)
50,000
43,333
215,000
240,000
200,000
748,333
–
-
–
–
–
–
325,000 150,000
325,000 150,000
–
-
–
–
–
–
–
–
–
-
25,000
–
–
25,000
25,000
25,000
1,073,333 150,000
–
50,000
–
-
–
–
–
–
–
–
–
–
-
–
–
–
–
–
–
–
88,057
138,057
64
-
–
–
43,333
240,000
240,000
70,701
270,701
158,758
932,091
56,561
556,561
56,561
556,561
–
–
–
26
–
37
–
215,319 1,488,652
–
2021
Directors
Non-Executive
A McDonald
G Webb
Executive
R Levison
G Molloy
D McNamara(2)
Total Directors
Other Key
Management
Personnel
K Hostland(3)
Total Other
Total Key
Management
Personnel
(1)
Equity settled share based payments. Performance rights granted are expensed over the performance period, which includes the
year to which the bonus relates and the subsequent vesting period of rights. All performance rights fully vested on 1 July 2021.
(2) D McNamara also has use of a fully maintained motor vehicle.
(3) The cash bonus relates to the 2020 financial year.
The above table presents the Directors and key management personnel of PPK and the amounts they have been
remunerated in respect of their management of the Group.
100
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 35 RELATED PARTIES (continued)
35.1 PPK Group Limited (continued)
Directors and key management personnel were also remunerated by LIS and WGL for the year ended 30 June 2021 as
follows, in addition to the above table:
Short Term Benefits
Salary &
Fees
($)
(5)Cash
Bonus
($)
Non-
Monetary
($)
Post-
employ-
ment
Super-
annuation
($)
16,667
100,000
16,667 400,000
16,667 200,000
– 100,000
50,001 800,000
16,667
16,667
16,667
50,001
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2021
LI-S ENERGY LIMITED
R Levison
G Molloy
A McDonald
K Hostland
WHITE GRAPHENE
LIMITED
R Levison
G Molloy
A McDonald
Long
Term
Benefits
($)
Termina-
tion
Payments
($)
(4)Share
Based
Payments
($)
Perfor-
mance
Related
%
Total
($)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
PPK Group Limited
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 2022 and 2021 reporting periods is set out below:
2022
Directors
Non-Executive
R Levison(1)
G Molloy(2) (3)
Share
Balance at
Start of Year
Shares
Transferred
from PPK
LTIP
Shares
Acquired
Shares
Acquired
Shares
Sold
Adjust for
Director
Ceasing in
the Year
Shares Held
at the End of
the Reporting
Period
4,100,153
14,468,121
–
–
–
–
(50,000)
50,000
7,014,866
(255,000)
–
–
4,050,153
21,277,987
D McNamara(4)
3,043,332
400,000
409,120
–
–
–
–
–
–
–
(3,443,332)
-
–
409,120
A McDonald
Total Directors
Other Key
Management
Personnel
K Hostland
Total Other
Total
22,020,726
400,000
50,000
7,014,866
(305,000)
(3,443,332)
25,737,260
428,692
244,000
428,692
244,000
–
–
–
–
(113,192)
(113,192)
–
–
559,500
559,500
22,449,418
644,000
50,000
7,014,866
(418,192)
(3,443,332) 26,296,760
101
(1)
Shares sold to a family member.
(2) Share movement of 7,014,866 was as a result of appointment as a Trustee from a Trust.
(3) Share movement of 255,000 was as a result of retirement as a Trustee from a Trust.
(4) Removes D McNamara share holding as he ceased to be a Director during the year.
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 35 RELATED PARTIES (continued)
35.1 PPK Group Limited (continued)
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)
D McNamara(4)
A McDonald
G Webb(6)
4,433,572
14,582,610
4,530,461
407,924
9,749,399
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
–
–
–
Total Directors
33,703,966
Other Key
Management
Personnel
K Hostland
Total Other
Total
254,878
254,878
665
665
56,649
56,649
125,000
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 which shares were 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 shareholding as he ceased to be a Director during the year.
As at the end of the financial year, the number of Performance Rights in PPK held by directors and Key Management
Personnel during the 2022 and 2021 reporting periods is set out below:
2022
Executive Rights Plan
Name and
Grant Dates
K Hostland
Special
Catch-Up
Grant(1)
FY22
Performance
Rights(2)
Balance
at Start
of the Year
Granted
During
Year
Vested Exercised
Forfeited
Vested Unvested
No.
No.
%
No.
No.
%
No.
Balance at
End of Year
Unvested
Maximum
$ value to vest(3)
–
–
– 34,704
– 34,704
–
–
–
–
–
–
–
–
– 34,704
91,967
– 34,704
–
(1) The performance rights fully vest on 30 June 2023.
(2) The performance rights fully vest on 30 June 2024.
(3)
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 granted.
102
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 35 RELATED PARTIES (continued)
35.1 PPK Group Limited (continued)
2022
Executive Rights Plan
Name and
Grant Dates
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
Balance
at Start
of the Year
Granted
During
Year
Vested
Exercised
Forfeited
Vested Unvested
No.
No.
%
No.
No.
%
No.
Balance at
End of Year
Unvested
Maximum
$ value to vest(3)
100,000
100,000
100,000
100,000
12,500
12,500
12,500
12,500
75,000
75,000
75,000
75,000
(100,000)
(100,000)
(100,000)
(100,000)
–
–
–
–
(75,000)
(75,000)
(75,000)
(75,000)
(1) The performance rights fully vested on 1 July 2021.
LIS
As at the end of the financial year, the number of ordinary shares in LIS held by directors and Key Management
Personnel during the 2022 and 2021 reporting periods is set out below:
2022
Directors
Non-Executive
R Levison
A McDonald
Total Directors
Other KMP
G Molloy(1)
K Hostland
Total Other
Total KMP
(1) Entered into a consulting agreement on 12 June 2021.
Share
Balance at
Start of Year
Shares
Acquired
Shares
Sold
Share
Balance at
End of Year
2,776,917
866,961
13,632
–
3,643,878
13,632
6,440,784
504,295
6,945,079
–
24,771
24,771
10,588,957
38,403
–
–
–
–
–
–
–
2,790,549
866,961
3,657,510
6,440,784
529,066
6,969,850
10,627,360
103
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 35 RELATED PARTIES (continued)
35.1 PPK Group Limited (continued)
2021
Directors
Non-Executive
R Levison
A McDonald
Total Directors
Executive Director
G Molloy(1)
Total Executive Director
Total KMP
Share
Balance at
Start of Year
Shares
Issued
via PPK’s
In-specie
Dividend
Shares
Acquired
Shares
Sold
Share
Balance at
End of Year
–
–
–
–
–
–
1,576,917
1,200,000
166,961
700,000
1,743,878
1,900,000
5,640,784
800,000
5,640,784
800,000
7,384,662
2,700,000
–
–
–
–
–
–
2,776,917
866,961
3,643,878
6,440,784
6,440,784
10,084,662
(1) Resigned as a Director on 11 June 2021.
As at the end of the financial year, the number of Service Rights in LIS held by directors and Key Management
Personnel during the 2022 and 2021 reporting periods is set out below:
2022
Balance at
Start of Year(1)
Granted
During
the Year
Vested Exercised
Forfe-
ited
Vested &
Unexe-
rcised
Unvested Unvested
No
%
No
No
%
No
Balance at
End of Year
Unvested
Maximum
$ Value to
Vest(2)
Directors
R Levison
A McDonald 480,000
480,000
– 160,000
– 160,000
100%
100%
Total
Directors
960,000
– 320,000
–
–
–
–
–
–
(1) There were nil vested and unexercised rights at the beginning of the year.
– 160,000 320,000
– 160,000 320,000
64,251
64,251
– 320,000 640,000
128,502
(2)
The maximum value of service rights to vest has been calculated as the amount of the grant date fair value of the service rights
yet to be expensed.
2021
Balance at
Start of Year
Granted
During
the Year
Vested Exercised
Forfe-
ited
Vested &
Unexe-
rcised
Unvested Unvested
No
%
No
No
%
No
Balance at
End of Year
Unvested
Maximum
$ Value to
Vest(1)
Directors
R Levison
A McDonald
Total
Directors
– 480,000
– 480,000
– 1,440,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
480,000
480,000
240,000
240,000
– 1,440,000
720,000
(1)
The maximum value of service rights to vest has been calculated as the amount of the grant date fair value of the service rights
yet to be expensed.
104
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 35 RELATED PARTIES (continued)
35.1 PPK Group Limited (continued)
WGL
As at the end of the financial year, the number of ordinary shares in WGL held by directors and Key Management
Personnel during the 2022 and 2021 reporting periods is set out below:
2022
Directors
R Levison
G Molloy
A McDonald
G Pullen
Total Directors
Other KMP
K Hostland
Total Other
Total
Share
Balance at
Start of Year
(1)Shares
Acquired
Shares
Sold
Shares Held
at the End of
the Reporting
Period
250,000
250,000
–
–
–
1,000,000
250,000
–
250,000
1,500,000
–
–
250,000
250,000
250,000
1,750,000
–
–
–
–
–
–
–
–
500,000
1,000,000
250,000
–
1,750,000
250,000
250,000
2,000,000
(1)
Shares were acquired at $0.40 per share as part of the capital raise process.
35.2 The Group has the following related party agreements in place:
Supply Agreement between LIS and BNNTTL
A supply agreement for the supply of BNNTs, with a purity of at least 95% or otherwise agreed, for the purpose of using
BNNTs in the development, testing and manufacture of the LIS batteries. The key terms of the supply agreement are as
follows:
– LIS may only order from BNNTTL to use BNNTs in the Customer’s development, testing and manufacture of
batteries or any other purpose agreed between the parties in writing; and
–
the initial term of the agreement is 5 years and it automatically renews for further 2 year terms unless LIS elects not
to renew the agreement by giving at least 3 months’ notice prior to the expiry of the latest term.
Distribution Agreement between LIS and BNNTTL
A worldwide exclusive distribution agreement pursuant to which LIS is appointed as distributor for BNNT products,
with a purity of at least 95% or otherwise agreed, within the battery industry, with certain exclusive distribution rights in
respect of lithium-sulphur batteries. The key material terms of the distribution agreement are as follows:
LIS may only buy BNNTs from BNNTTL to:
– distribute on an exclusive basis BNNTs to third party customers (Customers), provided the Customers are only
permitted to use BNNTs to develop, test or manufacture lithium-sulphur batteries; and
– 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 (including to stockpile BNNTs for
later use in accordance with forecasts); and
– manufacture nanomesh products incorporating BNNTs (including Li-Nanomesh) for the use in any form or type
of battery;
–
and any other purpose agreed between the parties in writing.
LIS is not restricted from distributing Li-Nanomesh (or other nanomesh products), or BNNTs to LIS’s customers who
have a licence from LIS to manufacture Li-Nanomesh (or other nanomesh products).
The initial term of the agreement is 5 years and it automatically renews for further 2 year terms unless LIS elects not to
renew the agreement by giving at least 3 months’ notice prior to the expiry of the latest term.
105
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
NOTE 35 RELATED PARTIES (continued)
35.2 The Group has the following related party agreements in place: (continued)
Management Services Agreement between LIS and PPK Aust
A management services agreement pursuant to which PPK Aust will provide administrative functions such as
accounting, record keeping, reporting, legal, company secretarial support, IT/systems support, etc. It is also appointed,
to the extent permitted by law to facilitate/oversee the funding and capital raising requirements of the company and
is paid a funding fee of up to 1% of any debt or capital raised that it facilitates. PPK Aust will also provide staff to act in
key officer roles including the public officer, chief financial officer and company secretary. The key material terms of the
management services agreement are as follows:
– PPK Aust is paid a fee for providing the management services, which the scope of services to be provided and the
fee is reviewed and agreed between the parties every 3 months;
–
the agreement is 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;
– PPK Aust may terminate the agreement on 30 days’ notice if it is not satisfied with the Annual Plan of LIS; and
– LIS may terminate the agreement at will on 6 months’ notice.
– LIS indemnifies PPK Aust for any loss that arises from the performance by PPK Aust of its obligations under the
agreement.
Research Framework Agreement between LIS and Deakin
A research framework agreement which governs all research projects conducted between LIS and Deakin as set out in
Project Schedules made under the agreement. The key material terms of the research framework agreement are as follows:
– 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 ; and
– 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 LIS (Project IP) and
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.
The Shareholders Agreement between PPK Aust., Deakin and BNNTTL was terminated on 20 July 2021.
A Joint Venture Agreement between BNNTTL and Deakin
A Joint Venture Agreement 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 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.
Technology Licence Agreement between BNNTTL and Deakin
A Technology Licence Agreement for an exclusive global 20 years to commercialise the BNNT manufacturing
technology patented by Deakin University expiring on 31 May 2038. The Agreement has a quarterly royalty payment
of 5% of the gross revenue received by or payable to BNNT Technology Limited or any of its sub-licensees payable
to Deakin. The commitment to generate $50.000M of gross revenues within the first three years after the Evaluation
Completion Date was terminated on 19 July 2021.
106
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 35 RELATED PARTIES (continued)
35.2 The Group has the following related party agreements in place: (continued)
Lease Agreements
BNNTTL has a three-year lease with Deakin with two three-year options for approximately 986 m2 at Waurn Pond,
Geelong commencing 7 March 2022. The initial rent payments commence 1 July 2022 at $13,147 per month, plus
building outgoings, with a 3% increase on the annual anniversary date of the lease and a market review at the
commencement of each option period. The landlord must be notified by the tenant within six months and not more
than twelve months if the tenant wants to exercise the option period. The lease includes all electrical, air conditioning,
fixtures and fittings that are installed. The lease also provides for first right of refusal for an additional 284 m2 expansion
space on similar terms and conditions as the existing lease.
BNNTTL has a one year lease extension with Deakin for the premises at Waurn Pond, Geelong commencing 1 June 2022
for $6,601 per month. BNNTTL has sub-leased these premises to WGL on the same terms and conditions as the existing
lease extension.
The following conditions of the previous lease with Deakin were waived in August 2022:
–
–
an initial $0.500M payment for Deakin to develop a research plan for BNNTTL; and
a $2.000M per annum payment for research funding once BNNTTL revenue exceeds $5.000M per annum.
PPK has a lease property to MI, a subsidiary of an associated company, for $240,000 per annum, plus outgoings,
with CPI increases on an annual basis and market reviews at the beginning of an option period. The lease expires on
26 August 2024 and has two three-year option periods at the option of the tenant.
35.3 Related Party Transactions
Management Services
PPK charged the following companies for management support services during the financial year:
Company
BNNTTL(1)
LIS
Strategic Alloys
WGL
Amount $
1,052,000
600,000
15,000
120,000
1,787,000
(1)
The amount of $788,000 relates to the previous financial year, however it was not agreed and charged until the current financial year.
Sale of BNNT
BNNTTL charged the following companies for sales of BNNT during the financial year:
Company
Amaero Engineering Pty Ltd
Ballistic Glass
Deakin
LIS
Precious Metals
Strategic Alloys
3D Dental
Amount $
2,910
8,000
7,500
54,682
16,000
36,265
4,000
129,357
107
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 35 RELATED PARTIES (continued)
35.3 Related Party Transactions (continued)
Research and Development
The following research and development charges were made during the financial year:
Deakin charged the following companies for research and development during the financial year:
Company
BNNTTL
LIS
Precious Metals
Strategic Alloys
WGL
Amount $
52,832
1,941,678
100,000
52,500
1,637,703
3,784,713
Amaero International Limited charged Strategic Alloys $5,196 research and development during the financial year.
Leases
Deakin charged the following companies for leases during the financial year:
Company
BNNTTL
LIS
Share Sales
The following sales of shares in related parties were made during the financial year:
Company
BNNNTL
Company Shares Sold
LIS
35.4 Related Party Balances
The related party balances are at 30 June 2022 are:
Receivable from
PPKMEG
Survivon
Ballistic Glass
See also Note 37.1.2. and 37.1.4.
Payable to
PPK
PPK
PPK
Amount $
84,054
133,448
217,502
Amount $
8,500,000
Notes
19
22.1
22.3
Amount
$000
2,000
628
66
108
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) 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
Li-S Energy Limited
White Graphene Limited
BNNT Technology Limited
BNNT Precious Metals Limited
Strategic Alloys Pty Ltd
3D Dental Technology Pty Ltd
PPK Prop Co 1 Pty Ltd
PPK Plans Pty Ltd
PPK Plans 2 Pty Ltd
BNNT Ballistics Pty Ltd
AIC Investment Corporation Pty Ltd
Willoughby NSW Holdings Pty Ltd
Willoughby NSW Pty Ltd
Rutuba Pty Limited
Seven Hills Property Holdings Pty Ltd
Dandenong South Property Pty Ltd
PPK Finance Pty Ltd
Joint venture with PPK Group Limited
Survivon Pty Ltd
Associates of PPK Group Limited
Craig International Ballistics Pty Ltd
Ballistic Glass Pty Ltd
AMAG Holdings Australia Pty Ltd
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
PPK Electrics 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
Australia
Australia
Australia
Australia
Australia
36.12
36.5
36.12
36.12
36.12
36.3
36.4
36.1
36.2
36.7
36.8
36.9
36.10
2022
%
100%
100%
45.4%
58.7%
51%
45%
45%
45%
100%
100%
100%
100%
100%
100%
100%
100%
–
–
–
2021
%
100%
100%
51.8%
64.4%
51%
45%
45%
45%
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
Australia
36.11
47.6%
–
Australia
Australia
Australia
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
45%
40%
35%
45%
40%
20%
Percentage Owned
2022
%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2021
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
36.6
Notes
36.13
36.13
36.13
36.13
36.13
36.13
36.13
36.13
36.13
36.13
36.13
36.13
36.13
36.13
109
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 36 INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (continued)
36.1
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.
36.2 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.
36.3 PPK Plans Pty Ltd is the trustee for the PPK Long Term Incentive Plan.
36.4 PPK Plans 2 Pty Ltd was incorporated on 14 February 2022 is the trustee for the PPK Executive Rights Plan.
36.5 BNNT Technology Limited was previously a joint venture but became a subsidiary on 4 August 2021 (Note 20.3, 21.1.2).
36.6 PPK made multiple investments in the company during the period (Note 22.2.2).
36.7 The company has applied to be deregistered.
36.8 The company was deregistered on 11 May 2022.
36.9 The company was deregistered on 8 June 2022.
36.10 The company was deregistered on 11 May 2022.
36.11 The investment in the company was done on 23 September 2021.
36.12 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 (Note 2.24).
36.13 The companies were demerged from the PPK on 29 June 2022 (Note 13).
NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
37.1 PPK
37.1.1 On 1 July 2022, PPK appointed Anne-Marie Birkill as an Independent Non-Executive Director of the Company.
37.1.2 On 14 July 2022, PPK loaned $600,000 to PPKMEG for a period of 12 months at 8.0% interest. The loan is secured
against inventory of mining equipment assets purchased from a competitor in the mining equipment industry
37.1.3 In August 2022, PPK made an advance facility of up to $1,000 million should WGL require the funds. The
facility remains open for a period of one year or upon WGL completes a capital raise of a minimum of $3.575M,
whichever is earlier.
37.1.4 PPK has invested $0.335M in AMAG’s equity, loaned $125,000 to Survivon and $0.015M to Precious Metals.
37.1.5 On 2 August 2022, Survivon assigned the debt owing to PPK of $0.645M and the debt owing to the other
shareholder of $0.083M to MI. Survivon then completed a selective share buyback from its shareholders with
both shareholders selling 100% of its shareholding to Survivon. PPK received $0.864M for its interest in Survivon
and used these funds to acquire 91% of the shares in MI from Survivon. The shareholders then terminated the
Shareholder Agreement on the same date.
110
PPK Group Limitedfor the year ended 30 June 2022Notes to the Consolidated Financial StatementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT’D) NOTE 37 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD (continued)
37.1 PPK (continued)
The summarised financial information of MI is provided below. This information is based on provisional management
information and is before inter-company and consolidation eliminations.
Summarised Statement of Financial Position
Assets
Cash
Inventories
Other current assets
Plant and equipment
Security deposit
Total assets
Liabilities
Trade and other payables
Provisions and lease liabilities
Total liabilities
Total identifiable net assets
$000
16
513
42
489
60
1,120
456
26
482
638
MI will be consolidated from 2 August 2022, being the date of the acquisition. The acquisition accounting for the
business combination is provisional financial information and will be disclosed at the half year.
37.1.6 In August 2022, PPKMEG restructured its $4.000M finance facility from a major Australian bank and the
guarantee and indemnity previously provided by the Group was terminated.
37.2 LIS
On 14 July 2022, LIS loaned $1.400M to PPK Mining Equipment Group (PPKMEG) for a period of 12 months at 8.0%
interest. The loan is secured against a property in Mt Thorley, NSW which was independently valued at $2.000M.
37.3WGL
On 21 July 2022, WGL approved a 1 for 2 bonus issue and, on completion of the bonus issue, it approved a capital
raise of a minimum of $3.575M and a maximum of $8.575M at $0.50 per share with the issuance of between 7.150M to
17.150M shares.
On 3 August 2022, WGL incorporated a 100% subsidiary called WGL Plans Pty Ltd which will be the trustee for the
WGL long term incentive plan. On 9 August 2022, WGL issued 1,000,000 WGL fully paid ordinary shares to WGL Plans
Pty Ltd which resulted in WGL having 92.900M shares issued. On the same day it completed the 1 for 2 bonus issue
resulting in an increase of 46.450M shares issued for a total number of shares on issue to 139.350M. At the time the
Directors have signed off on this report, the capital raise is in progress.
In August 2022, PPK made an advance facility of up to $1.000M should WGL require the funds. The facility remains
open for a period of one year or upon WGL completing its capital raise, whichever is earlier.
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 Company, the results of those operations or the state of affairs of the Company in
subsequent financial years.
111
PPK Group Limitedfor the year ended 30 June 2022Notes 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 2022 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 2022.
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 29th day of August 2022
112
PPK Group Limitedfor the year ended 30 June 2022Directors’ DeclarationDIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
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 2022, the consolidated statement of profit or loss and 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. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
and of its consolidated financial performance for the year ended on that date; and
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
113113
PPK Group LimitedIndependent Auditor’s ReportPPK Group Limited Independent Auditor's Report
PPK Group Limited
Page 2
Impairment Testing of Intangible Assets and Property, Plant and Equipment
Why significant
How our audit addressed the key audit matter
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, goodwill
and CGU including the commercial prospects,
growth rate and discount rate.
• Applying our knowledge of the business and
corroborating our work with external information
where possible.
• Assessing the adequacy of the disclosures
included in Notes to the financial report.
As disclosed in Notes 25, 24 and 23 to the
financial report, the Group’s continuing
operations recorded intangible assets of
$37,475,000, property, plant and equipment of
$5,439,000 and right of use assets of
$1,256,000 as at 30 June 2022. These assets
represent 68% of the Group’s total non-current
assets as at 30 June 2022.
The Group performs an annual impairment
assessment for indicators of impairment for
property, plant and equipment and intangible
assets other than goodwill and intangible assets
not yet available for use. 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. Goodwill and intangibles not yet
available for use are tested annually regardless
of indicators. An assessment is also made of
indicators of impairment for each individual Cash
Generating Unit (CGU).
The 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 amounts and the judgement involved
in determining the recoverable amount, we have
considered this a key audit matter.
114114
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PPK Group LimitedIndependent Auditor’s ReportINDEPENDENT AUDITOR’S REPORT (CONT’D)PPK Group Limited Independent Auditor's Report
PPK Group Limited
Page 3
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
Associate
Entity
Accounting
Method
Equity
method
Note
22
Craig
International
Ballistics Pty
Ltd
AMAG
Holdings
Australia Pty
Ltd*
Survivon Pty
Ltd*
Zeta Energy
LLC
Listed
Investments
22
22
18
18
Associate
Entity
Equity
method
Associate
Entity
Financial
Asset at Fair
Value
Through
Profit and
Loss
Financial
Asset at Fair
Value
Through
Profit and
Loss
Equity
Method
Fair Value
Through
Profit and
Loss
Fair Value
Through
Profit and
Loss
* Acquired during the year ended 30 June 2022.
The accounting policies applied in recognising
and measuring the Group’s investments are
disclosed in Note 2 of the Group’s financial
report.
This area is a key audit matter due to the
significance of the carrying amount of the
investments to the Group’s 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.
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 report.
Survivon Pty Ltd (“Survivon”), 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 Survivon for consistency with
Australian Accounting Standards.
Scoping and testing (based on the scoping) of
selected transaction and account balances in the
underlying financial information of Survivon, CIB
and AMAG to provide sufficient appropriate audit
evidence as to the profit and financial positions
of Survivon, CIB and AMAG investments for the
purpose of the Group audit.
Assessing the accounting policies of Survivon,
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 2022.
Assessing the carrying amount of the Group’s
equity method investment at 30 June 2022.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
115115
PPK Group LimitedIndependent Auditor’s ReportINDEPENDENT AUDITOR’S REPORT (CONT’D)PPK Group Limited Independent Auditor's Report
PPK Group Limited
Page 4
Why significant
How our audit addressed the key audit matter
Zeta Energy LLC
Our procedures included the following:
•
Recalculating the fair value of the Group’s
investment at 30 June 2022 using current share
valuations, supported by recent capital raising
transactions and converting the US dollar
denominated investment value to Australian
dollars at 30 June 2022.
Listed Investments
Our procedures included the following:
•
•
Recalculating the fair value of the Group’s
investment at 30 June 2022 using last trade
price information from the Australian Securities
Exchange.
Verifying the Group’s shareholding at 30 June
2022.
116116
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PPK Group LimitedIndependent Auditor’s ReportINDEPENDENT AUDITOR’S REPORT (CONT’D)PPK Group Limited Independent Auditor's Report
PPK Group Limited
Page 5
Disposal of PPK Mining Equipment Group Pty Ltd and Controlled Entities (PPKME)
Why significant
How our audit addressed the key audit matter
Our audit procedures included the following:
• Testing the operating result of PPKME for the
period between 1 July 2021 and 29 June 2022,
including the impairment charge and revenue
recognised during the period for compliance with
Australian Accounting Standards.
• Assessing the judgement applied in determining
the held-for-sale date.
• Assessing the key assumptions used to allocate
the in-specie distribution between dividend and
return of capital.
• Assessing the adequacy of the disclosures
included in Note 13 to the financial report.
On 29 June 2022, the Group disposed of its
interest in PPK Mining Equipment Group Pty Ltd
and Controlled Entities (PPKME) via an in-specie
distribution of 100% of the share capital in
PPKME to shareholders of the Group. The
transaction is disclosed in Note 13 to the
financial statements.
The distribution was allocated between a return
of capital $13,490,000 and a dividend of
$2,509,000. Prior to disposal, PPKME
contributed pre-tax loss of $649,000, including
which is disclosed as a loss after tax expense
from discontinued operations for the year
ended 30 June 2022.
Significant judgement has been used in
determining the held-for-sale date, the allocation
of the in-specie distribution between dividend
and return of capital and the calculation of the
impairment charge. Based on the above, we have
considered this a key audit matter.
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 Company’s 2022 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.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
117117
PPK Group LimitedIndependent Auditor’s ReportINDEPENDENT AUDITOR’S REPORT (CONT’D)PPK Group Limited Independent Auditor's Report
PPK Group Limited
Page 6
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.
► 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.
118118
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PPK Group LimitedIndependent Auditor’s ReportINDEPENDENT AUDITOR’S REPORT (CONT’D)PPK Group Limited Independent Auditor's Report
PPK Group Limited
Page 7
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 2022.
In our opinion, the Remuneration Report of PPK Group Limited for the year ended 30 June 2022,
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
29 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
119119
PPK Group LimitedIndependent Auditor’s ReportINDEPENDENT AUDITOR’S REPORT (CONT’D)PPK Group Limited SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
Shareholder Information
Fully paid ordinary shares:
(a) Total shares issued: 89,289,293
(b) Percentage held by 20 largest shareholders: 60.10%
(c) Total number of PPK shareholders: 5,125
(d) Shareholders with less than marketable parcel of shares: 1,427
(e) There is not a current on market buy-back.
(f)
Voting rights: Every shareholder 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. No voting rights attach to options.
(g) Distribution schedule of fully paid ordinary shares:
Holdings Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Total holders
Units
% Units
2,745
1,003,241
1,486
3,609,222
392
3,000,726
414
12,348,925
88
69,327,179
1.12
4.04
3.36
13.83
77.64
5,125 89,289,293
100.00%
(h) 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.
(i) Top 20 Holders of Ordinary Fully Paid Shares
Rank Name
Shares
%
WAVET FUND NO 2 PTY LTD
14,011,998
1 5 . 69
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
120
EQUIPMENT COMPANY OF AUSTRALIA PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
SMN HOLDINGS PTY LTD
BUYCO PTY LTD
BNP PARIBAS NOMINEES PTY LTD
MCNAMARA SUPER GROUP PTY LTD
IGNITION CAPITAL PTY LTD
CONTEMPLATOR PTY LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
IGNITION CAPITAL NO 2 PTY LTD
JOHN E GILL OPERATIONS PTY LIMITED
MR LESLIE JOHN FIELD + MRS EVE FIELD
SASH INVESTMENT GROUP PTY LTD
NATIONAL NOMINEES LIMITED
MINOAN CORPORATION LIMITED
EST MR FRANCESCO MARIO NAPOLI
RUMINATOR PTY LTD
20
IRONFURY PTY LTD
Top 20 holders of Ordinary Fully Paid Total
Total Remaining Holders Balance
7,014,866
4,689,162
3,230,000
3,000,000
2,780,733
2,775,919
2,336,788
2, 326 ,0 0 0
2,026,888
1, 599,950
1,527,692
1,102,221
1,007,584
955 ,0 0 0
896,302
700,000
597,181
568,425
516,733
53,663,442
35,625,851
7.86
5.25
3.62
3.36
3.11
3.11
2.62
2.61
2.27
1.79
1.71
1.23
1.13
1.07
1.00
0.78
0.67
0.64
0 . 5 8
60.10
39.90
PPK Group LimitedShareholder Informationas at 22 August 2022 (j) Substantial Holders
Substantial Holder
Wavet Fund No 2 Pty Ltd
Equipment Company of Australia Pty Ltd
JP Morgan Nominees Australia Pty Ltd
(k) Unquoted Securities:
Security
Total Holders
Number
Number of
Shares Held
% of Issued
Capital
14,011,998
7,014,866
4,689,162
15.69
7.86
5.25
Terms
Performance Rights
Performance Rights
Performance Rights
2
4
8
90,000
61,912
82,298
Each Performance Right is an entitlement, upon vesting and
exercise, to an ordinary fully paid share in the Company.
The Performance Rights all vested on 30 June 2021 but
remain unexercised.
Each Performance Right is an entitlement, upon vesting and
exercise, to an ordinary fully paid share in the Company.
The Performance Rights will be assessed against the
vesting conditions in June 2023.
Each Performance Right is an entitlement, upon vesting and
exercise, to an ordinary fully paid share in the Company.
The Performance Rights will be assessed against the
vesting conditions in June 2024.
121
PPK Group LimitedShareholder Informationas at 22 August 2022SHAREHOLDER INFORMATION (CONT’D) Corporate Directory
PPK Group Limited ABN 65 003 964 181
A public company incorporated in New South Wales and listed on the Australian Securities Exchange (ASX Code: PPK)
Directors
Robin Levison
Glenn Molloy
Anthony John McDonald
Anne-Marie Birkill
Company Secretaries
Will Shiel
Liam Fairhall
(Chairman)
(Executive Director)
(Non-Executive Director)
(Non-Executive Director)
Registered Office and Principal Place of Business
PPK Group Limited
Level 27, 10 Eagle Street
Brisbane QLD 4000 Australia
Telephone:
Email:
Web Site:
+61 7 3054 4555
info@ppkgroup.com.au
www.ppkgroup.com.au
Share Register
Computershare Investor Services Pty Ltd
Level 3, 60 Carrington Street
Sydney NSW 2000 Australia
Telephone
(within Australia): 1300 556 161
Telephone
(international):
Contact:
+61 2 8234 5000
https://www.computershare.com/au/business/registry-services/contact-us
Solicitors
Mills Oakley
Level 23, 66 Eagle Street
Brisbane QLD 4000 Australia
Bankers
National Australia Bank Limited
Level 17, 259 Queen Street
Brisbane QLD 4000 Australia
Auditors
Ernst & Young
Level 51, 111 Eagle Street
Brisbane QLD 4000 Australia
122
PPK Group LimitedCorporate DirectoryCORPORATE DIRECTORY G R O U P L T D
www.ppkgroup.com.au