PTB GROUP LIMITED
ABN 99 098 390 991
ANNUAL REPORT
30 June 2008
Corporate Directory and Information
Directors
Harvey Parker, Non-executive Chairman
Craig Baker, Managing Director and CEO
Steve Ferris, Executive Director
Andrew Kemp, Non-executive Director
Secretary
James Barbeler
Registered Office
47-51 Pandanus Avenue
Brisbane Airport QLD 4007
Telephone: +61 7 3637 7000
Facsimile: +61 7 3860 4006
Share Register
Link Market Services
Level 12, 300 Queen Street
BRISBANE QLD 4000
Telephone: +61 7 3320 2212
Facsimile: +61 7 3228 4999
Bankers
ANZ Corporate Bank
Level 3, 324 Queen Street
BRISBANE QLD 4000
Commonwealth Bank
Level 2, 633 Pittwater Road
DEE WHY NSW 2099
Solicitors
McCullough Robertson Lawyers
Level 12
Central Plaza Two
66 Eagle Street
BRISBANE QLD 4000
Auditor
WHK Horwath
Level 16
120 Edward St
Brisbane QLD 4000
Stock Exchange Listing
The Company is listed on the Australian
Securities Exchange
Internet address
www.pacificturbine.com.au
ANNUAL REPORT
30 June 2008
Annual Report
for the year ended 30 June 2008
Table of Contents
Corporate Directory and Information
Cover
Chairman’s and Managing Director’s Review
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Statements and Notes
Directors’ Declaration
Independent Auditor’s Report
Shareholders Information
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This financial report covers both PTB Group Limited as an individual entity and the consolidated entity consisting
of PTB Group Limited and its controlled entities. The financial report is presented in the Australian currency.
PTB Group Limited is a company limited by shares, incorporated and domiciled in Australia.
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Chairman’s and Managing Director’s Review
for the year ended 30 June 2008
Results
Net profit after tax decreased from $3.6 million in
2006-07 to $3.1 million in 2007-08, representing
a reduction of 12.8 per cent. Basic earnings per share
were 11.86 cents (16.10 cents in 2007).
This represents a return on average shareholders’ funds
of 8.3 per cent (15.8 per cent in 2007).
exit surplus assets. Provided we can settle the balance
of the Emerald aircraft (as we expect), the Group will be
well positioned to take advantage of the fall in certain
aviation asset prices.
A key part in this strategy change is the necessity for the
Group to earn its targeted returns on assets employed.
Historically we have achieved at least the targeted
return level.
No dividend will be paid for the June 2008 year (2007:
3 cents). The 2009 year dividend policy will be reviewed
late in calendar 2008.
Activities covered under PTB Group’s
Aviation Asset Management Operations
Strategic shift in the business
The Group now has three broad business groupings
under its aviation asset management umbrella:
The main shift will be that the Group will return to
concentrating mainly on trading activities and further
development of the turbine engine repair and overhaul
business. Aircraft acquired will be refurbished and sold
or will be parted out to generate profits and cashflow.
The rental and financing division will concentrate
predominantly on engines: these return in excess of
20% per annum and can be funded relatively easily if
used in Australia and New Zealand.
In the event that aircraft can be placed to earn in excess
of 20% per annum on a recurring basis, then specific
funding will be arranged on a deal-by-deal basis.
During the previous 12 months, major projects such
as the Emerald deal have contributed significant but
irregular returns. However, a strengthened capital base
and increased depth in management resources will
be necessary before we enter into any new deals of
similar magnitude and complexity. Accordingly we do
not expect in the near term to enter into any major new
deals of similar size.
The $US40 million funding pool is still available but
unutilised. Before the sub prime crisis the relative
availability of bank finance had caused the purchase price
of aircraft to increase such that the lease rates did not
allow an acceptable return on investment. We rejected
a number of potential deals for this reason and this has
largely protected the Group from the effects of the sub
prime crisis. Our change in strategy to sell the Emerald
aircraft rather than leasing them therefore came as a
result of this decision. However, the delays in the ATP
settlements since April have impacted on the business
and its profitability so we have not totally escaped the
sub prime problems.
Historically in times of change, aviation companies such
as ourselves with the ability to trade have prospered.
Opportunities are generated as operators and financiers
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PTB: TPE331 together with PT6A turbine
engine repair and overhaul in the repair facility
in Brisbane, trading in turbine engines, and spare
parts for engines. The Dart engine line will be
added during 2009;
IAP: Spare parts supply and the continued
acquisition of aircraft and redundant spares as
well as trading in aircraft. All aircraft are acquired
at a price underwritten by their parts value with
a view to resell or reduce to parts; and
Financing and Rentals: Purchase of engines and
aircraft for lease, rental or hire purchase and
sale of engines and aircraft from the aircraft and
engine pool. As outlined above, it is now expected
that engine financing and rentals will make up the
majority of the business of this division. Aircraft
will only be financed against specific funding.
Commentary on operations during the Year
The Company did not achieve the guidance announced at
the November AGM. The major variances and reasons
are set out in the table below:
Division
PTB Business
IAP Business
Emerald Assets
Corp Overheads
Sale of Belmont
Bad and doubtful
debts
Actual
$’000
Variance
$’000
Revised
Low
Forecast
$’000
1,686
785
2,747
(1,761)
1,839
2,047
729
4,142
(1,518)
-
(361)
56
(1,395)
(243)
1,839
(1,134)
-
(1,134)
Profit before Tax
4,162
5,400
(1,238)
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Chairman’s and Managing Director’s Review
for the year ended 30 June 2008 (Continued)
PTB Business
Emerald Assets
The PTB Business was well under budget with its margins
on engine and parts trading. The PT6 engine rebuilding
section performed well but was let down by a shortage
of engineers in the 331 division, resulting in it falling
short of its targets. The continued appreciation of the
Australian dollar against the US dollar also impacted on
margins.
The main reason for the lower than expected profit was
that one of the large freight door (LFD) ATP freighters
expected to be taken up in the 2008 year will now be
realised in the 2009 year as the contract was conditional
as at 30 June 2008. This was caused by the delay in
acceptance by our Middle East customer and settlement
is now expected prior to 30 November 2008.
The engine financing and rentals section performed
satisfactorily.
Overall we are happy with the management work in
revamping the PTB Business and expect a significant
improvement in 2009. The new building referred to
below, will provide additional space to continue growing
the PTB Business engine repair and overhaul section.
IAP Business
Lower than expected profits on aircraft sales, rentals,
and financing were the major reasons for IAP’s result for
the year. With Steve Ferris, the driver of activity in these
areas spending so much time on Emerald, IAP suffered.
The parts and engine business were ahead of budget. On
a positive note, the Aeropelican section recovered in the
final part of the year with Qantas withdrawing from the
Newcastle route.
Since June 2008, Steve Ferris has been able to spend
more time in the IAP business and activity has increased
in a number of areas, including the acquisition of two
aircraft for parting out. In particular:
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Aeropelican: Following an unsolicited approach,
we are in negotiations for the sale of Aeropelican
and lease of three J32 aircraft;
Purchase of Indian ATP turboprop aircraft: The
1993 build aircraft was slightly damaged in a
landing accident in India and IAP negotiated and
was successful in purchasing the aircraft. The
aircraft has been parted out in India as a rebuild
project in India was not considered viable. The
parts and engines are in transit for resale; and
Purchase of BA146–200: An Australian based
BA146-200 aircraft was purchased from British
Aerospace. This is a four-engined Jet aircraft of
1988 vintage. Profitability will be maximised by
parting the aircraft out.
These two aircraft will add modern aircraft parts to IAP’s
trading stock and exchange pool.
This business will now be reduced in scale and will focus
on contract maintenance from early calendar 2009. The
EASA 145 approval is a valuable commodity in Europe
and opportunities will be sought to maximise this asset.
Profitability for the 2009 year is expected to be strong
with two ATP passenger (PAX) aircraft available for sale
on completion of their refurbishment and the delivery
and sale of the second large freight door ATP to our
Middle East customer as detailed above.
Bad Debts
Bad debts expense totalled $1.13 million attributable
to three customers. These three had been customers
on open account since PTB Brisbane’s incorporation in
2000 and longer with IAP.
We will continue to pursue the Airlink debt which has
been written off.
We conduct business with second and third tier aviation
companies and extending credit is a risk of the business.
An engine or engine repair is often of high monetary
value with significant margin and credit levels evolving
over time. All these operators had been allowed credit
on their past payment performance based on eight years
of history and had established high credit limits.
Over eight years of trading our total bad debts expense,
including this year’s write-off of $1.13 million, is less
than $1.6 million. To have three long term customers fail
in one year is very unusual. After a review of our current
debtors we are not expecting bad debts to be significant
this financial year.
Corporate Overheads
Corporate overheads costs are ahead of budget due to
higher salary and financing costs, offset by lower overall
insurance premiums. The higher salary costs were due to
additional resources utilised during the initial period of
ASX listing and IAP acquisition. Head office staffing levels
have reduced for the 2009 financial year. Financing costs
included increased legal fees and charges as a result of
a higher number of transactions. Insurance premiums
were reduced in rate and amount, partially due to the
aggregation of the PTB and IAP businesses.
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Chairman’s and Managing Director’s Review
for the year ended 30 June 2008 (Continued)
Other Matters
Exchange rate increase
While the group has a natural hedge in respect to its
assets and liabilities, the fact that a large part of PTB
Group’s trading is undertaken in US dollars in US dollar
valued assets means that the conversion to Australian
dollars has a significant negative impact on the gross
margins and sales of the PTB and IAP businesses when
the AUD appreciates against the USD.
Sale of Belmont property
Settlement took place in early July 2008 with a $1.9 million
profit being booked on the sale. The Belmont airport was
part of IAP’s purchase of Ansett’s aviation assets.
Brisbane relocation
In November the Company will move into its new
combined engineering, warehouse and office facility
near Brisbane airport. This will enable the business to
once again combine under one roof. The lease on the
Brisbane facility expires in January 09 and the engine
repair and overhaul division of the business was space
constrained. The new facility will enable the expansion of
the PT6 and TPE331 engine repair and overhaul business
as opportunities develop. The business now has space to
add additional engine lines.
In addition, the Dart engine line will be able to be
installed. The line was acquired 12 months ago in the UK
and has been shipped to Australia for installation. Dart
engines are used in a number of aircraft types in which
IAP specialises and there are substantial rebuilding work
opportunities. IAP has a substantial inventory of Dart
engine parts. There are only two other significant Dart
engine re-builders left in the world.
Balance Sheet and Net Assets
The net asset position has increased from $9.9 million
in 2006 to $40.2 million as at 30 June 2008 (2007:
$35.5m). This is due to the Group’s equity raisings and
related acquisitions, and the earnings retained during
this period.
Included in net assets are:
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The Emerald assets: These are predominantly
aircraft and make up $15.3 million (2007: $12.8
million) of Inventories and $3.3 (2007: $3.3
million) million of property, plant and equipment.
As previously disclosed above, during the next
year a significant proportion of the remaining
inventory will be refurbished and completed.
These assets will either be sold outright to reduce
debt and generate working capital, or moved to
the financing and rentals pool (classified as plant
and equipment non-current assets); and
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AASB 139 requires that effective hedges of
foreign currency be recognised as a derivative
financial instrument in current assets, offset by a
hedging reserve in equity. As at 30 June 2008 net
assets increased by the $1.5 million recognised
as net effective hedges.
Cashflows
The negative operating cashflow has been predominantly
due to the continued investment in inventory across
the Group which has been financed by short-term
borrowings. As mentioned in previous years, the Group
will normally have a negative operating cashflow as
short-term debt is utilised to acquire aviation asset
inventories which are either sold or placed in the
recurring earnings lease and rental pool as non-current
assets. The short-term debt is then reduced and
substituted with longer-term debt secured over the
leased or rented assets.
Management
The Company now has a small team with the financial skills
to meet its management and reporting requirements and
obligations. The Company continues to work at building
the systems and processes to meet the complexities of a
multicurrency, multi-country business. In the Operations
area the PTB Business has a good team which can handle
growth.
The aim is to have good support, financial, and other
management staff freeing up the deal doers to spend a
greater proportion of their time creating sales and new
business.
PTB Group’s aviation sector outlook
The Turboprop market has gone from strength to
strength since a downturn in 2001.
Airlines have realised that the future was not necessarily
in the small regional jets and have flocked back to
turboprops due to their fuel efficiency and low operating
costs. This is a worldwide phenomenon, where we are
seeing major carriers making huge investments in
Bombardier, Dash 8 and ATR aircraft to replace both
small and large Jet transport aircraft. With the high cost
of fuel, this trend seems to be increasing at a staggering
rate which has effectively seen the death of the small
regional Jet, the aircraft that replaced and squeezed the
turboprop out of the same market.
The aviation industry pre 2000 effectively wrote
the turboprop off in favour of the Regional Jet and
almost all manufacturers ceased production prior to
the downturn. Only ATR and Bombardier remained,
concentrating on the larger 50+ seat turboprop aircraft.
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Chairman’s and Managing Director’s Review
for the year ended 30 June 2008 (Continued)
Today the smallest new commercial turboprop available
is the 50 seat ATR42 selling at USD 16 million.
PTB Group Limited
Harvey Parker
Chairman
Craig Baker
Managing Director
Times have come full circle and the high cost of fuel has
made airlines look again at the turboprop, but they are
now faced with little choice and very tight availability.
This has resulted in driving Turboprop prices up – in
some cases up to three times what we saw immediately
after 9/11.
Low time, well cared for aircraft are in short supply and
hard to source. There is only a very limited supply of
fewer than 50 seat aircraft and this pool is continually
diminishing as older aircraft are retired. Supply is further
hampered as soon after 2001, many of the “newer”
turboprops were snapped up by the freight market.
These are now dedicated freighters and no longer
available to cycle through the passenger networks. No
new aircraft are coming in to top up this pool except in
the 50+ range.
The 19 seat sector is in the biggest short supply. These are
in demand from both the smaller passenger operator and
the freighter market. The power plant for most 19 seat
aircraft is the P&W PT6 engine or the Honeywell TPE331
engine, both products extensively handled by PTB. The
19 to 50 seat market is also dominated by 1970’s, 80’s
and 90’s build aircraft that cannot be replaced, regardless
of funding. Many smaller operators and freight operators
rely upon this size aircraft and we are now seeing even
1950’s turboprop aircraft flying in Australia carrying
freight. Unthinkable just five years ago.
From our point of view this is all good news for the
PTB Group as there is a limited amount of spares and
engines in the marketplace and the demand for parts
and support can only increase. The value of inventory
is climbing as the larger manufacturers are unwilling to
make small production runs of new parts.
The primary focus for the group is aircraft and engines
in the Turbo Prop market and the group is well placed to
continue to build business in this section of the market.
Our existing inventories are the largest within Australia
and our extensive experience in this sector bodes well
for our growth in the coming year.
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Directors’ Report
for the year ended 30 June 2008
Your Directors present the financial report of PTB Group
Limited (“the Company”) and its controlled entities (“the
Group”) for the year ended 30 June 2008.
Directors
The names of Directors in office at any time during or
since the end of the year are:
Position
Director (non-executive), Chairman
Managing Director (Group)
Managing Director (IAP Division)
Name
H Parker
CL Baker
RS Ferris
APS Kemp Director (non-executive)
Director (non-executive)
RJ David
– resigned 22 February 2008
Sales and Marketing Director
(Pacific Turbine Brisbane Division)
– resigned 30 November 2007
SG Smith
R Blumberg Director (non-executive)
– appointed 4 July 2007
– resigned 22 February 2008.
Principal Activities
The principal activities of the Group during the financial
year were the provision of the following services in
relation to aviation assets:
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A specialist Pratt & Whitney PT6A and Honeywell
TPE331 turbine engine repair and overhaul
business based at Brisbane Airport, Australia;
Trading operations in Australia and internationally
in aircraft airframes, turbine engines, and related
parts;
The provision of finance for aircraft and turbine
engines sold to customers; and
The lease, rental, or hire of aircraft and turbine
engines to customers from the Group’s aviation
assets pool.
There have been no significant changes in the nature of
these activities during the year not otherwise disclosed
in this report.
Review of Operations
Background
PTB Group Limited (“PTB”) was established in 2001,
when it was incorporated to acquire the Brisbane assets
of Pacific Turbine Pty Ltd ACN: 079 166 653. It focused
on providing services in relation to the Pratt & Whitney
PT6A and Honeywell TPE331 light turbine engines.
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The Company undertook:
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Specialist turbine engine repair and overhaul
based at Brisbane Airport, Australia;
Trading operations in Australia and internationally
in aircraft turbine engines and related parts; and
The provision of finance for PT6A and TPE331
turbine engines for customers.
The Company listed on the Stock Exchange of Newcastle
Ltd (NSX) in March 2005. In September 2006 it acquired
IAP Group for $13.8 million. IAP Group is a Sydney-based
niche aviation asset management company providing
aircraft inventory support, encompassing:
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Global supply of aviation parts; and
Global aircraft and engine financing and sales.
Its business operations are highly complementary to PTB
Group’s business. Steve Ferris, the founder of IAP Group,
took approximately 80 per cent of the consideration as PTB
Group shares and now holds approximately 26 per cent of
the expanded Group. PTB Group’s management has known
and dealt with Steve Ferris for a number of years.
In December 2006 the Company moved from the NSX
to ASX. In conjunction with this move the Company
issued 2.5 million shares at $2 to raise $5 million. This
followed capital raisings totalling $7.9 million earlier in
the period to fund part of the IAP Group and Emerald
assets acquisitions (refer next section).
In October 2006 the Company announced it had acquired
the aircraft and associated parts of the UK companies
Emerald Airways Ltd and Emerald Airways Engineering
Ltd for approximately $16.25 million. The assets acquired
comprised five British Aerospace ATPs, 14 HS 748s, 10
Shorts 360s and their related spare parts along with a
lease of an engineering facility at the Blackpool airport.
The ATP and HS 748 aircraft are assets in which IAP
Group has a long-term history of trading and managing.
Refer update to Emerald Assets section below.
Initiatives in Current Period
The management team has completed the following
initiatives in the current period:
Dart Engine Line
The Dart engine line was acquired in July 2007 from the
UK and shipped to Australia for installation in the new
facility in Brisbane as detailed below. Dart engines are
used in a number of aircraft types in which IAP specialises
and there are substantial rebuilding work opportunities.
IAP has a substantial inventory of Dart engine parts
and there are only two other significant Dart engine
re-builders left in the world. It is expected that this line
will be operational in the 2010 financial year.
Directors’ Report
for the year ended 30 June 2008 (Continued)
Brisbane Relocation
Dividends
During the year, the Company purchased a new combined
engineering, warehouse and office facility near Brisbane
airport. It is expected to relocate on completion in November
2008. This will enable the business to once again combine
under one roof. The lease on the Brisbane facility expires
in January 09 and the engine repair and overhaul division
of the business was space constrained. The new facility
will enable the expansion of the PT6 and TPE331 engine
repair and overhaul business as opportunities develop. The
business now has space to add additional engine lines.
Sale of Belmont Property
A contract to sell the Belmont Airport land for
$5.5 million had been signed in the year ended 30 June
2007. Settlement had been delayed until a third party
had completed its obligations. The settlement occurred
in early July 2008 and generated a profit of $1.9 million
before tax and a net $3 million in working capital.
Emerald Assets
During the year the Group has substantially completed the
remaining large freight door (LFD) and passenger (PAX)
ATP aircraft. One LFD was subject to an unconditional
contract at year end and has been recognised in this
financial report. The remaining LFD was accepted in
early September 2008. Settlement is expected prior to
30 November 2008. The PAX aircraft will be sold or
leased on final completion in the 2009 financial year.
In addition, three HS 748 aircraft were completed with
two sold and the remaining aircraft expected to be
delivered prior to 31 December 2008. These activities
will substantially complete the Emerald refurbishment
activities with the remaining aircraft and parts to be sold
or parted-out at significant margins. The focus will then
be on contract maintenance from early 2009.
Operating Results
The consolidated profit for the financial year, after
providing for income tax, was $3,131,388 (2007:
$3,589,000), a decrease of 12.8%.
Operating profit before tax for the year was $4,162,091
(2007: $5,185,000) a decrease of 19.7%.
The decrease in both profit after tax and operating profit is
due in part to the reduced aircraft sales in PTB Emerald as
a result of the deferred settlement of one of the two LFD
ATP aircraft, reduced margins in the PTB Brisbane business
and unusually large associated bad debts of that business.
Financial Position
The net assets of the Group have increased by 13.2% from
30 June 2007 to $40.2 million as at 30 June 2008.
No dividend has been declared and paid for the 30 June
2008 financial year. PTB Group paid a fully franked
interim dividend of 3 cents per fully paid ordinary share
totalling $792,000 on 30 May 2007. A fully franked
final dividend of 6 cents per fully paid ordinary share
totalling $1,010,000 relating to 30 June 2006 was also
paid on 15 December 2006. The 2009 year dividend
policy will be reviewed late in calendar 2008.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs
of the Group not otherwise disclosed in this report.
After Balance Date Events
No matters or circumstances have arisen since the end
of the financial year which have 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 future years except as detailed below:
Settlement of Belmont Land
The settlement occurred
in early July 2008 and
generated a profit of $1.9 million before tax and a net
$3 million in working capital.
LFD ATP Aircraft
Final acceptance was received in early September on the
second LFD ATP aircraft and as such both contracts are
now unconditional at a selling price of $6m USD each.
Profit on the second LFD ATP will approximately be
between $1m to $1.5m. Settlement on both aircraft is
expected prior to 30 November 2008.
Sale of Aeropelican
Following an unsolicited approach, a contract for the sale
of Aeropelican Air Services Pty Ltd was signed in early
September 2008. The terms include a cash consideration
of $600,000 subject to a final balancing charge, and the
lease of three J32 aircraft currently owned by IAP.
Amendment of Emerald Refurbishment and
Term Facility
A facility of USD $5,400,000 for the refurbishment
of the Emerald aviation assets was established in July
2007. On 28 August 2008 this facility was extended
to 30 November 2008, or as otherwise agreed between
the parties in order to complete and settle the two LFD
ATP and two PAX ATP aircraft. The effective interest rate
has increased from 16% to 19%. In conjunction with this
amendment, the related Term facility of $6,885,000
($6,197,334 outstanding as at 30 June 2008) will
be paid out by 31 July 2009, or as otherwise agreed
between the parties.
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Directors’ Report
for the year ended 30 June 2008 (Continued)
The effective interest rate on the term facility has
increased from 13% to 13.5%.
Financing of Land & Buildings
On 12 February 2008 IAP Group Australia Pty Ltd
signed a purchase contract for Land and Buildings
to house the PTB Group Brisbane operations. On
16 September 2008 a variation to Commonwealth
Bank Limited facilities was executed to fund this project
for an amount of $2,275,000.
Future Developments, Prospects and
Business Strategies
The global aviation industry is currently experiencing
difficult trading conditions with high oil prices, shortage
of available funding created by the sub prime crisis, and
dampened consumer demand in key markets. However
suppliers to the industry such as the PTB Group have
benefited historically in these times, and the Group
has the ability to acquire assets to part out or trade as
operators and financiers exit surplus assets. As such the
prospects for the continuing performance and growth of
the Group remain sound.
The Group is maintaining a very strong focus on its core
competencies and has identified a number of further
initiatives that are expected to enhance its prospects.
The Group now has three broad business groupings
under its aviation asset management activities:
Aircraft Engine and Airframe Rental and Financing:
The Group will continue to build its recurring earnings
from rental and financing. These areas, which include
profits from assets bought and sold for the pool, earn
returns of between 12 and 25 per cent on assets
employed. Finance leases tend to generate lower returns
with operating leases being more profitable. Asset prices
have increased over the last 12 months which has
lowered returns. Activities will include:
■■
■■
Short or medium term rental or financing of
including: Pratt & Whitney PT6A;
engines
Honeywell TPE331; Rolls Royce Dart prop jet;
Rolls Royce Tay turbo fan and Rolls Royce Spey
turbo fan; and
Airframe financing (including purchase and sale)
for aircraft including: Metro 23; EMB 110
Bandeirante; Hawker Siddley 748; BAE ATP; F27;
Twin Otter and Beechcraft King Air.
Pacific Turbine Brisbane:
■■
■■
■■
■■
Rebuilding PT6A and TPE331 engines at PTB’s
engine repair and overhaul facilities in Brisbane;
Managing the rebuilding of engines at Dallas
Airmotive and Landmark Aviation;
Trading in spare parts for engines; and
Trading in parts (other than engines) for PTB
clients.
IAP Group:
■■
■■
Spare Parts Supply: Acquisition of redundant
spares from airlines which have changed their
aircraft types and then remarketing to other
operators of that type. IAP Group is by far
the largest surplus spare parts dealer in the
southern hemisphere. Its purchasing systems
are well-honed over many years and its network
of contacts enables maximum exposure both
for purchasing and reselling opportunities. IAP
Group also has a strong parts brokering business,
particularly with its Asian contacts; and
Acquisition and Sale of Aircraft/Parting out
Aircraft: As an integral activity to spares support,
IAP Group has bought and sold many aircraft.
The aircraft traded in this way range in size from
an Islander to a Boeing 737 and Airbus A300.
Its engineering operation at Bankstown airport
has significant capability to perform aircraft
refurbishment. IAP Group also acquires aircraft
and parts them out. For example, aircraft could
be acquired outside of Australia and be parted-
out. Some parts such as engines could then be
immediately sold to recoup the initial purchase
cost, with the balance containerised as parts and
shipped to the Sydney warehouse for marketing
and subsequent sale.
The Directors have excluded from this report any further
information on the likely developments in the operations
of the Group and the expected results of those
operations in future financial years, as the Directors have
reasonable grounds to believe that it would be likely to
result in unreasonable prejudice to the Group.
Environmental Issues
The Group operates from Brisbane, Newcastle, Inverell,
Sydney, and Bankstown Airports
in Australia, and
Blackpool Airport in the UK. It is required to meet Brisbane
Airport Corporation environment regulations and the
Commonwealth’s Airports (Environment Protection)
Regulations 1997 as well as relevant UK legislation. The
Group is subject to regular audits by these authorities. The
Group also has administration and warehouse facilities
in a number of locations subject to relevant legislation.
There have been no non-compliances to date while the
Group has operated from these various locations.
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Directors’ Report
for the year ended 30 June 2008 (Continued)
Information on Current Directors
Harvey Parker
(Non-Executive Chairman)
Harvey Parker was born in 1943 and has had a
distinguished career spanning several industries. He has
experience in the aviation industry as Managing Director
of New Zealand Post and the Airpost Joint Venture.
Presently he is the Chairman and also serves on the audit
and remuneration committees of the Company.
He is presently Chairman of DWS Advanced Business
Solutions Limited (since 9 May 2006) and Director of
Riding for the Disabled Association of Victoria limited.
During the past three years Mr Parker was also a Director
of the Volante Group (until April 2006) and Chairman
of Intermoco (from 2 May 2007 to 31 May 2008). He
has held no other Director positions with other listed
companies in the last three years.
Craig Louis Baker CA, BCA
(Managing Director – Group)
Craig Baker was born in 1946 and has had extensive
experience in the aviation industry. He is a qualified
accountant and has been involved in aviation businesses
as a General Manager, Director, and Finance Manager for
over 20 years. Along with Hugh Jones, he was involved
in the development of Airwork (NZ) Limited which has
grown to become a major aviation provider in New
Zealand with annual sales in excess of $80 million.
Craig’s duties involve the overall management of the
Group. He has held no other Director positions with
other listed companies in the last three years.
Royston Stephen (Steve) Ferris B.Sc
(Managing Director – IAP Division)
Steve Ferris was born in the UK in 1960. He graduated
from Bristol University in 1981 with a Bachelor of
Science. He incorporated the IAP Group in 1987 and has
grown the company in a successful manner by utilising
his vast knowledge of the aviation industry.
Steve is based in Sydney and is the Managing Director of
the IAP Group operations. He has held no other Director
positions with other listed companies in the last three
years.
Andrew Peter Somerville Kemp B.Com, CA
(Non-Executive Director)
Andrew graduated in Commerce from the University of
Melbourne and is a Chartered Accountant. After working
for KPMG and Littlewoods Chartered Accountants in
Melbourne and Sydney, he joined AIFC, the merchant
banking affiliate of the ANZ Banking Group, in Sydney in
1978. From 1979 until 1985, Andrew was Queensland
Manager of AIFC.
Andrew joined the North Queensland based Coutts
Group as general manager early in 1985, and continued
with this group until January 1987 when he formed
Huntington Group.
Since 1980, Andrew has been involved in a range of
listings, acquisitions and divestments. He has structured
and implemented the ASX listing of eleven companies. He
has also advised clients on a wide range of investments
and divestments over the last 20 years.
Andrew is currently a Director of the following listed
companies: Silver Chef Limited (from April 2005), Trojan
Equity Limited (from May 2005), and SCV Group Limited
(from March 2004). He was previously a Director of S8
Limited from February 2004 until January 2007.
is a member of the audit and remuneration
He
committees of the company.
Company Secretary
James Barbeler was appointed as the Chief Financial
Officer on 28 May 2007, and Company Secretary
on 15 June 2007. James has a Bachelor of Business
(Accountancy)
from Queensland University of
Technology, a MBA with an IT major, and is a member of
the Institute of Chartered Accountants. James has over
20 years experience in all aspects of financial accounting,
auditing, treasury, Board, and statutory reporting.
James has held various positions
including Audit
Manager in a Chartered Accounting firm, and CFO,
Company Secretary, and CEO of various agribusiness
and commercial entities in both public and private
companies.
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Directors’ Report
for the year ended 30 June 2008 (Continued)
Remuneration Report
The remuneration report is set out under the following
main headings:
A Principles used to determine the nature and
amount of remuneration
B Details of remuneration
C Service contracts
D Share-based payment compensation
E Additional information.
The information provided in this remuneration report
has been audited as required by section 308(3C) of the
Corporations Act 2001.
A.
Principles used to determine the nature
and amount of remuneration
Non-executive Directors
Directors are to be paid out of Company funds as
remuneration for their services, such sum as accrues on
a daily basis as the Company determines to be divided
among them as agreed, or failing agreement, equally. The
maximum aggregate amount which has been approved
by shareholders for payment to non-executive Directors
is $100,000 per annum.
Directors’ remuneration for their services as Directors
is by a fixed sum and not a commission or a percentage
of profits or operating revenue. It may not be increased
except at a general meeting in which particulars of the
proposed increase have been provided in the notice
convening the meeting to shareholders. There
is
provision for Directors who devote special attention to
the business of the Company or who perform services
which are regarded as being outside the scope of their
ordinary duties as Directors, or who at the request of
the Board engage in any journey on Company business,
to be paid extra remuneration determined by the
Board. Directors are also entitled to their reasonable
travel, accommodation and other expenses incurred in
attending Company or Board meetings, or meetings of
any committee engaged in the Company’s business.
Any Director may be paid a retirement benefit
as determined by the Board, consistent with the
Corporations Act 2001 and the ASX Listing Rules.
Executive and Key Management Pay
The remuneration committee is responsible for advising the
Board on remuneration and issues relevant to remuneration
policies and practices including those of senior management
and executive Directors. The committee has responsibility
for reviewing and evaluating market practices and trends
in relation to remuneration, recommending remuneration
policies, overseeing the performance and making
recommendations on remuneration of members of senior
management and executive Directors.
Remuneration in each case is taken as including not
only monetary payments (salaries), but all other non-
monetary emoluments and benefits, retirement benefits,
superannuation and incentive programs.
In each case the committee refers to the general
market and industry practice (as far as directly relevant
benchmarks can be identified for comparative purposes)
and the need to attract and retain high calibre personnel.
Compensation
in the form of cash bonuses for
executives and key management personnel is designed
to ensure reward for performance is competitive and
appropriate for the results delivered. The framework
aligns executive and key management reward with
achievement of strategic objectives and creation of
value for shareholders in terms of return on equity, and
conforms with market practice for delivery of reward.
The Board ensures that executive and key management
reward satisfies the following key criteria for good
reward governance practices:
■■
■■
■■
■■
■■
Competitiveness and reasonableness
Acceptability to shareholders
Performance alignment of compensation
Transparency
Capital management.
Executive Directors
In the previous year the Executive Directors’ pay and
reward framework included base pay and long-term
incentives through participation in the PTB Group Limited
option plan as detailed in section D. In the current year
the Executive Directors’ pay and reward framework has
the following components:
■■
■■
Base pay and benefits, including superannuation;
and
Short-term performance incentives.
Base pay: structured as a total employment cost package
which may be delivered as a combination of cash and
prescribed non-financial benefits at the Executive
Director’s discretion. Base pay is reviewed annually and
benchmarked against inflation.
Benefits: Executive Directors receive benefits including
car allowances.
Executive Directors’
Superannuation:
base pay
includes statutory and salary sacrificed superannuation
contributions.
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Directors’ Report
for the year ended 30 June 2008 (Continued)
Short-term incentives: Cash bonuses incentives are
based on pre-determined after tax return on equity and
operational targets based on the criteria detailed above,
as set by the remuneration committee. The bonuses are
paid in October each year. The pre-determined targets
ensure that variable reward is only available when value
has been created for shareholders, and when profit and
operational objectives are consistent with the business
plan. Each Executive Director has a target short-term
incentive opportunity depending on the accountabilities
of the role and impact on the organisation or business unit
performance. The maximum target bonus opportunity is
33% of base pay.
Other Executives and key management personnel
Other Executives and key management personnel’s
pay and reward framework includes base pay and
short-term incentives. There are no fixed performance
criteria for the cash bonuses. After the end of the
financial year the remuneration committee assesses
the performance of individuals and, where appropriate,
approves discretionary cash bonuses to be paid to the
individuals. Cash bonuses are paid following approval by
the remuneration committee.
Long-term incentives to Executives and Employees
In order to provide a long-term incentive to the
executives and employees of the Company, an Employee
Share Option Scheme (“the Scheme”) is in place. The
incentive provided by the scheme will be of material
benefit to the Company in encouraging the commitment
and continuity of service of the recipients. By providing
executives and employees with a personal financial
interest in the Company, the Company will be able to
attract and retain executive Directors, key executives
and employees in a highly competitive market. This is
expected to result in future benefits accruing to the
shareholders of the Company.
The establishment of the Scheme was approved by
shareholders on 3 June 2005. All staff are eligible to
participate in the scheme, including Executive Directors
(since they take part in the management of the
Company).
The options issued to key management personnel were
issued pursuant to the Scheme whereby options were
issued to all employees (excluding Executive Directors)
on the same basis and the entitlements are not linked to
performance. The number of options issued to employees
was determined by the remuneration committee and
approved by the Board in accordance with the terms of
the Scheme.
Options are granted under the Scheme for no
consideration. The exercise price is the amount specified
by the remuneration committee at the time of issue.
The exercise period is the period specified by the
remuneration committee at the time of issue. Options
under the plan may not exceed 5% of the total number
of issued shares of the Company at the date of issue.
Options lapse if prior to or during the exercise period
the employee is terminated or resigns. If a person dies,
becomes disabled, or is made redundant prior to the
exercise period the option lapses. If a person dies, becomes
disabled, or is made redundant during the exercise period
special rules apply that allow options to be exercised.
Options granted under the Scheme carry no dividend or
voting rights. When exercisable, each option is convertible
into one ordinary share in PTB Group Limited. Amounts
receivable on the exercise of options are recognised as
share capital. The above remuneration policy together
with the options package is to encourage the alignment
of personal and shareholder interests.
Company Performance, Shareholder Wealth
and Directors’ and Executive Remuneration
In the current year, the Executive Directors’ short-
term incentives are linked to return on equity and other
operational objectives as detailed above. In the prior
year there was no specific relationship between the
remuneration policy and Company performance. The base
salaries for the executives are substantially in accordance
with the market for executives of similar levels.
The long-term incentives for the executives was and
is delivered through the options referred to above and
as detailed in section D below. The share price at 30
June 2008 and at the date of this report is less than
the exercise price for all of the options however the
remuneration committee believes that the framework is
appropriate as long-term incentives.
Revenue ($’000)
Net profit ($’000)
Return on average
shareholders funds (%)
Share price at year-
end ($)
Dividend paid per
share in respect of
each financial year
2008 2007 2006 2005
46,608 40,559 16,982 10,135
3,131 3,589 1,861 1,420
8.3
15.8 20.31 26.29
0.46
1.95
1.60
1.15
Nil 6 cents 6 cents 6 cents
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Directors’ Report
for the year ended 30 June 2008 (Continued)
B.
Details of Remuneration
The remuneration for each Director and other key management personnel of the Group was as follows:
Short-term benefits
Post-
employment
Other
Share-based
payments
Total
Cash
salary and
fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Long-term
benefits* Options
$
$
$
167,526
117,826
252,344
30,000
10,900
20,000
-
598,596
171,496
131,344
207,523
170,973
-
17,890
20,000
84,833
632,563
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,793
69,734
5,500
5,166
9,900
-
-
-
-
-
21,450
3,000
8,415
-
1,962
1,800
-
-
-
-
-
-
-
-
254,553
132,892
282,209
33,000
12,862
21,800
-
16,959
-
107,846
-
13,915
-
-
- 737,316
-
15,030
-
6,181
192,707
4,858
99,408
4,737
7,558
19,800
4,737
-
-
-
-
14,867
3,666
-
1,610
1,800
-
-
-
-
-
-
-
-
-
240,347
239,618
189,506
-
19,500
21,800
-
12,416
1,650
139,135
-
13,140
-
86,483
- 797,254
68,289
6,000
17,754
-
-
-
8,686
1,484
-
-
1,327
84,302
547
19,785
2008 Year
Directors
CL Baker
(Managing Director – Group)
SG Smith (6) (Sales and Marketing
Director - Pacific Turbine Brisbane)
RS Ferris(4)
(Managing Director – IAP)
H Parker (Non-Executive Director)
RJ David (8)
(Non-Executive Director)
APS Kemp (1)
(Non-Executive Director)
R Blumberg (7)
(Non-Executive Director)
Total Directors
Other Key Management
Personnel
JT Barbeler (3)
(Company Secretary and CFO)
2007 Year
Directors
CL Baker
(Managing Director – Group)
SG Smith (Sales and Marketing
Director - Pacific Turbine
Brisbane)
RS Ferris(4)
(Managing Director – IAP)
HR Jones (5)
(Non-Executive Director)
H Parker (Non-Executive Director)
RJ David (Non-Executive Director)
APS Kemp (1)
(Non-Executive Director)
Total Directors
Other Key Management
Personnel
AL Abrahams (2)
(Company Secretary and Finance
Manager)
JT Barbeler (3)
(Company Secretary and CFO)
* comprising long service leave
(1) APS Kemp’s remuneration includes additional amounts paid for services provided in respect of corporate advisory and capital
raising strategy services totalling $Nil (2007: $66,500).
(2) AL Abrahams resigned as company secretary and finance manager on 6 April 2007.
(3) JT Barbeler was appointed CFO on 28 May 2007 and company secretary on 15 June 2007.
(4) RS Ferris was appointed Managing Director (IAP Division) on 21 September 2006.
(5) HR Jones resigned on 25 August 2006.
(6) SG Smith resigned on 30 November 2007.
(7) R Blumberg was appointed on 4 July 2007 and resigned on 22 February 2008.
(8) RJ David resigned 22 February 2008.
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Directors’ Report
for the year ended 30 June 2008 (Continued)
B.
Details of Remuneration (Continued)
JT Barbeler (Company Secretary and Chief
Financial Officer)
■■
■■
■■
– Indefinite with a notice
Term of agreement
period of one month;
– $195,030 inclusive of 9%
Base annual salary
superannuation to be reviewed annually by the
remuneration committee; and
Notice period
– Termination by one months
notice in writing by either party other than for
gross misconduct.
No other key management personnel are subject to
service agreements.
D.
Share-based Payment Compensation
In the 2006 and 2007 financial years, options were
granted to certain staff under the PTB Group Limited
Employee Share Option Scheme. Refer Section A above
for details of the Scheme. The options are not dependent
upon the satisfaction of a performance condition as they
depend upon service vesting conditions (the options
vest one third each year).
During the 2005 financial year options were granted to
Directors by the Company. The options were issued free
of charge. Each option granted is convertible into one
ordinary share in PTB Group Limited. The options were
issued pursuant to the prospectus dated 4 January
2005. Options granted carry no dividend or voting
rights. The options were granted upon listing on 10
March 2005 and included no vesting conditions but
were considered to be a reasonable financial benefit
to be applied as part of the reasonable remuneration
applicable for services having regard to the benefits
the Company has and will gain from their continuing
involvement with the Company.
There were no other executives in the current or prior year.
All Directors and other key management personnel are
employed by PTB Group Limited. Cash bonuses were paid
during the current and prior year to non-key management
personnel. No specific service or performance criteria
were used to determine the amount of the bonuses.
No share-based payment compensation benefits were
granted in the current year. Details of benefits provided
in the prior year, which were in the form of share
options, are given in section D below. No specific service
or performance criteria were used to determine the
amount of the grant.
C.
Service Contracts
Major provisions of service agreements with Executive
Directors and other key management personnel as at
30 June 2008 are set out below:
CL Baker (Managing Director – Group)
■■
■■
■■
– Minimum of three years
Term of agreement
commencing 17 December 2007;
– $280,000 inclusive of
Base annual salary
9% superannuation and vehicle allowance to
be reviewed annually by the remuneration
committee; and
Notice period
– Termination by a minimum of
12 months notice in writing by either party
other than for gross misconduct. Termination
payment is equivalent to one year’s salary plus
superannuation as noted above.
RS Ferris (Managing Director – IAP)
■■
■■
■■
– Minimum of three years
Term of agreement
commencing 17 December 2007;
– $280,000 inclusive of
Base annual salary
9% superannuation and vehicle allowance to
be reviewed annually by the remuneration
committee; and
Notice period
– Termination by a minimum of
12 months notice in writing by either party
other than for gross misconduct. Termination
payment is equivalent to one year’s salary plus
superannuation as noted above.
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14
Directors’ Report
for the year ended 30 June 2008 (Continued)
D.
Share-based Payment Compensation (Continued)
The terms and conditions of each grant of options affecting key management personnel remuneration in the previous,
current or future reporting periods are as follows:
Grant date
Expiry Date
10 March 2005
30 September 2005
31 May 2007
10 March
2008
19 November
2008
31 August
2010
Value per
option
at grant
date
Exercise
price
Date exercisable
$1.15
$0.137 10 March 2006 (expired 10 March 2008).
$1.00
$2.00
$0.35
$0.54
33% after 19 August 2006, 33% after 19 August
2007, and 33% after 19 August 2008.
33% after 31 May 2008, 33% after 31 May 2009,
and 33% after 31 May 2010.
Details of options over ordinary shares in the Company provided to each Director of PTB Group Limited and each
of the key management personnel of the Group in the 2008 and 2007 financial years are set out below. When
exercisable, each option is convertible into one ordinary share of PTB Group Limited.
Other Key Management Personnel
AL Abrahams
JT Barbeler
Number of options
granted during the year
Number of options
vested during the year
2008
2007
2008
2007
-
-
-
20,000
-
6,666
6,666
-
The amounts disclosed for remuneration relating to options above are the assessed fair values at grant date of options
granted, allocated equally over the period from grant date to vesting date. Fair values at grant date are determined
using a Binomial option pricing model which takes into account the exercise price, the term of the option, the share
price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free
interest rate for the term of the option. Refer note 25 of the financial report for the inputs into the model.
In the prior year, AL Abrahams exercised 6,666 remuneration options on 13 March 2007 at an amount of $1.00 per
ordinary share issued ($6,666 in total for 6,666 ordinary shares). No amounts were unpaid on the exercise of these
options. On termination, 13,334 options were forfeited as the service period was not met.
No other remuneration options granted to key management personnel were exercised or lapsed during this or the
prior financial year.
E.
Additional Information
Details of remuneration: cash bonuses and options
As both the grant of options and cash bonuses during the year were discretionary, no part of the grants was forfeited
and no part is payable in future years. For details of option vesting conditions and number vested refer to Section D.
Share-based compensation: Options
There were no options granted, exercised, or lapsed during the year.
A
Remuneration
consisting of
options
3.3%
B
Value at grant
date
$
$10,754
C
Value at
exercise date
$
-
D
Value at lapse
date
$
-
E
Total of
columns B-D
$
$10,754
Name
J Barbeler
A = The percentage of the value of remuneration consisting of options, based on the value of options expensed during
the year.
B = The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the
year as part of remuneration.
C = The value at exercise date of options that were granted as part of remuneration and were exercised during the year.
D = The value at lapse date of options that were granted as part of remuneration and that lapsed during the year.
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Directors’ Report
for the year ended 30 June 2008 (Continued)
E.
Additional Information (Continued)
Share Options
Loans to Directors and Executives
Shares Issued on Exercise of Options
There are no loans to Directors and executives.
Meetings of Directors
The following ordinary shares of PTB Group Limited
were issued during the year ended 30 June 2008 and
subsequent to year end on exercise of options granted
under the Employee Share Option Scheme:
Attendances by each Director during the financial year
were as follows:
Date Options
Granted
Issue Price
of Shares
Number
of Shares
Issued
Number of
Meetings Held
While a Director
Number of
Meetings
Attended
During the year
30 September 2005
$1.00
6,667
Full Board
CL Baker
H Parker
APS Kemp
RS Ferris
SG Smith
RJ David
R Blumberg
Remuneration
Committee
H Parker
APS Kemp
Audit and Risk
Management
Committee
H Parker
RJ David
APS Kemp
R Blumberg
17
17
17
17
10
12
11
2
2
4
3
4
3
17
17
16
12
7
10
9
2
2
4
3
4
2
Subsequent to year-end
Nil shares issued.
Shares Under Option
At the date of this report, PTB Group Limited has
unissued ordinary shares under option as follows:
Exercise
price
No. of ordinary
shares
Expiry date
of options
$1.15
$1.00
$1.60
$1.60
$2.00
-
10 March 2008
80,002 19 November 2008
1,529,600 30 November 2008
20 February 2010
31 August 2010
120,000
40,000
Directors’ Interests
Directors’ shares and options in the Company at the date
of this report are as follows:
Nominations Committee
Members of the committee were H Parker and RJ David.
No meetings of the nominations committee were held
during the year ended 30 June 2008. Given the size of
the Company and of the Board the separate Nominations
Committee has not been continued and the responsibility
for this function now rests with the Board.
CL Baker
RS Ferris
H Parker
APS Kemp
Number
Ordinary
Shares
Share
Options
1,782,104
6,908,054
296,000
167,248
-
-
-
38,267
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16
Directors’ Report
for the year ended 30 June 2008 (Continued)
E.
Additional Information (Continued)
■■
Indemnification and Insurance of Directors,
Officers and Auditors
During or since the end of the financial year, the
Company has not given any indemnity or entered into
any agreement to indemnify, or paid or agreed to pay
insurance premiums in relation to an officer or auditor,
except as detailed below.
The Company has Director and Officers insurance in
place for all Directors and officers of the Company.
This insurance insures any person who is or has been
an officer of the Company against certain liabilities in
respect of their duties as an officer of the Company, and
any other payments arising from or in connection with
such proceedings, other than where such liabilities arise
from conduct involving a wilful breach of duty.
The policy prohibits disclosure of details of the cover and
the amount of the premium paid.
Proceedings on Behalf of the Company
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene
in any proceedings to which the Company is a party,
for the purpose of taking responsibility on behalf of the
Company for all or part of those proceedings.
No proceedings have been brought or intervened in on
behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
Non-Audit Services
The Company may decide to employ the auditor on
assignments additional to statutory audit duties where
the auditor’s expertise and experience with the Company
are important.
The Board of Directors has considered the position and,
in accordance with the advice received from the audit
committee is satisfied that the provision of non-audit
services during the year is compatible with the general
standard of independence for auditors imposed by the
Corporations Act 2001. The Directors are satisfied the
provision of non-audit services by the auditor, as set out
below, did not compromise the auditor independence
requirements of the Corporations Act 2001 for the
following reasons:
none of the services undermine the general
principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional
Accountants, including reviewing or auditing the
auditor’s own work, acting in a management or
a decision-making capacity for the company,
acting as advocate for the company or jointly
sharing economic risk and rewards.
During the year WHK Horwath, the Company’s auditor,
has performed other services in addition to their statutory
audit duties as set out in note 26. During the year the
following non-audit service fees were paid or payable for
services provided by the auditor of the company:
2008
$
2007
$
Non Audit Services –
WHK Horwath
Taxation advice and compliance $55,000
-
Non Audit Services –
Other Audit Firms
Taxation advice and compliance
Other assurance services
Other compliance services
- $62,500
- $47,510
$5,000
-
The lead auditor’s independence declaration is set out on
page 17 and forms part of the Directors’ Report for the
year ended 30 June 2008.
WHK Horwath continues in office in accordance with
Section 327 of the Corporations Act 2001.
Rounding of Amounts
The Company is of a kind referred to in class order
98/100,
issued by the Australian Securities and
Investments Commission, relating to the “rounding off”
of amounts in the Directors’ report. Amounts in the
Directors’ report have been rounded off in accordance
with that class order to the nearest thousand dollars, or
in certain cases, the nearest dollar.
This report is made in accordance with a resolution of
the Directors.
H Parker
Chairman
■■
all non-audit services have been reviewed by the
audit committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
Brisbane
30th September 2008
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Auditor’s Independence Declaration
for the year ended 30 June 2008
To the Directors of PTB Group Limited
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2008 there have been:
(i) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
WHK Horwath
Don Langdon
Principal
Signed at Brisbane 30 September 2008.
Liability limited by a scheme approved by Professional Standards Legislation
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18
Corporate Governance Statement
for the year ended 30 June 2008
Scope of responsibility of the Board
Responsibility for the Company’s proper corporate
governance rests with the Board. The Board’s guiding
principle in meeting this responsibility is to act honestly,
conscientiously and fairly, in accordance with the law, in
the interests of PTB Group’s shareholders (with a view
to building sustainable value for them) and those of
employees and other stakeholders.
The Board’s broad function is to:
(a) Chart strategy and set financial targets for the
Company;
(b) Monitor the
implementation and execution
of strategy and performance against financial
targets; and
(c) Appoint and oversee the performance of
executive management and generally to take and
fulfil an effective leadership role in relation to the
Company.
Power and authority in certain areas is specifically
reserved to the Board – consistent with its function as
outlined above. These areas include:
(a) Composition of the Board itself including the
appointment and removal of Directors;
(b) Oversight of the Company including its control
and accountability system;
(c) Appointment and removal of senior management
and the Company Secretary;
(d) Reviewing and overseeing systems of risk
management and
internal compliance and
control, codes of ethics and conduct, and legal
and statutory compliance;
(e) Monitoring senior management’s performance
and implementation of strategy; and
(f) Approving and monitoring financial and other
reporting and the operation of committees.
Composition of the Board
The Board performs its role and function, consistent
with the above statement of its overall corporate
governance responsibility,
in accordance with the
following principles:
(a) The Board should comprise at
least five
Director, and C Baker and RS Ferris who are Executive
Directors. Andrew Kemp
is not considered to be
independent as he is an executive Director of Huntington
Group which provides corporate advice to the Group.
Notwithstanding the above, the Board is of the view
that such relationships do not materially interfere with
each Director’s ability to act in the best interest of the
Company.
During the year, three Directors resigned due to external
professional and personal commitments. The Board will
seek to appoint an independent non-executive Director
with appropriate experience during the coming year.
Notwithstanding the above, the Board is of the view
that the current composition of the Board is adequate to
ensure the best interests of shareholders given the size
and nature of the Company’s operations. In addition, the
Chairman has the deciding vote at any meetings where
a vote is initially tied.
Board Charter and Policy
The Board has adopted a charter (which will be kept under
review and amended from time to time as the Board
may consider appropriate) to give formal recognition to
the matters outlined above. This charter sets out various
other matters that are important for effective corporate
governance including the following:
i. A detailed definition of ‘independence’;
ii. A framework for the identification of candidates
for appointment to the Board and their selection;
iii. A framework for individual performance review
and evaluation;
iv. Proper training to be made available to Directors
both at the time of their appointment and on an
on-going basis;
v. Basic procedures for meetings of the Board and
its committees – frequency, agenda, minutes and
private discussion of management issues among
non-executive Directors;
vi. Ethical standards and values – formalised in a
detailed code of ethics and values;
vii. Dealings in securities – formalised in a detailed
code for securities transactions designed to
ensure fair and transparent trading by Directors
and senior management and their associates; and
viii. Communications with shareholders and the
Directors;
market.
(b) At least half of the Board should be non-executive
Directors independent from management; and
(c) The Chairman of the Board should be one of the
independent non-executive Directors.
At the date of this annual report the Board comprises
four members including H Parker an independent,
non-executive Chairman, APS Kemp a non-executive
These initiatives, together with the other matters provided
for in the Board’s charter, are designed to ‘institutionalise’
good corporate governance and generally, to build a
culture of best practice in PTB Group’s own internal
practices and in its dealings with others.
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Corporate Governance Statement
for the year ended 30 June 2008 (Continued)
Audit and Risk Management Committee
(‘ARM Committee’)
Among the functions performed by the Committee are
the following:
The purpose of this Committee is to advise on the
establishment and maintenance of a framework of
internal control and appropriate ethical standards for the
management of the Company. Its current members are
Harvey Parker and Andrew Kemp.
The Committee performs a variety of functions relevant
to risk management and internal and external reporting
and reports to the Board following each meeting. Among
other matters for which the Committee is responsible
are the following:
(a) Review and evaluation of market practices and
trends on remuneration matters;
(b) Recommendations to the Board
in relation
to the Company’s remuneration policies and
procedures;
(c) Oversight of
the performance of senior
management and non-executive Directors; and
(d) Recommendations to the Board in relation to the
remuneration of senior management and non-
executive Directors.
Meetings are held at least twice each year.
(a) Board and committee structure to facilitate a
proper review function by the Board;
Nominations Committee
(b) Internal control framework including management
information systems;
(c) Corporate risk assessment and compliance with
internal controls;
(d) Internal audit
function and management
processes supporting external reporting;
(e) Review of financial statements and other financial
information distributed externally;
(f) Review of the effectiveness of the audit
function;
(g) Review of the performance and independence of
the external auditors;
(h) Review of the external audit function to ensure
prompt remedial action by management, where
appropriate, in relation to any deficiency in, or
breakdown of, controls;
(i) Assessing the adequacy of external reporting for
the needs of shareholders; and
(j) Monitoring compliance with the Company’s code
of ethics.
Meetings are held at least twice each year. A broad
agenda is laid down for each regular meeting according
to an annual cycle. The Committee invites the external
auditors to attend each of its meetings.
The ARM Committee does not comply with two of the
Guidelines in that it has an equal number of independent
and non-independent Directors and that the Chairman
is also Chairman of the Board. However, the Board
believes these matters are acceptable given the size of
the Company, the nature of its business and the financial
literacy of the members.
Remuneration Committee
The purpose of this Committee is to assist the Board
and report to it on remuneration and issues relevant to
remuneration policies and practices including those for
senior management and non-executive Directors. Its
current members are Harvey Parker and Andrew Kemp.
recommendations
Best practice
issued by ASX
recommend a separate Nominations Committee to
assist the Board and report to it on selection and
appointment issues and practices including those for
senior management and non-executive Directors.
However, given the size of the Company and of the
Board the separate Nominations Committee has not
been continued and the responsibility for this function
now rests with the Board.
Best practice commitment
The Company is committed to achieving and maintaining the
highest standards of conduct and has undertaken various
initiatives, as outlined in this section that are designed
to achieve this objective. The PTB Group’s corporate
governance charter is intended to ‘institutionalise’ good
corporate governance and, generally, to build a culture of
best practice both in the Company’s own internal practices
and in its dealings with others.
The following are a tangible demonstration of the
Company’s corporate governance commitment:
Independent professional advice
With the prior approval of the Chairman, which
may not be unreasonably withheld or delayed, each
Director has the right to seek independent legal and
other professional advice concerning any aspect of the
Company’s operations or undertakings in order to fulfil
their duties and responsibilities as Directors. Any costs
incurred are borne by the Company.
Code of ethics and values
The Company has developed and adopted a detailed
code of ethics and values to guide Directors in the
performance of their duties.
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Corporate Governance Statement
for the year ended 30 June 2008 (Continued)
Code of conduct for transactions in securities
The Company has developed and adopted a formal code
to regulate dealings in securities by Directors and senior
management and their associates. This is designed to
ensure fair and transparent trading in accordance with
both the law and best practice.
■■
■■
Directors having a conflict of interest in relation
to a particular item of business must absent
themselves from the Board meeting before
commencement of discussion on the topic; and
Non-executive Directors confer on a needs basis
without management in attendance.
Charter
The code of ethics and values and the code of conduct for
transactions in securities (referred to above) both form
part of the Company’s corporate governance charter
which has been formally adopted, which complies with
ASX corporate governance guidelines and best practice
recommendations.
The ASX document, ‘Corporate Governance Principles
and Recommendations – second edition’ (‘Guidelines’)
applying to listed entities was published in August 2007
by the ASX Corporate Governance Council with the
aim of enhancing the credibility and transparency of
Australia’s capital markets. PTB Group decided to make
an early transition to these revised recommendations as
at 30 June 2007.
The Board has assessed the Company’s current practice
against the Guidelines and outlines its assessment below:
Principle 1 – Lay solid foundations for
management and oversight
The role of the Board and delegation to management
have been formalised as described above in this section
and will continue to be refined, in accordance with the
Guidelines, in light of practical experience gained in
operating as a listed company. PTB Group complies with
the Guidelines in this area.
Principle 2 – Structure the Board to add value
Of the four Company Directors, Harvey Parker and
Andrew Kemp are non-executive Directors. Together the
Directors have a broad range of experience, expertise,
skills, qualifications and contacts relevant to the business
of the Company.
Andrew Kemp is not considered to be an independent
Director and consequently its composition does not
comply with recommendation 2.1 of the ASX Corporate
Governance Guidelines.
The Board has adopted the following measures to ensure
that independent judgment is achieved and maintained
in respect of its decision-making processes:
■■
Directors are entitled to seek
independent
professional advice at the company’s expense,
subject to the approval of the Chairman;
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Principle 3 – Promote ethical and responsible
decision making
The Board encourages the highest standards of ethical
conduct by all Directors and employees of the Group.
The Board has adopted a Code of Ethics that sets
out the principles and standards with which all Group
officers and employees are expected to comply in the
performance of their respective functions. Officers and
employees are expected to:
■■
■■
■■
■■
■■
Comply with the law;
Act honestly and with integrity;
Reduce the opportunity for situations to arise which
result in divided loyalties or conflicts of interest;
Use PTB Group’s assets responsibly and in the
best interests of its shareholders; and
Be responsible and accountable for their actions.
Senior management immediately investigates possible
failures to comply with the principles of ethical and
responsible conduct, employing the use of third party
expertise where necessary. The appropriate level of
disciplinary action is applied where departures from
these principles are confirmed.
(and
their
Guidelines for dealing in securities: The Company has
developed specific written guidelines that prohibit
respective
Directors and executives
associates) from acquiring, selling or otherwise trading
in the Company’s shares if they possess material price-
sensitive information which is not in the public domain.
Pursuant to these guidelines, no person may deal in
securities while they are in possession of price-sensitive
information. The Company’s policy is that trading in PTB
Group’s securities is permitted, as set out below:
■■
■■
■■
■■
Selling of Shares: During the four week period
after ASX announcement of half-yearly and
yearly profits and Annual General Meeting;
Buying: Employees are able to purchase shares
throughout the year except for six week periods
running up to ASX announcement of half-yearly
and yearly profits. Staff will be notified of these
timeframes;
Price Sensitive information: Both the above are
subject to the person not being in possession of
price sensitive information and the buying not
being for short term or speculative gain; and
In no circumstances should
Trading Limits:
any person sell more than $50,000 worth of
Corporate Governance Statement
for the year ended 30 June 2008 (Continued)
securities unless prior to entering into discussions
they have written approval from the Chairman
as to the form and timing of the sale and the
management of its public disclosure.
for monitoring the Company’s activities in light of its
continuous disclosure policy and where necessary
discussing disclosure obligations with the Board.
Principle 4 – Safeguard integrity in financial
reporting
PTB Group’s Managing Director and Chief Financial
Officer report in writing to the ARM Committee that
the consolidated financial statements of PTB Group and
its controlled entities for each half and full financial year
present a true and fair view, in all material respects, of
the Group’s financial condition and operational results
and are in accordance with accounting standards.
The ARM Committee operates throughout the year with
the primary objective to assist the Board of Directors
in fulfilling the Board’s responsibilities relating to the
accounting, reporting and financial risk management
practices of the Company. In fulfilling this objective, the
ARM Committee meets at least two times each year. The
main duties and responsibilities of the committee include:
■■
■■
■■
■■
■■
■■
Review and consideration of statutory compliance
matters;
Review of the annual and half-yearly financial
reports;
Recommend to the Board nominations for
appointment as external auditors;
Review the scope of the audit, the level of
audit fees and the performance of the external
auditors;
Liaison with external auditors, review of audit
planning and consideration of audit results; and
Evaluation of the adequacy and effectiveness
of the Company’s administrative, operating and
accounting policies and controls through active
communication with operating management and
the external auditors.
The ARM Committee (with its own charter) does not
comply with two of the Guidelines in that it has an
equal number of independent and non-independent
Directors and that the Chairman is also Chairman of the
Board. However, the Board believes these matters are
acceptable given the size of the Company, the nature of
its business and the financial literacy of the members.
is
responsible
The Company Secretary
for all
communications with the ASX. All communications with
external stakeholders in respect of sensitive company
information are subject to the relevant safeguarding and
confidentiality procedures. These communications are
undertaken in light of continuous disclosure requirements
of the ASX and the broad principles of ensuring the
market is fully informed of price sensitive information.
Principle 6 – Respect the rights of shareholders
The Board recognises the importance of this principle
and strives to communicate with shareholders both
regularly and clearly - both by electronic means and using
more traditional communication methods. Shareholders
are encouraged to attend and participate at general
meetings. The Company’s auditors will always attend
the annual general meeting and will be available to
answer shareholders’ questions. The Company’s policies
comply with the Guidelines in relation to the rights of
shareholders.
Principle 7 - Recognise and manage risks
The Board is responsible for oversight of the Group’s
risk management and control framework. The ARM
Committee assists the Board in fulfilling its responsibilities
in this regard by reviewing the financial and reporting
aspects of the Group’s risk management and control
framework. The Group is currently implementing a policy
framework designed to ensure that the Group’s risks are
identified and that controls are adequate, in place and
functioning effectively. This framework will incorporate
the maintenance of comprehensive policies, procedures
and guidelines that encompass the Group’s activities. It
addresses areas such as, occupational health and safety,
environmental management, trade practices, IT disaster
recovery and business continuity planning. Responsibility
for control and risk management is delegated to the
appropriate level of management within the Group with
the Managing Director and Chief Financial Officer having
ultimate responsibility to the Board for the Group’s risk
management and internal control activities.
Principle 5 – Make timely and balanced disclosure
Arrangements put in place by the Board to monitor risk
management include:
Documented procedures are in place to identify matters
that are likely to have a material effect on the price of
the Company’s securities and to ensure those matters
are notified to the ASX in accordance with the Company’s
Listing Rule disclosure requirements. The Managing
Director and Chief Financial Officer are responsible
■■
■■
Regular monthly reporting to the Board in respect
of operations and the financial position of the
Group;
Reports by the Chairman of the ARM Committee
and circulation to the Board of the minutes of
each meeting held by the ARM Committee;
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Corporate Governance Statement
for the year ended 30 June 2008 (Continued)
■■
■■
Presentations made to the Board throughout
the year by appropriate members of the Group’s
management team (and/or independent advisers,
where necessary) on the nature of particular risks
and details of the measures which are either in
place or can be adopted to manage or mitigate
the risk; and
Any Director may request that operational and
project audits be undertaken by management.
Prior to signing the Group’s annual financial statements,
PTB Group’s Managing Director and Chief Financial
Officer report in writing to the ARM Committee that:
■■
■■
The statement given in accordance with Council’s
best practice recommendation 4.1 is founded on
a sound system of risk management and internal
compliance and control which implements the
policies adopted by the Board; and
The company’s risk management and internal
compliance and control framework is operating
efficiently and effectively in all material respects.
Principle 8 - Remunerate fairly and responsibly
The Company’s polices relating to Directors’ and Senior
Executives’ remuneration are set out in the annual
report. Options were granted to employees under an
Employee Share Option Scheme. Options have also been
issued to executive Directors of the Company and to a
corporate adviser.
It is the Company’s objective to provide maximum
stakeholder benefit from the retention of a high quality
Board and executive team by remunerating Directors and
key executives fairly and appropriately with reference
to relevant employment market conditions. To assist
in achieving this objective, the nature and amount of
some components of executive Directors’ and officers’
emoluments are linked to the Company’s financial and
operational performance. The expected outcomes of
the remuneration structure are:
■■
■■
■■
Retention and motivation of key executives;
Attraction of quality management to the
Company; and
Performance incentives which allow executives to
share the rewards of the success of the Group.
In relation to the payment of bonuses and options the
Board, having regard to the overall performance of PTB
Group and the performance of the employee during the
period, exercises discretion.
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Income Statements
for the year ended 30 June 2008
Revenue
Other income
Cost of goods sold
Employee benefits expense
Depreciation and amortisation
Airport charges and taxes
Repairs and maintenance
Fuel costs
Bad and doubtful debts
Finance costs
Other expenses
Total expenses
Profit/(Loss) before income tax
expense
Income tax (expense)/ benefit
Profit/(Loss) for the year
Basic earnings per share
Diluted earnings per share
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
46,608
2,019
40,559
15,066
18,954
214
-
110
Note
2
3
(24,961)
(21,721)
(11,029)
(13,649)
(5,457)
(2,224)
(2,343)
(626)
(1,483)
(1,135)
(2,836)
(3,400)
(4,060)
(1,772)
(1,499)
(303)
(783)
(158)
(1,987)
(3,305)
(2,337)
(1,678)
(223)
(147)
-
(21)
-
(843)
(396)
-
(27)
-
(149)
(391)
(1,476)
(1,334)
(44,465)
(35,588)
(16,325)
(17,375)
4,162
5,185
(1,259)
(1,031)
(1,596)
3,131
3,589
324
(935)
1,689
(566)
1,123
Cents
Cents
11.86
11.85
16.10
15.60
4
5
23
23
The income statements should be read in conjunction with the accompanying notes.
23
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U
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L
R
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P
O
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2
0
0
8
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U
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M
I
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D
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C
O
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T
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O
L
L
E
D
E
N
T
I
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I
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S
24
Balance Sheets
for the year ended 30 June 2008
Consolidated
Parent Entity
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Current tax assets
Other current assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Other non-current assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Other current liabilities
Total Current Liabilities
Non-Current Liabilities
Borrowings
Deferred tax liabilities
Provisions
Other non-current liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Retained profits
Total Equity
22
6
7
8
9
10
6
11
12
13
14
10
15
16
9
18
19
16
17
18
19
20
21
1,200
17,614
27,691
1,770
517
545
290
9,763
26,835
-
-
280
750
4,085
5,550
-
443
157
91
7,210
5,321
-
-
136
49,337
37,168
10,985
12,758
3,914
-
4,254
-
24,329
25,764
2,026
4,334
116
34,719
84,056
4,626
18,404
1,423
826
1,072
717
4,334
-
35,069
72,237
4,956
8,923
635
644
389
9,890
14,019
1,441
715
-
-
11,597
14,019
1,606
366
-
-
26,065
37,050
27,588
40,346
1,450
2,809
-
355
346
2,142
3,509
215
256
167
26,351
15,547
4,960
6,289
14,397
2,685
201
197
17,480
43,831
40,225
27,963
1,725
10,537
40,225
18,928
1,903
334
-
21,165
36,712
35,525
-
3
36
40
79
5,039
32,011
1,052
-
144
-
1,196
7,485
32,861
27,956
28,041
28,034
163
7,406
241
3,729
163
4,664
35,525
32,011
32,861
The balance sheets should be read in conjunction with the accompanying notes.
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
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P
U
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G
B
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P
I
Statements of Changes in Equity
for the year ended 30 June 2008
Contributed Equity
Other
Equity
Securities
$’000
Issued
Capital
$’000
Reserves
Retained
Total
Share
Based
Payments
$’000
Hedging
Reserve
$’000
Profits
$’000
$’000
Consolidated
At 1 July 2006
Profit for the year
Employee share options
Dividends paid
Issues of share capital (net of transaction
costs)
At 30 June 2007
Profit for the year
Employee share options
Dividends paid
Issues of share capital (net of transaction
costs)
Recognition of effective cashflow hedge
3,988
183
100
-
-
257
23,528
27,773
-
-
-
-
-
63
-
-
183
163
-
-
-
7
-
-
-
-
-
-
-
78
-
-
-
At 30 June 2008
27,780
183
241
Parent Entity
At 1 July 2006
Profit for the year
Employee share options
Dividends paid
Issues of share capital (net of transaction
costs)
At 30 June 2007
Loss for the year
Employee share options
Dividends paid
Issues of share capital (net of transaction
costs)
3,988
261
100
-
-
257
23,528
27,773
-
-
-
7
-
-
-
-
-
63
-
-
261
163
-
-
-
-
-
78
-
-
At 30 June 2008
27,780
261
241
-
-
-
-
-
-
-
-
-
-
1,484
1,484
-
-
-
-
-
-
-
-
-
-
-
5,619
9,890
3,589
3,589
-
63
(1,802)
(1,545)
-
23,528
7,406
35,525
3,131
3,131
-
-
-
-
78
-
7
1,484
10,537
40,225
5,343
9,692
1,123
1,123
-
63
(1,802)
(1,545)
-
23,528
4,664
32,861
(935)
(935)
-
-
-
78
-
7
3,729
32,011
The statements of changes in equity should be read in conjunction with the accompanying notes.
25
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8
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26
Cash Flow Statements
for the year ended 30 June 2008
Consolidated
Parent Entity
Note
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Cash Flow From Operating Activities
Cash receipts in the course of operations
40,840
37,224
19,325
18,672
Cash payments in the course of
operations
Interest received
Finance costs
Income taxes paid
Net cash used in operating activities
22
(40,636)
(49,529)
(16,630)
(18,305)
596
(2,136)
(1,290)
(2,626)
574
(2,613)
(1,070)
(15,414)
286
(396)
(679)
1,906
491
(391)
(779)
(312)
Cash Flow From Investing Activities
Purchase of subsidiaries (net of cash
acquired)
Payments for property, plant and
equipment
Proceeds on disposal of property, plant
and equipment
Net proceeds/(repayment) of loans to
subsidiaries
Net cash provided by/(used in) investing
activities
Cash Flow From Financing Activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Proceeds from issue of shares
Share issue transaction costs
Proceeds from issue of notes
Dividends paid
-
(2,959)
-
(2,693)
(3,684)
(5,916)
(60)
(743)
2,309
-
819
-
3
498
555
(9,336)
(1,375)
(8,056)
498
(12,274)
14,147
(8,372)
(161)
7
-
-
-
16,442
(5,595)
(231)
12,953
(683)
-
(1,545)
21,341
378
(1,771)
-
7
-
-
-
(1,386)
4,394
(2,883)
(8)
12,953
(683)
-
(1,545)
12,228
Net cash provided by financing activities
5,621
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at the
beginning of the year
Cash and cash equivalents at the end of
the year
22
1,620
(2,129)
1,018
(358)
(953)
1,176
(268)
90
667
(953)
750
(268)
The cash flow statements should be read in conjunction with the accompanying notes.
8
0
0
2
T
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U
N
N
A
S
E
I
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N
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L
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N
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Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies
The principal accounting policies adopted
in the
preparation of the financial report are set out below.
These policies have been consistently applied to all
the years presented, unless otherwise stated. The
financial report includes separate financial statements
for PTB Group Limited as an individual entity and the
consolidated entity consisting of PTB Group Limited and
its subsidiaries.
(a)
Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards and
the Corporations Act 2001, and was authorised for
issue on 30 September 2008.
Compliance with IFRSs
to
include Australian
Australian Accounting Standards
equivalents
International Financial Reporting
Standards (AIFRS). Compliance with AIFRS ensures
that the consolidated financial statements and notes of
PTB Group Limited comply with International Financial
Reporting Standards (IFRSs). The parent entity financial
statements and notes also comply with IFRSs.
Historical cost convention
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation
of available-for-sale financial assets, financial assets and
liabilities (including derivative instruments) at fair value
through the income statement, and certain classes of
property, plant and equipment.
Critical accounting estimates
The preparation of financial statements in conformity
with AIFRS requires the use of certain critical accounting
estimates. It also requires management to exercise
its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements
are disclosed in note 1(ad).
(b) Principles of consolidation
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of PTB Group
Limited (“company” or “parent entity”) as at 30 June
2008 and the results of all subsidiaries for the year then
ended. PTB Group Limited and its subsidiaries together
are referred to in this financial report as the Group or the
consolidated entity. For details of the subsidiaries refer
note 31.
Subsidiaries are all those entities over which the Group
has the power to govern the financial and operating
policies, generally accompanying a shareholding of
more than one-half of the voting rights. The existence
and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing
whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
The purchase method of accounting is used to account
for the acquisition of subsidiaries by the Group (refer
note 1(i)).
Intercompany transactions, balances and unrealised
gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Investments in subsidiaries are accounted for at cost
in the individual financial statements of PTB Group
Limited.
(c)
Segment reporting
A business segment is a group of assets and operations
engaged in providing products or services that are
subject to risks and returns that are different to those
of other business segments. A geographical segment
is engaged in providing products or services within a
particular economic environment subject to risks and
returns that are different from those of segments
operating in other economic environments.
d)
Foreign currency translation
(i)
Functional and presentation currency
Items included in the financial statements of each of
the Group’s entities are measured using the currency of
the primary economic environment in which the entity
operates (‘the functional currency’). The consolidated
financial statements are presented in Australian dollars,
which is PTB Group Limited’s functional and presentation
currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing
at the dates of the transactions.
27
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28
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies (Continued)
(e) Revenue recognition
d)
Foreign currency translation (Continued)
Foreign exchange gains and
losses resulting from
the settlement of such transactions and from the
translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies
are recognised in the income statement, except when
deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges, or are attributable to
part of the net investment in a foreign operation.
Translation differences on non-monetary financial assets
and liabilities are reported as part of the fair value gain or
loss. Translation differences on non-monetary financial
assets and liabilities such as equities held at fair value
through the income statement are recognised in the
income statement as part of the fair value gain or loss.
Translation differences on non-monetary financial assets
such as equities classified as available-for-sale financial
assets are included in the fair value reserve in equity.
(iii) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary
economy) that have a functional currency different
from the presentation currency are translated into the
presentation currency as follows:
■■
■■
Assets and liabilities for each balance sheet
presented are translated at the closing rate at the
date of that balance sheet;
Income and expenses for each income statement
are translated at average exchange rates (unless
this is not a reasonable approximation of the
cumulative effect of the rates prevailing on
the transaction dates, in which case income
and expenses are translated at the dates of the
transactions); and
■■
All resulting exchange differences are recognised
as a separate component of equity.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities,
and of borrowings and other financial instruments
designated as hedges of such investments, are taken to
shareholders’ equity. When a foreign operation is sold
or any borrowings forming part of the net investment
are repaid, a proportionate share of such exchange
differences are recognised in the income statement, as
part of the gain or loss on sale where applicable.
8
0
0
2
T
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L
A
U
N
N
A
S
E
I
T
I
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N
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D
E
L
L
O
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T
N
O
C
D
N
A
D
E
T
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Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are
net of returns, trade allowances, rebates, and amounts
collected on behalf of third parties.
The Group recognises revenue when the amount of
revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and
specific criteria have been met for each of the Group’s
activities as described below. The amount of revenue
is not considered to be reliably measurable until all
contingencies relating to the sale have been resolved.
Revenue is recognised for the major business activities
as follows:
■■
■■
■■
■■
■■
Revenue from the sale of goods is recognised
when the significant risks and rewards of
ownership of the goods have passed to the buyer
and can be measured reliably. Risks and rewards
are considered passed to the buyer at time of
delivery to customers;
Revenue from repairs is recognised at the time
the service is performed;
Revenue from sale of goods and provision
of services under maintenance contracts
is
recognised in accordance with the stage of
completion method unless the outcome of the
contract cannot be reliably estimated. When
the outcome of the contract cannot be reliably
estimated, contract costs are recognised as an
expense as incurred, and where it is probable that
costs will be recovered, revenue is recognised to
the extent of costs incurred;
is
Interest on extended credit receivables (under
hire purchase agreements)
recognised
progressively by the Group over the hire purchase
term to achieve a constant periodic rate of return
on the carrying amount of the receivable (being
the Group’s net investment in the hire purchase
arrangement);
is
income
Rental
recognised on a basis
representative of the time pattern in which the
benefit of use derived from the asset is diminished.
For engines rental, income is recognised based on
an hourly rate and hours of usage. For aircraft
rental, income is recognised on a straight-line
basis over the lease term; and
■■
Airline revenue that mainly arises from passenger
ticket sales is recognised when uplift is performed.
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies (Continued)
(f) Unearned revenue
Unearned revenue includes amounts received in advance
from customers. Such amounts are recorded as revenue
in the income statement when the above revenue
recognition criteria are met.
(g)
Income tax
The income tax expense or revenue for the period is the
tax payable on the current period’s taxable income based
on the national income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax
bases of assets and liabilities and their carrying amounts
in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are
settled, based on those tax rates which are enacted
or substantively enacted for each jurisdiction. The
relevant tax rates are applied to the cumulative amounts
of deductible and taxable temporary differences to
measure the deferred tax asset or liability. An exception
is made for certain temporary differences arising from
the initial recognition of an asset or a liability. No deferred
tax asset or liability is recognised in relation to these
temporary differences 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 or loss.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and
tax bases of investments in controlled entities 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.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right
to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to
amounts recognised directly in equity are also recognised
directly in equity.
Tax consolidation legislation
PTB Group Limited and its wholly-owned Australian
implemented the tax
controlled entities have not
consolidation legislation. Accordingly, the income tax
expense, tax payable and deferred tax assets and liabilities
of each entity are calculated on a standalone basis and
are recognised in the entity to which they relate.
(h)
Leased assets
Leases are classified as finance leases whenever the
terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are
classified as operating leases.
As lessor
Amounts due from lessees under finance leases are
recorded as receivables. Finance lease receivables are
initially recognised at amounts equal to the net investment
in the lease. Finance lease payments receivable are
allocated between interest revenue and reduction of
the lease receivable over the term of the lease in order
to reflect a constant periodic rate of return on the net
investment outstanding in respect of the lease.
For operating leases, the leased asset (rental engines
and aircraft) is classified as a non-current asset and
depreciated in accordance with the depreciation policy
set out in note 1(q). Rental income from operating leases
is recognised as set out in note 1(e).
As lessee
Assets held under finance leases are initially recognised
at their fair value or, if lower, at amounts equal to present
value of the minimum lease payments, each determined
at the inception of the lease. The corresponding liability
to the lessor is included in the balance sheet as a finance
lease obligation, net of finance charges.
Lease payments are apportioned between finance
charges and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged
directly against
income, unless they are directly
attributable to qualifying assets, in which case they are
capitalised in accordance with the consolidated entity’s
general policy on borrowing costs. Refer to note 1(u).
29
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30
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies (Continued)
(h)
Leased assets (Continued)
Finance leased assets are amortised on a diminishing
value basis over the estimated useful life of the asset.
Refer note 1(q).
Operating lease payments are recognised as an expense
on a straight-line basis over the lease term, except
where another systematic basis is more representative
of the time pattern in which economic benefits from the
leased asset are consumed.
(i)
Business combinations
The purchase method of accounting is used to account
for all business combinations regardless of whether
equity instruments or other assets are acquired. Cost is
measured as the fair value of the assets given, equity
instruments issued or liabilities incurred or assumed at
the date of exchange plus costs directly attributable to
the acquisition. Where equity instruments are issued
in an acquisition, the fair value of the instruments is
their published market price as at the date of exchange
unless, in rare circumstances, it can be demonstrated
that the published price at the date of exchange is an
unreliable indicator of fair value and that other evidence
and valuation methods provide a more reliable measure
of fair value. Transaction costs arising on the issue of
equity instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent
liabilities assumed
in a business combination are
measured initially at their fair values at the acquisition
date, irrespective of the extent of any minority interest.
The excess of the cost of acquisition over the fair value of
the Group’s share of the identifiable net assets acquired
is recorded as goodwill. If the cost of acquisition is less
than the Group’s share of the fair value of the identifiable
net assets of the subsidiary acquired, the difference
is recognised directly in the income statement, but
only after a reassessment of the identification and
measurement of the net assets acquired.
Where settlement of any part of cash consideration
is deferred, the amounts payable in the future are
discounted to their present value as at the date
of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent
financier under comparable terms and conditions.
(j)
Impairment of assets
Goodwill and intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that they might
be impaired. Other assets are reviewed for impairment
whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an
asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately
identifiable cash inflows (cash generating units).
(k) Cash and cash equivalents
For cash flow statement presentation purposes, cash
and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-
term, highly liquid investments with original maturities
of three months or less that are readily convertible to
known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current
liabilities on the balance sheet.
(l)
Trade and other receivables
Trade and other receivables are recognised initially at
fair value and subsequently measured at amortised cost,
less provision for impairment. Trade receivables are due
for settlement in 30 to 90 days.
Collectibility of receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectible are
written off by reducing the carrying amount directly.
A provision for impairment is established when there
is objective evidence that the Group will not be able
to collect all amounts due according to the original
terms of receivables. The amount of the provision is the
difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted
at the original effective interest rate. The amount of
the provision is recognised in the income statement.
Cashflows relating to short-term receivables are not
discounted if the effect of discounting is immaterial.
(m)
Inventories
Raw materials, work in progress, and finished goods
Inventories are stated at the lower of cost and net
realisable value. Costs are assigned to individual items
of stock by specific identification. Net realisable value
is the estimated selling price in the ordinary course of
business less the estimated costs of completion and the
estimated costs necessary to make the sale.
8
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Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies (Continued)
(m)
Inventories (Continued)
Land held for resale
Land held for sale is stated at the lower of cost and net
realisable value. Cost is assigned by specific identification
and includes the cost of acquisition and development costs.
(n) Other financial assets
The Group classifies its investments in the following
categories: financial assets at fair value through profit or
loss, loans and receivables, held-to-maturity investments,
and available-for-sale financial assets. The classification
depends on the purpose for which the investments were
acquired. Management determines the classification of
its investments at initial recognition and re-evaluates this
designation at each reporting date.
The Group has no financial assets at fair value through
profit or loss, held-to-maturity investments or available-
for-sale financial assets.
Loans and receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted
in an active market. They arise when the Group provides
money, goods or services directly to a debtor with no
intention of selling the receivable. They are included in
current assets, except for those with maturities greater than
12 months after the balance sheet date which are classified
as non-current assets. Loans and receivables are included in
trade and other receivables in the balance sheet.
Loans and receivables are initially recognised at fair
value plus transaction costs and subsequently carried at
amortised cost using the effective interest method.
The Group assesses at each balance date whether there
is objective evidence that a financial asset or group of
financial assets is impaired.
Fair value estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or
for disclosure purposes.
The fair value of financial instruments traded in active
markets (such as publicly traded derivatives, and trading
and available-for-sale securities) is based on quoted
market prices at the balance sheet date. The quoted
market price used for financial assets held by the Group
is the current bid price; the appropriate quoted market
price for financial liabilities is the current ask price.
The fair value of financial instruments that are not
traded in an active market is determined using valuation
techniques. The Group uses a variety of methods and
makes assumptions that are based on market conditions
existing at each balance date. Quoted market prices or
dealer quotes for similar instruments are used for long-
term debt instruments held. Other techniques, such as
estimated discounted cash flows, are used to determine
fair value for the remaining financial instruments.
The nominal value less estimated credit adjustments of
trade receivables and payables are assumed to approximate
their fair values due to their short-term nature. The
fair value of financial liabilities for disclosure purposes
is estimated by discounting the future contractual cash
flows at the current market interest rate that is available
to the Group for similar financial instruments.
(o)
Leasehold improvements
The cost of improvements to or on leasehold properties
is amortised over the unexpired period of the lease or
the estimated useful life of the improvement to the
Group, whichever is the shorter. Refer note 1(q).
(p) Derivatives and hedging activities
Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each
reporting date. The accounting for subsequent changes
in fair value depends on whether the derivative is
designated as a hedging instrument, and if so, the nature
of the item being hedged. The Group designates certain
derivatives as either:
■■
■■
■■
Hedges of the fair value of recognised assets
and liabilities or a firm commitment (fair value
hedges);
Hedges of the cashflows of recognised assets and
liabilities and highly probable forecast transactions
(cashflow hedges); or
Hedges of a net investment in a foreign operation
(net investment hedges).
At the
inception of the hedging transaction the
Group documents the relationship between hedging
instruments and hedged items, as well as its risk
management objective and strategy for undertaking
various hedge transactions. The Group also documents
its assessment, both at hedge inception and on an
ongoing basis, of whether the derivatives that are used
in hedging transactions have been and will continue to
be highly effective in offsetting changes in fair values or
cashflows of hedged items.
31
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32
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies (Continued)
(p)
Derivatives and hedging activities
(Continued)
The fair values of various derivative financial instruments
used for hedging purposes are disclosed in note 8.
Movements in the hedging reserve in shareholders
equity are shown in note 21. The full fair value of a
hedging derivative is classified as a non-current asset or
liability when the remaining maturity of the hedged item
is more than 12 months. If the remaining maturity of the
hedged item is less than 12 months it is classified as a
current asset or liability. Trading derivatives are classified
as a current asset or liability.
Fair value hedge
Changes in the fair value of derivatives that are
designated and qualify as fair value hedges are recorded
in the income statement, together with any changes in
the fair value of the hedged asset or liability that are
attributable to the hedged risk. The gain or loss relating
to the effective portion of interest rate swaps hedging
fixed rate borrowings is recognised in the income
statement within ‘finance costs’, together with changes
in the fair value of the hedged fixed rate borrowings
attributable to interest rate risk. The gain or loss relating
to the ineffective portion is recognised in the income
statement within ‘other income’ or ‘other expenses’.
If the hedge no longer meets the criteria for hedge
accounting, the adjustment to the carrying amount of
a hedged item for which the effective interest method
is used is amortised to the income statement over
the period to maturity using a recalculated effective
interest rate.
Cashflow hedge
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cashflow
hedges is recognised in equity in the hedging reserve.
The gain or loss relating to the ineffective portion is
recognised immediately in the income statement within
‘other income’ or ‘other expense’.
Amounts accumulated in equity are recycled in the
income statement in the periods when the hedged item
affects profit or loss. The gain or loss relating to the
effective portion of interest rate swaps hedging variable
rate borrowings is recognised in the income statement
within ‘finance costs’. The gain or loss relating to the
effective portion of forward foreign exchange contracts
hedging export sales is recognised in the income
statement within ‘sales’. However when the forecast
transaction that is hedged results in the recognition of
a non-financial asset the gains and losses previously
deferred in equity are transferred from equity and
included in the initial measurement of the cost of the
asset. The deferred amounts are ultimately recognised in
the income statement as costs of goods sold in the case
of inventory, or as depreciation in the case of property,
plant and equipment.
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the criteria
for hedge accounting, and cumulative gain or loss existing
in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised
in the income statement. When a forecast transaction is
no longer expected to occur, the cumulative gain or loss
that was reported in equity is immediately transferred to
the income statement.
Net investment hedges
Hedges of net investments in foreign operations are
accounted for similarly to cashflow hedges. Any gain or
loss on the hedging instrument relating to the effective
portion of the hedges is recognised in equity. The gain
or loss relating to the ineffective portion is recognised
immediately in the income statement, within ‘other
income’ or ‘other expense’. Gains or losses accumulated
in equity are included in the income statement when the
foreign operation is partially disposed of or sold.
Derivatives that do not qualify for hedge
accounting
Certain derivative instruments do not qualify for hedge
accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting
are recognised immediately in the income statement and
are included in ‘other income’ or ‘other expenses’.
(q) Property, plant and equipment
Property, plant and equipment is stated at historical cost
less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the
items. Cost may also include transfers from equity of any
gains/losses on qualifying cashflow hedges of foreign
currency purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs
and maintenance are charged to the income statement
during the financial period in which they are incurred.
8
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Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies (Continued)
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each balance sheet date.
(q) Property, plant and equipment (Continued)
Increases in the carrying amounts arising on revaluation
of land and buildings are credited, net of tax, to the
revaluation reserve in shareholders equity. To the
extent that the increase reverses a decrease previously
recognised in the income statement, the increase is first
recognised in the income statement. Decreases that
reverse previous increases of the same asset are first
charged against revaluation reserves directly in equity
to the extent of the remaining reserve attributable
to the assets, all other decreases are charged to the
income statement.
Depreciation is generally calculated on a straight-line
(SL) or diminishing value (DV) basis so as to allocate the
cost, net of residual values, of each item of property,
plant and equipment (excluding land and rental engines)
over its estimated useful life to the Group. For rental
engines, depreciation is based on the estimated operating
hours. The line item in the income statement in which
the depreciation and amortisation of property, plant and
equipment is included is ‘depreciation and amortisation
expense’.
The estimated useful lives are as follows:
Life
Basis
Class
Buildings
Leasehold
improvements
Leasehold
improvements –
leased
40 years
5 years
6 years
SL
SL
SL
DV
Plant and equipment 3-10 years
Plant and equipment
– leased
Rental engines
6-8 years
DV
5,500-
7,000 hours
Airframes
15-20 years
Actual hours as
a proportion of
estimated total
operating hours
SL
Certain items of plant and equipment, primarily rental
engines, are required to be overhauled on a regular basis.
This is managed as part of an ongoing major cyclical
maintenance program. The costs of this maintenance
are charged as expenses as incurred, except where they
relate to the replacement of a component of an asset, in
which case the costs are capitalised and depreciated in
accordance with the above. The carrying amount of the
replaced part is derecognised. Other routine operating
maintenance, repair and minor renewal costs are also
charged as expenses as incurred.
An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount (note
1 (j)).
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These are
included in the income statement. When re-valued
assets are sold, it is Group policy to transfer the amounts
included in revaluation reserves in respect of those
assets to retained earnings.
(r)
Intangibles
Goodwill
Goodwill represents the excess of the cost of an
acquisition over the fair value of the Group’s share of
the net identifiable assets of the acquired subsidiary
at the date of the acquisition. Goodwill on acquisitions
of subsidiaries is included in intangible assets. Goodwill
is not amortised. Instead it is tested for impairment
annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and
is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to the cash generating units for the
purpose of impairment testing.
Computer software
Costs incurred in acquiring software and licenses that
will contribute to future period financial benefits through
revenue generation and/or cost reduction are capitalised
to software and systems. Costs capitalised include
external direct costs of materials and service, direct
payroll and payroll related costs of employee’s time spent
on the project. Computer software has a finite life and is
carried at cost less any accumulated amortisation and
any impairment losses. Computer software is amortised
on a straight-line basis over its estimated useful life of
7 years. The line item in the income statement in which
the amortisation of computer software is included is
‘depreciation and amortisation’ expense.
(s)
Trade and other payables
Trade and other payables are recognised initially at fair
value and subsequently measured at amortised cost.
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial
year which are unpaid. The amounts are unsecured and
are usually paid within 30 days of recognition.
33
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34
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies (Continued)
(t)
Borrowings
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 income statement over
the period of the borrowings using the effective
interest method. Fees paid on the establishment of loan
facilities, which are not an incremental cost relating to
the actual draw-down of the facility, are recognised as
prepayments and amortised on a straight-line basis over
the term of the facility.
The fair value of the liability portion of a note (with
an attached option to convert into ordinary shares) is
determined using a market interest rate for an equivalent
non-convertible note. This amount is recorded as a
liability on an amortised cost basis until extinguished on
conversion or maturity of the note. The remainder of the
proceeds is allocated to the conversion option. This is
recognised and included in shareholders’ equity, net of
income tax effects.
Borrowings are removed from the balance sheet when
the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying
amount of a financial liability that has been extinguished
or transferred to another party and the consideration
paid, including any non-cash assets transferred or
liabilities assumed, is recognised in ‘other income’ or
‘other expense’.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement
of the liability for at least 12 months after the balance
sheet date.
(u) Borrowing costs
Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the period of
time that is required to complete and prepare the asset
for its intended use or sale. Other borrowing costs are
expensed. The amount of borrowing costs capitalised
is determined as the actual borrowing costs incurred
as funds are borrowed specifically for the purpose of
obtaining a qualifying asset.
(v)
Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and accumulating sick leave
expected to be settled within 12 months of the reporting
date are recognised in the employee benefits provision in
respect of employees’ services up to the reporting date
and are measured at the amounts expected to be paid
when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in the
employee benefits provision and measured as the
present value of expected future payments to be made
in respect of services provided by employees up to
the reporting date. Consideration is given to expected
future wage and salary levels, experience of employee
departures and periods of service. Expected future
payments are discounted using market yields at the
reporting date on national government bonds with
terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Superannuation
The Group makes contributions to defined contribution
superannuation funds. Contributions are recognised as
an expense as they become payable.
Share-based payments
Share-based compensation benefits are provided to
employees via the PTB Group Limited Employee Share
Option Scheme as detailed in note 25.
The fair value of options granted under the PTB Group
Limited Employee Share Option Scheme is recognised
as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant
date and recognised over the period during which the
employees become unconditionally entitled to the
options.
The fair value at grant date is determined using a
Binomial option pricing model that takes into account
the exercise price, the term of the option, the share
price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the
risk-free interest rate for the term of the option.
The fair value of the options granted excludes the impact
of any non-market vesting conditions (for example,
profitability and sales growth targets and performance
and service criteria). Non-market vesting conditions are
included in assumptions about the number of options
that are expected to become exercisable. At each balance
sheet date, the entity revises its estimate of the number
of options that are expected to become exercisable. The
employee benefit expense recognised each period takes
into account the most recent estimate.
8
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Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies (Continued)
(v)
Employee benefits (Continued)
Profit sharing and bonus plans
The Group recognises a liability and an expense for
bonuses and profit sharing based on a formula that
takes into consideration the profit attributable to the
company’s shareholders after certain adjustments.
The Group recognises a provision where contractually
obliged or where there is a past practice that has created
a constructive obligation.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest and
other financing costs associated with dilutive potential
ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
(aa) Goods and services tax
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST), except:
(w) Provisions
Provisions for service warranties and make good
obligations are recognised when the Group has a present
legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will
be required to settle the obligation and the amount has
been reliably estimated.
Provisions are measured at the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the reporting date.
The discount rate used to determine the present value
reflects current market assessments of the time value of
money and the risks specific to the liability.
(x) Contributed equity
Ordinary shares are classified as equity.
■■
■■
Where the amount of GST incurred is not
recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an
asset or as part of an item of expense; or
For
receivables and payables which are
recognised inclusive of GST. The net amounts of
GST recoverable from, or payable to, the taxation
authority is included as part of receivables or
payables.
(ab) Rounding of amounts
The company is of a kind referred to in class order
98/100,
issued by the Australian Securities and
Investments Commission, relating to the “rounding
off” of amounts in the financial report. Amounts in the
financial report have been rounded off in accordance
with that class order to the nearest thousand dollars, or
in certain cases, the nearest dollar.
Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a deduction,
net of tax, from proceeds.
(ac) General
(y) Dividends
Provision is made for the amount of any dividend
declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of
the year but not distributed at balance date.
(z)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the company, excluding
any costs of servicing equity other than ordinary shares,
by the weighted average number of ordinary shares
outstanding during the year, adjusted for bonus elements
in ordinary shares issued during the year.
PTB Group Limited is a public company limited by shares,
incorporated and domiciled in Australia. Listed below are
the registered office and principal place of business, and
its principal administrative office:
Registered office and
principal place of business:
Principal Administrative
Office:
47-51 Pandanus Avenue,
Brisbane Airport
QLD 4007
Ph: +61 7 3637 7000
341 Lavarack Avenue,
Eagle Farm, Brisbane
QLD 4009
Ph: +61 7 3633 9666
The company changed its name on 1 December 2006 from
Pacific Turbine Brisbane Limited to PTB Group Limited.
35
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36
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
1.
Summary of Significant Accounting
Policies (Continued)
(ae)
New accounting standards and
interpretations
(ad)
Critical accounting estimates and
judgements
judgements
The Group evaluates estimates and
incorporated into the financial report based on historical
knowledge and best available current
information.
Estimates assume a reasonable expectation of future
events and are based on current trends and economic
data, obtained both externally and within the company.
Key estimates and judgements impacting the financial
statements are as follows:
Impairment
The Group tests annually whether goodwill has suffered
any impairment, in accordance with the accounting
policy stated in note 1(j). The recoverable amounts of
cash-generating units have been determined based on
value-in-use calculations. These calculations require the
use of assumptions. Refer to note 14 for details of these
assumptions and the potential impact of changes to the
assumptions.
Australian Accounting Standards that have recently been
issued or amended but are not yet effective and have
not been adopted for the annual reporting period ended
30 June 2008, are as follows:
Standard/
Interpretation
AASB 8 Operating
Segments and
consequential
amendments to other
accounting standards
resulting from its issue
AASB 123 Borrowing
Costs revised and
consequential
amendments to other
accounting standards
resulting from its issue
AASB 101 Presentation
of Financial Statements
and consequential
amendments to other
accounting standards
resulting from its issue
Interpretation 12 Service
Concession Arrangements
Interpretation 13
Customer Loyalty
Programs
Interpretation 14 Limit
on a defined benefit
asset, Minimum Funding
Requirements and their
Interaction
Application
date of
standard*
Application
date for
the Group*
1 January
2009
1 July
2009
1 January
2009
1 July
2009
1 January
2009
1 January
2008
1 July
2008
1 July
2009
1 July
2008
1 July
2008
1 January
2008
1 July
2008
* Application date is for annual reporting periods beginning
on or after the date shown in the above table.
The Directors anticipate that the adoption of these
Standards and Interpretations in future periods will
have no material impact on the financial statements
of the company or the Group. The application of AASB
101 (revised), AASB 8, AASB 123, may change the
disclosures presently made in relation to the company’s
and the Group’s assets, liabilities, segments, financial
instruments and the objectives, policies and processes
for managing capital. The circumstances addressed by
Interpretations 12, 13, and 14 do not have application
to the business of the company or the Group.
8
0
0
2
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E
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A
U
N
N
A
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E
I
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N
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L
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Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
2.
Revenue
Sales revenue
Sale of goods
Services
Airline passengers and freight
Rental of engines/aircraft
- Minimum lease payments
- Contingent rentals
Other revenue
Interest
-
Extended credit receivables (hire purchase
agreements)
- Other
Management fee - subsidiaries
Other
3. Other Income
Net foreign exchange gains
Net gain on disposal of property, plant and
equipment
4.
Expenses
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
30,795
4,027
7,238
1,717
1,956
45,733
551
44
-
280
46,608
1,803
216
2,019
32,170
405
4,164
1,445
1,580
39,764
352
222
-
221
40,559
-
214
214
9,840
4,096
-
393
129
14,458
276
10
167
155
15,066
-
-
-
17,452
405
-
161
103
18,121
339
152
228
114
18,954
-
110
110
Profit before income tax expense includes the following specific items:
Cost of sale of goods
Depreciation
- Buildings
- Plant and equipment
- Rental engines/aircraft
- Leasehold improvements
Amortisation
- Leased leasehold improvements
- Leased plant and equipment
- Software
Operating lease rentals – minimum lease payments
- Premises
- Equipment
Impairment losses (bad and doubtful debts)
- trade debtors
Net foreign exchange loss
Defined contribution superannuation expense
Finance costs
-
- Amount capitalised
Interests and finance charges paid/payable
24,961
21,721
11,029
13,649
47
142
1,943
41
-
44
7
478
55
1,135
-
638
3,515
(679)
2,836
35
92
1,579
25
15
22
4
325
1
158
85
533
2,674
(687)
1,987
-
66
118
39
-
-
-
82
5
843
137
174
396
-
396
-
48
54
25
15
1
4
58
1
149
46
234
391
-
391
37
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
38
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
5.
Income Tax Expense
(a) Income tax expense
Current tax
Deferred tax
Under/(over) provided in prior years
The under provision for the prior year related to tax payable
on the Belmont property which is liable at the date of
settlement, but included in the income tax year in which
the contract was executed.
(b) Numerical reconciliation of income tax expense
to prima facie tax
Profit before income tax expense
Tax at the Australian tax rate of 30% (2007: 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
- Share-based payments
- Deferred tax liability on assets not previously recognised
- Sundry items
Provisions transferred in
Losses not recognised in prior year
Under/(over) provided in prior years
Income tax expense
(c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting
period and not recognised in net profit or loss but directly
debited or credited to equity:
Net deferred tax – debited (credited) directly to equity
(notes 13 and 17)
Trade and Other Receivables
6.
Current
Trade receivables
Provision for impairment
Maintenance contract receivables
Extended credit receivables (hire purchase agreements)
Other receivables
Non-Current
Extended credit receivables (hire purchase agreements)
Amounts receivable from controlled entities
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
850
(527)
708
1,031
1,509
76
11
1,596
-
(346)
22
(324)
661
(120)
25
566
4,162
1,249
-
329
17
1,595
-
(388)
(176)
1,031
5,185
1,556
(1,259)
(378)
1,689
507
19
-
10
-
-
9
1,585
(369)
-
-
11
(2)
-
47
1,596
(324)
19
-
15
541
-
-
25
566
164
(205)
164
(205)
15,493
(304)
15,189
-
2,191
234
17,614
3,914
-
3,914
6,331
(139)
6,192
103
3,468
-
9,763
4,254
-
4,254
3,067
(133)
2,934
-
987
164
4,085
74
9,816
9,890
4,500
(102)
4,398
103
2,709
-
7,210
1,226
10,371
11,597
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
6.
Trade and Other Receivables (Continued)
Trade receivables
Trade receivables are generally unsecured and due 30 to 90 days from date of recognition.
Impaired trade receivables
As at 30 June 2008 current trade receivables of the Group with a nominal value of $326,821 (2007: $139,038)
were impaired. The amount of the provision was $303,492 (2007: $139,038). As at 30 June 2008 current trade
receivables of the parent entity with a nominal value of $153,625 (2007: $101,778) were impaired. The amount
of the provision was $132,878 (2007: $101,778). It was assessed that a portion of the receivables is expected to
be recovered. The Group has retention of title over the goods until the cash is received.
Current
30+
Days
60+
Days
90+
Days
Total
The ageing of trade receivables is as follows:
Group – 2008
Trade receivables
Impaired trade receivables
Unimpaired receivables
Group – 2007
Trade receivables
Impaired trade receivables
Unimpaired receivables
Parent entity – 2008
Trade receivables
Impaired trade receivables
Unimpaired receivables
Parent entity – 2007
Trade receivables
Impaired trade receivables
Unimpaired receivables
Past due but not impaired
12,751
(27)
12,724
735
(4)
731
959
-
959
1,048
(296)
15,493
(327)
752
15,166
2,430
1,008
1,211
(8)
-
-
2,422
1,008
1,211
1,682
(131)
1,551
6,331
(139)
6,192
1,176
-
1,176
1,214
-
1,214
588
-
588
683
-
683
714
-
714
589
(154)
435
3,067
(154)
2,913
1,044
-
1,044
1,559
(102)
1,457
4,500
(102)
4,398
As at 30 June 2008, unimpaired trade receivables greater than 30 days represent amounts past due but not
impaired. Based on the credit history of these other classes, it is expected that these amounts will be received when
due. The Group and parent entity hold retention of title over goods sold until cash is received.
Movements in the provision for impairment of receivables are as follows:
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
At 1 July
Provision for impairment recognised during the year
Receivables written off during the year as uncollectable
Unused amount reversed
At 30 June
(139)
(1,135)
970
-
(360)
(158)
379
-
(102)
(843)
812
-
(360)
(149)
407
-
(304)
(139)
(133)
(102)
39
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
40
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
6.
Trade and Other Receivables (Continued)
Maintenance contract receivables
Maintenance contract receivables are generally unsecured. The relevant agreements require fixed monthly payments
over the term of the contracts which are generally up to 5 years.
Extended credit receivables
Extended credit receivables (hire purchase agreements) represent amounts owed by customers for engines and
aircraft sold to those customers. The amounts owed by customers are secured under hire purchase agreements
between the Group and the customer. The amounts are repayable by the customers by monthly instalments of
principal and fixed interest over periods of 1 to 5 years with no unguaranteed residual value. Furthermore, the
agreements do not include any contingent rentals. The receivables are secured as the rights to the engine and/
or aircraft revert to the Group in event of default. The engines and aircraft are maintained and insured by the
customers and at the end of the term of the agreement are retained by the customers. None of the extended credit
receivables are impaired, or past due but not impaired.
Payments in relation to the hire purchase agreements
are receivable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Future finance revenue
Within one year
Later that one year but not later than five years
Later than five years
Representing receivables:
Current
Non-current
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2,692
4,400
241
4,070
4,924
-
1,036
77
-
2,986
1,282
-
7,333
8,994
1,113
4,268
(501)
(719)
(8)
(602)
(670)
-
(1,228)
(1,272)
6,105
7,722
2,191
3,914
6,105
3,468
4,254
7,722
(49)
(3)
-
(52)
1,061
987
74
1,061
(277)
(56)
-
(333)
3,935
2,709
1,226
3,935
Amounts receivable from controlled entities
Refer note 33 for information on amounts receivable from controlled entities.
Risk exposure
Information concerning the exposure to credit risk, foreign exchange and interest rate risk is set out in note 28.
7.
Inventories
Work in progress – at cost
Finished goods – at cost
Land held for resale – at cost
13,118
13,354
483
487
14,573
10,270
5,067
4,834
-
3,211
-
-
27,691
26,835
5,550
5,321
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
7.
Inventories (Continued)
Finished goods includes aircraft, engines and parts held for sale. Work in progress includes engines and aircraft
undergoing reconditioning in preparation for sale as well as incomplete repair jobs.
Borrowing costs of $679,000 (2006: $687,000) have been capitalised into the cost of inventory on qualifying
assets (recognised in work in progress). The capitalisation rate is the interest rate applicable to the specific facility
of 16% (2007: 16%)
Land held for resale was subject to a conditional sales contract entered into in June 2007 for $5.5 million. The
contract settled on 4 July 2008. The land was pledged as security for the Advance from developer (refer note 16).
8. Derivative Financial Instruments
Current
Forward foreign exchange contracts
– cashflow hedges
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
1,770
-
-
-
The Emerald operations include the contract for sale of two LFD ATP aircraft currently under contract, of which
one has been included in the current year as the contract is unconditional. In order to protect against exchange
rate movements, the Group has entered into forward exchange contracts (FEC’s) to sell US dollars. These contracts
are hedging highly probable contractual sales for the ensuing year and the FEC’s are timed to mature when the
settlements are scheduled to be made. The first contract is a firm commitment, and the second is highly probable.
The portion of the gain or loss on the hedging instruments that are deemed to be an effective hedge are recognised
directly in equity. When the cashflows occur, the Group adjusts the initial measurement of the component recognised
in the balance sheet by the related amount deferred in equity. Settlement is expected prior to 30 November 2008.
Tax balances – Current
9.
Current tax assets
Current tax liabilities
517
1,423
-
635
443
-
-
215
10. Other Assets
Current
Prepayments
Deposits
Non-Current
Other
468
77
545
116
200
80
280
91
66
157
103
33
136
-
-
-
11. Other Financial Assets
Shares in subsidiaries
-
-
14,019
14,019
These financial assets are carried at cost. For details of the subsidiaries refer note 31.
41
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
42
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
12. Property, Plant and Equipment
Consolidated
Land &
Buildings
Leasehold
Improvements
Plant &
Equipment
Rental
Engines/
Aircraft
Assets Under
Construction
Total
Owned
Owned
$’000
$’000
Under
Lease
$’000
Owned
$’000
Under
Lease
$’000
Owned
Owned
$’000
$’000
Under
Lease
$’000
$’000
98
(43)
55
74
379
(43)
(202)
31
177
19
(3)
16
5,763
(753)
5,010
-
6,333
- (1,044)
-
5,289
At 1 July 2006
Cost
Accumulated depreciation
Net book value
Year ended 30 June
2007
Opening net book value
Additions
-
-
-
-
-
Acquisition of subsidiary
4,188
Transfers
Disposals
Depreciation/
amortisation
Closing net book value
(35)
4,153
(25)
70
At 30 June 2007
Cost
4,188
196
Accumulated depreciation
(35)
(126)
Net book value
4,153
70
Year ended 30 June
2008
Opening net book value
4,153
Additions
Transfers 1
Disposals
Depreciation/
amortisation
Closing net book value
70
86
-
-
(47)
4,106
(41)
115
At 30 June 2008
Cost
4,188
281
Accumulated depreciation
(82)
(166)
Net book value
4,106
115
-
-
-
-
-
55
24
-
16
-
31
-
-
(16)
177
415
63
19
-
(57)
(15)
-
-
-
-
-
-
-
-
-
-
-
-
-
(96)
521
824
(303)
521
521
66
-
(149)
417
854
(437)
417
16
43
55
(19)
-
5,010
3,166
6,683
4,811
(548)
(22)
(1,579)
2,095
1,250
-
5,289
6,993
875
(816)
-
-
- 11,864
-
-
3,995
(605)
- (1,772)
73 17,543
2,154
1,250 25,764
91 19,501
2,154
1,250 28,204
(18)
(1,958)
-
- (2,440)
73 17,543
2,154
1,250 25,764
73 17,543
2,154
1,250 25,764
166
2,026
764
-
1,257 (1,582)
140
-
3,248
(325)
- (2,134)
- (2,224)
179 16,786
1,336
1,390 24,329
235 19,986
1,336
1,390 28,270
(56)
(3,200)
-
- (3,941)
179 16,786
1,336
1,390 24,329
(21)
(16)
(2,097)
(44)
(1,943)
-
-
-
-
-
-
1 net transfers consists of items transferred to/from inventory ($325,000) and between owned assets under
construction and rental engines and aircraft ($1,582,000).
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
12. Property, Plant and Equipment (Continued)
Parent Entity
Leasehold
Improvements
Plant & Equipment
Owned
$’000
Under
Lease
$’000
Owned
$’000
Under
Lease
$’000
Rental
Engines/
Aircraft
Assets Under
Construction
Total
Owned
Owned
$’000
$’000
$’000
At 1 July 2006
Cost
Accumulated depreciation
Net book value
Year ended 30 June 2007
Opening net book value
Additions
Transfers***
Disposals
Depreciation/ amortisation
Closing net book value
At 30 June 2007
Cost
Accumulated depreciation
Net book value
Year ended 30 June 2008
Opening net book value
Additions
Transfers ***
Disposals
Depreciation/ amortisation
Closing net book value
At 30 June 2008
Cost
Accumulated depreciation
Net book value
98
(43)
55
55
24
16
-
(25)
70
196
(126)
70
70
-
-
-
(39)
31
196
(165)
31
74
(43)
31
31
-
(16)
-
(15)
-
-
-
-
-
-
-
-
-
-
-
-
-
379
(202)
177
177
128
15
-
(52)
268
526
(258)
268
268
41
-
(4)
(66)
239
538
(299)
239
19
(3)
16
16
-
(15)
-
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
445
(75)
370
370
591**
749
(388)*
(54)
1,268
1,340
(72)
1,268
1,268
-
-
-
(118)
1,150
1,340
(190)
1,150
includes engines at a written down value of $325,000 sold to a subsidiary.
*
** includes engines purchased from a subsidiary for $364,000.
*** net transfers consist of items transferred to/from inventory.
-
-
-
-
-
-
-
-
-
-
-
-
-
21
-
-
-
21
21
-
21
1,015
(366)
649
649
743
749
(388)
(147)
1,606
2,062
(456)
1,606
1,606
62
-
(4)
(223)
1,441
2,094
(653)
1,441
43
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
44
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
12. Property, Plant and Equipment (Continued)
Rental arrangements – aircraft and engines
The Group rents aircraft and engines under two general arrangements:
■■
■■
Contingent rentals - rented to customers under agreements with rentals payable monthly and no fixed term
. As
such, the agreements are cancellable. The rent is calculated on the basis of an hourly rate and hours of usage.
There are no minimum hours of usage or minimum lease payments set out in the relevant agreements. As
such, in accordance with AASB 117 “Leases” the rental income comprises of contingent rentals not minimum
lease payments. Accordingly, there are no fixed lease commitments receivable; and
Set or minimum rentals - the operating leases relate to aircraft and/or engines leased to third parties with
lease terms of between 3-7 years. The monthly rental payments are either set or per hour of usage with
minimum hours per annum. In addition, a contingent rental may be receivable based upon hours of usage. The
lessee may have an option to purchase the aircraft/engine at the expiry of the lease period. However, the final
purchase price is determined on a case by case basis in negotiation between the Group and the lessee.
Minimum lease payments in relation to aircraft and engine operating leases are receivable as follows:
No later than one year
Later than one year but no later than five years
Later than five years
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
1,031
3,300
345
1,681
4,288
892
509
339
1,554
1,258
-
-
4,676
6,861
2,063
1,597
Non-current assets pledged as security
Refer note 16 for information on non-current assets pledged as security.
13. Deferred Tax Assets
The balance comprises temporary differences attributable to:
Tax losses
Accruals
Employee benefits
Doubtful debts
Share issue expenses
Other
Finance leases
Maintenance contracts
Total deferred tax assets
1,350
52
308
91
-
225
-
-
87
101
293
42
164
11
-
19
475
14
116
40
-
70
-
-
-
16
112
31
164
43
-
-
2,026
717
715
366
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
13. Deferred Tax Assets (Continued)
Movements:
Tax
losses
Accruals Employee
benefits
Doubtful
debts
Share
issue
expenses
Other
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Consolidated
At 1 July 2006
(Charged)/credited to income
statement
Credited directly to equity
Utilised against current tax
liability
Acquisition of subsidiary
At 30 June 2007
(Charged)/credited to income
statement
Credited directly to equity
Utilised against current tax
liability
Acquisition of subsidiary
108
42
30
274
-
-
-
(326)
413
87
20
62
-
-
19
101
74
31
-
-
188
293
(175)
-
-
109
42
(83)
205
-
-
-
-
-
-
164
30
1,263
(49)
15
49
-
195
-
-
-
-
-
-
-
-
-
-
-
-
At 30 June 2008
1,350
52
308
91
Parent Entity
At 1 July 2006
(Charged)/credited to income
statement
Credited directly to equity
Other
At 30 June 2007
(Charged)/credited to income
statement
Credited directly to equity
Other
At 30 June 2008
-
-
-
-
-
475
-
-
475
20
(4)
-
-
16
(2)
-
-
14
74
38
-
-
112
4
-
-
116
108
(77)
-
-
31
9
-
-
40
(165)
205
(326)
729
717
1,473
(164)
-
-
-
-
-
225
2,026
2
25
-
16
43
27
-
-
70
246
(101)
205
16
366
513
(164)
-
715
(164)
-
-
-
42
(83)
205
-
164
-
(164)
-
-
45
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
46
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
14.
Intangible Assets
Consolidated
At 1 July 2006
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2007
Opening net book amount
Acquisition of subsidiary
Closing net book amount
At 30 June 2007
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2008
Opening net book amount
Amortisation charge
Closing net book amount
At June 2008
Cost
Accumulated amortisation and impairment
Net book amount
Parent Entity
At 1 July 2006
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2007
Opening net book amount
Amortisation charge
Closing net book amount
At 30 June 2007
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2008
Opening net book amount
Amortisation charge
Closing net book amount
At June 2008
Cost
Accumulated amortisation and impairment
Net book amount
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Goodwill
$’000
-
-
-
-
4,334
4,334
4,334
-
4,334
4,334
-
4,334
4,334
-
4,334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
14.
Intangible Assets (Continued)
Impairment tests for goodwill
Goodwill is allocated to the IAP operations as a single cash-generating unit (CGU) which is included in the Aircraft and
Engines Sales/Rentals primary business segment. The recoverable amount of the CGU is determined based on value
in use calculations. These calculations use cashflow projections based on financial budgets approved by management
covering a five-year period and include a terminal value adjusted for the perpetual growth rate.
Key assumptions used for value-in-use calculations
The calculations utilise a pre-tax risk adjusted discount rate of 14.2%. A growth rate of 3% has been used. Management
determined budgeted net profit based on past performance and its expectations for the future. The discount rate
reflects the specific risks relating to the relevant segment in which IAP operates.
Impact of possible changes in key assumptions
The Directors consider that there is no reasonably possible change in key assumptions which management has based
its determination of IAP’s recoverable amount which would cause the carrying amount of IAP’s CGU to exceed its
recoverable amount.
15. Trade and Other Payables
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Trade payables and accruals
4,626
4,956
1,450
2,142
Effective Interest Rates
Information concerning the effective interest rates is set out in note 28.
16. Borrowings
Current
Secured
Bank overdraft
Bank loans
Finance company loan
Lease liabilities
Unsecured
Notes
Developer advance
Other loans – related parties
Non-Current
Secured
Bank loans
Lease liabilities
Unsecured
Notes
Other loans – related parties
533
10,313
72
116
11,034
4,528
2,044
798
18,404
11,133
802
11,935
-
2,462
14,397
1,243
4,868
577
97
6,785
-
2,000
138
8,923
11,421
801
12,222
4,397
2,309
18,928
-
2,737
72
-
359
3,150
-
-
2,809
3,509
-
-
-
-
-
-
2,809
3,509
-
-
-
-
-
-
1,052
-
1,052
-
-
1,052
47
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
48
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
16. Borrowings (Continued)
Unsecured Notes
During the 2006 year, PTB Finance Limited (a subsidiary of PTB Group Limited) issued 4,588,800 unsecured notes
at $1 per note raising $4,588,800 cash. The notes are repayable on 30 November 2008. Nominal interest of
11.5% per annum (fixed) is payable monthly in arrears. Noteholders also received one option to acquire shares
in PTB Group Limited for every $3 invested in the notes (being 1,529,600 options). The options are exercisable
between 31 May 2008 and the note expiry date of 30 November 2008 at an exercise price of $1.60 per share.
The options are transferable.
The notes are presented in the balance sheet as follows:
Face value of notes issued
Other equity securities – value of conversion rights
Transaction costs
Interest expense *
Interest paid
Non-current liability
Consolidated
2008
$’000
2007
$’000
4,589
(261)
(83)
4,245
1524
(1241)
4,528
4,589
(261)
(83)
4,245
610
(458)
4,397
*
interest expense is calculated by applying the effective interest rate of 14% (2007:14%) to the liability component.
Bank Overdraft, Bank Loans and Bills Payable
The bank overdraft, bank loans and bills payable in the parent entity are secured by way of a registered mortgage
debenture and chattel mortgages over all assets and undertakings of the parent entity. The bank overdraft and bills
payable of the subsidiaries are secured by the land and building (recognised in property, plant and equipment) of
$4,106,000 (2007: $4,153,000). The bank loans in the subsidiaries are secured by the aviation assets included in
plant and equipment and inventory of the relevant subsidiary of $18,618,794 (2007: $16,161,000).
A facility of USD $5,400,000 for the refurbishment of the Emerald aviation assets was established in July 2007 in
order to complete and settle the two LFD ATP and two PAX ATP aircraft. The nominal interest rate is 16% capitalised
quarterly on the balance of the facility. The security arrangements are consistent with those noted below.
During the 2006 year PTB (Emerald) Pty Ltd (a subsidiary) received a term loan from a finance company of
$8,263,000. The loan is repayable in monthly installments of $115,000 from February 2008 and the loan terminates
on 31 December 2012. Nominal interest of 13% per annum is payable quarterly in arrears. The following security has
been provided by PTB:
■■
■■
■■
Mortgage over the shares held by PTB in PTB (Emerald) Pty Ltd and the bank account;
Mortgage over the aircraft held by PTB (Emerald) Pty Ltd as detailed above; and
A charge over the assets and rights of PTB (Emerald) Pty Ltd which have a carrying value of $32,283,527
(2007: $16,623,000).
Advance from developer
The Belmont property was previously used by the IAP Group (Aeropelican Air Services Pty Ltd) as the Newcastle
airport for its passenger and freight operations prior to moving to Williamtown Airport.
In March 2004 IAP entered into a joint venture deed with a third party developer in respect of the Belmont property.
Under the joint venture deed the third party developer advanced IAP $2 million for the right to pursue the rezoning
of the property as residential and/or commercial and if achieved, the development of the property by subdivision and
sale of subdivided lots. The $2.04 million advance from the developer is secured by a mortgage over the property.
Prior to 30 June 2007 year end, the Group entered into an agreement to sell the land for $5.5 million. On 4 July
2008 the contract settled and the proceeds were utilised to repay the liability of $2.04 million (including accrued
fees and charges).
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
16. Borrowings (Continued)
Lease Liabilities
Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.
Other Loans – Related Parties
Refer note 24 for information on other loans from related parties.
Effective Interest Rates
Information concerning the effective interest rates is set out in note 28.
Finance Facilities
Information concerning the finance facilities is set out in note 28.
Assets Pledged as Security
Certain assets of the Group are pledged as security for the facilities as noted above.
17. Deferred Tax Liabilities
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
The balance comprises temporary differences
attributable to:
Property, plant and equipment
Inventory
Other
Finance costs payable
Total deferred tax liabilities
Movements:
Consolidated
1 July 2006
Charged/(credited) to income
statement
Acquisition of subsidiary
At 30 June 2007
Charged/(credited) to income
statement
At 30 June 2008
Parent Entity
1 July 2006
Charged/(credited) to income
statement
At 30 June 2007
Charged/(credited) to income
statement
Charged directly to equity
At 30 June 2008
1,836
556
293
-
1,725
135
-
43
2,685
1,903
3
-
-
-
3
-
-
-
-
-
Property,
plant and
equipment
Inventory Maintenance
Other
Total
contracts
$’000
$’000
$’000
$’000
$’000
15
-
206
212
1,498
1,725
111
1,836
15
(15)
-
3
-
3
(68)
203
135
421
556
-
-
-
-
-
-
(206)
-
-
-
-
206
(206)
-
-
-
-
70
(27)
-
43
250
293
-
-
-
-
-
-
291
(89)
1,701
1,903
782
2,685
221
(221)
-
3
-
3
49
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
50
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
18. Provisions
Current
Employee benefits
Non-Current
Employee benefits
19. Other Liabilities
Current
Deferred revenue
Deposits in advance
Non-Current
Deferred revenue
Deferred revenue
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
826
201
209
863
1,072
197
644
334
389
-
389
-
355
36
-
346
346
40
256
144
167
-
167
-
Deferred revenue relates to maintenance contract revenue received in advance.
20. Contributed Equity
Share capital
26,403,135 ordinary shares fully paid
(2007: 26,396,468 ordinary shares fully paid)
Other equity securities
Value of conversion rights (net of tax) (note 16)
27,780
27,773
27,780
27,773
183
27,963
183
27,956
261
28,041
261
28,034
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par
value shares. Accordingly, the parent does not have authorised capital nor par value in respect of its issued shares.
Movements in ordinary share capital
Note
No of Shares
Issue Price
$
$’000
Balance 1 July 2006
Dividend reinvestment scheme
Options exercised
Consideration for business combination
Private share placement
Private share placement
Public offer
Dividend reinvestment scheme
Share issue costs (net of tax)
Closing balance 30 June 2007
Options exercised
Closing balance 30 June 2008
(a)
(b)
(c)
(d)
(d)
(e)
(a)
11,738,632
99,571
33,330
6,908,054
3,150,020
1,937,500
2,500,000
29,361
-
26,396,468
1.99
1.00
1.60
1.53
1.60
2.00
2.03
(b)
6,667
1.00
26,403,135
3,988
198
33
11,053
4,820
3,100
5,000
59
(478)
27,773
7
27,780
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
20. Contributed Equity (Continued)
Notes
(a) Issue of shares pursuant to dividend reinvestment scheme (refer note 30).
(b) Ordinary shares issued to employees on exercise of options for cash.
(c) On 21 September 2006, 6,908,054 ordinary shares were issued at $1.60 for the purchase of IAP Group Pty
Ltd. The issue price represented the market price at that date.
(d) In August and September 2006, 3,150,020 ordinary shares were issued at $1.53 to sophisticated and
professional investors raising $4,820,000 cash. In November 2006, a further 1,937,500 ordinary shares at
$1.60 were issued to investors under a subscription agreement raising $3,100,000 cash.
(e) In December 2006, 2,500,000 ordinary shares were issued at $2.00 per share pursuant to a prospectus
dated 8 November 2006, raising $5,000,000 cash.
The company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have
all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather than by being paid cash.
Shares are issued under the plan at up to a 4% discount to the market.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the parent entity in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares
present at a meeting in person or by proxy, is entitled to vote, and upon a poll each share is entitled to one vote.
Options
As at balance date the number of options to purchase ordinary shares in the parent entity was as follows:
2008
2007
No. of Options
No. of Options
Exercise Price
Expiry Date
Director options
Employee share options
Employee share options
Employee share options
Note options
-
80,002
120,000
40,000
1,529,600
550,000
93,336
140,000
40,000
1,529,600
$1.15
10 March 2008
$1.00 19 November 2008
$1.60
20 February 2010
$2.00
31 August 2010
$1.60 30 November 2008
The Director options were issued upon listing on 10 March 2005. Refer note 25 for further details.
An employee share option scheme was approved by shareholders on 3 June 2005. Refer to note 25 for details.
Note options were granted as part of the unsecured note placement. Refer note 16 for details.
Capital Risk Management
The Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to continue as a
going concern, so that they can continue to provide returns to shareholders, benefits to other stakeholders, and to
maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt. The Board of Directors monitors the
return on capital, which the Group defines as net profit after tax divided by average shareholders’ equity.
51
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
52
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
21. Reserves
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Share-based payments reserve
241
163
241
163
Movements:
Reserve balance 1 July
Option expense
Reserve balance 30 June
The share-based payments reserve is used to
recognise the fair value of the options issued but
not exercised.
Hedging reserve
Movements:
Reserve balance 1 July
Recognition of effective cashflow hedge
Reserve balance 30 June
163
78
241
100
63
163
163
78
241
100
63
163
1,484
-
1,484
1,484
-
-
-
-
-
-
-
-
-
-
-
-
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised
directly in equity, as described in note 1(p). Amounts are recognised in the income statement when the associated
hedged transaction affects the income statement.
22. Cash Flow Information
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
(a)
Reconciliation of Cash and Cash
Equivalents
Cash and cash equivalents at the end of the
financial year as shown in the cash flow statements
is reconciled to items in the balance sheets as
follows:
Cash and cash equivalents assets
– cash at bank and on hand
Bank overdraft (note 16)
1,200
(533)
667
290
(1,243)
(953)
750
-
750
91
(359)
(268)
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
22. Cash Flow Information (Continued)
(b)
Reconciliation of Net Cash Flow from
Operating Activities to Profit/(Loss)
for the Year
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Profit/(Loss) for the year
3,131
3,589
(935)
1,123
Depreciation and amortisation
Gain on disposal of property, plant and equipment
Share-based payments
Movement in provision for doubtful debts
Interest capitalised
Unrealised foreign currency movements
Other
Changes in operating assets and liabilities net
of effects from business combination.
(Increase)/decrease in:
Receivables
Inventories **
Deferred tax assets*
Other assets
Increase/(decrease) in:
Trade payables and accruals
Employee benefits
Deferred revenue
Current tax liabilities
Deferred tax liabilities*
2,224
(209)
78
-
696
(934)
32
(7,511)
(856)
(619)
380
550
49
-
271
92
1,772
(214)
63
-
-
-
61
(4,940)
(18,523)
(198)
(17)
1,891
104
274
124
600
Net cash flow from operating activities
(2,626)
(15,414)
223
-
-
31
-
-
-
4,246
(151)
(346)
(22)
(306)
(9)
(167)
(658)
-
1,906
147
(110)
63
-
-
-
-
(844)
(1,288)
(136)
2
533
151
124
(77)
-
(312)
* net of amounts charged or credited directly to equity
** net of transfers to/from property, plant and equipment
(c) Non-cash Investing and Financing Activities
Dividends satisfied by the issue of shares under the dividend reinvestment scheme are shown in note 30. Options
issued to employees under the Employee Share Option Scheme are shown in note 25.
During the year the Group purchased $305,896 of property, plant and equipment by way of finance lease
(2007: $1,077,000).
53
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
54
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
23. Earnings Per Share
Basic earnings per share
Diluted earnings per share
Earnings used to calculate basic and diluted earnings per share – profit after tax
for the year
Consolidated
2008
cents
2007
cents
11.86
11.85
16.10
15.60
$’000
$’000
3,131
3,589
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings
per share
26,402,185 22,270,165
Effect of dilutive securities:
- Director and employee share options
- Note options
23,607
-
326,841
475,245
Weighted average number of ordinary shares and potential ordinary shares used
in calculating diluted earnings per share
26,425,792 23,072,251
Options granted to Directors and to employees under the PTB Group Limited Employee Share Option Scheme (note
25) and the 1,529,600 options granted as part of the unsecured notes (note 16) are considered to be potential
ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they
are dilutive. The options have not been included in the determination of basic earnings per share.
24. Key Management Personnel Disclosures
Directors
The following persons were Directors of PTB Group Limited during the financial year:
Chairman – non-executive
H Parker
Executive Directors
CL Baker, Managing Director (Group)
SG Smith, Sales and Marketing Director (Pacific Turbine Brisbane Division) – resigned 30 November 2007.
RS Ferris, Managing Director (IAP Division)
Non-executive Directors
RJ David – resigned 22 February 2008.
APS Kemp
R Blumberg was appointed non-executive Director on 4 July 2007 and resigned 22 February 2008.
Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the
Group, directly or indirectly, during the financial year:
Name
JT Barbeler
Position
Company Secretary and CFO
Employer
PTB Group Limited
AL Abrahams resigned on 6 April 2007. JT Barbeler was appointed on 28 May 2007.
There were no other key management personnel in either the current or prior year.
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
24. Key Management Personnel Disclosures (Continued)
Key management personnel compensation:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
787,051
122,876
13,915
6,181
930,023
737,022
149,305
13,140
1,874
901,341
787,051
122,876
13,915
6,181
930,023
737,022
149,305
13,140
1,874
901,341
The company has taken advantage of the relief provided by Corporations Regulations 2001 and has transferred the
detailed remuneration disclosures to the Directors’ report. The relevant information can be found in sections A to D
of the remuneration report in the Directors’ report.
Equity instrument disclosures relating to key management personnel
Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms
and conditions of the options, can be found in section D of the remuneration report in the Directors’ report.
Option holdings
The numbers of options over ordinary shares in the company held during the financial year by each Director of PTB Group
Limited and other key management personnel of the Group, including their personally related parties, are set out below:
Name
Balance at
the start of
the year
Granted
during the
year as
compensation
Exercised/
Lapsed
during the
year
Balance
at date of
appointment/
resignation
Balance at
the end of
the year
Vested and
exercisable
at the end of
the year
2008
Directors
CL Baker
SG Smith
RS Ferris
H Parker
RJ David
APS Kemp
R Blumberg
Other key management personnel of the Group
JT Barbeler
200,000
200,000
-
-
-
188,267
-
-
-
-
-
-
-
-
20,000
-
2007
Directors
CL Baker
SG Smith
RS Ferris
HR Jones
H Parker
RJ David
APS Kemp
200,000
200,000
-
-
-
-
188,267
-
-
-
-
-
-
-
(200,000)1
-
-
-
-
(150,000)1
-
-
(200,000)1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38,267
-
-
-
-
-
-
38,267
-
20,000
6,667
200,000
200,000
200,000
200,000
-
-
-
-
-
-
-
-
188,267
150,000
Other key management personnel of the Group
AL Abrahams
JT Barbeler
20,000
-
-
20,000
(6,666)
-
(13,334)
-
-
20,000
-
-
1 550,000 options issued to Directors expired and lapsed on 10 March 2008.
55
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
56
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
24. Key Management Personnel Disclosures (Continued)
In 2007 AL Abrahams exercised 6,666 remuneration options at an amount of $1.00 per ordinary share issued
($6,666 in total). On termination 13,334 options were forfeited as the service period was not met. The 38,267
note options held by APS Kemp and the 6,667 held by J Barbeler are exercisable.
Share holdings
The numbers of shares in the company held during the financial year by each Director of PTB Group Limited and other
key management personnel of the Group, including their personally related parties, are set out below. There were no
shares granted during the current or previous year as compensation.
Name
Balance at
the start of
the year
Issued as part
of business
combination
(note 34)
Received
during the
year on the
exercise of
options
Other
changes
Balance
at date of
appointment/
resignation
Balance at
the end of
the year
2008
Directors
CL Baker
SG Smith
RS Ferris
H Parker
RJ David
APS Kemp
1,782,104
1,843,860
6,908,054
296,000
337,000
136,348
-
-
-
-
-
-
Other key management personnel of the Group
JT Barbeler
-
-
2007
Directors
CL Baker
SG Smith
RS Ferris
HR Jones
H Parker
RJ David
APS Kemp
1,776,000
1,778,500
-
-
-
6,908,054
1,776,000
296,000
212,000
96,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,900
-
6,104
65,360
-
-
-
125,000
40,348
-
1,782,104
(1,843,860)
-
-
-
(337,000)
-
-
-
-
-
(1,776,000)
-
-
-
6,908,054
296,000
-
147,248
-
1,782,104
1,843,860
6,908,054
-
296,000
337,000
136,348
Other key management personnel of the Group
AL Abrahams
JT Barbeler
3,157
-
-
-
6,666
-
-
-
(9,823)
-
-
-
Loans to key management personnel
There were no loans to Directors of PTB Group Limited or other key management personnel of the Group during the
current or previous reporting period.
Other transactions with key management personnel
In the previous year APS Kemp’s remuneration included additional amounts paid for services provided in respect of
corporate advisory and capital raising strategy services (2007: $66,500). These services were supplied at normal
terms and conditions.
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
24. Key Management Personnel Disclosures (Continued)
In 2007 PTB (Emerald) Pty Ltd (subsidiary) obtained a loan of $2,000,000 from Steve Ferris (Director). The loan is
repayable on 16 December 2011. The loan is subordinated to the finance company loan. Nominal interest of 10% per
annum (fixed) is payable monthly in arrears and capitalised to the balance of the loan. The loan is unsecured and has
a balance outstanding at 30 June 2008 of $2,371,224 (2007: $2,145,878).
Additionally, IAP Group Australia Pty Ltd (subsidiary) has a loan from Steve Ferris (Director) where monies are advanced
to IAP and repaid on a revolving line of credit basis. The loan has a maturity of 3 years, is unsecured and has a fixed
interest rate of 8%. The loan is repayable in monthly instalments and has a balance outstanding at 30 June 2008 of
$889,116 (2007: $416,306).
In October 2006, 2 aircraft costing $512,000 were purchased from Mr R.R Ferris, father of PTB Group Director
Steve Ferris. These aircraft were sold at a profit to third parties during 2007.
All transactions were under normal commercial terms and conditions, unless otherwise stated. No bad or doubtful
debts expense has been, or is likely to occur from transactions with related parties.
Aggregate amounts of each of the above types of other transactions with key management personnel of the Group:
Amounts recognised as expense
Purchase of aircraft
Purchases of spare parts
Interest expense*
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
-
-
-
-
512,000
-
186,445
698,445
-
-
-
-
Aggregate amounts receivable/payable arising from the above types of transactions with key management
personnel of the Group:
– current receivables
– current borrowings
– non-current borrowings
-
-
798,001
138,000
2,462,339
2,424,184
-
-
-
-
-
-
-
-
-
-
*
represents interest paid at 11.5% to APS Kemp on unsecured notes and on the two unsecured loans payable by
Group companies to R.S Ferris at 8% and 10%.
25. Share-based Payments
Employee Share Option Scheme
The establishment of the Employee Share Option Scheme was approved by shareholders on 3 June 2005. All staff
are eligible to participate in the scheme, including executive Directors.
Options are granted under the scheme for no consideration. The exercise price will be the amount specified by
the remuneration committee at the time of issue. The exercise period is the period specified by the remuneration
committee at the time of issue. Options under the plan may not exceed 5% of the total number of issued shares of
the company at the date of issue.
Options lapse if prior to or during the exercise period the employee is terminated or resigns. If a person dies, becomes
disabled, or is made redundant prior to the exercise period the option lapses. If a person dies, becomes disabled, or is
made redundant during the exercise period special rules apply that allow options to be exercised.
Options granted under the scheme carry no dividend or voting rights. When exercisable, each option is convertible
into one ordinary share for cash. Amounts receivable on the exercise of options are recognised as share capital.
57
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
58
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
25. Share-based Payments (Continued)
Set out below are summaries of options granted under the scheme:
Grant date
Expiry date
Exercise
price
Balance
at start
of year
Granted
during
the year
Exercised
during
the year
Expired/
forfeited
during
the year
Balance
at end of
the year
Exercisable
at end of
the year
Number
Number
Number
Number
Number
Number
Consolidated and parent entity – 2008
31 May 2007 31 Aug 2010
30 Dec 2006
20 Feb 2010
30 Sep 2005
19 Nov 2008
$2.00
40,000
$1.60
140,000
$1.00
93,336
-
-
-
-
-
-
40,000
(20,000)
120,000
(6,667)
(6,667)
80,002
13,334
40,000
46,667
Consolidated and parent entity – 2007
31 May 2007 31 Aug 2010
30 Dec 2006
30 Sep 2005
20 Feb 2010
19 Nov 2008
$2.00
$1.60
$1.00
-
40,000
-
-
40,000
-
140,000
140,000
-
-
(33,330)
-
(13,334)
140,000
93,336
-
13,332
Options held vest one third each year on the anniversary of the grant date.
The weighted average remaining contractual life of share options outstanding at the end of the 2008 year was
1.3 years (2007: 2.3 years).
The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2008
was $1.52 (2007: $2.44).
Fair value of options granted
The assessed fair value at grant date of the options granted during the year ended 30 June 2007 was $1.01 per
option for the 30 December 2006 grant and $0.54 per option for the 31 May 2007 grant (2006: 35 cents per
option). The fair value at grant date is determined using a Binomial option pricing model that takes into account the
exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk free interest rate for the term of the option.
The model inputs for options granted as at 31 May 2007, 30 December 2006, and September 2005 respectively
included:
Grant date
Consideration
Life
Exercise price
Expiry date
Share price at grant date
Expected price volatility
Expected dividend yield
Risk free interest rate
31 May 2007
Nil
30 December 2006
Nil
30 September 2005
Nil
3 years
$2.00
3 years
$1.60
3 years
$1.00
31 August 2010
20 February 2010
19 November 2008
$2.00
24%
6%
6.22%
$2.53
36%
6%
5.93%
$1.20
39%
6%
5.29%
The expected price volatility is based on the historic volatility of the entity up to the grant date of the options as
well as the historic volatility of a number of similar entities (based on a period with a similar life of the options). The
fair value of the options granted excludes the impact of any non-market vesting conditions. There were no market
based conditions.
Director Options
During the 2005 year options were granted to Directors by the parent entity. Each option granted is convertible into
one ordinary share in PTB Group Limited for cash. The options were issued upon listing pursuant to the prospectus
dated 4 January 2005. Options granted carry no dividend or voting rights. The options vested upon listing and there
were no further vesting conditions. They are exercisable at any time after 12 months after grant but before expiry.
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
25. Share-based Payments (Continued)
Set out below are summaries of options granted:
Grant date
Expiry date
Exercise
price
Balance
at start
of year
Granted
during
the year
Exercised
during
the year
Expired
during
the year
Balance
at end of
the year
Exercisable
at end of
the year
Number
Number
Number
Number
Number
Number
Consolidated and parent entity – 2008
10 Mar 2005
10 Mar 2008
$1.15
550,000
Consolidated and parent entity – 2007
10 Mar 2005
10 Mar 2008
$1.15
550,000
-
-
-
-
550,000
-
-
-
550,000
550,000
No such options were granted in the 2007 or 2008 years.
The weighted average remaining contractual life of share options outstanding at the end of the year was Nil years
(2007: 0.78 years).
Fair value of options granted
The assessed fair value at grant date of the options granted during the year ended 30 June 2005 was 13.7 cents per
option. The fair value at grant date was independently determined using a Binomial option pricing model that takes
into account the exercise price, the term of the option, the share price at grant date and expected price volatility of
the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
The model inputs for options granted during the year ended 30 June 2005 included:
Options are granted for no consideration and have a three year life
Exercise price: $1.15
Grant date: 10 March 2005
Expiry date: 10 March 2008
Share price at grant date: $1.00
Expected price volatility of the company’s shares: 31.5%
Expected dividend yield: 6%
Risk-free interest rate: 5.22%
The expected price volatility was based on the historic volatility of a number of similar entities (based on a period
with a similar life of the options). The fair value of the options granted excludes the impact of any non-market
vesting conditions. There were no market based conditions.
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the year as part of employee
benefit expense were as follows:
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Options issued under employee option scheme
78
63
78
63
59
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
60
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
26. Auditor’s Remuneration
(a) Audit Services
Remuneration of the auditor of the Group for:
Audit or review of the financial reports
Related practices of the auditor for an audit
of an entity within the group
Other Audit firms for the audit or review
of financial reports of the Group
(b) Non audit services
Taxation advice and compliance services
Other Audit firms for other assurance services
Other Audit firms for taxation compliance services
Other Audit firms for other compliance services
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
130,000
10,000
-
-
-
171,500
55,000
-
-
-
-
47,510
62,500
5,000
80,000
-
-
26,000
-
-
-
-
-
166,500
-
35,000
62,500
-
Other assurance services for 2007 comprises the provision of the independent accountant’s report for the
November 2006 prospectus.
There was no other remuneration paid to related practices of the auditor.
27. Commitments
Finance leases
(a)
Commitments in relation to finance leases are payable
as follows:
Within one year
Later than one year but not later than five years
Later than five years
Minimum lease payments
Future finance charges
- Within one year
- Later than one year but not later than five years
- Later than five years
Representing lease liabilities:
Current
Non-current
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
215
915
128
1,258
(98)
(235)
(6)
919
117
802
919
195
730
341
1,266
(98)
(240)
(30)
898
97
801
898
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Finance leases comprise leases of property, plant and equipment, under normal commercial finance lease terms and
conditions.
(b) Operating leases
Commitments in relation to non-cancellable
operating leases contracted for at the reporting
date but not recognised as liabilities are payable
as follows:
Within one year
Later than one year but not later than five years
357
92
449
386
202
588
66
20
86
94
69
163
Operating leases mainly comprise leases of premises in Brisbane, Sydney and Newcastle in Australia and Blackpool in
UK. These leases are under normal commercial terms and conditions including rentals, in certain cases, being subject
to periodic review for market and/or CPI increases as well as options for renewal.
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
27. Commitments (Continued)
(c)
Remuneration commitments
Commitments for payment of salaries and other
remuneration under long-term employment
contracts in existence at the reporting date but
not recognised as liabilities payable:
Less than one year
Greater than one year but not later than five years
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
560
840
1,400
660
-
660
560
840
1,400
660
-
660
Remuneration commitments comprise the minimum amounts payable to C Baker and S Ferris upon termination under
their service agreements.
(d) Capital commitments
Capital expenditure for Land and Buildings
contracted for at balance date but not recognised
as liabilities are payable as follows:
Within one year
3,380
3,380
-
-
-
-
-
-
Capital commitments include the land and buildings contracted for at 12 February 2008 by IAP Group Australia Pty
Ltd to house the PTB Group Brisbane workshop, sales, and administration activities. Settlement is expected once
practical completion is achieved in early October 2008.
28. Financial Risk Management and Other Financial Instrument Disclosures
Financial Risk Management
The Group’s activities expose it to a variety of financial risks; market risk (including foreign exchange risk, price risk,
and cash flow and fair value interest rate risk), credit risk, and liquidity risk. The Group’s overall risk management
program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the Group.
Risk management is carried out by management under policies approved by the Board of Directors. Management
identifies, evaluates and addresses financial risks and uses different methods to measure different types of risk to
which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other
price risks, and ageing analysis for credit risk. The Board provides principles for overall risk management, as well as
policies covering specific areas, such as mitigating foreign exchange, interest rate and credit risks, use of derivative
financial instruments and investing excess liquidity.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated
in a currency that is not the entity’s functional currency.
The Group operates internationally and is exposed to foreign exchange risk primarily arising from sale and purchase
transactions denominated in US dollars and UK pounds. The risk is measured using sensitivity analysis and cashflow
forecasting.
These derivatives are exclusively used for hedging purposes to minimise foreign exchange risk on relevant transactions
and the Group does not speculate on foreign currency. The Group manages this risk through matching, to the extent
possible, of US dollar denominated receivables and payables. All transactions which are exposed to foreign exchange
risk are authorised by senior management.
61
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
62
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
28. Financial Risk Management and Other Financial Instrument Disclosures (Continued)
The Group’s exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Trade and other debtors
Forward exchange contracts
Trade and other payables
Borrowings
Other liabilities
Group sensitivity
30 June 2008
30 June 2007
USD
$’000
GBP
’000
USD
$’000
GBP
$’000
907
10,654
12,000
(1,098)
(7,340)
(164)
45
902
-
(572)
-
-
59
6,769
-
(2,053)
(410)
-
1
475
-
(300)
-
-
Based on the financial instruments held at 30 June 2008, had the Australian dollar weakened/strengthened by 10%
against the USD dollar, with all other variables held constant, the Group’s post tax profit for the year would have
been $239,000 higher/$196,000 lower (2007: $402,000 higher/$329,000 lower), mainly as a result of foreign
exchange gains and losses on translation of US dollar denominated financial instruments as detailed in the above table.
Profit is less sensitive to movements in the Australian dollar/US dollar exchange rates in 2008 than in 2007 because
of the increased amount of the US dollar denominated borrowings offsetting US dollar denominated receivables.
Equity would have been $466,000 lower/$359,000 higher (2007: $402,000 higher/$329,000 lower) had the
Australian dollar weakened/strengthened by 10% against the US dollar, arising mainly from forward foreign exchange
contracts designated as cash flow hedges. Equity is more sensitive to movements in the Australian dollar/US dollar
exchange rates in 2008 than in 2007 because of the increased amount of forward foreign exchange contracts. The
Group’s exposure to other foreign exchange movements is not material.
The Parent entity’s exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Trade and other debtors
Forward exchange contracts
Trade and other payables
Borrowings
Other liabilities
Parent entity sensitivity
30 June 2008
USD
$’000
GBP
’000
30 June 2007
USD
$’000
GBP
$’000
445
1,878
-
(729)
-
(164)
-
-
-
-
-
-
53
1,851
-
(1,010)
-
-
-
-
-
-
-
-
Based on the financial instruments held at 30 June 2008, had the Australian dollar weakened/strengthened by 10%
against the USD dollar, with all other variables held constant, the Parent entity’s post tax profit for the year would
have been $116,000 higher/$95,000 lower (2007: $82,000 higher/$67,000 lower), mainly as a result of foreign
exchange gains and losses on translation of US dollar denominated financial instruments as detailed in the above
table. Profit is more sensitive to movements in the Australian dollar/US dollar exchange rates in 2008 than in 2007
because of the increased amount of the US dollar denominated borrowings.
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
28. Financial Risk Management and Other Financial Instrument Disclosures (Continued)
Equity would have been $116,000 higher/$95,000 lower (2007: $82,000 higher/$67,000 lower) had the
Australian dollar weakened/strengthened by 10% against the US dollar, arising mainly from the movement in US
dollar denominated receivables. The Parent entity’s exposure to other foreign exchange movements is not material.
(ii) Price risk
The Group is not directly exposed to material equity securities price risk or commodity price risk.
(iii) Cash flow and fair value interest rate risk
The Group has significant interest-bearing assets being extended credit receivables. These receivables are subject
to fixed interest rates. The fair value interest rate risk associated with these receivables is not hedged. The risk is
minimised through the relatively short nature of the majority of these receivables as well as funding them, where
possible, by matching fixed rate bank loans.
The Group has significant interest bearing liabilities, as detailed below. The majority of these liabilities bear fixed interest
rates. The fair value interest rate risk is not hedged. However, as noted above, the fixed interest rate bank loans are
generally used to fund extended credit receivables. Loans from financial institutions are used to purchase and refurbish
aviation assets. Although the fair value interest rate risk is not hedged where possible the loans are matched against
receivables in currencies that match the interest rate risk. The unsecured notes which bear a fixed interest rate were
primarily issued to fund the engine rental pool which derives rental revenue as disclosed in note 2.
Variable rate debt (primarily the bank overdraft) is also not hedged.
The Group’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial
assets and financial liabilities is set out below:
Effective
Weighted
Average
Floating
Fixed Interest Rate Maturing
Interest
Rate
Interest
Rate
1 year
or less
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
Over 5
years
%
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Non-
Interest
Bearing
$’000
Total
$’000
2008
Financial assets
Cash and cash
equivalents
Trade and other debtors
Extended credit
receivables
Total financial assets
Financial liabilities
Trade and other
payables
Bank overdraft
Bank loans
Bills payable
Lease liabilities
Unsecured notes
Related party loans
Total financial liabilities
1.29
-
1,155
-
-
-
-
-
-
-
-
-
-
-
-
-
45
1,200
15,423 15,423
10.57
-
1,155
2,197
2,197
902
902
1,876
1,876
507
507
390
390
233
233
-
6,105
15,468 22,728
-
9.82
11.85
9.04
10.50
11.50
9.45
-
533
297
2,100
-
-
-
-
-
9,299
-
116
4,528
798
2,930 14,741
-
-
2,749
-
126
-
91
2,966
-
-
2,434
-
148
-
-
2,582
-
-
3,820
-
158
-
-
3,978
-
-
2,863
-
248
-
-
3,111
-
-
-
-
122
-
2,371
2,493
4,626
4,626
533
-
- 21,462
2,100
-
918
-
4,528
-
3,260
-
4,626 37,427
63
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
64
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
28. Financial Risk Management and Other Financial Instrument Disclosures (Continued)
Effective
Weighted
Average
Floating
Fixed Interest Rate Maturing
Interest
Rate
Interest
Rate
1 year
or less
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
Over 5
years
%
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Non-
Interest
Bearing
$’000
Total
$’000
2007
Financial assets
Cash and cash
equivalents
Trade and other debtors
Maintenance contract
receivables
Extended credit
receivables
Total financial assets
Financial liabilities
Trade payables
Bank overdraft
Bank loans
Finance company loan
Bills payable
Lease liabilities
Unsecured notes
Related party loans
Developer advance
Total financial liabilities
5.6
-
-
10.3
-
9.3
8.2
13.0
8.7
10.8
14
9.8
-
236
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54
6,192
290
6,192
103
103
-
236
3,468
3,468
1,734
1,734
1,294
1,294
816
816
194
194
216
216
-
7,722
6,349 14,307
-
1,243
558
-
2,080
-
-
-
-
3,881
-
-
2,655
577
-
97
-
138
-
3,467
-
-
1,359
1,266
-
106
4,397
138
-
7,266
-
-
946
1,349
-
113
-
25
-
2,433
-
-
595
1,377
-
132
-
-
-
2,104
-
-
2,037
1,377
-
139
-
-
-
3,553
-
-
-
690
-
311
-
2,146
-
3,147
4,956
4,956
1,243
-
8,150
-
6,636
-
2,080
-
898
-
4,397
-
2,447
-
2,000
2,000
6,956 32,807
There are no other interest bearing financial assets and liabilities.
Group and Parent entity sensitivity
As the majority of the interest rates are fixed, at 30 June 2008 if interest rates had changed by -/+100 basis points
from year-end rates with all other variables held constant, post tax profit and equity for the year would not be
materially impacted (2007: $nil).
Net Fair Values
The net fair values of financial assets and financial liabilities approximate their carrying values.
Derivative Financial Instruments
The Group does not normally use derivative financial instruments except as noted above.
(b) Credit risk
The Group trades only with recognised, creditworthy third parties.
The main credit risk arises from receivables balances. These balances are monitored on an ongoing basis with the
result that the Group’s exposure to bad debts is not considered significant by the Directors. Management review the
credit rating of each customer, taking into account any previous trading history with the Group, its financial position,
and external credit reports where appropriate. Individual risk limits are set based on internal ratings and compliance
is regularly monitored by management.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to
recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed
in the balance sheet and notes to the financial statements.
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
28. Financial Risk Management and Other Financial Instrument Disclosures (Continued)
The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial
instruments at balance date except as follows:
■■
■■
The Group’s customers are involved in the airline passenger and freight operation industry;
There are a number of individually significant receivables
. For example at 30 June 2008 the largest 10 debtors
comprised approximately 80% (2007: 66%) of total receivables. It should be noted in the current year that
the two largest debtors include the Belmont Land receivable of $5.2m which was settled and received on 4
July 2008, and the LFD ATP aircraft debtor of $5.9m due to be settled prior to 30 November 2008. There is a
broad spread of other trade and extended credit receivables comprising 22% and 28% (2007: 44% and 55%)
of total receivables respectively; and
■■
The receivables are concentrated in six main geographical areas
. Refer to note 29 for further information.
At balance date cash was held with ANZ, CBA, and National Australia Bank.
(c)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of committed credit facilities. The Group manages liquidity risk by continuously monitoring forecast
and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group also ensures
that adequate unutilised borrowing facilities and cash reserves are maintained. The Group’s objective is to maintain
a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, unsecured
notes, and finance leases and finance company loans. Details of unused borrowing facilities are disclosed below.
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Finance Facilities
Available facilities
Bank overdraft
Bank loans
- chattel mortgage
-
refurbishment
- aviation fund
-
- other
- multi-option
foreign currency
Bills payable
Notes
Related Party facilities
Developer loan
Amounts utilised
Bank overdraft
Bank loans
- chattel mortgage
-
refurbishment
- aviation fund
-
- other
- multi-option
foreign currency
Bills payable
Notes
Related Party facilities
Developer loan
Unused facilities
Bank overdraft
Bank loans
Bills payable
Notes
Related Party facilities
- chattel mortgage
refurbishment
-
- aviation fund
-
- other
- multi-option
foreign currency
1,519
16,684
5,610
31,166
-
368
2,100
4,528
3,260
2,043
67,278
534
15,923
4,045
-
-
368
2,100
4,528
3,260
2,043
32,801
985
761
1,565
31,166
-
-
-
-
-
34,477
1,400
18,755
-
-
109
772
2,100
4,397
2,447
2,000
31,980
1,243
15,017
-
-
109
558
2,080
4,397
2,447
2,000
27,851
157
3,738
-
-
-
214
20
-
-
4,129
500
2,500
-
-
-
72
1,000
-
-
-
4,072
-
1,737
-
-
-
72
1,000
-
-
-
2,809
500
763
-
-
-
-
-
-
-
1,263
500
7,500
-
-
109
60
1,000
-
-
-
9,169
359
3,113
-
-
109
-
980
-
-
-
4,561
141
4,387
-
-
-
60
20
-
-
4,608
65
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
66
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
28. Financial Risk Management and Other Financial Instrument Disclosures (Continued)
Maturities of financial liabilities
The tables below analyse the Group’s and the Parent entity’s financial liabilities and net and gross settled derivative
financial instruments into relevant maturity groupings based on the remaining period at the reporting date to the
contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cashflows.
Group 2008
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total financial liabilities
Derivatives
Gross settled – (inflow)
Group 2007
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total financial liabilities
Derivatives
Gross settled – (inflow)
Parent 2008
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total financial liabilities
Parent 2007
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total financial liabilities
1 year
or less
$’000
1 to 2
years
$’000
2 to 3
years
$’000
3 to 4
years
$’000
4 to 5
years
$’000
Over 5
years
$’000
Total
$’000
6,669
3,202
15,416
25,287
-
-
4,323
4,323
-
-
3,642
3,642
-
-
4,712
4,712
-
-
3,478
3,478
-
-
2,736
2,736
6,669
3,202
34,307
44,178
1,769
1,769
-
-
-
-
-
-
-
-
-
-
1,769
1,769
6,956
3,620
4,776
15,352
-
-
1,450
1,094
1,164
3,708
2,142
1,072
2,164
5,378
-
-
9,171
9,171
-
-
3,480
3,480
-
-
2,928
2,928
-
-
4,084
4,084
-
-
3,417
3,417
6,956
3,620
27,856
38,432
-
-
-
-
-
-
-
-
317
317
-
-
885
885
-
-
287
287
-
-
124
124
-
-
207
207
-
-
95
95
-
-
-
-
92
92
-
-
16
16
-
-
-
-
-
-
2,736
2,736
1,450
1,094
4,803
7,347
-
-
-
-
2,142
1,072
3,284
6,498
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
28. Financial Risk Management and Other Financial Instrument Disclosures (Continued)
Bank overdraft
The bank overdraft facilities are subject to annual review and may be drawn at any time. The interest rate is variable
and is based on prevailing market rates. The facilities are subject to annual review.
Bank loans
The chattel mortgage loans are repayable by monthly instalments of principal and fixed interest over a period of
2 to 4 years from each draw down date.
The foreign currency loan was denominated in US dollars, was repayable by quarterly principal and fixed interest
repayments to clear the facility in full by the termination date on 14 January 2008.
The other bank loans are mainly interest only and are subject to annual review. The interest rate is variable and is
based on prevailing market rates.
Finance company loan
The finance company loan is repayable by quarterly/monthly principal and interest repayments over five years to
December 2012. These loans are drawn down for specific projects.
Bills payable
The multi-option facility includes variable rate commercial bills. For each drawing of a bill, a rate is quoted by the bank
at the time of draw down. The bills have a term of 12 months and the facility is subject to annual review.
Maturities of financial liabilities
The previous tables analyse the Group’s and the parent entity’s financial liabilities, net and gross settled derivative
financial instruments into relevant maturity groupings based on the remaining period at the reporting date to the
contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cashflows.
29. Segment Information
Business Segments (Primary Reporting)
The Group operates predominantly in the following business segments all of which are continuing operations:
■■
■■
Aircraft Transport – Operation of Aeropelican Air Services; and
Aircraft and Engines Sales and Rentals – Repair, rental and sale of aircraft, engines and related parts (including
hire purchase agreements).
67
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
68
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
29. Segment Information (Continued)
Aircraft
Transport
$’000
Aircraft
& Engines
Sales/
Rentals
$’000
Elimination
Total
$’000
$’000
7,238
-
7,238
9
7,247
33,870
827
34,697
2,010
36,707
-
41,108
(827)
(827)
-
(827)
-
41,108
2,019
43,127
5,500
48,627
(239)
4,324
-
4,085
2008
Segment revenue
Sales to external customers
Intersegment sales
Total sales revenue
Other revenue/income
Total segment revenue/income
Unallocated revenue
Consolidated revenue/income
Segment result
Segment result
Unallocated revenue less unallocated expenses
Profit before income tax
Income tax expense
Profit for the year
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
3,449
73,855
2,729
6,772
Other segment information
Acquisition of property, plant and equipment,
intangibles and other non- current segment assets
66
3,151
Unallocated
Total acquisitions
Depreciation and amortisation expense
343
1,872
Unallocated
Total depreciation and amortisation
(77)
4,162
(1,031)
3,131
77,304
6,752
84,056
9,501
34,330
43,831
3,217
31
3,248
2,215
19
2,234
-
-
-
-
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Aircraft
Transport
$’000
Aircraft
& Engines
Sales/
Rentals
$’000
Elimination
Total
$’000
$’000
4,164
-
4,164
-
4,164
35,026
382
35,408
1,009
36,417
-
39,190
(382)
(382)
-
(382)
-
39,190
1,009
40,199
574
40,773
(326)
8,630
-
8,304
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
29. Segment Information (Continued)
2007
Segment revenue
Sales to external customers
Intersegment sales
Total sales revenue
Other revenue/income
Total segment revenue/income
Unallocated revenue
Consolidated revenue/income
Segment result
Segment result
Intersegment elimination
Unallocated revenue less unallocated expenses
Profit before income tax
Income tax expense
Profit for the year
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
4,313
64,235
954
5,665
Other segment information*
Acquisition of property, plant and equipment,
intangibles and other non-current segment assets
348
22,538
Unallocated
Total acquisitions
Depreciation and amortisation expense
290
1,469
Unallocated
Total depreciation and amortisation
-
(3,119)
5,185
(1,596)
3,589
68,548
3,689
72,237
6,619
30,093
36,712
22,886
57
22,943
1,759
13
1,772
-
-
-
-
69
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
N
T
I
T
I
E
S
70
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
29. Segment Information (Continued)
Geographical Segments (Secondary Reporting)
The Group’s management and operations are based in Brisbane and Sydney, Australia. Its customers, however, are
located in six main geographical markets – Australia/New Zealand, Pacific Islands, North America, Asia, Africa, Europe.
The following table shows the distribution of the Group’s sales, assets, and purchase of property, plant and equipment
by those geographical markets:
Segment Revenues
From Sales to External
Customers
Segment Assets
Purchase of Property,
Plant and Equipment
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2008
$’000
2007
$’000
25,299
3,740
2,966
12,973
464
3,070
19
48,534
93
48,627
16,433
4,140
3,643
7,500
2,284
6,162
518
40,680
93
40,773
48,167
2,465
682
10,680
956
20,136
19
83,105
951
84,056
42,178
3,138
1,784
3,909
1,705
18,695
111
71,520
717
72,237
2,698
-
38
-
-
513
-
3,249
-
3,249
15,696
1,364
33
849
604
311
-
18,857
-
18,857
Australia/NZ
Pacific
North America
Asia
Africa
Europe
Other
Unallocated
Total
Segment assets include rental engines and aircraft which are attributed either to the geographic market in which the
customer who rents the engine or aircraft at year-end is based or, for non-rented engines and aircraft, where they
are physically located.
All other segment assets are attributed to the geographical location where they are physically located.
30. Dividends
Dividends paid during the year
No dividends were paid during the year.
In the previous year a final dividend for 30 June 2006 of 6 cents per share fully
franked (at 30%) paid 15 December 2006 and interim dividend for 30 June 2007
of 3 cents per share fully franked (at 30%) paid 30 May 2007
Dividends paid in cash or satisfied by the issue of shares under the dividend
reinvestment scheme during the year were as follows:
Paid in cash
Satisfied by the issue of shares
Parent Entity
2008
$’000
2007
$’000
-
-
-
-
1,802
1,545
257
1,802
Consolidated
Parent Entity
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Franking credits
Franking credits available for subsequent financial
years based on a tax rate of 30% (2007: 30%)
12,847
11,284
2,623
2,197
8
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S
E
I
T
I
T
N
E
D
E
L
L
O
R
T
N
O
C
D
N
A
D
E
T
I
M
L
P
U
O
R
G
B
T
P
I
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
30. Dividends (Continued)
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The consolidated amounts include franking credits that would be available to the parent entity if distributable
profits of subsidiaries were paid as dividends.
Dividends not recognised at year end
Since year end the Directors have not recommended the payment of a final
dividend (2007: 3 cents per fully paid ordinary share, fully franked based on
tax paid at 30%). In the previous year, the aggregate amount of the proposed
dividend expected to be paid on 30 November 2006 out of retained profits
but not recognised as a liability at year end was:
2008
$’000
2007
$’000
-
792
The impact on the franking account of the dividend amount recommended by the Directors since year end, but not
recognised as a liability at year end would be a reduction in the franking account of Nil (2007: $339,000).
31. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries:
Name
PTB Finance Limited (1)
PTB Rentals Australia Pty Ltd (1)
Pacific Turbine, Inc (2)
PTB (Emerald) Pty Ltd (3)
Aircraft Maintenance Services Ltd (4)
IAP Group Australia Pty Ltd (5)
Aeropelican Air Services Pty Ltd (5)
International Air Parts UK Limited (6)
PTB Emerald Limited (7)
PTB Asset Management Pty Ltd (8)
Country of
Incorporation
Australia
Australia
USA
Australia
United Kingdom
Australia
Australia
United Kingdom
United Kingdom
Australia
Equity Holding
2008
2007
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(1) Incorporated 14 October 2005
(2) Incorporated 29 September 2005
(3) Incorporated 4 October 2006
(4) Incorporated 6 November 2006
(5) Purchased as part of business combination on 21 September 2006
(6)
Incorporated 18 October 2006
(7) Incorporated 13 October 2006
(8)
Incorporated 21 June 2007
All subsidiaries are 100% owned by PTB Group Limited which is incorporated in Australia. All share capital consists of
ordinary shares in each company. All subsidiaries were established by the parent except for those acquired as part of
the business combination in prior years.
All subsidiaries except for PTB Finance Limited and Pacific Turbine Inc have been granted relief from the necessity to
prepare financial reports in accordance with Class Order 98/1418 issued by the Australian Securities and Investments
Commission as detailed in note 32.
71
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
8
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
T
R
O
L
L
E
D
E
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72
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
32. Deed of Cross Guarantee
On 29 June 2007, PTB Group Limited and all of its subsidiaries, excluding PTB Finance Limited and Pacific Turbine
Inc, entered into an arrangement as parties to a deed of cross guarantee under which each company guarantees the
debts of the others. By entering into the deed, the wholly owned entities have been relieved from the requirements
to prepare a financial report and Directors’ report under Class Order 98/1418 (as amended) issued by the Australian
Securities and Investments Commission.
(a) Consolidated income statement and a summary of movements in consolidated retained profits
PTB Group Limited and its subsidiaries, excluding PTB Finance Limited and Pacific Turbine Inc, represent a ‘Closed
Group’ for the purposes of the Class Order, and as there are no other parties to the Deed of Cross Guarantee that are
controlled by PTB Group Limited, they also represent the ‘Extended Closed Group’.
Set out below is a consolidated income statement and a summary of movements in consolidated retained profits for
the year ended 30 June 2008 of the Closed Group:
Revenue
Other income
Cost of goods sold
Employee benefits expense
Depreciation and amortisation
Airport charges and taxes
Repairs and maintenance
Fuel costs
Bad and doubtful debts
Finance costs
Other expenses
Total expenses
Profit before income tax expense
Income tax expense
Profit for the year
Summary of movements in consolidated retained profits
Retained profits at the beginning of the financial year
Profit for the year
Dividends provided for or paid
Retained profits at the end of the financial year
2008
$’000
2007
$’000
46,603
2,019
40,536
214
(24,961)
(21,721)
(5,547)
(2,234)
(2,343)
(626)
(1,483)
(1,135)
(2,861)
(3,289)
44,479
4,143
1,026
3,117
7,401
3,117
-
10,518
(4,060)
(1,772)
(1,499)
(303)
(783)
(158)
(1,954)
(3,299)
(35,549)
5,201
(1,601)
3,600
5,603
3600
(1,802)
7,401
8
0
0
2
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N
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Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
32. Deed of Cross Guarantee (Continued)
(b) Balance sheet
Set out below is a consolidated balance sheet as at 30 June 2008 of the Closed Group:
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Current tax assets
Other current assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Other non-current assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Other current liabilities
Total Current Liabilities
Non-Current Liabilities
Borrowings
Deferred tax liabilities
Provisions
Other non-current liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Retained earnings
Total Equity
2008
$’000
2007
$’000
1,153
17,614
27,691
1,770
517
545
49,290
4,957
264
24,329
2,026
4,334
116
36,026
85,316
4,616
13,876
1,398
826
1,072
21,788
20,170
2,674
202
197
23,243
45,031
40,285
28,040
1,727
10,518
40,285
126
9,763
26,835
-
-
280
37,004
4,854
264
25,764
717
4,334
-
35,933
72,937
10,039
6,923
619
644
2,389
20,614
14,531
1,859
335
-
16,725
37,339
35,598
28,034
163
7,401
35,598
73
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74
Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
33. Related Party Transactions
a) Parent entity and subsidiaries
The ultimate parent entity of the Group is PTB Group Limited. Interests in subsidiaries are set out in note 31.
b) Key management personnel
Disclosures relating to key management personnel are set out in note 24.
c) Other transactions with subsidiaries
The following transactions occurred with subsidiaries:
Revenue - sale of engines
Revenue – sale of goods and services
Revenue – engine rentals
Revenue – management fee
Purchase of goods
Parent Entity
2008
$
2007
$
220,000
456,135
37,927
95,802
166,668
187,605
44,273
57,375
228,334
381,283
In addition to the above sales, the parent has also provided, free of charge, other administrative and accounting
assistance to the subsidiaries.
d) Loans to subsidiaries
Parent Entity
2008
$
2007
$
Loans to subsidiaries
9,815,823 10,369,903
The parent entity advanced loans to subsidiaries during the current year (refer cash flow statement). The loans are
non-interest bearing, unsecured, at call and repayable in cash.
e) Outstanding balances arising from sales/purchases of goods and services
Trade and extended credit receivables
Trade payables
Parent Entity
2008
$
2007
$
801,700
167,004
896,761
391,134
No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been
recognised in respect of bad or doubtful debts due from related parties.
8
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Notes to the Financial Statements
for the year ended 30 June 2008 (Continued)
34. Events after the Balance Sheet Date
No matters or circumstances have arisen since the end of the financial year which have 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 future years except as detailed below:
Settlement of Belmont Land
A contract for the sale of land was entered into during the financial year, generating a profit of $1.9 million before tax
and a net $3 million in working capital with settlement occurring on 4 July 2008. This has been included in the 2008
financial results as the contract was unconditional as at 30 June 2008.
LFD ATP Aircraft
Final acceptance was received in early September on the second LFD ATP aircraft and as such both contracts are now
unconditional at a selling price of $6m USD each. Profit on the second LFD ATP will approximately be between $1m
to $1.5m. Settlement on both aircraft is expected prior to 30 November 2008.
Sale of Aeropelican
Following an unsolicited approach, a contract for the sale of Aeropelican Air Services Pty Ltd was signed in mid
September 2008. The terms include a cash consideration of $600,000 subject to a final balancing charge, and the
lease of three J32 aircraft currently held by IAP.
Amendment of Emerald Refurbishment and Term Facility
A facility of $5,400,000 for the refurbishment of the Emerald aviation assets was established in July 2007. On 28
August 2008 this facility was extended to 30 November 2008, or as otherwise agreed between the parties in order
to complete and settle the two LFD ATP and two PAX ATP aircraft. The effective interest rate has increased from 16%
to 19%. In conjunction with this amendment, the related Term facility of $6,885,000 ($6,197,334 outstanding
as at 30 June 2008) will be paid out by 31 July 2009, or as otherwise agreed between the parties. The effective
interest rate on the term facility has increased from 13% to 13.5%.
Financing of Land & Buildings
On 12 February 2008 IAP Group Australia Pty Ltd signed a purchase contract for Land and Buildings to house the
PTB Group Brisbane operations. On 16 September 2008 a variation to Commonwealth Bank Limited facilities was
executed to fund this project for an amount of $2,275,000.
35. Contingencies
During the 30 June 2007 financial year a preference claim of $857,000 was made against the parent entity in
relation to receipts from a customer who had subsequently been placed into liquidation. During the same year, a
subsidiary of the Group also acquired an aircraft from the customer referred to above. The Group’s management
were investigating whether the correct procedures were followed by the Directors of the company in liquidation in
relation to the removal of a charge in relation to this aircraft. The Directors believed that it was prudent to disclose a
contingent liability of $500,000, being the full value of the aircraft purchased.
During the current year, the above claims, and potential claims, were settled for an amount totaling $164,756.
There are no other contingencies requiring disclosure.
75
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76
Directors’ Declaration
for the year ended 30 June 2008
The Directors of the Company declare that:
(a) the attached financial statements and notes, as set out on pages 23 to 75 are in accordance with the
Corporations Act 2001 and:
(i) comply with Australian Accounting Standards and the Corporations Regulations 2001; and
(ii) give a true and fair view of the financial position as at 30 June 2008 and of the performance for the year
ended on that date of the Company and consolidated entity;
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable;
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended
Closed Group identified in note 31 will be able to meet any obligations or liabilities to which they are, or may
become, subject by virtue of the deed of cross guarantee described in note 32.
The Directors have been given the declarations by the chief executive officer and chief financial officer for the
financial year ended 30 June 2008 required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
H Parker
Chairman
Brisbane
30 September 2008
8
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Independent Auditor’s Report
for the year ended 30 June 2008
Independent Auditor’s Report
To the members of PTB Group Limited
Report on the Financial Report
We have audited the accompanying financial report of PTB Group Limited (the Company), which comprises the
balance sheets as at 30 June 2008, and the income statements, statements of changes in equity and cash flow
statements for the year ended on that date, a summary of significant accounting policies, other explanatory notes
and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the
year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the
preparation and fair presentation of the financial report that is free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB
101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial
Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with
International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether
the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial report 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 entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating
the overall presentation of the financial report.
Liability limited by a scheme approved by Professional Standards Legislation
77
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Independent Auditor’s Report
for the year ended 30 June 2008 (Continued)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s Opinion
In our opinion the financial report of PTB Group Limited is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2008 and
of their performance for the year ended on that date; and
(b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001.
The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included on pages 13 to 18 of the directors’ report for the year ended 30
June 2008. The directors of the company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of PTB Group Limited for the year ended 30 June 2008, complies with
section 300A of the Corporations Act 2001.
WHK Horwath
Don Langdon
Principal
Brisbane, 30 September 2008
8
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Shareholders Information
for the year ended 30 June 2008
The shareholder information set out below was applicable
as at 31 August 2008.
(c)
The names of the substantial shareholders
(including related entities) listed in the
company’s register are:
(a) Distribution of Shareholders:
Category (size of Holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Class of equity
security
Ordinary
Shares
Options
46
192
81
115
27
461
-
9
30
38
2
79
(b)
The number of ordinary shareholdings held
in less than marketable parcels is 54.
Number of
Ordinary
Shares Held
Percentage
%
6,908,054(2)
4,397,100
1,782,104
1,843,860
1,776,000
26.16
16.65
6.7
6.9
6.7
RS Ferris
River Capital
CL Baker
SG Smith
GD Hills
(d) Voting Rights
On a show of hands every member present at a meeting
in person or by proxy shall have one vote and upon a
poll each share shall have one vote. Options carry no
voting rights.
(e) 20 Largest Shareholders — Ordinary Shares (Quoted):
Number of Ordinary
Fully Paid Shares Held
% Held of issued
Ordinary Capital
RS Ferris
River Capital Pty Limited
S Smith
C Baker
S Martin
J Flintoft
G Hills
M Hills
Cogent Nominees Pty Ltd
ACAO Capital Pty Ltd
Bydand Capital Pty Ltd
Hawk Capital Pty Ltd
CS Fourth Nominees Pty Ltd
David Family Superannuation Family Trust
H Parker
H Jones
Fortis Clearing Nominees P/L
Top Dog Trading Pty Ltd
Colex Pty Ltd
Harvels Pty Ltd
6,908,054
4,397,100
914,140
891,052
891,052
888,000
888,000
888,000
887,955
498,000
446,276
435,129
354,828
337,000
296,000
276,000
260,870
231,437
181,500
181,500
21,051,893
26.16
16.65
3.46
3.37
3.37
3.36
3.36
3.36
3.29
1.89
1.69
1.65
1.34
1.28
1.12
1.05
0.99
0.88
0.69
0.69
79.73
Unquoted equity securities
Options issued under the PTB Group Ltd Share Option
Scheme to take up ordinary shares
Options issued in terms of the unsecured notes issue
Number on issue
Number of holders
240,002(1)
1,529,589
15
64
(1) Number of unissued ordinary shares under the options. No person holds 20% or more of these securities.
(2) These shares are subject to voluntary escrow expiring 20 September 2008.
79
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80
Notes:
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PO Box 90 Pinkenba Qld 4008
47-51 Pandanus Avenue
Brisbane Airport Qld 4007 AUSTRALIA
t 61 7 3637 7000 f 61 7 3860 4006