ANNUAL REPORT
30 June 2013
ABN 99 098 390 991
Corporate Directory and Information
Directors
Harvey Parker, Chairman
Craig Baker, Managing Director and CEO
Steve Ferris, Executive Director
Andrew Kemp, Non-executive Director
Company Secretary
Pierre Kapel
Registered Office and Principal
Administrative Office
22 Orient Avenue
Pinkenba QLD 4008
Mailing Address
PO Box 90
Pinkenba QLD 4008
Telephone: +61 7 3637 7000
Facsimile: +61 7 3260 1180
Share Registry
Link Market Services
Level 15, 324 Queen Street
BRISBANE QLD 4000
Telephone: 1300 554 474
Facsimile: +61 7 3228 4999
Bankers
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
Williams Hall Chadwick
Level 19
144 Edward Street
Brisbane QLD 4000
Stock Exchange Listing
The Company is listed on the
Australian Securities Exchange
ASX Code: PTB
Internet address
www.pacificturbine.com.au
ANNUAL REPORT
30 June 2013
Annual Report
for the year ended 30 June 2013
Table of Contents
Corporate Directory and Information
Inside Cover
Chairman and Managing Director’s Review
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Statements and Notes
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Company Statistics
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This financial report covers PTB Group Limited, a 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 public company limited by shares, incorporated and domiciled in Australia.
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Chairman and Managing Director’s Review
for the year ended 30 June 2013
1.
Results
Net profit after tax for the Group was $0.368 million in 2013 compared to $1.375 million in 2012. Basic earnings
per share were 1.14 cents (4.27 cents in 2012).
Operationally however, the result showed significant improvement. Two loss-incurring transactions were executed
which generated cash and provided other operational benefits.
Early payout by Indonesian customer and HP debtor of
one BAE ATP large door freighter
Sale of HS748 in Bangladesh
Funds Generated
Loss Incurred
$’000
$’000
2,850
340
3,190
1,859
233
2,092
An analysis of operational earnings set out below, reviews the operational progress made during the year.
The 2013 result represented a return on average shareholders’ funds of 0.83 per cent (3.13 per cent in 2012).
An interim fully franked dividend of 5.1 cents per share was paid in the year ended 30 June 2013 (2012: nil), with
approximately 85 per cent of shares on issue participating in the dividend reinvestment plan for this dividend.
2.
The 2013 Year in Review
A summary of the divisional contributions for the year is as follows:
Division
PTB Business (before unrealised currency movement)
IAP Business
Emerald Assets
Emerald : Interest
Emerald : Currency movement (realised & unrealised)
Emerald : Loss on asset realisation transactions
PTB : Currency - unrealised
Corporate Overheads
Emerald : Refinancing (loan forgiveness)
Bad and doubtful debts
Profit before Tax
2013
$’000
4,171
355
901
(710)
(357)
(1,859)
(313)
2012
$’000
3,443
(248)
947
(946)
341
40
(79)
2011
$’000
2,904
2,128
1,227
(1,256)
(2,670)
-
(4)
2010
$’000
1,944
598
628
(2,212)
(265)
-
(361)
(1,275)
(1,443)
(1,414)
(1,333)
-
(328)
585
-
(282)
1,773
-
120
1,035
3,633
(395)
2,237
The above table shows the operational progress
continuing to be made, in particular in the PTB Business.
Progress was also made in refocusing the IAP Business.
The Emerald operation continues as a challenge
Overall it was a very encouraging operational result in
a challenging business environment. A discussion on
the trading of each division of the business is set out in
Section 4.
The result has been achieved while managing a robust
loan repayment program for Emerald and IAP, and a
strong AUD relative to the USD for the financial year.
The Group continues to make substantial progress
in working through the issues created by the Global
Financial Crisis (GFC) in respect to financing of second
and third tier aircraft and a strong AUD. The efficiencies
implemented as a result of the strong Australian dollar
will assist profitability as the AUD weakens.
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Chairman and Managing Director’s Review
for the year ended 30 June 2013 (Continued)
To meet these challenges and build profitability the
Group continues its focus as follows:
(cid:3)(cid:81) managing cash flow to pay down debt and
build working capital;
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
concentrating on core competencies ;
asset utilisation and deployment;
recurring earnings;
PT6A engine shop capability;
targeting a natural currency hedge.
Managing cash flow to pay down debt and
build working capital
The Group has paid down $4.1 million of debt in the
2013 financial year (2012: $3.5 million). The Group will
continue to pay down debt to reduce its exposure.
The Group received $3.19 million cash from the early
payout of two long term HP debtors of which $2.9
million was used to pay down debt.
The Group refinanced the Capital Finance loan balance
of USD1.8 million with a USD denominated loan with
the CBA. The CBA’s facilities as at 30 June 2013 total
$15.263 million representing 85 per cent of the Group’s
loan funds ($2.6 million being a related party loan).
order to continue this improvement the Parts Business
was split at year end into engine sales, engine parts
sales and airframe part sales with each section being
responsible for its costs and margins.
In the past engines were the backbone of the IAP Parts
Business. IAP has the sales staff with the technical and
commercial experience to once again make engines a
major contributor to improving IAP profitability. The
initial focus will be on support for Rolls Royce Dart, Spey
and Tay engines of which IAP has significant inventory
holdings. The focus on engines will lead to increased
brokerage opportunities in engine and parts sales in
PW100, CFM56, V2500 and ALF502 engines.
The airframe parts business is focused on ATP, Fokker
F27, HS748 and the modern Fokker F100. IAP has three
F100’s it is breaking down for parts which will support
the F100 product line in both engines and airframe
parts.
The remaining inventory lines will continue to contribute
to sales and cash as they are sold down.
Customer aircraft part requirements are demand driven.
IAP parts inventory is listed on the various global aircraft
parts data bases. IAP recently upgraded to a Platinum
subscriber on ILS (Inventory Locator Service) a major
Global aircraft parts and service data base. The Platinum
supplier designation enables a supplier to move to the
top of a parts enquiry as a supplier of up to date and
accurate inventory from a quality assured supplier.
PTB’s working capital position continues to improve
enabling it to increase profitability through various
initiatives.
One-off trading and special projects remains an
important part of the business but the changes to
aviation since the GFC has significantly reduced these
opportunities.
IAP has a robust loan repayment program. Turnover is
forecast to strengthen in the 2014 financial year which
will improve IAP’s liquidity.
Emerald has an aggressive loan repayment program with
debt reduction from asset sales and improved asset
utilisation being the primary operational targets.
Concentrating on core competencies
IAP Business
IAP continues the shift back to core trading activities
and a reduced reliance on one-off trading opportunities
and special projects to make a profit.
The internet and the GFC have required IAP to become
more focused on select product lines. The traditional
IAP parts business covered a wide range of inventory
and lines. The focus on select product lines produced an
improvement in the IAP Parts Business profitability. In
PTB Brisbane
PTB is a focused engine business concentrating on
the PT6 and TPE331 engines. The TPE331 engine is a
significant contributor to Brisbane’s profitability but it is
a mature engine with a slowly declining operator base.
PTB has a number of TPE331 engine management
contracts which will assist maintain profitability into the
future. The PT6A small engine is becoming PTB’s primary
focus for profitability growth. This focus on the small
PT6A engine is enabling PTB to build up an ever increasing
presence in the region through its engine management
programs and tailored engineering offerings.
A core competency for PTB’s business is the sale of
engines, engine parts and airframe parts. This business
will increase as PTB’s increased working capital will enable
the Company to take advantage of opportunities as we
market the Company’s engine maintenance programs to
potential customers world-wide.
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Chairman and Managing Director’s Review
for the year ended 30 June 2013 (Continued)
Asset utilisation and deployment
of PTB’s turbine engine business.
IAP
IAP has not been able to generate significant recurring
earnings in its engine and airframe business but its
leased aircraft generate 29 per cent of its total margin
as recurring earnings.
The
Indonesian operator of Emerald-leased ATP’s
is providing recurring earnings for IAP’s parts sales
business.
PT6A Engine Shop Capability
The Pratt & Whitney PT6A engine continues
in
production on a number of working aircraft types.
The engine will continue to be the engine of choice for
10 to 20 seat aircraft requiring a turbo prop engine.
PTB’s focus has been to continue developing its PT6A
repair and overhaul capability as this engine will be the
backbone for future profit growth in the PTB engine
business.
PTB now overhauls the complete PT6A engine and are
building the support and capability to produce engines
to meet the Company’s engine management contract
requirements. This enables the business to access the
profit opportunities forgone in the past when engines
were subcontracted offshore. The Group’s increased
working capital has enabled the PT6A business to
create a production line of engines based on cores that
were previously traded to generate cash to meet bank
repayment commitments.
In addition the Business has been able to retain core
engines for the tear down department to provide parts
for the workshop and sales.
The PT6A workshop has been expanded with continued
investment in tooling and equipment to build the PT6A
section’s capabilities.
A PT6A test cell is required to complete the buildup of
PT6A capability.
The key to managing future profitability is to ensure,
as capacity increases, the workshop remains nimble
and responsive to customer requirements; this is our
competitive advantage over the large volume-driven
engine shops.
The Emerald business continues to have under utilised
aviation assets. These include a small door ATP freighter,
one ATP passenger and two HS748 aircraft which are
in the UK under care and maintenance programs. In
addition, an ATP and HS748 are mothballed in the UK.
The small door ATP freighter is being converted to a
large freight door for lease to our Indonesian operator
of ATP’s. In addition the Indonesian operator has a
need for a further large freight door ATP freighter
and management is considering the various options,
including funding to meet this requirement.
IAP is currently repairing the Metro 23 which will become
available for lease or sale in the new financial year.
Recurring Earnings
PTB
PTB made a decision several years ago to build the PT6A
and TPE 331 engine business through the recurring
earnings generated by engine management contracts
with operators.
This has reduced reliance on the traditional engine
business based on all engine shops quoting unrealistically
low “come on” prices to secure the customer and then
spending the next month or so talking the price up; thus
creating a very dissatisfied customer.
PTB had two engine management contracts in the
Maldives. Private equity investors acquired and merged
the two companies and competitively tendered out
the PT6A engine management contract to the major
international players in the PT6A engine business. This
was a major block of PT6A engines and the competition
was international and aggressive. The Company won a
five year contract with the new combined Maldivian
operator. Our seamless support and performance over
the last seven years were vital in securing this contract.
This is a major endorsement of our engine management
contract model.
PTB Brisbane’s engine management contracts generate
recurring earnings of over half of PTB’s TPE331 and
PT6 margin. The majority of contracts are for five years.
Only one contract was not renewed as the customer
transitioned to a new aircraft type. The level of recurring
PT6A workshop margin is set to increase significantly
as we increase the number of overhauls able to be
performed by the shop.
PTB’s method of meeting its support requirements under
the engine management contracts has evolved over a
number of years to become the “intellectual property”
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Chairman and Managing Director’s Review
for the year ended 30 June 2013 (Continued)
Targeting a Natural Currency Hedge
A review of our results over prior years will give a
snapshot of how operational performance has been
affected by USD/AUD currency movements.
.
As the Group’s post GFC position with its financiers has
improved we have implemented a program to balance
USD receivables with USD-denominated borrowings.
This natural hedge has been of assistance in reducing the
effect of the currency movements.
With the Company’s continued improvement in working
capital and the bank’s cooperation we expect to be in a
position to further improve this balance.
3. Activities covered under PTB Group’s
Aviation Asset Management Operations
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
PTB: TPE331 together with PT6A turbine engine
repair and overhaul at the repair facility in
Brisbane; trading in spare parts for engines and
aircraft parts primarily for contract customers;
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
(cid:72)(cid:81)(cid:74)(cid:76)(cid:81)(cid:72)(cid:3)(cid:83)(cid:82)(cid:82)(cid:79)(cid:17)(cid:123)(cid:3)
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Chairman and Managing Director’s Review
for the year ended 30 June 2013 (Continued)
4.
Commentary on Operations during the Year
A summary of the results for the year is as follows:
Actual
2013
$000
Budget
2013
$000
Actual
2012
$000
Actual
2011
$000
Actual
2010
$000
PTB Business (before unrealised currency movement)
4,171
IAP Business
Emerald Assets
Emerald : Interest
Emerald : Currency movement (realised & unrealised)
Emerald : Discount on asset realisation transactions
PTB : Currency - unrealised
Corporate Overheads
Emerald : Refinancing (loan forgiveness)
Bad and doubtful debts
Profit before Tax
Add Back
Financing Costs
Depreciation
EBITDA
Share Price 30 June
EPS
NTA backing per share
355
901
(710)
(357)
(1,859)
(313)
3,283
1,181
416
3,443
(248)
947
2,904
2,128
1,227
1,944
598
628
(696)
(946)
(1,256)
(2,212)
-
-
-
341
(2,670)
(265)
40
(79)
-
(4)
-
(361)
(1,275)
(1,148)
(1,443)
(1,414)
(1,333)
-
(328)
-
-
-
(282)
-
120
3,633
(395)
585
3,036
1,773
1,035
2,237
1,703
2,070
1,706
2,295
2,208
2,070
2,769
1,491
3,727
1,929
4,358
7,037
6,051
5,295
7,893
Cents
40
1.14
110
Cents
Cents
Cents
23
4.27
125
25
2.04
121
17
5.52
119
Average AUS/USD exchange rate
$1.03
$1.00
$1.03
$0.99
$0.88
AUD/USD exchange rate
The average AUD/USD exchange rate for the 2013 year of 1.03 is in line with the 2012 year average. The Group
expects that if the recent decline in the AUD/USD exchange rate is maintained for the 2014 year it will have a
positive impact on the Group’s profit performance for this period.
With the early repayment of the Indonesian long term HP debtor, loan reductions and the movements in the level of
USD creditors, the Company’s USD natural hedge balance has materially changed. Rebalancing of the Group’s loan
book with the aim to restore a balanced natural hedge position will be a key focus for the 2014 year.
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Chairman and Managing Director’s Review
for the year ended 30 June 2013 (Continued)
PTB Business Performance
The PTB Brisbane Business generated a profit before tax
and unrealised foreign currency movements of $4.171
million. This result is ahead of budget by $0.888 million.
This continues the excellent results generated by PTB in
the very competitive global turboprop engine market.
income continued
Engine rental
its decline and
performed significantly below budget. Rental income
has now stabilised. Engine rental income has become a
minor part of the PTB business as a result of the lack
of working capital as the Business paid down debt. The
transition to engine maintenance contracts has also
reduced the need for rental engines. There are however
rental opportunities, some in the less favoured parts of
the region. As PTB’s working capital position strengthens
we can revisit engine rental opportunities, bearing in
mind that the capacity to fund engines offshore will be a
limiting factor. However the Business can expect steady
profitability growth in its rental engines division.
Engine sales margins were to budget and have stabilised.
The Group’s results were historically very dependent on
engine sales. Engine sales are by their nature subject to
considerable variation which made it difficult to build
future strategies with consistent underlying earnings.
Over time we have reduced the reliance on engine sales.
In addition, engine management contracts have further
reduced the opportunity for engine sales to PTB’s
established client base. Engine sales however remain a
significant contributor to our gross margin and this is
expected to continue into the future.
the global standard. This was a major undertaking in cost
and time as maintenance manuals and procedures had
to be rewritten and new safety management systems
implemented.
Parts sales did not perform to budget and fell just short
of last year’s result. We continue to review how best to
build the spare parts sales to non-engine maintenance
contract customers as parts sales to engine maintenance
contract customers performed well. The increased
working capital will improve the capacity of this section
to create opportunistic parts sales.
A number of initiatives are in play which will promote
strong future growth for the business:
PT6A engine repair and overhaul
The Business continues to build this capability. As the
skill levels and the number of skilled staff build, PTB
can invest in plant and processes to further improve
workshop capability.
Working Capital opportunities
The PTB Business is a parts business with the margin
being made in the buy side of a transaction. We have
appointed a business development manager based
in Asia to comb the region for opportunistic buying
opportunities. This is expected to generate additional
sales margin opportunities for PTB’s parts, engine
sales and workshops. The increase in working capital is
expected to create additional leased engine and engine
sales opportunities.
Engine Management contracts
The Business receives extended credit terms from
several vendors which is an additional selling tool for
engine sales. The engines being produced by the PT6A
workshop will also create opportunities for engine sales.
The PTB business continues to develop the scope of its
engine management contracts and client base. These
contracts are the backbone of the recurring income and
cash flow for the Business.
EASA Approval
The Australian regulator CASA advised with the new
Part 145 maintenance approval the government was
working to establish reciprocal acceptance with various
countries and EASA. If this should happen the Business
might not need EASA approval. However government
progress in this area has not been productive in the past.
If we decide EASA certification will increase business
the process to achieve our CASA Part 145 (already
undertaken) will tick most of the regulatory boxes. The
final hurdle will be EASA’s costs to certify.
Opportunistic sales as a result of increased working
capital increased in the current year. This will continue
as a small but valuable contributor to the Business into
the future.
The workshop margin has increased 15 per cent
compared to the prior year’s result and comprises 54
per cent of all sales margin. The workshop remains the
key to extracting optimal profit from parts and engine
management contracts. The building of the PT6A repair
and overhaul capacity will continue without significant
disruption to the workshop’s increasing profitability.
The Business achieved CASA Part 145 maintenance
approval in May for its TPE331 and PT6A engine
business. This was an Australian government undertaking
to align Australia’s aviation maintenance approvals and
processes with EASA (European Air Safety Authority)
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Chairman and Managing Director’s Review
for the year ended 30 June 2013 (Continued)
Engine Test Cell
The test cell will be required as PT6A production ramps
up as the cost to freight and test in the USA will shorten
the payback period. There is a build lead time of 12
months with a forecast investment of $2 million.
Trade Finance
Several of the Group’s major vendors have offered
trade finance for engines purchased through them. We
continue to investigate various options where this trade
finance can be used to build the rental pool or provide
credit.
IAP Business performance
The IAP Business profit before tax of $0.355 million was
behind budget by $0.826 million but ahead of last year’s
result by $0.603 million.
The IAP traditional parts business and one-off trading
activities model continues to be challenged with reduced
enquiries from its traditional clients as a result of the
internet and reduced flying by the aircraft supported by
IAP.
IAP has recognised the change in its traditional business
and continues to review and implement changes to
improve profitability.
The Parts Sales Business margin was ahead of budget
until February and ahead of last year’s result. In the four
months to the end of June it fell behind by $0.520 million
and behind last year’s result by 13 per cent. The result
to February provides comfort that focus is the key as
management input from PTB had reduced from January.
To continue building parts sales focus the Parts Sales
Business was split into:
Each section is responsible for its margin and costs. A
sales manager is to be recruited to develop the airframe
business.
IAP’s 2014 Parts Sales Business’s forecast margin is
expected to increase over 2013 actuals with the part-
out of the three F100’s expected to underpin and
provide a future product line.
The leased aircraft in the IAP portfolio contributed 29
per cent of the sales margin and a 42 per cent increase
over prior year’s as aircraft available for lease have been
leased. One Metro 23 will be available for lease when
repaired. The lessee’s become Parts Sales customers for
IAP and engine repair and overhaul work for Brisbane.
IAP has an additional J32 available for refurbishment but
does not plan to invest cash in the refurbishment until it
has a customer.
One-off trading and special projects continue as a
valuable contributor to margin but at a reduced level.
IAP is expected to increase its profitability with minimal
reliance on special projects.
The focus continues on increasing the rate at which
inventory is turned into cash. In this regard, cash flow
generated by the combined IAP and Emerald Businesses
(set out in Section 7 below) was quite strong as
summarised below:
IAP & Emerald Cash Flow Summary
Asset Sales Proceeds
Operations & Working Capital movements
less financing charges
Capital Expenditure (Cash)
Loan repayments
2013
$
3,220
2,601
(930)
(3,910)
981
(cid:3)(cid:81)
(cid:3)(cid:81)
an engine and engine parts section; and
Net Movements in Cash
an airframe section.
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Chairman and Managing Director’s Review
for the year ended 30 June 2013 (Continued)
Emerald Assets
The Emerald 2013 result (excluding realised and
unrealised
abnormal
transactions) was a profit of $0.191 million (2012:
breakeven).
currency movements
and
The Business’s Indonesian customer paid USD 3 million
to repay its finance liability on one ATP freighter and
the Group paid down debt with the proceeds. A loss
of $1.859 million was incurred. At the same time it
committed to finance a further Large Freight Door ATP.
Following this transaction, the Emerald Business will have
reduced rental income until the third ATP commences
flying later in the year.
Emerald also sold an HS 748 on an HP lease to another
operator in Bangladesh. This produced a loss of USD
225,000 and cash of USD 375,000 on a payment
plan. The aircraft required significant engineering work
some of which would have been at Emerald’s cost. The
Bangladeshi operators have been challenging customers
and it made commercial sense to focus on profitable
opportunities. This operator will be a future customer
for aircraft parts and engines.
As indicated in the IAP Business performance section
above, cash flow generated by the combined IAP and
Emerald Businesses (set out in Section 7 below) was
quite strong.
Corporate Overheads
The Group’s corporate overheads were $1.275 million
(2012: $1.443 million) which was 11 per cent higher
than budget. Employment costs represent 53 per
cent (2012: 63 per cent) of overheads with 2013
expenditure of $0.687 million compared to $0.910
million for 2012.
Bad and Doubtful Debts
The Group recognised $0.328 million
impairment.
in debtors’
5.
Debt and Equity Finance
CBA Facility Review
The Group has met all its loan repayments and the CBA’s
covenant requirements.
is one further HS748
There
discussions continue on its sale.
in Bangladesh and
In 2014 the PTB Business plans to source loan funding
to support financing of engines to offshore customers.
The preparation of the third Large Freight Door ATP
for the Indonesian operator is well underway and the
aircraft is expected to be available early in the 2014
calendar year. The Group’s Bankers provided the funds
to meet a significant part of the cost required to bring
this aircraft on line.
Emerald’s cash flow is sufficient to meet its financier’s
repayment obligations without drawing on IAP or PTB
for other than short term bridging finance. The third ATP
will come on line in the second half of the 2014 financial
year and will further improve Emerald’s operating result
and cash flow position.
The conversion of the fourth ATP (from passenger
to freighter plus a large freight door installation) will
incur significant extra costs. Various options are being
investigated. In addition, we do not have the engineering
slots available to commence conversion until the third
aircraft is delivered.
The Emerald Business incurs significant cash costs for
insurance, care and maintenance, aircraft storage costs
and non-cash depreciation. A review is being carried out
to investigate how we minimise these costs.
Emerald continues to make slow but steady progress in
building into an ongoing profitable business.
6.
Statement of Financial Position and Net
Assets
The net asset position as at 30 June 2013 has been
maintained at $44.6 million.
Included in net assets are:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
Emerald assets: These are predominantly aircraft
assets of $12.7 million (2012: $13.6 million)
and extended credit receivables of $7.4 million
(2012: $13.1 million), being hire purchase
arrangements for aircraft.
IAP Assets: Land and Buildings $6.7 million
(2012: $6.8 million), Aircraft fixed assets $8.1
million (2012: $7.4 million), other fixed assets
$0.3 million (2012: $0.3 million), and spare parts
inventory of $11.2 million (2012: $11.6 million).
PTB Assets: Comprise plant & equipment of $3.9
million (2012: $4.1 million), engines and spare
parts inventory of $9.3 million (2012: $6.4
million).
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Chairman and Managing Director’s Review
for the year ended 30 June 2013 (Continued)
7.
Cashflows
The Group’s improving operating performance for 2013 is reflected in the cashflow result. Operating cashflow was
$6.5 million, which is $1.1 million higher than the previous year.
The following table outlines the source and application of cash by business groupings PTB & IAP/Emerald:
Cash Flow Summary 2013 Financial Year
IAP &
Emerald
$’000
PTB
$’000
Group
$’000
Cash Profits
Asset Sales Proceeds ¹
Capital Expenditure ²
Working Capital Movements
Financing Charges
Loan repayments
Net Movement in Cash Before Dividend
Dividend Payment
Net Movement in Group Cash
1,271
3,220
(930)
2,410
(1,080)
(3,910)
981
3,741
-
5,012
3,220
(550)
(1,480)
(2,100)
(620)
(190)
281
310
(1,700)
(4,100)
1,262
(250)
1,012
¹ Asset Sales Proceeds includes i) the payout by the long term Indonesian Finance debtor of $2.850 million, (ii) $0.330 million from
the payout of a Bangladeshi LT HP debtor for a HS 748 under finance lease (Both these items are categorised as “cash receipts from
customers” in the Consolidated Statement of Cash Flows) combined with (iii) $0.040 million of other asset proceeds.
“Proceeds on disposal of property, plant and equipment” as per the Consolidated Statement of Cash Flows comprises $2.080 million
for two Emerald ATP Engines being used on the Indonesian customer’s ATPs (settled through the customer’s prepaid maintenance
reserve account) combined with $0.040 million of other asset proceeds.
² Capital Expenditure in this table excludes $1.780 million of ATP engine cores removed from the Indonesian Customer’s ATPs
which were capitalised in Emerald’s accounts (settled through the customer’s prepaid maintenance reserve account). This amount
combined with the $1.480 million in the above cash flow table is reflected in the Consolidated Statement of Cash Flows item
“Payments for property plant & Equipment”.
As per the above table the Group has generated $8.230
million in cash from Asset Sales and Operations including
the early payout by Indonesia Lessor of the ATP Finance
Lease and the sale of the Bangladesh based HS748 to a
Bangladeshi operator.
The Group has used this cash to pay down related party
loans and CBA loans totaling $4.100 million. It has also
expended $1.480 million on capital investments.
IAP/Emerald’s capital expenditure mainly relates to
the conversion of a passenger ATP into a large freight
door freighter for our Indonesian customer (a lease
agreement for this aircraft was executed in February
2013). This ATP is expected to be operating early in
2014.
PTB has been investing in expanding facilities and tooling
at its Brisbane site which will support continued growth
in the PTB engine business.
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Chairman and Managing Director’s Review
for the year ended 30 June 2013 (Continued)
(cid:3)(cid:81)
Continuing to travel the globe to unearth possible
purchase opportunities
in the Group’s core
product lines;
(cid:3)(cid:81) Developing new (or renewing) engine care and
maintenance contracts;
(cid:3)(cid:81)
Continuing the focus on turning inventory into
cash;
(cid:3)(cid:81) Obtaining EASA approval to increase potential
markets for PT6A and TPE331 engines and
engine parts.
All of the above are components which will contribute
to the Group’s steady progress in continuing to build
profitability in the face of global economic challenges.
8. Management
In July 2013 PTB Brisbane appointed Carl Jepson as
General Manager. Carl has an MBA and extensive aviation
experience. He moved to PTB from a New Zealand
aviation company where he was general manager. Prior
to this, his experience included engineering management
and sales management in aviation related businesses.
The Group continues to build on developing or recruiting
staff with management skills to maintain and build
growth without losing its entrepreneurial flair.
9.
PTB Group’s Outlook
Progress has been slow but steady as we have worked
through the cash and operational constraints created
by the events of the last five years. This year there has
been a noticeable increase in PTB initiatives as working
capital increased.
The Group is confident progress will continue and the
focus continues on building a strong foundation for
improved operational performance and profitability.
The weakening of the AUD will assist profitability.
Harvey Parker
Chairman
For the next 12 months the Group will be concentrating
on:
(cid:3)(cid:81) Managing cash flow to pay down debt and build
working capital in each business;
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
Utilising working capital to build the core business
and increase profitability;
Craig Baker
Managing Director
Building IAP parts sales business to reduce
reliance on one-off trading;
Continuing building on the PT6 repair and
overhaul capability including the test cell;
(cid:3)(cid:81) Deploying underutilised aircraft through sale or
lease (as working capital allows) ;
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12
Directors’ Report
for the year ended 30 June 2013
Your Directors present the financial report of PTB Group
Limited and its controlled entities (“the Group”) for the
year ended 30 June 2013.
(cid:3)(cid:81)
The provision of finance for PT6A and TPE331
turbine engines for customers.
Directors
The following persons were Directors in office at any
time during or since the end of the year:
Name
H Parker
CL Baker
RS Ferris
Position
Director (non-executive), Chairman
Managing Director (Group)
Managing Director (IAP Division)
APS Kemp
Director (non-executive)
Principal Activities
The principal activities of the Group during the financial
year were the provision of the following services in
relation to aviation assets:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
A specialist Pratt & Whitney PT6A and Honeywell
TPE331 turbine engine repair and overhaul
business based at Brisbane, 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.
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.
The Company performed:
(cid:3)(cid:81)
(cid:3)(cid:81)
Specialist turbine engine repair and overhaul
based at Brisbane, Australia;
Trading operations in Australia and internationally
in aircraft turbine engines and related parts; and
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:
(cid:3)(cid:81)
(cid:3)(cid:81)
Global supply of aviation parts; and
Global aircraft and engine financing and sales.
Its business operations were 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 21 per cent of the expanded Group.
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.
In December 2006 the Company moved from the NSX
to the ASX. In conjunction with this move the Company
issued 2.5 million shares at $2 each to raise $5 million.
This followed capital raisings totaling $7.9 million earlier
in the period to fund part of the IAP Group and Emerald
assets acquisitions.
In June 2007 a USD 40 million financing and rental fund
was created with debt provided by an Australian financial
institution. The purpose of the fund was to acquire and
refurbish a diverse array of aviation assets for resale or
lease. By this time, PTB Emerald had also refurbished
and delivered one of the ATP and three of the HS748
freighters to European customers.
A brief summary of the years ended June 2008 to June
2012 as the Company dealt with the global financial
crisis and its aftermath is set out below:
FY 2008:
(cid:3)(cid:81)
Global financial crisis;
(cid:3)(cid:81) Decision made to sell aircraft rather than use the
rental fund; and
(cid:3)(cid:81) Delay in settlement by a Middle Eastern customer
on two of the LFD ATP aircraft impacted on the
interest and holding costs of the Emerald project.
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Directors’ Report
for the year ended 30 June 2013 (Continued)
FY 2009:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
The effect of the financial crisis continued to
impact on global passenger and freight activity,
creating a fall in aircraft values, the inability to
source financing, and significant oversupply
leasing
of aircraft which
opportunities;
limited sale and
(cid:3)(cid:81) One of Metro aircraft leased into South Korea;
fourth J32 aircraft deployed with NSW RPT
operator;
(cid:3)(cid:81)
(cid:3)(cid:81)
PTB engine maintenance contracts expanded;
and
Continued strengthening of Australian dollar.
The sale of the two LFD ATP aircraft did not
proceed as the customer defaulted;
FY 2011:
The Group was forced to renegotiate the $14.7
million Emerald loan to an amortising facility over
four years at a more expensive interest rate;
(cid:3)(cid:81)
(cid:3)(cid:81)
Substantial increase in operating performance of
PTB Division;
Good IAP Division result with one-off trading
events contributing strongly;
The facility was moved to AUD at request of the
Financier causing a $2.4 million currency loss;
(cid:3)(cid:81) Debt of $4.5 million paid down; and
The USD $40 million facility was lapsed as the
Group was unable to secure profitable projects
within its risk profile;
(cid:3)(cid:81)
Refinanced $4.6 million of Note finance by $4
million CBA Bank facility.
FY 2012:
As part of the strategic consolidation of its
operations, the Company settled on the Belmont
Land resulting in a profit of $1.9m (booked in the
2008 year); subsidiary Aeropelican Air Services
an RPT operator based at Newcastle Airport was
sold; the $4.5 million Unsecured Note facility was
rolled over; a purpose built workshop and office
complex in Brisbane was completed; and the
existing ANZ financing facilities were extended;
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
Good operational progress made with the PTB
Business and progress made in refocussing the
IAP Business;
Cashflow from operations up to $5.4 million; and
$3.5 million of debt paid down and AUD8.4
million of debt converted to USD to better match
with USD receivables.
Core operating business in Pacific Turbine and
IAP exceeded prior year and current forecasts
in a difficult year, and a major Australian freight
operator was signed up to an engine management
contract;
Prior to the 2009 year end, the two LFD
ATP aircraft were also sold to an Indonesian
freight operator on an extended credit type of
arrangement; and
(cid:3)(cid:81) Decision made to reduce the scope of the UK
refurbishment facility.
FY 2010:
(cid:3)(cid:81)
Emerald financier debt refinanced by CBA Bank
leading to a profit on settlement of approximately
$3.6 million;
(cid:3)(cid:81) MD 90 project in Indonesia (purchase of aircraft
for part-out and sale) was settled, financed on
a profit share basis by an international aviation
group;
A detailed discussion and analysis of the 2013 year’s
performance has been provided in the Chairman’s and
Managing Director’s Review included in this annual
report.
Operating Results
The consolidated profit for the financial year after
providing for income tax was $0.368 million (2012:
$1.375 million). Operating profit before tax for the year
was $0.585 million (2012: $1.773 million).
Financial Position
The net assets of the Group are $44.693 million as at
30 June 2013 (2012: $44.575 million).
Dividends
A fully franked dividend of 5.1 cents per share has been
declared and paid for the 30 June 2013 financial year
(2012: Nil).
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Directors’ Report
for the year ended 30 June 2013 (Continued)
Franking Credits
likely to result in unreasonable prejudice to the Group.
Franking credits available for subsequent financial years
based on a tax rate of 30 per cent are $11.020 million
(2012: $11.724 million).
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.
Future Developments, Prospects and
Business Strategies
The global aviation industry is currently experiencing
difficult trading conditions with lower passenger and
freight demand, and a shortage of available funding.
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.
Environmental Issues
The Group operates from Brisbane, Sydney, and
Bankstown Airport in Australia. It is required to meet
Brisbane Airport Corporation environment regulations,
the Commonwealth’s Airports (Environment Protection)
Regulations 1997. 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.
Information on Current Directors
Harvey Parker Dip P.A, B.A. MBA (Melb) (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 Australian Natural Proteins
Ltd (since October 2012), Chairman of DWS Limited
(since May 2006), Director and Chairman of Jumbuck
Entertainment Limited (since February 2009) and was
formerly Director of Riding for the Disabled Association
of Victoria Limited (resigned October 2010). He has
held no other Director positions with other listed
companies in the last three years.
The Group now has three broad business groupings
under its aviation asset management operations:
Craig Louis Baker CA, BCA (Managing Director –
Group)
Craig Baker was born in 1946 in New Zealand. He has
had extensive experience in the aviation industry and is
a qualified accountant having 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.
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
PTB: TPE331 together with PT6A turbine engine
repair and overhaul at the repair facility in
Brisbane; trading in spare parts for engines and
aircraft parts primarily for contract customers;
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.
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
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Directors’ Report
for the year ended 30 June 2013 (Continued)
Royston Stephen (Steve) Ferris B.Sc (Managing
Director – IAP Division)
Company Secretary
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 25 years.
Andrew is currently a Director of the following listed
companies: Silver Chef Limited from April 2005 and G8
Education Limited from March 2011. He was a director
of Eureka Group Holdings Ltd from March 2004 until
February 2011, and Trojan Equity Limited from May
2005 until March 2013.
He is a member of the audit and remuneration committees
of the Company.
Pierre Kapel was appointed as the Chief Financial Officer
and Company Secretary from 22 November 2010.
Pierre has Bachelor of Commerce from Newcastle
University and is a CPA.
Pierre has over 30 years’ experience in finance with a
significant part of his career with BHP in Australia and
Asia. He has a diverse business background ranging
from Steel manufacturing & processing, Mining,
Rural, Industrial Waste processing, Quarrying, Asphalt
manufacture & paving and Civil Construction. Pierre has
held CFO roles in the Private and Public sectors and was
the CFO of ERS Limited.
Audit & Risk Management Committee Chairman
Russell Cole B.Com, FCA was appointed independent
Chairman of the Audit and Risk Management Committee
on 28 September 2012. Russell graduated from the
University of Queensland with a Bachelor of Commerce
and is a Chartered Accountant and Registered Company
Auditor.
Russell has over 25 years’ experience in public practice
as a Chartered Accountant specialising in the corporate
in audit, risk
sector with significant experience
management and corporate governance. He has spent
15 years as an audit & assurance partner of national
accounting firms with a particular focus on emerging
listed companies.
Remuneration Report (Audited)
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.
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16
Directors’ Report
for the year ended 30 June 2013 (Continued)
Principles used to determine the nature
A.
and amount of remuneration
Non-executive Directors
Non-executive 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 of 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.
in the form of cash bonuses for
Compensation
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 to 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:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
Competitiveness and reasonableness;
Acceptability to shareholders;
Performance alignment of compensation;
Transparency; and
Capital management.
Executive Directors
The Executive Directors’ pay and reward framework has
the following components:
(cid:3)(cid:81)
(cid:3)(cid:81)
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.
Executive Directors’ base pay
Superannuation:
includes statutory and salary sacrificed superannuation
contributions.
incentives:
Cash bonus
Short-term performance
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 per cent of
base pay.
As advised in the following “Section B. Details of
Remuneration”, no short term incentives were paid to
Executive Directors during the financial year (2012: Nil).
3
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Directors’ Report
for the year ended 30 June 2013 (Continued)
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).
As advised in the following “Section D Share-Based
Payment Compensation” no options were issued under
the scheme during the year (2012: Nil).
Company Performance, Shareholder Wealth and
Directors’ and Executive Remuneration
The base salaries for the executives are substantially in
accordance with the market for executives of similar
levels.
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Directors’ Report
for the year ended 30 June 2013 (Continued)
B.
Details of Remuneration
Short - term benefits
Post -
employment
Other
Total
Share-
based
payment
Cash
salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
Super-
annuation
Long-
term
benefits* Options
$
$
$
$
$
2013 Year Directors
H Parker
(Non-Executive Director)
CL Baker
(Managing Director - Group)
RS Ferris
(Managing Director - IAP)
APS Kemp
(Non-Executive Director)
30,000
-
247,227
-
-
-
3,000
-
24,840
4,277
-
-
33,000
276,344
266,699
-
-
23,119
4,267
-
294,085
21,800
-
-
-
-
-
21,800
Total Directors
565,726
-
-
50,959
8,544
-
625,229
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D
E
L
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N
O
C
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N
A
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E
T
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U
O
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I
Other Key Management Personnel
P Kapel
(Company Secretary and CFO)
178,264
Other Key Management
Personnel
178,264
2012 Year Directors
H Parker
(Non-Executive Director)
CL Baker
(Managing Director - Group)
RS Ferris
(Managing Director - IAP)
APS Kemp
(Non-Executive Director)
30,000
231,498
271,180
-
-
-
-
-
-
25,000
3,163
-
206,427
-
25,000
3,163
-
206,427
-
-
3,000
-
-
33,000
49,519
4,277
-
285,294
-
23,118
4,386
-
298,684
21,800
-
-
-
-
-
21,800
Total Directors
554,478
-
-
75,637
8,663
-
638,778
Other Key Management Personnel
P Kapel
(Company Secretary and CFO)
Other Key Management
Personnel
178,626
178,626
-
-
-
16,804
3,163
-
198,593
-
16,804
3,163
-
198,593
* comprising accrued long service leave
Directors’ Report
for the year ended 30 June 2013 (Continued)
There were no other executives in the current or prior
year. All Directors and other key management personnel
are employed by PTB Group Limited except Mr S Ferris
who is employed by IAP Group Australia Pty Ltd from 1
July 2008. 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 previous years, 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 2013 are set out below:
CL Baker (Managing Director – Group)
Pierre Kapel (Company Secretary and Chief
Financial Officer)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
Term of agreement – Minimum of three years
commencing 22 November 2010 ;
Base annual salary – $207,000 inclusive of 9
per cent superannuation + LSL accrual + Bonus
to be reviewed annually by the remuneration
committee; and
Notice period – Termination by three 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
No
remuneration options were granted to key
management personnel, exercised or lapsed during this
or the prior financial year.
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
Term of agreement – Minimum of one year
commencing 18 December 2012;
Base annual salary – $280,000 inclusive of 9
per cent 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 as noted above.
RS Ferris (Managing Director – IAP)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
Term of agreement – Minimum of one year
commencing 18 December 2012;
Base annual salary – $280,000 inclusive of 9
per cent 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 as noted above.
19
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Directors’ Report
for the year ended 30 June 2013 (Continued)
E
Additional Information
Nominations Committee
Given the size of the Company and of the Board the
separate Nominations Committee was discontinued in
the year ended 30 June 2008 and the responsibility for
this function now rests with the Board.
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 Directors 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 willful breach of duty.
The policy prohibits disclosure of details of the cover and
the amount of the premium paid.
Details of remuneration: cash bonuses and
options
Any grant of options and cash bonuses are discretionary.
No options or bonuses were granted during the year.
Share-based compensation: options
There were no options granted during the year. As at 30
June 2013 there are no options on issue.
Share Options
Shares Issued on Exercise of Options
There were no options outstanding as at the
commencement of the financial year and no options
were issued during the year ending 30 June 2013, No
options were issued subsequent to year end.
Shares Under Option
At the date of this report, PTB Group Limited has no
unissued ordinary shares under option.
Loans to Directors and Executives
There are no loans to Directors and executives.
Meetings of Directors
Attendances by each Director during the financial year
were as follows:
Number of
Meetings Held
While a Director
Number of
Meetings
Attended
Full Board
H Parker
CL Baker
APS Kemp
RS Ferris
Remuneration Committee
H Parker
APS Kemp
Audit and Risk
Management Committee
H Parker
APS Kemp
11
11
11
11
2
2
4
4
10
11
11
9
2
2
4
4
3
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Directors’ Report
for the year ended 30 June 2013 (Continued)
Proceedings on Behalf of the Company
Rounding of Amounts
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.
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.
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.
This report is made in accordance with a resolution of
the Directors.
H Parker
Chairman
Brisbane
23 August 2013
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, if any, during the year is compatible with the
general standard of independence for auditors imposed
by the Corporations Act 2001.
During the year no non-audit service fees were paid
or payable for services provided by the auditor of the
company (2012: Nil).
The lead auditor’s independence declaration is set out on
page 22 and forms part of the Directors’ Report for the
year ended 30 June 2013.
Williams Hall Chadwick continues in office in accordance
with Section 327 of the Corporations Act 2001.
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Auditor’s Independence Declaration
for the year ended 30 June 2013
Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 to the directors
of PTB Group Limited
I declare that, to the best of my knowledge and belief during the year ended 30 June 2013 there have been no
contraventions of:
(i) the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Geoffrey Stephens
Director
Williams Hall Chadwick
Dated this 23rd day of August 2013
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Corporate Governance Statement
for the year ended 30 June 2013
Scope of responsibility of the Board
Composition of the Board
for
the Company’s corporate
Responsibility
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;
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 four Directors;
b) The Board must comprise of members with
a broad range of experience, expertise, skills
and contacts relevant to the Company and its
business;
c) At least half of the Board should be non-executive
Directors independent from management; and.
d) 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 an independent non-
executive Director, and C Baker and RS Ferris who are
executive Directors.
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.
b) Oversight of
its
the Company
strategy, operational performance, controls and
accountability systems;
including
c) Appointment and removal of senior executives
and the Company Secretary;
d) Reviewing, ratifying, and monitoring 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;
f) Approving and monitoring the progress of major
capital expenditure, capital management, and
acquisitions and divestures; and
g) Approving and monitoring financial and other
reporting and the operation of committees.
The Managing Director and other senior executives are
responsible for:
a) Developing corporate strategy, performance
targets, budgets, and business and operational
plans for review and ratification by the Board;
b) Developing,
implementing, and maintaining
appropriate policies, procedures, and practices for
the management and control of the business; and
c) Execution of the overall corporate strategy and
business plans, and the day to day management
of operations.
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Corporate Governance Statement
for the year ended 30 June 2013 (Continued)
Independence of Board Members
Board Charter and Policy
The Board has adopted the following definition of an
Independent Director:
An independent Director is a Director who is not a
member of management (a non executive Director) and
who:
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. The last amendment was on 28
June 2013. This charter sets out various other matters
that are important for effective corporate governance
including the following:
a) A detailed definition of ‘independence’;
b) A framework for the identification of candidates
for appointment to the Board and their selection;
c) A framework for individual performance review
and evaluation;
d) Proper training to be made available to Directors
both at the time of their appointment and on an
on-going basis;
e) Basic procedures for meetings of the Board and
its committees: frequency, agenda, minutes and
private discussion of management issues among
non-executive Directors;
f) Ethical standards and values: formalised in a
detailed code of ethics and values;
g) Dealings
in securities: as per the Group’s
Securities Trading Policy last updated on 22
December 2010 that is lodged with the ASX; and
h) Communications with shareholders and the
market.
a)
is not a substantial shareholder of the Company
or an officer of, or otherwise associated, directly
or indirectly, with a substantial shareholder of the
Company;
c)
b) has not, within the last three years, been employed
in an executive capacity by the Company or
another Group member, or been a Director after
ceasing to hold any such employment;
is not a principal of a professional advisor to
the Company or another Group member, or an
employee materially associated with the service
provided, except in circumstances where the
advisor might be considered to be independent
notwithstanding their position as a professional
advisor due to the fact that fees payable by
the Company to the advisor’s firm represent an
insignificant component of its overall revenue;
d) is not a significant supplier or customer of the
Company or another Group member, or an officer
of or otherwise associated, directly or indirectly,
with a significant supplier or customer;
f)
e) has no significant contractual relationship with
the Company or another Group member other
than as a Director;
is free from any interest and any business or other
relationship, which could, or could reasonably
be perceived to, materially interfere with the
Director’s ability to act in the best interests of
the Company; and
g) has not served on the Board for a period which
could, or could reasonably be perceived to,
materially interfere with the Director’s ability to
act in the best interests of the Company.
.
The Board regularly assesses the independence of each
Director in the light of the interests disclosed by them.
The independence of Directors is disclosed in the annual
report. Where the independence of a Director is lost,
this will be immediately disclosed to the market.
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Corporate Governance Statement
for the year ended 30 June 2013 (Continued)
Audit and Risk Management Committee
(‘ARM Committee’)
Remuneration Committee
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 Russell Cole (Independent external Chairman of
ARM Committee), Harvey Parker (Independent Non-
Executive Director) and Andrew Kemp (Independent
Non-Executive Director).
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) Board and committee structure to facilitate a
proper review function by the Board;
b) Internal control framework including management
information systems;
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 (Chairman) and
Andrew Kemp.
Among the functions performed by the Committee 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;
the performance of senior
c) Oversight of
management and non-executive Directors; and
d) Recommendations to the Board in relation to the
remuneration of senior management and non-
executive Directors.
c) Corporate risk assessment and compliance with
Meetings are held at least twice each year.
internal controls;
d) Management processes supporting external
Nominations Committee
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.
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.
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;
j) Overseeing business continuity planning and risk
mitigation arrangements.
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.
25
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Corporate Governance Statement
for the year ended 30 June 2013 (Continued)
Best practice commitment
Charter
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 Charter is available on the Company’s
website.
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.
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
the ASX document, ‘Corporate Governance Principles
and Recommendations with 2010 amendments
– second edition’ (‘Guidelines’) applying to
listed
entities with the aim of enhancing the credibility and
transparency of Australia’s capital markets.
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
Recommendation 1.1
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.
Code of ethics and values
Recommendation 1.2
The Company has developed and adopted a detailed
code of ethics and values to guide Directors in the
performance of their duties
Code of conduct for transactions in securities
The Company has developed and adopted a Securities
Trading Policy (lodged with the ASX) to regulate
dealings in securities by Directors, senior management,
employees and their associates. This is designed to
ensure fair and transparent trading in accordance with
both the law and best practice.
The process for evaluating the performance of
senior executives is outlined in section A and B of the
“Remuneration Report” included in the Directors’ Report.
PTB Group complies with the Guidelines in this area.
Recommendation 1.3
The Corporate Governance Statement and Board Charter
are available on the Company’s website. Performance
evaluations have taken place in accordance with the
process disclosed.
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Corporate Governance Statement
for the year ended 30 June 2013 (Continued)
Principle 2 – Structure the Board to add value
Recommendation 2.4
As described above, 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.
Recommendation 2.5 and 2.6
The performance of the Board, its committees, and
is evaluated annually by the
individual Directors
Chairman in accordance with the Company’s Corporate
Governance Charter. This review includes the mix and
experience and skills represented, the effectiveness of
Board processes, and the performance and contribution
of individual members in terms of the execution of
the required Board functions as described above,
for the relevant year. Members of the Board whose
performance is unsatisfactory are asked to retire. The
Charter is available on the Company’s website. PTB
Group complies with the Guidelines in these areas. As at
the date of this report the board has not implemented
a formal policy of performance evaluation of the Board,
committees and Directors. Given the size and complexity
of the business such evaluation has to date taken place
informally however the board has undertaken to consider
implementation of a more formalised policy during the
year ending 30 June 2014.
Recommendation 2.1
Of the four Company Directors, Harvey Parker and
Andrew Kemp are independent non-executive Directors.
Together the Directors have a broad range of experience,
expertise, skills, qualifications and contacts relevant to
the business of the Company.
The Board composition does not comply with
recommendation 2.1 of the ASX Corporate Governance
Guidelines as the majority of Directors are not
independent Directors (50 per cent independent).
The Board has adopted the following measures to ensure
that independent judgment is achieved and maintained
in respect of its decision-making processes:
(cid:3)(cid:81)
The Chairman is an independent non-executive
Director;
(cid:3)(cid:81) Directors are entitled to seek
independent
professional advice at the Company’s expense,
subject to the approval of the Chairman;
(cid:3)(cid:81) 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.
(cid:3)(cid:81)
The size and complexity of the business does not warrant
additional Directors at the present time.
Recommendation 2.2 and 2.3
Harvey Parker is an independent non-executive Director
and Chairman of the Company. PTB Group complies
with the Guidelines in these areas.
27
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Corporate Governance Statement
for the year ended 30 June 2013 (Continued)
The Board is of the view that it supports a culture where
recruitment and promotion are based on merit and that
workforce flexibility is supported. However, given the
size of the Company and of the Board, it is considered
that setting diversity targets and measurement systems
are not appropriate and hence PTB Group does not fully
comply with this guideline.
Principle 4 – Safeguard integrity in financial
reporting
Recommendation 4.1, 4.2, 4.3 and 4.4
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 are
detailed on page 25 under Audit and Risk Management
Committee.
While recommendation 4.2 requires all members to
be non-executive directors, the chairman of the ARM
Committee is not a director of the company but has been
appointed because of his specialist expertise in financial
reporting, governance and audit related matters and for
his independence.
The Charter is available on the Company’s website and
the names, qualifications, and the number of meetings
attended has been disclosed in the Directors’ Report.
Principle 3 – Promote ethical and responsible
decision making
Recommendation 3.1
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 in its Corporate
Governance Charter 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:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
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. The Charter is available
on the Company’s website. PTB Group complies with
the Guidelines in these areas.
Recommendation 3.2, 3.3, 3.4 and 3.5
Guidelines for promoting diversity: The Board aims
to create a corporate culture that embraces diversity
by applying transparent merit based principles to
recruitment, training and promotion opportunities.
It supports employment flexibility and employee career
development and recognises the importance of creating
an environment that is conducive to the appointment of
suitably qualified employees, management and Board
candidates who will maximise the achievement of the
corporate goals.
recommendations
Best practice
issued by ASX
recommend a separate disclosure in the annual report
of measurable objectives for measuring gender diversity
and the proportion of women employees in the whole
organisation, in senior positions and on the Board.
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Corporate Governance Statement
for the year ended 30 June 2013 (Continued)
Principle 5 – Make timely and balanced disclosure
Recommendation 5.1 and 5.2
Documented procedures
in accordance with the
Corporate Governance Charter 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 for monitoring the Company’s activities in
light of its continuous disclosure policy. The Company’s
continuous disclosure obligations are also reviewed as a
standing item on the agenda for each regular meeting
of the Board. Each Director is required at every such
meeting to confirm details of any matter within their
knowledge that might require disclosure to the market.
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.
The Charter is available on the Company’s website. PTB
Group complies with the Guidelines in these areas.
Principle 6 – Respect the rights of shareholders
Recommendation 6.1 and 6.2
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.
Announcements and reporting results are available on
the Company’s website. Shareholders are encouraged to
attend and participate at general meetings and are given
an opportunity to put forward questions they would like
addressed at annual 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
Recommendation 7.1, 7.2, 7.3 and 7.4
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 has implemented a
policy framework included in the Corporate Governance
Charter, designed to ensure that the Group’s risks are
identified and that controls are adequate, in place, and
functioning effectively.
incorporates the maintenance of
This framework
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.
Arrangements put in place by the Board to monitor risk
management include:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
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;
Presentations made to the Board throughout
the year by appropriate members of the Group’s
management
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.
(and/or
team
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:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
the
The Company’s financial reports are complete
and present a true and fair view, in all material
respects, of
financial condition and
operational results of the Company and Group,
and are in accordance with relevant accounting
standards;
The above statement is founded on a sound
internal
system of
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.
risk management and
The Charter is available on the Company’s website. PTB
Group complies with the Guidelines in these areas.
29
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Corporate Governance Statement
for the year ended 30 June 2013 (Continued)
Principle 8 - Remunerate fairly and responsibly
Recommendations 8.1, 8.2, 8.3 and 8.4
As detailed above, the Company has a Remuneration
committee to assist the Board and report to it on
issues relevant to remuneration
remuneration and
policies and practices
including those for senior
management and executive Directors. These policies
are included in the Company’s Corporate Governance
Charter and its current members are Harvey Parker and
Andrew Kemp.
Harvey Parker and Andrew Kemp are independent
Directors and its composition does not fully comply
with the recommendations in 8.2 of the ASX Corporate
Governance Guidelines as it has less than three members.
The Board believes these matters are acceptable given
the size of the Company, the nature of its business and
the commercial experience of the members.
The Company’s polices relating to Directors’ and Senior
Executives’ remuneration are set out in the annual
report.
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.
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.
The Charter is available on the Company’s website and
the names and the number of meetings attended has
been disclosed in the Directors’ Report
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Consolidated Statement Of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2013
31
Revenue
Total Revenue
Cost of goods sold
Employee benefits expense
Depreciation and amortisation
Repairs and maintenance
Bad and doubtful debts
Finance costs
Net foreign exchange gain/(loss)
Net gain/(loss) on sale of property, plant and equipment
Other expenses
Total expenses
Profit before income tax expense
Income tax expense
Profit for the year attributable to the owners
of the parent entity
Other comprehensive income net of tax
Total comprehensive income for the year
attributable to the owners of the parent entity
Basic earnings per share
Diluted earnings per share
Note
2
3
4
20
20
2013
$’000
2012
$’000
27,704
27,704
32,275
32,275
(14,079)
(17,712)
(5,469)
(2,070)
(49)
(328)
(5,390)
(2,070)
(83)
(282)
(1,703)
(2,208)
(617)
(405)
(2,399)
(27,119)
585
(217)
368
-
163
150
(3,070)
(30,502)
1,773
(398)
1,375
-
368
1,375
Cents
1.14
1.14
Cents
4.27
4.27
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
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Consolidated Statement Of Financial Position
as at 30 June 2013
2013
$’000
Note
2012
$’000
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Inventories
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
Issued Capital
Reserves
Retained earnings
Total Equity
19(a)
2,352
5
6
8
5
6
9
10
11
8
12
13
7
15
16
13
14
15
16
17
18
6,244
12,180
197
20,973
7,123
9,141
31,727
1,776
4,334
2
54,103
75,076
6,179
3,091
-
766
1,125
11,161
14,944
3,238
68
972
19,222
30,383
44,693
1,354
6,627
12,355
257
20,593
12,111
6,072
33,517
2,112
4,334
3
58,149
78,742
4,792
7,457
-
849
1,714
14,812
14,687
3,357
64
1,247
19,355
34,167
44,575
30,367
28,973
13,956
370
44,693
-
15,602
44,575
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
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Consolidated Statement Of Changes in Equity
for the year ended 30 June 2013
Issued Capital
Reserves
Note
Share
Capital
Other
Equity
Securities
Total
Issued
Capital
Dividend
Appropriation
Reserve
Retained
Earnings
Total
Equity
$’000
$’000
$’000
$’000
$’000
$’000
-
-
-
-
-
-
-
-
-
14,227
43,200
1,375
1,375
-
-
1,375
1,375
15,602
44,575
15,602
44,575
368
-
368
-
368
368
Balance at 1 July 2011
28,790
183
28,973
Total comprehensive income:
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
-
-
-
-
-
-
-
-
-
Balance at 30 June 2012
28,790
183
28,973
Balance at 1 July 2012
28,790
183
28,973
Total comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners and
other transfers
Contributions of equity net of
transaction cost
Transfer to reserves
Dividend recognised for the year
-
-
-
17
18
18
1,394
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2013
30,184
183
30,367
1,394
-
-
1,394
15,600 (15,600)
-
(1,644)
13,956
-
(1,644)
370
44,693
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
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Consolidated Statement Of Cashflows
for the year ended 30 June 2013
2013
Note
$’000
2012
$’000
Cash Flow From Operating Activities
Cash receipts from customers (inclusive of goods & services tax)
31,349
29,468
Cash payments to suppliers and employees
(inclusive of goods & services tax)
Interest received
Finance costs
Income tax (paid)/ refund
Net cash provided by operating activities
19(b)
Cash Flow From Investing Activities
Payments for property, plant and equipment
Proceeds on disposal of property, plant and equipment
Net cash (used in)/ provided by investing activities
Cash Flow From Financing Activities
Proceeds from borrowings raised
Repayment of borrowings
Repayment of lease liabilities
Payment of dividend
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
19(a)
(24,756)
(23,797)
1,606
(1,703)
-
6,496
(3,264)
2,124
(1,140)
1,952
(2,208)
(2)
5,413
(2,616)
1,472
(1,144)
2,473
10,615
(6,365)
(13,968)
(202)
(250)
(167)
-
(4,344)
(3,520)
1,012
146
1,158
749
(603)
146
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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Notes to the Financial Statements
for the year ended 30 June 2013
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 the financial statements for PTB Group
Limited as the consolidated entity consisting of PTB
Group Limited and its subsidiaries.
(a) Basis of preparation
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 acquisition method of accounting is used to account
for business combinations by the Group (refer note 1(i)).
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards,
other authoritative pronouncements of the Australian
Accounting Standards Board, Australian Accounting
Interpretations and the Corporations Act 2001. This
Report was authorised by the Board of Directors for
issue on 23 August 2013.
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.
The consolidated financial statements and notes of
PTB Group Limited comply with International Financial
Reporting Standards (IFRS).
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 statement of profit or loss and other
comprehensive income, 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(ac).
(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
2013 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 28.
Subsidiaries are all those entities over which the Group
has the power to control the financial and operating
(c) Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief
operating decision maker. The chief operating decision
maker, who is responsible for allocating resources and
assessing performance of the operating segments, has
been identified as the Executive Directors.
(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 (‘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. 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
statement of profit or loss and other comprehensive
income, 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.
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Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
1.
Summary of Significant
Accounting Policies (continued)
(d)(ii) Foreign currency translation
(continued)
Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain
or loss. Translation differences on non-monetary assets
and liabilities such as equities held at fair value through
the statement of profit or loss and other comprehensive
income are recognised in the 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:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
Assets and liabilities for each statement of
financial position presented are translated at
the closing rate at the date of that statement of
financial position;
Income and expenses for each statement of
profit or loss and other comprehensive income
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
in other comprehensive income.
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 recognised in other
comprehensive income. 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 statement of profit
or loss and other comprehensive income statement, as
part of the gain or loss on sale where applicable.
(e) Revenue recognition
Revenue
is measured at the fair value of the
consideration received or receivable. Amounts disclosed
as revenue are net of returns, trade allowances, rebates,
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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 Group bases its
estimates on historical results, taking into consideration
the type of customer, the type of transaction and the
specifics of each arrangement. 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:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
Revenue from the sale of goods is recognised when
persuasive evidence exists that the significant
risks and rewards of ownership of the goods have
passed to the buyer, the consideration can be
measured reliably and collectability is probable.
Risks and rewards are considered passed to the
buyer at time of delivery to customer or where
an executed sales agreement, or an arrangement
exists, indicating there has been a transfer of the
risks and rewards to the customer, the goods are
complete and available to be despatched;
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;
Interest on extended credit receivables (under hire
purchase agreements) is 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); and
recognised on a basis
Rental
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.
income
is
(f) Unearned revenue
Unearned revenue includes amounts received in advance
from customers. Such amounts are recorded as revenue
in the statement of profit or loss and comprehensive
income when the above revenue recognition criteria are
met.
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
Summary of Significant
1.
Accounting Policies (continued)
(g)
Income tax
The income tax expense for the year is the tax payable on
the current year’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 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 is recognised in profit or loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity respectively.
Tax consolidation legislation
PTB Group Limited and its wholly-owned Australian
tax
controlled entities have
implemented
the
consolidation legislation effective 1 July 2008. The head
entity, PTB Group Limited, and the controlled entities in
the tax consolidated group account for their own current
and deferred tax amounts. These tax amounts are
measured as if each entity in the tax consolidated group
continues to be a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts,
PTB Group Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed
from controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as
amounts receivable from, or payable to, other entities in
the Group.
Any difference between the amounts assumed and
amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or
distribution from) wholly-owned tax consolidated
entities. PTB Group limited may also require payment of
interim funding amounts to assist with its obligations to
pay tax instalments. The funding amounts are recognised
as current intercompany receivables or payables.
(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(p). 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 statement of financial
position as a finance lease obligation, net of finance
charges.
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Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
1.
Summary of Significant
Accounting Policies (continued)
(h) Leased assets (continued)
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(t).
Finance leased assets are amortised on a diminishing
value basis over the estimated useful life of the asset.
Refer note 1(p).
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.
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).
(i) Business combinations
(k) Cash and cash equivalents
issued or
The acquisition method of accounting is used to account
for all business combinations regardless of whether
equity
instruments or other assets are acquired.
The consideration transferred for the acquisition of
a subsidiary comprises the fair value of the assets
liabilities
instruments
transferred, equity
incurred or assumed at the date of exchange. The
consideration transferred also includes the fair value
of any contingent consideration arrangement and the
fair value of any pre-existing equity interest in the
subsidiary. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their
fair values at the acquisition date. On an acquisition-
by-acquisition basis, the Group recognises any non-
controlling interest in the acquiree either at fair value or
at the non-controlling interest’s proportionate share of
the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree, and
the acquisition-date fair value of any previous equity
interest in the acquiree over the fair value of the Group’s
share of the net identifiable assets acquired is recorded
as goodwill. If those amounts are less than the fair value
of the net identifiable assets of the subsidiary acquired
and the measurement of all amounts has been reviewed,
the difference is recognised directly in profit and loss as
a bargain purchase.
For the purpose of presentation in the statement of
cash flows, 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 statement of
financial position.
(l)
Trade and other receivables
Trade and other receivables are recognised initially at
fair value and subsequently measured at amortised cost
using the effective interest method, less provision for
impairment. Trade receivables are due for settlement in
30 to 90 days.
Collectability 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 statement of profit or loss
and other comprehensive income. Cashflows relating to
short-term receivables are not discounted if the effect of
discounting is immaterial.
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Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
1.
Summary of Significant
Accounting Policies (continued)
(m)
Inventories
income. When the Directors are of the view that
collection is no longer possible and the recovery action
has ceased the amount in the allowance account is
offset against the loan or receivable.
Raw materials, work in progress, and finished goods
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 reporting 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 reporting 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(p).
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.
Inventories are classified as non-current assets if the
asset is expected to be realised in a period greater than
twelve months from balance date.
(n) Other financial assets
loans and
The Group classifies its financial assets in the following
categories: financial assets at fair value through
statement of profit or loss and other comprehensive
income,
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
statement of
financial position, 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 date which are
classified as non-current assets. Loans and receivables
are included in trade and other receivables in the
statement of financial position.
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. Losses are recognised in the
statement of profit or loss and other comprehensive
income and reflected in an allowance account. When an
event occurring after the impairment was recognised
causes the amount of the impairment loss to decrease
the decrease in impairment loss is reversed through the
statement of profit or loss and other comprehensive
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Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
1.
Summary of Significant
Accounting Policies (continued)
(p) Property, plant and equipment
Property, plant and equipment is stated at historical
cost less accumulated 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 statement
of profit or loss and other comprehensive income during
the financial period in which they are incurred.
Increases in the carrying amounts arising on revaluation
of land and buildings are credited, net of tax, in other
comprehensive income and to the revaluation reserve
in shareholders’ equity. To the extent that the increase
reverses a decrease previously recognised as a loss, the
increase is first recognised in the income statement.
Decreases that reverse previous increases of the same
asset are first recognised in other comprehensive income
to the extent of the remaining surplus attributable to the
asset, all other decreases are to profit or loss.
Land is not depreciated. Depreciation on other assets
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 statement of profit or loss and
other comprehensive income in which the depreciation
and amortisation of property, plant and equipment is
included is ‘depreciation and amortisation’.
The estimated useful lives are as follows:
Class
Buildings
Leasehold improvements
Leasehold improvements - leased
Plant and equipment
Plant and equipment – leased
Rental engines
Airframes
Life
40 years
5 years
6 years
3 - 10 years
6 - 8 years
Basis
SL
SL
SL
DV
DV
5,500 - 7,000 hours
Actual hours as a proportion of
estimated total operating hours
6-10 years
SL
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These are
included in the statement of profit or loss and other
comprehensive income. 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.
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.
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each balance date.
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)).
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Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
Summary of Significant
1.
Accounting Policies (continued)
(q)
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. The allocation is
made to those cash-generating units or groups of cash-
generating units that are expected to benefit from
the business combination in which the goodwill arose,
identified according to operating segments (note 26).
Computer software
incurred
in acquiring software and
licenses
Costs
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 employees’
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. The line item in the statement
of comprehensive income in which the amortisation
of computer software is included is ‘depreciation and
amortisation’ expense.
(r) 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.
(s) 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 statement of profit or loss
and other comprehensive income 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.
Borrowings are removed from the statement of financial
position 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 date.
(t) 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.
(u) Employee benefits
Wages and salaries, annual leave and sick leave
including non-
Liabilities for wages and salaries,
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. The
liability for annual leave and accumulating sick leave is
recognised in the provision for employee benefits. All
other short-term employee benefit obligations are
presented as payables.
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
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Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
Summary of Significant
1.
Accounting Policies (continued)
(v) Provisions
(u)
Employee benefits (continued)
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. Prepaid
contributions are recognised as an asset to the extent
that a cash refund or a reduction in the future payments
is available.
Share-based payments
Share based compensation benefits are provided to
employees via the PTB Group Limited Employee Share
Option Scheme as detailed in note 22.
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.
Profit sharing and bonus plans
The Group recognises a provision where contractually
obliged or where there is a past practice that has
created a constructive obligation. Bonus payments are
discretionary and subject to Board approval.
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.
(w) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a
deduction, net of tax, from proceeds.
(x) 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.
(y) 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.
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 that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
3
1
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 2013 (Continued)
Summary of Significant
1.
Accounting Policies (continued)
(ac) Critical accounting estimates
and judgements
(z) Goods and services tax
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST), except:
(cid:3)(cid:81)
(cid:3)(cid:81) 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;
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; or
Cash flows are presented on a gross basis and
the GST components of cash flows arising
from investing or financing activities which are
recoverable from, or payable to the taxation
authority, are presented as operating cash flows.
(cid:3)(cid:81)
(aa) 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 statements. Amounts
in the financial statements have been rounded off in
accordance with that class order to the nearest thousand
dollars, or in certain cases, the nearest dollar.
(ab) General
PTB Group Limited is a public company limited by shares,
incorporated and domiciled in Australia. Listed below is
the registered office, principal place of business, and its
principal administrative office:
22 Orient Avenue
Pinkenba QLD 4008
The Group evaluates estimates and
judgements
incorporated into the financial report based on historical
knowledge and best available current
information.
Estimates assume a reasonable expectation of future
events and are based on current trends and economic
data, obtained both externally and within the company.
Key estimates and judgements impacting the financial
statements are as follows:
Impairment
impairment
The Group tests six monthly whether goodwill has
in accordance with the
suffered any
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 11 for
details of these assumptions and the potential impact of
changes to the assumptions.
Long Service Leave (LSL)
The Group estimates the pattern of LSL taken based
on history and utilises management’s judgement in
determining the cash flow estimates of payments of
LSL. These estimates are then utilised to determine the
NPV of these expected LSL payments and the adequacy
of the provision.
Hire Purchase Receivables
judgement
Management applies
in assessing the
recoverability of its hire purchase receivables The
Group assesses both the current payment performance
and operational knowledge of the debtor’s business
operation as the Group is in regular contact with the
debtor as it is responsible for undertaking scheduled
engine maintenance and is a supplier of spare parts for
the aircraft under lease to the LT HP debtors maintenance
department.
43
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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
Accounting Standards Board, including:
AASB 1: First-time Adoption of Australian
Accounting Standards to clarify the requirements
in respect of the application of AASB 1 when an
entity discontinues and then resumes applying
Australian Accounting Standards;
AASB 101: Presentation of Financial Statements
and AASB 134:
Interim Financial Reporting
to clarify the requirements for presenting
comparative information;
AASB 116: Property, Plant and Equipment to
clarify the accounting treatment of spare parts,
stand-by equipment and servicing equipment;
AASB 132 and Interpretation 2: Members’ Shares
in Co-operative Entities and Similar Instruments
to clarify the accounting treatment of any tax
effect of a distribution to holders of equity
instruments; and
AASB 134 to facilitate consistency between the
measures of total assets and liabilities an entity
reports for its segments in its interim and annual
financial statements.
This Standard is not expected to significantly
impact the Group’s financial statements.
44
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
1.
Summary of Significant
Accounting Policies (continued)
(ad) New accounting standards
and interpretations
New standards and interpretations not yet adopted
The following standards, amendments to standards and
interpretations have been identified as those which may
impact the entity in the period of initial application. They
are available for early adoption at 30 June 2013, but
have not been applied in preparing this financial report:
(i) AASB 2012–2: Amendments to Australian
Accounting Standards – Disclosures – Offsetting
Financial Assets and Financial Liabilities (applicable
for annual reporting periods commencing on or
after 1 January 2013).
AASB 2012–2 principally amends AASB 7:
Instruments: Disclosures to require
Financial
entities to include information that will enable
users of their financial statements to evaluate
the effect or potential effect of netting
arrangements,
rights of set-off
associated with the entity’s recognised financial
assets and recognised financial liabilities, on the
entity’s financial position.
including
This Standard does not impact the Group’s
financial statements.
(ii) AASB 2012–3: Amendments to Australian
Accounting Standards – Offsetting Financial
Assets and Financial Liabilities (applicable for
annual reporting periods commencing on or after
1 January 2014).
This Standard adds application guidance to
AASB 132: Financial Instruments: Presentation
to address potential inconsistencies identified
in applying some of the offsetting criteria of
AASB 132, including clarifying the meaning of
“currently has a legally enforceable right of set-
off” and that some gross settlement systems
may be considered equivalent to net settlement.
(iii) AASB 2012–5: Amendments to Australian
Accounting Standards arising
from Annual
Improvements 2009–2011 Cycle (applicable for
annual reporting periods commencing on or after
1 January 2013).
This Standard amends a number of Australian
Accounting Standards as a consequence of
the
Improvements to
IFRSs 2009–2011 Cycle by the International
issuance of Annual
3
1
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 2013 (Continued)
2.
Revenue
Sales revenue
Sale of goods
Services
Rental of engines/aircraft
- Minimum lease payments
- Contingent rentals
Other revenue
Interest
- Extended credit receivables (hire purchase agreements)
- Other
Other
Total revenue
3.
Profit before income tax expense
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 engines/aircraft
- Leased plant and equipment
Operating lease rentals – minimum lease payments
- Premises
- Equipment
Impairment losses (bad and doubtful debts)
- Trade debtors
Net foreign exchange (gain)/loss
Defined contribution superannuation expense
Finance costs
2013
$’000
2012
$’000
16,151
6,689
1,214
1,537
25,591
1,606
-
507
21,233
6,303
867
1,916
30,319
1,952
-
4
27,704
32,275
14,079
17,712
97
129
1,633
8
203
-
108
39
328
617
387
95
132
1,740
8
95
-
124
30
282
(163)
437
- Interests and finance charges paid/payable
1,703
2,208
45
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
4.
Income Tax Expense
(a)
Income tax expense
Current tax
Deferred tax arising from origination or reversal of temporary differences
Under/(over) provided in prior years
(b)
Numerical reconciliation of income tax expense
to prima facie tax
Profit/(loss) before income tax expense
Tax at the Australian tax rate of 30% (2012: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
- Sundry items
Under/(over) provided in prior years
Income tax expense/(benefit)
5.
Trade and Other Receivables
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)
Maintenance contract receivables
Impaired trade receivables
2013
$’000
2012
$’000
-
217
-
217
585
176
41
217
-
217
-
500
(102)
398
1,773
532
(32)
500
(102)
398
2013
$’000
2012
$’000
4,870
(5)
4,865
298
645
436
6,244
6,589
534
7,123
4,639
(301)
4,338
817
1,445
27
6,627
11,679
432
12,111
As at 30 June 2013 current trade receivables of the Group with a nominal value of $4,523 (2012: $297,157) were
impaired. The amount of the provision was $4,523 (2012: $301,000).
3
1
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 2013 (Continued)
5.
Trade and Other Receivables (continued)
The ageing of trade receivables is as follows:
Current
30 Days
60 Days
90+ Days
Total
2,701
-
2,701
2,800
(5)
2,795
369
-
369
935
(1)
934
160
-
160
424
(5)
419
1,640
(5)
1,635
480
(290)
190
4,870
(5)
4,865
4,639
(301)
4,338
Group – 2013
Trade receivables
Impaired trade receivables
Unimpaired receivables
Group – 2012
Trade receivables
Impaired trade receivables
Unimpaired receivables
Past due but not impaired
As at 30 June 2013, 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 holds retention of title over goods sold until cash is received.
Movements in the provision for impairment of receivables are as follows:
At 1 July
Provision for impairment recognised during the year
Receivables written off during the year as uncollectable
At 30 June
Maintenance contract receivables
2013
$’000
2012
$’000
(301)
(32)
328
(5)
(371)
(212)
282
(301)
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. 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.
47
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
5.
Trade and Other Receivables (continued)
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
Minimum hire purchase payments receivable
Future finance revenue
Within one year
Later than one year but not later than five years
Later than five years
Total hire purchase payments receivable
Representing receivables:
Current
Non-current
2013
$’000
2012
$’000
1,434
6,827
-
3,018
13,642
-
8,261
16,660
(789)
(238)
-
(1,027)
7,234
645
6,589
7,234
(1,573)
(1,963)
-
(3,536)
13,124
1,445
11,679
13,124
Refer note 30 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 25.
6.
Inventories
Current
Work in progress – at cost
Finished goods – at cost
Non-Current
Finished goods – at cost
753
11,427
12,180
9,141
9,141
441
11,914
12,355
6,072
6,072
Finished goods include 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.
7.
Tax balances – Current
Current tax liabilities
-
-
3
1
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 2013 (Continued)
8. Other Assets
Current
Prepayments
Deposits
Non-Current
Other
2013
2012
$’000
$’000
169
28
197
2
241
16
257
3
9.
Property, Plant and Equipment
Rental arrangements – aircraft and engines
The Group rents aircraft and engines under two general arrangements:
(cid:3)(cid:81)
(cid:3)(cid:81)
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 not later than five years
1,304
1,013
2,317
889
885
1,774
Non-current assets pledged as security
Refer note 13 for information on non-current assets pledged as security.
49
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
9.
Property, Plant and Equipment (continued)
Leasehold
Land &
Buildings
Improvements
Owned Owned Under
Lease
Plant &
Equipment
Owned Under
Lease
Rental Engines/
Aircraft
Owned Under
Lease
Assets Under
Construction
Owned Under
Lease
Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Year ended
30 June 2012
Opening net
book value
Additions
Transfers 1
Disposals
Depreciation/
amortisation
Closing net
book value
At 30 June 2012
Cost
Accumulated
depreciation
Net book value
Year ended
30 June 2013
Opening net
book value
Additions
Transfers 2
Disposals
Depreciation/
amortisation
Closing net
book value
At 30 June 2013
Cost
Accumulated
depreciation
Net book value
6,860
-
-
-
(95)
6,765
68
37
-
-
(8)
97
-
-
-
-
-
-
610
42
54
-
- 21,685
- 1,595
-
227
- (1,323)
945 3,642 1,017 34,827
721 2,616
205
16
-
-
(54)
(760)
(533)
-
-
- (1,323)
- (2,070)
(132)
- (1,740)
(95)
574
- 20,444 1,055 3,604
978 33,517
7,210
131
- 1,261
187 26,159 1,386 3,604
978 40,916
(445)
6,765
(34)
97
6,765
254
38
-
(97)
6,960
97
-
(38)
-
(8)
51
-
-
-
-
-
-
-
-
(687)
574
574
81
121
(24)
(187) (5,715)
-
- 20,444 1,055 3,604
(331)
- (7,399)
978 33,517
- 20,444 1,055 3,604
519
- 2,251
158
978 33,517
1 3,264
-
(983) 1,082
(42)
(631)
(453)
- (2,507)
-
-
-
- (2,531)
- (2,070)
(129)
- (1,633)
(203)
623
- 17,572 2,092 4,081
348 31,727
7,502
93
- 1,382
126 24,417 2,793 4,081
348 40,742
(542)
6,960
(42)
51
-
-
(759)
(126) (6,845)
(701)
-
- (9,015)
623
- 17,572 2,092 4,081
348 31,727
1
2
2012: Net Transfers consists of items transferred from asset under construction to plant and equipment of $54,000,
$533,000 of engine cores to inventory and $227,000 of engine refurbishment cost to Rental Engines/Aircraft fixed assets..
2013: Net Transfers of $453,000 represents the transfer of engine cores to inventory of $283,000 combined with the
elimination of profit in Property, Plant and equipment of $170,000.
3
1
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 2013 (Continued)
10. Deferred Tax Assets
The balance comprises temporary differences attributable to:
Tax losses
Accruals
Employee benefits
Doubtful debts
Other
Total deferred tax assets
2013
$’000
2012
$’000
563
95
250
1
867
1,776
423
47
235
260
1,147
2,112
Movements
Tax losses Accruals
Employee
benefits
Doubtful
debts
Other
Total
$’000
$’000
$’000
$’000
$’000
$’000
At 1 July 2011
268
37
221
112
951
1,589
(Charged)/credited to statement
of profit or loss and
other comprehensive income
At 30 June 2012
(Charged)/credited to statement
of profit or loss and other
comprehensive income
At 30 June 2013
155
423
140
563
10
47
48
95
14
235
15
250
148
260
196
1,147
523
2,112
(259)
(280)
1
867
(336)
1,776
51
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
11. Intangible Assets
Cost
Total Goodwill
Impairment tests for goodwill
2013
$’000
2012
$’000
4,334
4,334
4,334
4,334
Goodwill is allocated to the IAP operations as a single cash-generating unit (CGU) which is included in the IAP 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 12.6% (2012: 12.1%). An average growth rate of 4%
(2012: 3%) has been used. Management determined budgeted net profit based on past performance and Directors’
best estimates of profit estimates over a five year period. The discount rate reflects Directors’ best estimates of 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.
12. Trade and Other Payables
2013
$’000
2012
$’000
Trade payables and accruals
6,179
4,792
3
1
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 2013 (Continued)
13. Borrowings
Current
Bank overdraft
Bank loans
Lease liabilities
Unsecured
Other loans – related parties
Non-Current
Secured
Bank loans
Lease liabilities
Unsecured
Other loans – related parties
2013
$’000
2012
$’000
1,194
1,759
138
3,091
-
3,091
1,208
4,599
254
6,061
1,396
7,457
12,310
11,965
34
122
12,344
12,087
2,600
14,944
2,600
14,687
Information concerning the effective interest rates is set out in note 25.
Bank Overdraft, Bank Loans and Bills Payable
The bank overdraft, bank loans including bills payable are secured by way of a registered company charge over the
whole of the assets and undertakings of the parent entity and that of its subsidiaries PTB Emerald Pty Ltd and IAP
Group Australia Pty Ltd of $44.378 million (2012: $44.260 million). Included in the above are bank loans and
finance leases in the subsidiaries that are secured by the relevant aviation assets included in plant and equipment
and inventory of the relevant subsidiary. In addition the Group has complied with the requirement that, while there is
money owed to the lender, no return of capital, dividends or payments can be made to ordinary shareholders in PTB
or related parties without its approval.
Lease Liabilities
Lease liabilities and finance company loans 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 21 for information on other loans from related parties.
Effective Interest Rates
Information concerning the effective interest rates is set out in note 25.
Finance Facilities
Information concerning available facilities including used and unused portion of the finance facilities is set out in note 25.
Assets Pledged as Security
All assets of the Group are pledged as security for the facilities as noted above.
53
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
14. Deferred Tax Liabilities
The balance comprises temporary
differences attributable to:
Property, plant and equipment
Inventory
Other
Total deferred tax liabilities
Movements
2013
$’000
2012
$’000
2,926
103
209
3,238
3,003
11
343
3,357
Property, plant
and equipment
Inventory
Other
Total
$’000
$’000
$’000
$’000
At 1 July 2011
Charged/(credited) to statement of profit
or loss and other comprehensive income
At 30 June 2012
Charged/(credited) to statement of profit
or loss and other comprehensive income
At 30 June 2013
2,076
927
3,003
(77)
2,926
38
(27)
11
92
103
321
22
343
(134)
209
2,435
922
3,357
(119)
3,238
3
1
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 2013 (Continued)
15. Provisions
Current
Employee benefits
Service Warranties
Non-Current
Employee benefits
Movements in Provisions
Balance 1 July 2011
Provisions made during the year
Provisions used during the year
Balance at 30 June 2012
Provisions made during the year
Provisions used during the year
Balance at 30 June 2013
(a) Service warranties
2013
$’000
2012
$’000
766
-
766
68
719
130
849
64
Employee
Benefits
Service
Warranties
Total
$’000
$’000
$’000
735
328
(280)
783
372
(321)
834
130
-
-
130
-
-
(130)
-
865
328
(280)
913
372
(451)
834
Provision is made for the estimated warranty claims in respect of products sold which are still under warranty at
the end of the reporting period. Historically there have been no material warranty claims and this is not expected to
change in the future.
(b) Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes accrued annual leave, vesting sick leave and long service leave.
For long service leave it covers all unconditional entitlements where employees have completed the required period
of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire
amount of the provision 2013: $766,000 (2012: $719,000) is presented as current, since the group does not
have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the
group does not expect all employees to take the full amount of accrued leave or require payment within the next
12 months. The following amounts reflect leave that is not to be expected to be taken or paid within the next 12
months. Leave obligations expected to be settled after 12 months 2013: $350k (2012: $300k)
16. Other Liabilities
Current
Deferred revenue *
Deposits in advance
Non-Current
Deferred revenue *
* Deferred revenue relates to maintenance contract revenue received in advance.
2013
$’000
2012
$’000
485
640
1,125
794
920
1,714
972
1,247
55
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
17. Contributed Equity
Share capital
36,581,727 ordinary shares fully paid
(2012: 32,225,168 ordinary shares fully paid)
Other equity securities
Value of conversion rights (net of tax)
2013
$’000
2012
$’000
30,184
28,790
183
183
30,367
28,973
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.
All shares rank equally with regards to the Company’s residual assets. The holders of ordinary shares are entitled to
one vote per share at meetings of the Company.
Movements in ordinary share capital
No. of Shares
$000
Closing balance 30 June 2011
32,225,168
28,790
Share issues 2012
Closing balance 30 June 2012
Share issues 2013*
Closing balance 30 June 2013
-
-
32,225,168
28,790
4,356,559
36,581,727
1,394
30,184
*Issue of shares on 28 June 2013 pursuant to dividend reinvestment scheme at an issue price of $0.32 per share
(2012: Nil).
Options
As at balance date there are no outstanding options to purchase ordinary shares in the parent entity. All options
previously outstanding expired without being exercised in the year ended 30 June 2011.
An employee share option scheme was approved by shareholders on 3 June 2005. Refer to note 23 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.
3
1
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 2013 (Continued)
18. Reserves
Dividend Appropriation Reserve
Movements
Reserve balance 1 July
Transfer from retained earnings
Dividend Payment (5.1 cents per share fully franked)
Reserve balance 30 June
2013
$’000
2012
$’000
13,956
-
15,600
(1,644)
13,956
-
-
-
-
-
The dividend appropriation reserve is used to record the retained earnings which can be used for future dividend
payments.
57
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
19. Cash Flow Information
(a) Reconciliation of Cash and Cash Equivalents
Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to
items in the statement of financial position as follows:
Cash and cash equivalents assets – cash at bank and on hand
Bank overdraft (note 13)
2013
$’000
2012
$’000
2,352
(1,194)
1,158
1,354
(1,208)
146
(b) Reconciliation of Net Cash Flow from Operating Activities to Profit for the Year
Profit for the year
Depreciation and amortisation
(Gain)/loss on disposal of property, plant and equipment
Movement in impairment of trade receivables
Unrealised foreign currency movements
Changes in operating assets and liabilities
(Increase)/decrease in:
Trade and other receivables
Inventories *
Deferred tax assets
Other assets
Increase/(decrease) in:
Trade payables, accruals, and other liabilities
Employee benefits
Current tax liabilities
Deferred tax liabilities
Net cash flow from operating activities
* Net of transfers to/from property, plant and equipment
2013
$’000
2012
$’000
368
2,070
405
(296)
(755)
6,423
(2,438)
336
60
521
(79)
-
(119)
6,496
1,375
2,070
(150)
(70)
(688)
(2,597)
2,452
(523)
316
2,260
48
(2)
922
5,413
3
1
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 2013 (Continued)
20. 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
Weighted average number of ordinary shares used in
calculating basic earnings per share
Effect of dilutive securities:
- Director and employee share options
2013
cents
2012
cents
1.14
1.14
4.27
4.27
$’000
$’000
368
1,375
Number
Number
32,260,975
32,225,168
-
-
Weighted average number of ordinary shares and potential ordinary shares used in
calculating diluted earnings per share
32,260,975
32,225,168
21. 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)
RS Ferris, Managing Director (IAP Division)
Non-executive Directors
APS Kemp
Other key management personnel
The following person also had authority and responsibility for planning, directing and controlling the activities of the
Group, directly or indirectly, during the financial year:
Name
P Kapel
Position
Employer
Date appointed
Company Secretary and CFO
PTB Group Limited
22 November 2010
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
2013
$
2012
$
743,990
733,104
75,959
11,707
92,441
11,826
831,656
837,371
59
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
21. Key Management Personnel Disclosures (continued)
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
There were no options over ordinary shares in the company held during the financial year by Directors of PTB Group
Limited and other key management personnel of the Group, including their personally related parties (2012: Nil).
Share holding
The number 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
purchase
consideration
Received
during the
year on the
exercise of
options
Other
changes
(on-market
purchases
& DRP)
Balance at
the date of
appointment
/ resignation
Balance at
the end of
the year
No
No
No
No
No
No
2013
Directors
H Parker
CL Baker
RS Ferris
APS Kemp
296,000
1,931,704
6,908,054
385,163
-
-
-
-
Other key management personnel of the Group
P Kapel
-
2012
Directors
H Parker
CL Baker
RS Ferris
APS Kemp
296,000
1,931,704
6,908,054
250,982
-
-
-
-
-
Other key management personnel of the Group
P Kapel
-
-
-
-
-
-
-
-
-
-
-
-
47,175
392,501
825,729
208,382
14,318
-
-
-
134,181
-
-
-
-
-
-
-
-
-
-
-
343,175
2,324,205
7,733,783
593,545
14,318
296,000
1,931,704
6,908,054
385,163
-
3
1
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 2013 (Continued)
21. Key Management Personnel Disclosures (continued)
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
During 2007 PTB (Emerald) Pty Ltd (subsidiary) obtained a loan of $2,000,000 from Steve Ferris (Director). The
loan is repayable on 5 March 2016. Interest of 9% (2012: 10%) per annum (fixed) is payable monthly in arrears. The
loan is unsecured and has a balance outstanding at 30 June 2013 of $2,600,000 (2012: $3,531,587). This loan is
subordinated to the CBA to the extent of $2,600,000.
In March 2013 IAP Group Australia Pty Ltd repaid in full the at call loan facility from Steve Ferris from the proceeds
of the early payout of the Indonesian LT HP Receivable (2012: $464,106 at interest rate of 9.5% per annum).
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.
A Director, Mr R S Ferris, is the major shareholder and Chairman of Skyforce Aviation Pty Ltd (Skyforce). During the
year ended 30 June 2013 IAP Group Australia Pty (IAP), as the owner of an aircraft under lease to Toll Aviation Pty
Limited (Toll), finalised an agreement with Toll and Skyforce in which Skyforce manages the aircraft leased to Toll on
behalf of IAP.
During the year ended 30 June 2013 IAP ceased to provide aircraft maintenance services at its Bankstown Airport
aircraft hangar and entered in an agreement with Skyforce whereby all IAP Bankstown Aircraft Maintenance
employees’ employment was transferred to Skyforce. IAP provided aircraft maintenance services to Skyforce and
Skyforce provided aircraft maintenance services to IAP during the year ended 30 June 2013.The services provided
were invoiced at market rates.
Aggregate amounts of each of the above types of other transactions with key management personnel of the Group
are as follows:
Amounts recognised as revenue
Rental Income from Metro Aircraft
Cost of the provision of maintenance services
Amounts recognised as expense
Cost of the provision of maintenance services
Interest expense*
2013
$
2012
$
224,707
225,110
449,817
-
57,679
57,679
40,074
344,468
384,542
22,667
377,089
399,756
Aggregate amounts receivable/payable arising from the above types of transactions with key management
personnel of the Group:
– current borrowings
– non-current borrowings
-
1,395,693
2,600,000
2,600,000
*
represents interest paid on the two unsecured loans payable by Group companies to R.S Ferris as detailed above.
61
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
22. 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.
There were no options granted or exercised during the financial year and no options were outstanding at the current
or prior financial year end.
23. Remuneration of Auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity:
2013
2012
$
$
Audit Services – Williams Hall Chadwick (2012: Crowe Horwath)
Audit or review of the financial reports
129,548
156,414
Total remuneration for audit services
129,548
156,414
There was no other remuneration paid to related practices of the auditor, or other non-related audit firms.
3
1
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 2013 (Continued)
24. Commitments
(a) Finance leases
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
2013
$’000
2012
$’000
148
36
-
184
(10)
(2)
-
172
138
34
172
284
128
-
412
(30)
(6)
-
376
254
122
376
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
Later than five years
169
629
172
970
146
531
247
924
Operating leases mainly comprise leases of premises in Australia (Bankstown, Sydney) and in the UK (Blackpool).
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.
(c) Remuneration commitments
Commitments for payment of salaries and other remuneration under long-term employment contracts in in place at
the reporting date but not recognised as liabilities payable:
Less than one year
Greater than one year but not later than five years
341
-
341
466
81
547
Remuneration commitments comprise the minimum amounts payable to C Baker, S Ferris and P Kapel upon termination
under their service agreements.
63
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
24. Commitments (continued)
(d) Capital commitments
No Capital expenditure contracted for at balance date.
25. 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 transaction 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.
Where derivatives are used they 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.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Trade and other receivables
Other assets
Trade and other payables
Borrowings
Other liabilities
30-Jun-13
30-Jun-12
USD
GBP
USD
GBP
$’000
£’000
$’000
£’000
1,651
9,506
35
(4,927)
(8,945)
(100)
7
-
-
1,338
16,977
-
5
2
-
(173)
(2,113)
(167)
-
-
(11,946)
(548)
-
-
3
1
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 2013 (Continued)
25. Financial Risk Management and Other Financial Instrument Disclosures (continued)
(a) Market risk (continued)
Group sensitivity
Based on the financial instruments held at 30 June 2013, 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 $335,000 higher/$192,000 lower (2012: $236,000 higher/$289,000 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.
Equity would have been $335,000 higher/$192,000 lower (2012: $236,000 higher/$289,000 lower) had the
Australian dollar weakened/strengthened by 10% against the US dollar due to the reasons noted above. The Group’s
natural hedge position at year end is unfavorable in a climate of declining exchange rates as the foreign currency
liability exposure is higher than the foreign currency denominated assets. This imbalance has recently occurred due to
the payout of two USD denominated long term HP Debtors combined with an increase in USD creditors associated
with engine acquisitions as at year end. The Group’s exposure to other foreign exchange movements is not material.
As the company undertakes the majority of its sales and purchases in US dollars most profit is generated in US dollars
with the AUD reported profit positively impacted by any weakening of the Australian dollar.
(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 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.
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 in the following table:
65
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
25. Financial Risk Management and Other Financial Instrument Disclosures (continued)
(a) Market risk (continued)
Fixed Interest Rate Maturing
Effective
Weighted
Average
Interest
Rate
Floating
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
Non-
Interest
Bearing
Total
%
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
$’000
2013
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Extended credit
receivables
0.00%
2,347
-
-
-
-
-
-
13.2%
- 1,885 5,349
Total financial assets
2,347 1,885 5,349
Financial liabilities
Trade and other
payables
Bank overdraft
Bank Loans
Bills payable
Lease liabilities
Insurance Loan
Related party loans
-
-
7.09%
1,194
-
-
-
-
7.60%
- 1,231 7,090 1,508
33
7.39%
1,880
- 2,275
10.80%
4.58%
9.00%
-
-
-
138
52
-
18
-
-
15
-
- 2,600
-
1
-
-
Total financial liabilities
3,074 1,421 9,383 4,123
34
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
2,352
-
6,133
6,133
-
-
- 7,234
6,138 15,719
-
-
-
-
-
-
-
-
6,179
6,179
-
-
-
-
-
-
1,194
9,862
4,155
172
52
2,600
6,179 24,214
3
1
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 2013 (Continued)
25. Financial Risk Management and Other Financial Instrument Disclosures (continued)
(a) Market risk (continued)
Fixed Interest Rate Maturing
Effective
Weighted
Average
Interest
Rate
Floating
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
Non-
Interest
Bearing
Total
%
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
$’000
2012
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Extended credit
receivables
0.00%
1,348
-
-
-
-
-
-
-
-
12.60%
- 1,445 1,763 9,916
Total financial assets
1,348 1,445 1,763 9,916
-
-
-
-
-
-
-
-
-
6
1,354
-
5,614
5,614
-
-
- 13,124
5,620 20,092
Financial liabilities
Trade and other
payables
Bank overdraft
Bank loans
Bills payable
Lease liabilities
Insurance Loan
-
-
-
-
-
-
-
-
4,792 4,792
8.42%
1,208 -
-
-
-
-
-
- 1,208
7.98%
100 4,374 2,168 4,040
306
79
-
- 11,067
7.78%
5,375
-
-
-
-
-
-
- 5,375
10.34% -
254
122
-
-
-
-
4.06% -
122 -
-
-
-
-
-
376
122
Related party loans
9.94% - 1,396 2,600
-
-
-
-
- 3,996
Total financial liabilities
6,683 6,146 4,890 4,040
306
79
-
4,792 26,936
There are no other interest bearing financial assets and liabilities.
Group sensitivity
As the majority of the interest rates are fixed, at 30 June 2013 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 (2012: immaterial).
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.
67
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
25. Financial Risk Management and Other Financial Instrument Disclosures (continued)
(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.
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:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
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 2013 the largest 10 debtors
comprised approximately 71% (2012: 77%) of total receivables. It should be noted that the largest debtor
is an extended credit receivable to a customer in Indonesia which accounts for 44% (2012: 56%) of total
receivables.
The Group has security over the underlying asset in the event of a default, in conjunction with guarantees of
$5 million USD from the parent entity of the customer. Other trade receivables comprise 29% (2012: 33%)
of total receivables; and
(cid:3)(cid:81)
The receivables are concentrated in six main geographical areas. Refer to note 26 for further information.
At balance date cash was held with the Commonwealth Bank of Australia.
3
1
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 2013 (Continued)
25. Financial Risk Management and Other Financial Instrument Disclosures (continued)
(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.
Finance Facilities
Available facilities
Bank overdraft
Bank loans - chattel mortgage
- other
Bills payable - multi option
Finance Company Leases & Loans
Related party facilities
Amounts utilised
Bank overdraft
Bank loans - chattel mortgage
- other
Bills payable - multi option
Finance Company Leases & Loans
Related party facilities
Unused facilities
Bank overdraft
Bank loans - other
Consolidated
2013
$’000
2012
$’000
1,542
679
9,279
4,155
172
2,600
1,500
3,629
7,563
5,375
376
3,996
18,427
22,439
1,194
679
9,235
4,155
172
2,600
1,208
3,629
7,560
5,375
376
3,996
18,035
22,144
348
44
392
292
3
295
69
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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 2013 (Continued)
25. Financial Risk Management and Other Financial Instrument Disclosures (continued)
(c) Liquidity risk (continued)
Maturities of financial liabilities
The tables below analyse the Group’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.
1 year
or less
1 to 2
years
2 to 3
years
3 to 4
years
4 to 5
years
Over 5
years
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Group 2013
Non-derivatives
Non-interest bearing
6,179
-
-
-
-
-
-
-
-
-
4,123
4,123
34
34
-
-
-
14,961
-
24,214
6,179
3,074
Variable rate
Fixed rate
Total financial liabilities
1,674
1,421
9,274
1,400
9,383
10,783
Group 2012
Non-derivatives
Non-interest bearing
4,792
-
-
-
-
-
Variable rate
Fixed rate
Total financial liabilities
1,308
6,147
12,247
1,100
4,889
5,989
4,275
-
-
4,040
8,315
306
306
79
79
4,792
6,683
15,461
-
-
-
26,936
Bank overdraft
The bank overdraft facilities may be drawn at any time. The interest rate is variable and is based on prevailing market
rates.
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.
Related party loans
The related party loan is at the interest rate of 9.0% (2012: 9.5% & 10%) per note 21.
Bills payable
The multi-option facility includes variable rate commercial bills of $4,155,000 (2012: $5,375,000) at a weighted
average interest rate of 7.39% (2012: 7.78%). For each drawing of a bill, a rate is quoted by the bank at the time of
draw down. The bills have terms between one and two years from drawdown date. All bills will mature within 15 to
16 months from the year end.
Maturities of financial liabilities
The previous tables analyse the Group’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.
3
1
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 2013 (Continued)
26. Segment Information
The Group has three reportable segments:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
PTB: Covering the operations of the holding company PTB Group Limited specialising in PT6 and TPE331
Turboprop engines. The business repairs, sells hires and leases PT6 and TPE331 engines, maintains under
contract related engines, and trades in related engine and airframe parts.
IAP: Covering the operations of the IAP Group Australia Pty Ltd trading in aircraft, jet aircraft engines,
airframes and related parts. This business is an aircraft owner and leases aircraft to airline operators under
both operating and finance leases.
Emerald: Covers the operation of PTB (Emerald) Pty Ltd the owner of the aircraft acquired from Emerald
Airways UK which are leased to airline operators under both operating and finance leases.
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/PNG/New Zealand, Pacific Islands, America, Asia, Africa, and
Europe.
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.
The following tables outline the distribution of the Group’s sales, adjusted EBITDA, assets and liabilities by those
geographical markets by business segment.
.
71
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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
72
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
26. Segment Information (continued)
Australia
PNG &
NZ
Pacific
America
North &
South
Asia
Africa
Europe Unallocated
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
2013
(i) Revenue
PTB
Total Segment Revenue
13,755 3,395
2,778
7,556
Inter-segment Revenue
(7,547)
-
-
-
Revenue from external
customers
6,208 3,395
2,778
7,556
3
-
3
Emerald
Total Segment Revenue
Inter-segment Revenue
Revenue from external
customers
IAP
-
-
-
-
-
-
-
-
-
(456)
-
141
-
(456)
141
53
-
53
-
-
-
Total Segment Revenue
Inter-segment Revenue
3,113
(296)
27
-
2,286
2,328
-
-
156
-
412
-
2,817
27
2,286
2,328
156
412
-
-
-
-
-
-
- 27,540
- (7,547)
- 19,993
-
-
-
-
-
-
-
(315)
-
(315)
8,322
(296)
8,026
-
9,025 3,422
5,064
9,428
300
465
- 27,704
1,138
699
572
1,557
1
-
674
-
-
6
-
-
(1,958)
(188)
481
-
490
-
89
33
-
(154)
11
-
87
-
98
-
3,978
- (2,146)
-
-
-
1,771
-
3,603
Adjusted EBITDA
1,812
705
1,053
Revenue from external
customers
Unallocated
Total Unallocated
Revenue
Revenue from external
customers
(ii) Adjusted EBITDA
PTB
Emerald
IAP
Unallocated
3
1
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 2013 (Continued)
26. Segment Information (continued)
2013
Australia
PNG &
NZ
Pacific
America
North &
South
Asia
Africa
Europe Unallocated
Total
$’000
$’000
$’000 $’000 $’000
$’000
$’000
$’000
(iii) Segment Disclosure Items
Depreciation & Amortisation
PTB
Emerald
IAP
Total
Impairment of Goodwill
PTB
Total
Impairment of Assets
PTB
Emerald
IAP
Total
278
-
1,040
1,318
-
-
-
-
-
-
62
-
-
62
-
-
-
-
-
-
Unrealised (Gain)/Loss on Foreign Currency
PTB
Emerald
IAP
Total
-
-
-
-
77
-
-
77
63
172
- (948)
(13)
(13)
50 (789)
52
141
-
-
-
40
52
181
-
-
16
16
-
441
-
441
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(91)
(1)
(92)
-
-
-
-
-
-
1
-
(2)
(1)
-
-
-
-
-
-
-
-
-
-
533
441
1,096
2,070
-
-
-
-
-
-
-
313
- (1,039)
-
-
(29)
(755)
73
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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
74
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
26. Segment Information (continued)
2013
Australia
PNG &
NZ
Pacific
America
North &
South
Asia
Africa
Europe Unallocated
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Capital Expenditure
PTB
Emerald
IAP
Total
553
-
414
967
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,297
-
2,297
-
-
-
-
553
2,297
414
3,264
-
24,696 48,370
Total Segment Assets
PTB
Emerald
IAP
Unallocated
Total
20,895 1,381
261 1,137
192
25,198
-
-
-
-
- 6,689
1,498
12,726
(13,532)
7,573
790
693
1,073
767
(11,164) 17,357
-
-
-
-
46,285 1,381
1,051 8,519
2,571
13,493
-
-
- 73,300
Total Assets Includes
Non-current Assets (other than financial assets and deferred tax)
PTB
Emerald
IAP
Total
8,643
169
-
-
-
-
24,696 33,508
2
24,205
-
-
- 5,091
1,498
12,719
(13,532)
5,778
-
-
-
-
(11,164) 13,041
32,850
169
- 5,091
1,498
12,719
- 52,327
Total Segment Liabilities
PTB
Emerald
IAP
Total
1,169
544
1,764 2,985
91
1,772
-
-
-
36
127
58
3,032
544
1,800 3,170
-
294
-
294
2
121
147
270
-
-
-
-
6,464
633
2,013
9,110
3
1
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 2013 (Continued)
26. Segment Information (continued)
Australia
PNG &
NZ
Pacific
America
North &
South
Asia
Africa
Europe Unallocated
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
2012
(i) Revenue
PTB
Total Segment Revenue
8,639 2,068
1,939 10,423
Inter-segment Revenue
(1,049)
-
-
-
Revenue from external
customers
7,590 2,068
1,939 10,423
3
-
3
Emerald
Total Segment Revenue
Inter-segment Revenue
Revenue from external
customers
IAP
-
-
-
-
-
-
- 1,815
-
-
212
-
- 1,815
212
19
-
19
3
-
3
Total Segment Revenue
Inter-segment Revenue
3,011
(381)
36
-
2,042 2,537
-
-
425
-
533
-
2,630
36
2,042 2,537
425
533
-
-
-
-
-
-
Revenue from external
customers
Unallocated
Total Unallocated
Revenue
Total revenue from
external customers
(ii) Adjusted EBITDA
- 23,091
- (1,049)
- 22,042
-
-
-
-
-
-
-
2,030
-
2,030
8,584
(381)
8,203
-
10,220 2,104
3,981 14,775
640
555
- 32,275
PTB
Emerald
IAP
Unallocated
1,208
408
308 1,659
99
449
-
-
7
-
-
378
-
(32)
512
-
Adjusted EBITDA
1,756
415
686 2,139
-
237
89
-
326
3
6
32
-
41
-
-
-
-
-
3,586
310
1,467
-
5,363
75
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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
76
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
26. Segment Information (continued)
2012
Australia
PNG &
NZ
Pacific
America
North &
South
Asia
Africa
Europe Unallocated
Total
$’000
$’000
$’000
$’000 $’000
$’000
$’000
$’000
(iii) Segment Disclosure Items
Depreciation & Amortisation
PTB
Emerald
IAP
Total
Impairment of Goodwill
PTB
Total
Impairment of Assets
PTB
Emerald
IAP
Total
350
-
576
926
-
-
-
-
-
-
51
-
-
51
-
-
-
-
-
-
Unrealised (Gain)/Loss on Foreign Currency
PTB
Emerald
IAP
Total
-
99
2
101
79
-
1
80
48
258
-
-
48
-
273
531
-
72
-
72
-
442
-
442
-
-
-
-
-
-
-
-
31
31
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(880)
81
(799)
(62)
17
(45)
-
-
-
-
-
-
-
3
(59)
(56)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
707
514
849
2,070
-
-
-
-
-
-
79
(840)
73
(688)
3
1
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 2013 (Continued)
26. Segment Information (continued)
2012
Australia
PNG &
NZ
Pacific
America
North &
South
Asia
Africa
Europe Unallocated
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Capital Expenditure
PTB
Emerald
IAP
Total
380
-
2,213
2,593
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23
-
23
-
-
-
-
380
23
2,213
2,616
-
15,232 35,503
13,348
(17,194) 10,353
Total Segment Assets
PTB
Emerald
IAP
Unallocated
Total
17,344
342
1,107
1,478
- 13,942
257
24,383
-
-
5
-
349
1,597
1,753
725
1,962 30,774
-
-
-
-
-
-
- 76,630
41,984
347
1,456 17,017
1,753
14,073
Total assets includes:
Non-current Assets (other than financial assets and deferred tax)
PTB
Emerald
IAP
Total
8,921
2
20,523
29,446
-
-
-
-
-
-
- 12,495
-
-
-
15,232 24,153
12,726
(17,194)
8,029
-
1,015
355
-
1,962 23,855
- 13,510
355
12,726
- 56,037
Total Segment Liabilities
PTB
Emerald
IAP
Total
1,184
553
2,777
4
1,900
-
-
-
241
333
934
280
3,088
553
3,018
1,547
-
-
49
49
1
170
240
411
-
-
-
-
4,848
1,108
2,710
8,666
77
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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
78
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
26. Segment Information (continued)
Other segment information
(i) Segment revenue
Sales between segments are carried out at cost and are eliminated on consolidation. The revenue from external
parties reported to the Board is measured in a manner consistent with that in the income statement.
Revenues from external customers of PTB are derived from repairing, selling, leasing and maintaining PT6 and
TPE331 turbo prop aircraft engines under contract and trading in related engine and airframe parts. For IAP revenue
is derived from trading in aircraft, jet aircraft engines, airframes and related parts as well as leasing aircraft under
operating and finance leases. Emerald’s revenue is interest income from finance leases and revenue from operating
leases and sale of aircraft.
A breakdown of revenue and results is provided in the preceding tables.
Total Segment revenue
Intersegment eliminations
Interest revenue
Total revenue from continuing operations (note 2)
2013
$’000
2012
$’000
35,547
(7,843)
-
33,705
(1,430)
-
27,704
32,275
The Group is domiciled in Australia. The amount of its revenue from external customers in Australia is $9.025 million
(2012: $10.220 million) and the total revenue from external customers in other countries is $18.679 million (2012:
$22.055 million). Segment revenues are allocated based on the country in which the customer is located.
(ii) Adjusted EBITDA
The Board assesses the performance of the operating segments based on a measure of adjusted EBITDA.
This measurement basis excludes the effects of non recurring expenditure from the operating segments such as,
unrealised gains / (losses) on foreign currency movement and goodwill impairment. Interest income and interest
income on long term HP receivables is allocated to segments whereas finance costs and depreciation and amortisation
expenses are not allocated to segments.
A reconciliation of adjusted EBITDA to operating profit before income tax is provided as follows:
Adjusted EBITDA
Unrealised gain/(loss) on foreign Currency
Goodwill impairment
Impairment of other assets
Depreciation and amortisation
Finance Costs
Profit before income tax from continuing operations
2013
$’000
2012
$’000
3,603
755
-
-
(2,070)
(1,703)
585
5,363
688
-
-
(2,070)
(2,208)
1,773
3
1
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 2013 (Continued)
26. Segment Information (continued)
(iii) Segment assets
The amounts provided to the Board with respect to total assets are measured in a manner consistent with that of the
financial statements. These assets are allocated based on the operations of the segment and the physical location
of the asset.
Reportable segments’ assets are reconciled to total assets as follows:
Segment Assets
Unallocated:
Deferred tax assets
Total assets as per the statement of financial position
2013
$’000
2012
$’000
73,300
76,630
1,776
75,076
2,112
78,742
The total of non current assets other than financial instruments and deferred tax assets located in Australia is $32.850
million (2012: $29.446 million), and the total of these non current assets located in other countries is $19.477
million (2012: $26.591 million). Segment assets are allocated to countries based on where the assets are located.
(iv) Segment liabilities
The amounts provided to the board with respect to total liabilities are measured in a manner consistent with that of
the financial statements. These liabilities are allocated based on the operations of the segment.
The group’s borrowings and derivative financial instruments are not considered to be segment liabilities but rather
managed by the treasury function. Reportable segments’ liabilities are reconciled to total liabilities as follows:
Segment Liabilities
Unallocated:
Current tax liabilities
Deferred tax liabilities
Current borrowings
Non-current borrowings
Total liabilities as per the statement of financial position
2013
$’000
2012
$’000
9,110
8,666
-
3,238
3,091
14,944
30,383
-
3,357
7,457
14,687
34,167
79
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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
80
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
27. Dividends
Dividends paid during the year
2013
$’000
2012
$’000
Dividends paid during the year
Interim dividend for 30 June 2013 of 5.1 cents per share (2012: Nil) fully
franked (at 30%) paid on 28 June 2013
1,644
Dividends paid in cash or satisfied by the issue of shares under dividend reinvestment scheme during the year
were as follows:
Paid in cash
Satisfied by the issue of shares
250
1,394
1,644
-
-
-
-
Consolidated
Parent Entity
2013
$’000
2012
$’000
2013
$’000
2012
$’000
Franking credits
Franking credits available for subsequent financial
years based on a tax rate of 30% (2012: 30%)
11,020
11,724
11,020
11,724
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(cid:3)(cid:81)
(cid:3)(cid:81)
(cid:3)(cid:81)
franking credits that will arise from the payment of the amount of the provision for income tax;.
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
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.
3
1
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 2013 (Continued)
28. Subsidiaries
Name
Country of Incorporation
2013
2012
Equity Holding
PTB Finance Limited (1)
PTB Rentals Australia Pty Ltd (1)
Pacific Turbine, Inc (2)
PTB (Emerald) Pty Ltd (3)
Australia
Australia
USA
Australia
Aircraft Maintenance Services Ltd (4)
United Kingdom
IAP Group Australia Pty Ltd (5)
International Air Parts UK Limited (6)
PTB Emerald Limited (7)
748 Cargo Pty Ltd (8)
Australia
United Kingdom
United Kingdom
Australia
(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.
Aeropelican Air Services disposed 30 September 2008.
(6) Incorporated 18 October 2006
(7) Incorporated 13 October 2006
(8) Incorporated 21 June 2007 (Previously PTB Asset Management Pty Ltd)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
All subsidiaries are 100% owned by PTB Group Limited which is incorporated in Australia. All share capital consists of
ordinary shares in each company and the proportion of ownership interest is equal to the proportion of voting power
held. All subsidiaries were established by the parent except for those acquired as part of the business combination
in prior years.
81
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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
82
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
29. 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 statement of profit or loss and other comprehensive income and summary
of movements in consolidated retained earnings
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 statement of profit or loss and other comprehensive income and a summary of
movements in consolidated retained profits for the year ended 30 June 2013 of the Closed Group:
Revenue
Total Revenue
Cost of goods sold
Employee benefits expense
Depreciation and amortisation
Repairs and maintenance
Bad and doubtful debts
Finance costs
Net foreign exchange loss
Net loss on sale of property, plant and equipment
Other expenses
Total expenses
Profit before income tax expense
Income tax expense
Profit for the year
Statement of Comprehensive Income
Profit for the year
Other comprehensive income net of tax
Total comprehensive income for the year attributable
to the owners of the parent entity
Summary of movements in consolidated retained profits
Retained profits at the beginning of the financial year
Transfer to dividend appropriation reserve
Profit for the year
Retained profits at the end of the financial year
3
1
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
2013
$’000
2012
$’000
27,704 32,275
27,704
32,275
(14,079)
(17,712)
(5,469)
(2,070)
(49)
(328)
(5,390)
(2,070)
(83)
(282)
(1,703)
(2,208)
(617)
(405)
163
150
(2,399)
(3,070)
(27,119)
(30,502)
585
(217)
368
368
-
368
15,476
(15,600)
368
244
1,773
(398)
1,375
1,375
-
1,375
14,101
-
1,375
15,476
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
29. Deed of Cross Guarantee (continued)
(b) Consolidated Statement of Financial Position
Set out below is a consolidated statement of financial position as at 30 June 2013 of the Closed Group:
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other current assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Inventories
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
2013
$’000
2012
$’000
2,352
6,244
1,354
6,627
12,180
12,355
-
197
-
257
20,973
20,593
6,809
9,141
265
11,797
6,072
265
31,727
33,517
1,776
4,334
2
54,054
75,027
6,179
3,091
-
766
1,125
11,161
14,944
3,238
68
972
19,222
30,383
44,644
30,444
13,956
244
44,644
2,112
4,334
3
58,100
78,693
4,792
7,457
-
849
1,714
14,812
14,687
3,357
64
1,247
19,355
34,167
44,526
29,050
-
15,476
44,526
83
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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
84
Notes to the Financial Statements
for the year ended 30 June 2013 (Continued)
30. Related Party Balances and 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 28.
b)
Key management personnel
Disclosures relating to key management personnel are set out in note 21.
c) Other Transactions with Subsidiaries
The following transactions occurred with subsidiaries:
Parent Entity
Revenue - sale of engines
Revenue - sale of goods and services
Revenue - engine rentals
Revenue - dividend
Purchase of goods and services
Rent and property related expenses
Parent Entity
2013
$
2012
$
-
579,111
115,011
662,320
50,133
131,180
7,382,000
-
-
200,415
279,643
265,376
In addition to the above sales, the parent has also provided, free of charge, other administrative and accounting
assistance to the subsidiaries.
d) Outstanding balances of Loans to Subsidiaries
Loans to subsidiaries
24,378,908
19,064,244
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
-
-
-
-
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.
3
1
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 2013 (Continued)
31. Parent Entity Financial Information
a)
Summary financial information
Statement of Financial Position
Current assets
Total Assets
Current liabilities
Total Liabilities
Shareholder’s equity
Issued Capital
Reserves
Retained earnings
Profit or loss for the year
Total comprehensive income
b) Guarantees entered into by the parent entity
Carrying amount included in current liabilities
32. Events after the Balance Date
2013
$’000
2012
$’000
14,863
11,352
58,763
49,872
6,859
5,005
12,197
12,128
30,444
13,956
2,166
46,566
29,050
-
8,694
37,744
9,072
1,380
9,072
1,380
-
-
-
-
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.
33. Contingent liabilities
The Group had the following bank guarantees as at 30 June 2013:
Favouree
Bank
Date
Brisbane Airport Corporation Limited
Bankstown Airport Limited
CBA
CBA
16/05/2013
27/03/2007
2013
$’000
2012
$’000
20
18
38
-
18
18
85
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
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
86
Directors’ Declaration
for the year ended 30 June 2013
The Directors of the Company declare that:
(a) the attached financial statements and notes, as set out on pages 31 to 85 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 2013 and of the performance for the year
ended on that date of the 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; and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended
Closed Group identified in note 29 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 29; and
(d) the financial statements also comply with International Financial Reporting Standards as disclosed in note 1.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer for the financial
year ended 30 June 2013 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
23 August 2013
3
1
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
Independent Auditor’s Report
for the year ended 30 June 2013
Independent Auditor’s Report
To the members of PTB Group Limited
Report on the Financial Statements
We have audited the accompanying financial report of PTB Group Limited, which comprises the consolidated statement
of financial position as at 30 June 2013, the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, notes comprising a summary of significant accounting policies and other explanatory information, and
the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the
year’s end or from time to time during the financial year.
Directors Responsibility for the Financial Statements
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control
as the directors determine is necessary to enable the preparation of the financial report that is free from material
misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting
Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards (IFRS).
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about
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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
87
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
I
P
T
B
G
R
O
U
P
L
M
I
T
E
D
A
N
D
C
O
N
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O
L
L
E
D
E
N
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S
88
Independent Auditor’s Report
for the year ended 30 June 2013 (Continued)
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s Opinion
In our opinion:
a. the financial report of PTB Group Limited is in accordance with the Corporations Act 2001, including:
(i) i. giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2013
and of their performance for the year ended on that date; and
(ii) ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Remuneration Report
We have audited the Remuneration Report included on pages 15 to 20 of the directors’ report for the year
ended 30 June 2013. 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 2013, complies with
section 300A of the Corporations Act 2001.
Geoffrey Stephens
Director
Williams Hall Chadwick
Dated this 23rd day of August 2013
3
1
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
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Shareholders’ Information
for the year ended 30 June 2013
The shareholder
applicable as at 09 September 2013.
information set out below was
(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
28
136
64
91
38
357
Number of
Ordinary
Shares Held
Percentage
%
RS Ferris
Keybridge Capital
River Capital
CL Baker
SG Smith
GD Hills
(d) Voting Rights
-
-
-
-
-
-
7,733,783
6,749,920
4,548,266
2,102,704
1,996,201
1,909,295
21.41
18.45
12.43
5.75
5.46
5.22
(b)
The number of ordinary shareholdings held
in less than marketable parcels is 44.
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
Percentage
%
MR ROYSTON STEPHEN FERRIS
KEYBRIDGE CAPITAL LIMITED
RIVER CAPITAL ALTERNATE FUND MANAGEMENT PTY LTD
BAKER SUPERANNUATION PTY LTD
MR STEPHEN GARRY SMITH & MRS JUDITH ANN FLINTOFT
GRAEME HILLS
MARGARET HILLS
JUDITH FLINTOFT
MILTON YANNIS
ROSS GEORGE YANNIS
ROCKET SCIENCE PTY LTD
MS CECILIA HAMILTON CROAKER
MOAT INVESTMENTS PTY LTD
MR GEORGE YANNIS & MRS THELMA YANNIS
M R & S J GORDON PTY LTD
DAVID FAMILY SUPERANNUATION FUND PTY LTD
HARVEY PARKER
MR RICHARD GRAHAM FARLEY
HUGH JONES
MRS SUSAN DEBORAH MARTIN-BAKER
7,733,783
6,749,920
4,548,266
1,783,390
1,108,201
957,373
951,922
888,000
879,010
724,955
695,625
481,621
410,419
408,479
401,464
390,710
343,175
320,067
319,988
319,314
30,415,682
21.14%
18.45%
12.43%
4.88%
3.03%
2.62%
2.60%
2.43%
2.40%
1.98%
1.90%
1.32%
1.12%
1.12%
1.10%
1.07%
0.94%
0.87%
0.87%
0.87%
83.14%
Unquoted equity securities
Number on issue
Number of holders
Options issued under the PTB Group Ltd Share Option Scheme
to take up ordinary shares
-
-
89
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
I
P
T
B
G
R
O
U
P
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M
I
T
E
D
A
N
D
C
O
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90
Company Statistics
for the year ended 30 June 2013
Revenue ($’000)
+-Net profit ($’000)
Net Assets ($’000)
Cash Flow from Operating
Activities ($’000)
Ordinary Shares fully paid
(‘000)
Return on average
shareholders’ funds (%)
Share price at year-end ($)
NTA backing per Share
(Cents)
Dividend paid (Cents) per
share in respect of each
financial year
Average AUD/USD
exchange rate
2013
2012
2011
2010
2009
27,704
368
44,693
32,275
1,375
45,575
31,347
657
43,200
27,241
1,647
42,543
38,526
103
40,010
6,496
5,413
2,079
4,137
2,110
36,582
32,225
32,225
32,225
27,603
0.82
0.40
110
3.13
0.23
125
1.53
0.25
121
3.99
0.17
119
0.25
0.12
129
5.1
Nil
Nil
Nil
Nil
$1.03
$1.03
$0.99
$0.88
$0.75
3
1
0
2
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A
U
N
N
A
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E
I
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D
E
L
L
O
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T
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C
D
N
A
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Notes:
91
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
3
I
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I
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E
D
A
N
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E
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S
Notes:
92
3
1
0
2
T
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P
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R
L
A
U
N
N
A
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E
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D
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L
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P
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PO Box 90 PINKENBA QLD 4008
22 Orient Avenue PINKENBA QLD 4008
t 61 7 3637 7000
f 61 7 3260 1180