ANNUAL REPORT 2019
PTB GROUP LIMITED AND
CONTROLLED ENTITIES
CORPORATE DIRECTORY AND INFORMATION
Directors
Craig Baker, Chairman
Stephen Smith, Managing Director and CEO
Prince Gunasekara, Non-executive Director
Andrew Kemp, Non-executive Director
Russell Cole, Non-executive Director
Company Secretary
Daniel Zgrajewski
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 21, 10 Eagle Street
BRISBANE QLD 4000
Telephone: +61 1300 554 474
Bankers
Commonwealth Bank
Business and Private Banking
Level 21, 180 Ann Street
Brisbane QLD 4000
Solicitors
Talbot Sayer
Level 27, Riverside Centre
123 Eagle Street
Brisbane QLD 4000
Auditor
Hall Chadwick Qld
Level 4, 240 Queen 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
For the year ended 30 June 2019
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
2
6
19
20
30
85
86
91
Inside back cover
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.
1
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CHAIRMAN AND MANAGING DIRECTOR’S REVIEW
For the year ended 30 June 2019
Dear Shareholders,
It is with great pleasure we present to you the annual report for the 2019 Financial Year.
Highlights
» Net profit before tax of $5.577m (+19%)
» Net assets of $50.966m (+8%)
» Earnings per share of 5.71 cents (2018: 5.17 cents)
» Net tangible assets per share of $0.62 (2018: $0.64)
»
Fully franked dividend of 7c per share (2018: 5c per share)
FY19 has been another pleasing year for PTB Group. The businesses have all performed very well and exceeded
management expectations. The management of each business have done a very good job of continuing to
improve the core businesses while implementing the growth strategies.
Operational Results by Business
Pacific Turbine Brisbane
Pacific Turbine USA
Pacific Turbine Leasing
International Air Parts
Corporate Overheads
2019
$’000
2018
$’000
2017
$’000
$3,928
$4,142
$2,492
$549
$641
($74)
$565
$527
$712
$1,855
$1,393
$1,782
($1,659)
($1,598)
($1,398)
Profit/(Loss) excluding FX
$5,314
$4,428
$4,115
Foreign Exchange (FX) Gains/(Losses)
$263
$246
$42
Profit/(Loss) before Income Tax Expense
$5,577
$4,674
$4,157
Pacific Turbine Brisbane
Pacific Turbine Brisbane delivered a net profit before tax (excluding FX) of $3.928 million (2018: $4.142 million).
The commissioning of the new PT6 Test Cell was a key focus and a major milestone for the business. While this
did cause disruptions to the workshops throughout the year, management is confident about the opportunities
that it will provide in future years.
The parts sales team had an excellent year, consistently exceeding management targets and building strong
customer relationships. The improved results are providing a significant boost to the returns that the business
continues to derive from long term engine maintenance contracts.
Pacific Turbine USA
Pacific Turbine USA returned a net profit before tax (excluding FX) of $0.549 million (2018: $0.074 million loss).
The business provided a solid financial result while continuing to focus on providing excellent support to the
Brisbane business.
Pacific Turbine USA now supplies a large portion of the parts used by the PT6 workshop in Brisbane and
manages the repairs of piece parts in the USA. Its physical location and experienced staff has delivered significant
savings to the Brisbane business.
The business has also grown its own sales throughout the year and will look to make continued improvements
in the new year.
2
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
CHAIRMAN AND MANAGING DIRECTOR’S REVIEW
For the year ended 30 June 2019
Pacific Turbine Leasing
Pacific Turbine Leasing contributed a net profit before tax (excluding FX) of $0.641 million (2018: $0.565 million).
The business generates consistent returns from the current fleet of aircraft and engines on lease to long-term
customers.
Four new leased aircraft were added to the portfolio during the year, with a number of other transactions currently
being negotiated. The Group is committed to growing this business due to the additional sales opportunities it
provides across the Group.
International Air Parts (IAP)
The IAP business returned a net profit before tax (excluding FX) of $1.855 million (2018: $1.393 million), with all
product lines ahead of the prior year. The Airframe division continues to provide consistent results and meet
management expectations, while the Engines division continues to grow. The business has made significant
investments in stock for the engine parts business with this expected to provide a consistent flow of revenue for
the business into the future.
Corporate Overheads
Corporate overheads costs were $1.659 million (2018: $1.598 million). This includes all head office and corporate
costs, including Group management, the board and the central finance function. There were no significant
changes during the year.
Balance Sheet and Net Assets
The net asset position has increased from $47.315 million as at 30 June 2018 to $50.966 million at 30 June 2019.
Total debt has increased from $16.339m to $20.317m during the year. This includes new funding for four leased
aircraft and the final draw downs against the Test Cell loan.
Cash Flows
The overall cash balance at the end of the year was $7.174m (2018: $4.184m).
Operating: Cash flows from operating activities were $4.193 million (2018: $3.910 million).
Financing: New borrowings for leased aircraft and the balance of the Test Cell added $5.614m. These were partly
offset by $2.194m of principal repayments and $1.294m of dividend payments.
PTB Group Growth Outlook
Management and the Board are confident that the improvements in performance seen in FY19 will continue into
FY20. The management and staff in all businesses are performing very well and delivering results.
The Group continues to focus on the following areas:
» Utilise the relationships with our Japanese business partners to grow Pacific Turbine Leasing;
» Grow (and renew) engine management programs for PTB, leveraging off growth in Pacific Turbine Leasing;
»
Improve efficiency, capacity and capabilities for the Pacific Turbine Brisbane workshops;
» Build capacity and capabilities for Pacific Turbine USA; and
» Maintain and grow sales in all businesses.
3
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CHAIRMAN AND MANAGING DIRECTOR’S REVIEW
For the year ended 30 June 2019
Overview of Group Businesses
Pacific Turbine Brisbane
Pacific Turbine Brisbane is an aircraft engine business concentrating on the PT6 and TPE331 engines. The
business sells engines, engine maintenance services and spare parts to a range of customers around the world.
The business operates out of a purpose-built facility at Pinkenba, near the Brisbane Airport.
Pacific Turbine Brisbane’s engine management programs (PTB-EMProgram) are the main driver of its success
and consistent returns. Under these programs, Pacific Turbine Brisbane provides a comprehensive engine
management service in return for consistent monthly payments. These plans provide Pacific Turbine Brisbane
with consistent cash flows and a continuous flow of engine sales, parts sales and workshop jobs.
With the established production plan that contract customers provide, the business can extract maximum value
from any opportunist bulk parts buys or engine opportunities that may arise.
The small PT6A engine is the cornerstone of the Pacific Turbine Brisbane engine business. The focus on the
PT6A engine has allowed Pacific Turbine Brisbane to build specialist knowledge and significantly reduce the
whole of life costs of operating and maintaining these engines. The addition of the PT6A test cell during the year
is very exciting and will provide cost savings and a number of new opportunities for the business.
The TPE331 engine is also a contributor to Brisbane’s profitability but it is a mature engine with a slowly declining
operator base. Pacific Turbine Brisbane has a number of TPE331 engine management contracts, which assist
the business to maintain profitability in line with the declining operator base.
The Group continues to invest in plant, people and processes that improve efficiencies and profitability and
execute on organic growth opportunities. Our engine overhaul shops are primarily geared to produce engines for
our contract customers.
Pacific Turbine USA
The business is based around a similar model to the Pacific Turbine Brisbane business but is focused on the
North American market. This business has strategic supply agreements with a number of businesses in the USA
that supply the engine repair and overhaul services required to support customers in North America.
The business is based in Miami, Florida. The President, DJ Davant has extensive experience in the aviation
industry and is a very good match for the growing business.
Pacific Turbine USA is responsible for coordinating the purchasing and repair of all PT6A parts for the Group.
The business is able to deliver savings across the Group by consolidating inventory, increasing purchasing power
and reducing freight costs.
The ongoing development of this business is a key strategy for the Group as it has the potential to provide a
significant boost to the Group’s overall results.
Pacific Turbine Leasing
Pacific Turbine Leasing is the Group business responsible for all rental and leasing activities for the Group. This
includes a fleet of freight and passenger aircraft and a large number of lease and rental engines. Prior to FY17,
these assets had been spread across the Group.
Growing the fleet of leased aircraft and engines is a key strategy for the Group. The business is actively seeking
quality leasing opportunities to grow the fleet of leased assets and provide additional returns across the Group.
The Group has relationships with a number of Japanese investors that are keen to share in these mutually
beneficial opportunities.
Pacific Turbine Leasing fits in with other core business as it allows for cross selling of parts and maintenance of
engines under engine management plans. Contracts in Pacific Turbine Leasing are typically long term in nature,
with high retention rates, offering consistent earnings.
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PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CHAIRMAN AND MANAGING DIRECTOR’S REVIEW
For the year ended 30 June 2019
International Air Parts (IAP)
IAP is predominantly an aircraft spare parts business. The business operates out of a large warehouse in
Warriewood, New South Wales.
The business sells a large variety of airframe and engine parts, aircraft engines and engine repair and overhaul
services from its own vast stockholding and a comprehensive supplier network.
The IAP business is split into two main divisions: Engines and Airframe Parts.
The Engines division manages repairs and overhauls of engines on behalf of its customers. It also manages the
tear down of engines and sells a range of engine parts. The division is currently focused on Rolls Royce engines.
The knowledge in the engine division enables team members to work across a number of turbine engine types
and extract maximum returns from all opportunities.
The Airframe division has focused on Fokker, SAAB and British Aerospace airframes. It also has a major role in
supporting the customers of Pacific Turbine Leasing. The airframe segment will continue to extract returns from
the sell down of the existing stock, while maintaining an appropriate level of stock to support lease customers.
Craig Baker
Chairman
Stephen Smith
Managing Director
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PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
DIRECTORS’ REPORT
For the year ended 30 June 2019
Your Directors present the financial report of PTB Group Limited and its controlled entities (“the Group”) for the
year ended 30 June 2019.
Directors
The following persons were Directors in office at any time during or since the end of the year:
Name
CL Baker
SG Smith
APS Kemp
RQ Cole
Position
Director (non-executive), Chairman
Managing Director
Director (non-executive)
Director (non-executive)
PP Gunasekara
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:
» 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.
Operating Results
The consolidated net profit after tax was $3.974 million (2018: $3.243 million profit).
Financial Position
The net assets of the Group are $50.966 million as at 30 June 2019 (2018: $47.315 million).
Dividends
A fully franked dividend of 7 cents per share was declared and paid for the 30 June 2019 financial year (2018: 5
cents per share).
Franking Credits
Franking credits available for subsequent financial years based on a tax rate of 30 per cent are $5.167 million
(2018: $6.859 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 years.
Future Developments, Prospects and Business Strategies
With all core businesses performing well, the Group is focused on growth opportunities.
6
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 DIRECTORS’ REPORT
For the year ended 30 June 2019
The Group has two main growth strategies:
Further development of the engine business in America through Pacific Turbine USA. The business sells PT6
engines, parts and management programs similar to the PTB business.
Strategic relationships with established engine shops in the USA allow the USA business to expand operations
with no fixed capital requirements and greatly reduced risk.
The second key growth path for the business is aircraft leasing. The Group will grow the fleet of leased assets
and provide additional returns across the Group. The Group has relationships with a number of Japanese
investors that are keen to share in these mutually beneficial opportunities.
Other than as detailed in the Chairman and Managing Director’s Review, the Directors have excluded from this
report any further information on the likely developments in the operations of the Group and the expected results
of those operations in future financial years, as the Directors have reasonable grounds to believe that it would be
likely to result in unreasonable prejudice to the Group.
Environmental Issues
The Group operates from Brisbane and Sydney (including Bankstown Airport) in Australia. It is required to meet
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
Craig Baker CA, BCA (Non-Executive Director, Chairman)
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 35 years.
Craig was appointed as the Chairman of the Remuneration Committee and a member of the Audit and Risk
Management Committee effective from 1 July 2017. He has held no Director positions with other listed companies
in the last three years.
Stephen Smith (Managing Director)
Stephen was a founding shareholder and Director of PTB Group Limited and has fulfilled a number of key roles
within the Group including Commercial Sales Manager and Director of Sales and Marketing. Through these
roles, Stephen has been a key contributor to the strategic direction and growth of the Group. Prior to his
involvement with the Group, Stephen had significant experience in the aviation industry as both a helicopter and
fixed wing operator.
Stephen has held no Director positions with other listed companies in the last three years.
Andrew 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 Silver Chef Limited (from April 2005) and the unlisted Firstmac Limited (home
loans) and Investors Central Limited (second tier motor vehicle finance).
Andrew is a member of the Audit and Risk Management and Remuneration Committees of the Company.
7
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 DIRECTORS’ REPORT
For the year ended 30 June 2019
Russell Cole B.Com, FCA (Non-Executive Director)
Russell graduated from the University of Queensland with a Bachelor of Commerce and is a Chartered Accountant.
He has over 25 years’ experience in public practice as a Chartered Accountant specialising in the corporate
sector with significant experience in audit, risk 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.
Russell is the Chairman of the Audit and Risk Management Committee and was appointed as a member of the
Remuneration Committee effective from 1 July 2017. He has held no Director positions with other listed companies
in the last three years.
Prince Gunasekara (Non-Executive Director)
Prince was appointed as a director of PTB Group Limited on 1 September 2017.
Prince is a Sri Lankan born aviation expert with over 20 years’ experience, particularly within Japanese aviation.
Prince has worked across many areas of the industry, including but not limited to procurement of aircraft parts
and aircraft engines for Japanese aircraft operators.
Since joining PTB Group in 2013 as an Engine Sales Manager, Prince has been instrumental in introducing key
Japanese investors and business partners.
Company Secretary
Daniel Zgrajewski was appointed as the Chief Financial Officer and Company Secretary effective from 27
November 2013. Daniel holds a Bachelor of Business from Queensland University of Technology and is a Certified
Practicing Accountant.
Daniel has over 20 years of experience in finance and has worked in a number of roles in commercialised
segments of Brisbane City Council. These roles included Commercial Accountant for Brisbane CityWorks and
Principal Financial Accountant for Brisbane Water.
8
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 DIRECTORS’ REPORT
For the year ended 30 June 2019
Remuneration Report (Audited)
The remuneration report is set out under the following main headings:
A
B
C
D
E
F
Key management personnel
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service contracts
Share-based payment compensation
Additional information
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
A. Key management personnel
The directors and other key management personnel of the consolidated entity during or since the end of the
financial year were:
Non-executive directors
Mr CL Baker (Chairman, Non-Executive Director)
Mr APS Kemp (Non-Executive Director)
Mr RQ Cole (Non-Executive Director)
Mr PP Gunasekara (Non-Executive Director)
Executive officers
Mr SG Smith (Managing Director)
Mr D Zgrajewski (Company Secretary and CFO)
Except as noted, the named persons held their current position for the whole of the financial year and since the
end of the financial year.
B. Principles used to determine the nature and amount of remuneration
Non-executive Directors
Non-executive Directors are to be paid out of Group funds as remuneration for their services, such sum as
accrues on a daily basis as the Group 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 $200,000 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 Group 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 Group 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
Group or Board meetings, or meetings of any committee engaged in the Group’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.
9
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 DIRECTORS’ REPORT
For the year ended 30 June 2019
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 caliber personnel.
Compensation in the form of cash bonuses for executives and key management personnel is designed to ensure
reward for performance is competitive and appropriate for the results delivered. The framework aligns executive
and key management reward with achievement of strategic objectives and creation of value for shareholders in
terms of return on equity and conforms 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:
» 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:
» 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.
Superannuation: Executive Directors’ base pay may include statutory and salary sacrificed superannuation
contributions.
Short-term performance incentives: Cash bonus 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 C. Details of Remuneration”, no short-term incentives were paid to Executive
Directors during the financial year (2018: Nil).
10
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 DIRECTORS’ REPORT
For the year ended 30 June 2019
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 Group, an Employee Share
Option Scheme (“the Scheme”) is in place. The incentive provided by the scheme will be of material benefit to
the Group in encouraging the commitment and continuity of service of the recipients. By providing executives
and employees with a personal financial interest in the Group, the Group 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 Group.
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 Group).
As advised in the following “Section E Share-Based Payment Compensation” no options were issued under the
scheme during the year (2018: 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.
11
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 DIRECTORS’ REPORT
For the year ended 30 June 2019
C. Details of Remuneration
The remuneration for each Director and other key management personnel of the Group was as follows:
Short-term benefits
Post-
employ-
ment
Share-
based
payment
Total
Other
Cash
salary
and fees
$
Non-
monetary
benefits
$
Cash
bonus
$
Super-
annu-
ation
$
Long-
term
benefits*
$
Termin-
ation
Benefits
$
Options
$
$
2019 Year
Directors
CL Baker
(Chairman,
Non-Executive
Director)
SG Smith
(Managing
Director)
APS Kemp
(Non-Executive
Director)
RQ Cole
(Non-Executive
Director)
PP Gunasekara
(Non-Executive
Director)
21,139
439,980
21,800
30,000
190,000
Total Directors
702,919
–
–
–
–
–
–
–
22,661
–
–
–
–
–
–
–
–
–
22,661
Other Key
Management
Personnel
D Zgrajewski
(Company
Secretary and
CFO)
Total Other
Key Management
Personnel
210,509
5,000
–
23,648
210,509
5,000
–
23,648
* comprising accrued long service leave.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
43,800
–
439,980
–
21,800
–
–
–
–
–
30,000
190,000
725,580
239,157
239,157
12
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
DIRECTORS’ REPORT
For the year ended 30 June 2019
Short-term benefits
Post-
employ-
ment
Share-
based
payment
Total
Other
Cash
salary
and fees
$
Non-
monetary
benefits
$
Cash
bonus
$
Super-
annu-
ation
$
Long-
term
benefits*
$
Termin-
ation
Benefits
$
Options
$
$
2018 Year
Directors
CL Baker
(Chairman,
Non-Executive
Director)
SG Smith
(Managing
Director)
APS Kemp
(Non-Executive
Director)
RS Ferris
(Non-Executive
Director – resigned
7th October 2017)
RQ Cole
(Non-Executive
Director)
PP Gunasekara
(Non-Executive
Director –
appointed 1st
September 2017)
21,139
439,980
21,800
8,420
30,000
168,333
Total Directors
689,672
–
–
–
–
–
–
–
–
22,661
–
–
–
–
–
–
–
–
–
950
–
23,611
Other Key
Management
Personnel
D Zgrajewski
(Company
Secretary and
CFO)
Total Other
Key Management
Personnel
202,120
5,000
–
19,734
202,120
5,000
–
19,734
* comprising accrued long service leave.
There were no other executives in the current or prior year.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
43,800
–
439,980
–
21,800
–
–
–
8,420
30,000
169,283
–
713,283
–
226,854
–
226,854
13
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
DIRECTORS’ REPORT
For the year ended 30 June 2019
D. Service Contracts
Major provisions of service agreements with Executive Directors and other key management personnel as at 30
June 2019 are set out below:
S G Smith (Managing Director)
» Commencement date of consultancy agreement –- 1 May 2017;
» Service fee – $440,000 p.a.; and
» Notice period – Termination by three months’ notice in writing by either party other than for gross
misconduct.
P P Gunasekara (Director)
» Commencement date of consultancy agreement –- 1 August 2017;
» Service fee – $190,000 p.a. ($20,000 of this relates to non-executive Director fees and the remainder is for
other activities); and
» Notice period – Termination by three months’ notice in writing by either party other than for gross
misconduct.
D Zgrajewski (Company Secretary and Chief Financial Officer)
» Term of agreement – Three years commencing 22 November 2016;
» Base annual salary – $225,000 excluding superannuation; 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.
E. Share-based Payment Compensation
No remuneration options were granted to key management personnel, exercised or lapsed during this or the
prior financial year.
14
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 Name
2019
Directors
CL Baker
SG Smith
APS Kemp
RQ Cole
DIRECTORS’ REPORT
For the year ended 30 June 2019
F. Additional Information
The number of shares in the Group 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.
Balance at the
start of the
year
Received
during the
year on the
exercise of
options
Other changes
(on-market
purchases
& DRP)
Balance
at date of
appointment/
resignation
Balance at the
end of the year
Number
Number
Number
Number
Number
2,274,293
5,992,635
1,329,314
69,755
PP Gunasekara
2,443,282
Other key management personnel of the Group
D Zgrajewski
69,238
2018
Directors
CL Baker
RS Ferris
SG Smith
3,585,639
5,134,499
5,560,038
APS Kemp
1,216,658
RQ Cole
PP Gunasekara
63,843
–
Other key management personnel of the Group
D Zgrajewski
63,370
–
–
–
–
–
–
–
–
–
–
–
–
–
256,776
576,331
143,384
7,876
275,855
7,818
(1,311,346)
–
–
–
–
–
–
–
2,531,069
6,568,966
1,472,698
77,631
2,719,137
77,056
2,274,293
(2,500,000)
2,634,499
N/A
432,597
112,656
5,912
–
–
–
5,992,635
1,329,314
69,755
207,058
2,236,224
2,443,282
5,868
–
69,238
Loans to key management personnel
On 21 June 2017, the Group provided a limited recourse loan of $1.65 million to SG Smith at an interest rate of
5% per annum to pay for the subscription price of 3 million fully paid ordinary shares. These shares were issued
to him in accordance with the shareholder approval on 9 June 2017 and the terms of his engagement as the
Group’s Managing Director. The maximum term of this loan is 5 years and interest will be capitalised throughout
the term of the loan. The interest capitalised during the year was $88,845. A voluntary escrow applies to these
shares until money owing under the loan is repaid. Any cash dividends paid in relation to these shares are paid
against any remaining loan balance. There were no other loans to Directors of PTB Group Limited or other key
management personnel of the Group during the previous reporting period.
15
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 DIRECTORS’ REPORT
For the year ended 30 June 2019
Other transactions with key management personnel (KMP) and/or their related parties
All transactions were under normal commercial terms and conditions, unless otherwise stated. No bad or
doubtful debt expenses have been, or are likely to occur, from transactions with related parties.
A previous Director, Mr. RS Ferris (resigned 7th October 2017) beneficially owned 100% of the shares and was a
director of: IAP Engineering Pty Ltd (Engineering), Pionair Australia Pty Ltd (Pionair) and SF Aviation Pty Ltd (SF
Aviation). He was also a shareholder of Horizon Airlines Engineering Pty Ltd (Horizon).
From 1/7/2017 to 6/10/2017, IAP and PTB processed sales to Engineering, Horizon, Pionair and SF Aviation on
normal commercial terms.
From 1/7/2017 to 6/10/2017, IAP processed purchases from Engineering and Horizon on normal commercial
terms.
Aggregate amounts of each of the above types of other transactions with key management personnel of the
Group are as follows:
Amounts invoiced by IAP and PTB to:
Engineering - Rental for hangar, airport parking fees and other costs (IAP)
Horizon – Sale of aircraft and engine parts (IAP and PTB)
Amounts invoiced to IAP and PTB by:
SF Aviation – Consultancy services rendered by Mr. Ferris
Aggregate amounts receivable/payable arising from the above types of
transactions with key management personnel of the Group:
2019
$
2018
$
–
–
–
17,832
12,540
17,460
– Non-current receivables (Loan to SG Smith)
1,825,401
1,736,555
There were no other transactions conducted between the Group and KMP or their related parties, other than
those disclosed above relating to equity, compensation and loans, that were conducted other than in accordance
with normal employee, customer or supplier relationships on terms no more favourable than those expected
under arm’s length dealings with unrelated persons.
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 2019 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 2019. 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.
16
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
DIRECTORS’ REPORT
For the year ended 30 June 2019
Loans to Directors and Executives
On 21 June 2017, the Group provided a limited recourse loan of $1.65 million to SG Smith at an interest rate of
5% per annum to pay for the subscription price of 3 million fully paid ordinary shares.
These shares were issued to him in accordance with the shareholder approval on 9 June 2017 and the terms of
his engagement as the Group’s Managing Director. The maximum term of this loan is 5 years and interest will be
capitalised throughout the term of the loan. The interest capitalised during the year was $88,845.
A voluntary escrow applies to these shares until money owing under the loan is repaid. Any cash dividends paid
in relation to these shares are paid against any remaining loan balance.
There were no other loans to Directors of PTB Group Limited or other key management personnel of the Group
during the previous reporting period.
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
CL Baker
SG Smith
APS Kemp
RQ Cole
PP Gunasekara
Remuneration Committee
CL Baker
APS Kemp
RQ Cole
Audit and Risk Management Committee
RQ Cole
CL Baker
APS Kemp
12
12
12
12
12
2
2
2
4
4
4
12
12
12
12
9
2
2
2
4
4
4
Indemnification and Insurance of Directors, Officers and Auditors
During or since the end of the financial year, the Group 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 Group has Directors and Officers insurance in place for all Directors and officers of the Group.
This insurance insures any person who is or has been an officer of the Group against certain liabilities in respect
of their duties as an officer of the Group, 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.
17
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 DIRECTORS’ REPORT
For the year ended 30 June 2019
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose
of taking responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
Non-Audit Services
The Group may decide to employ the auditor on assignments additional to statutory audit duties where the
auditor’s expertise and experience with the Group 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 Group
(2018: Nil).
The lead auditor’s independence declaration is set out on page 19 and forms part of the Directors’ Report for the
year ended 30 June 2019.
Hall Chadwick Qld continues in office in accordance with Section 327 of the Corporations Act 2001.
Rounding of Amounts
The Company is of a kind referred to in legislative instrument 2016/191, relating to the “rounding off” of amounts
in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that
legislative instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
This report is made in accordance with a resolution of the Directors.
CL Baker
Chairman
Brisbane
30 August 2019
18
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 AUDITOR’S INDEPENDENCE DECLARATION
For the year ended 30 June 2019
Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 to the
directors of PTB Group Limited
As lead auditor for the audit of the financial report of PTB Group Limited for the financial year
ended 30 June 2019, I declare to the best of my knowledge and belief, 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.
This declaration is in respect of PTB Group Limited and the entities it controlled during the financial
period.
Geoffrey Stephens
Director
HALL CHADWICK QLD
Dated this 30th day of August 2019
Limited Liability by a scheme approved
under the Professional Standards Legislation
National Association | Hall Chadwick
International Association | Prime Global
Associations of Independent Firms
19
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
Corporate Governance describes the framework of
rules, relationships, systems and processes within
and by which authority is exercised and controlled
within corporations. It encompasses the mechanisms
by which companies, and those in control, are held to
account. Good corporate governance promotes
investor confidence which is crucial to the ability of
the Group to compete for capital.
The ASX Corporate Governance Council’s Corporate
Governance Principles
and Recommendations
3rd Edition
recommends eight core corporate
governance principles for entities listed on the ASX
that, in the Council’s view are likely to achieve good
governance outcomes and meet the reasonable
expectations of most investors in most situations. The
Recommendations are not mandatory and do not
seek to prescribe the corporate governance practices
that a listed entity must adopt.
Under Listing Rule 4.10.3 PTB is required to provide a
statement disclosing the extent to which it has followed
the Recommendations. Where a Recommendation has
not been followed, this fact must be disclosed together
with the reasons for the departure.
This PTB Group Corporate Governance Statement is
structured with reference to the Council’s Principles
and Recommendations.
Principle 1: Lay solid foundations for
management and oversight.
A listed entity should establish and disclose the
respective roles and responsibilities of its board and
management and how their performance is monitored
and evaluated.
Recommendation 1.1
Complies: YES
A listed entity should disclose:
Recommendation 1.3
Complies: YES
A listed entity should have a written agreement with
each director and senior executive setting out the
terms of their appointment.
Recommendation 1.4
Complies: YES
The company secretary of a listed entity should be
accountable directly to the board, through the chair,
on all matters to do with the proper functioning of the
board.
Recommendation 1.5
Complies: NO
A listed entity should:
(a) have a diversity policy which includes requirements
for the board or a relevant committee of the board
to set measurable objectives for achieving gender
diversity and to assess annually both the objectives
and the entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period the
measurable objectives
for achieving gender
diversity set by the board or a relevant committee
of the board in accordance with the entity’s
diversity policy and its progress towards achieving
them, and either:
(1) the respective proportions of men and women
on the board, in senior executive positions and
across the whole organisation (including how
the entity has defined “senior executive” for
these purposes); or
(2) if the entity is a “relevant employer” under the
Workplace Gender Equality Act, the entity’s
most recent “Gender Equality Indicators”, as
defined in and published under that Act.
Recommendation 1.6
Complies: YES
(a) the respective roles and responsibilities of its
board and management; and
A listed entity should:
(b) those matters expressly reserved to the board and
those delegated to management.
Recommendation 1.2
Complies: YES
A listed entity should:
(a) undertake appropriate checks before appointing a
person, or putting forward to security holders a
candidate for election, as a director; and
(a) have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was undertaken
in the reporting period in accordance with that
process.
Recommendation 1.7
Complies: YES
(b) provide security holders with all material
information in its possession relevant to a decision
on whether or not to elect or re-elect a director.
(a) have and disclose a process for periodically
evaluating the performance of its senior
executives; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was undertaken
in the reporting period in accordance with that
process.
20
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
Responsibility of the Board
for
the Company’s
Responsibility
corporate
governance rests with the Board. The Board’s guiding
principle in meeting this responsibility is to act
honestly, conscientiously and fairly, in accordance
with the law, in the interests of PTB Group’s
shareholders (with a view to building sustainable
value for them) and those of employees and other
stakeholders.
The Board’s broad function is to:
a) Chart strategy and set financial targets for the
Group;
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 Group.
Power and authority in certain areas is specifically
reserved to the Board – consistent with its function as
outlined above. These areas include:
(a) Composition of the Board itself including the
appointment and removal of Directors;
(b) Oversight of the Group including its strategy,
and
performance,
controls
operational
accountability systems;
(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
c) Execution of the overall corporate strategy and
business plans, and the day to day management
of operations.
Board Charter and Policy
The Board has adopted a charter which will be kept
under review and amended from time to time as the
Board may consider appropriate to give formal
recognition to the matters outlined above. The last
amendment was in June 2015. 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.
Appointment of Board Members
When a vacancy exists, through whatever cause, or
where the Board considers that it would benefit from
the services of a new member with particular skills,
the Board considers a panel of candidates identified
and selected by the Board having regard to:
(g) Approving and monitoring financial and other
a) what may be appropriate for the Company and the
reporting and the operation of committees.
Group;
Responsibilities of the Managing Director and
Senior Management
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
b) the skills, expertise and experience of the
candidates;
c) the mix of those skills, expertise and experience
with those of the existing Directors; and
d) the perceived compatibility of the candidates with
the Group and with the existing Directors.
Potential candidates to be appointed as Directors are
considered by the Board with advice from an external
consultant as considered by the Board to be
appropriate. The Board then appoints the most
suitable candidates who (assuming that they consent
to act as Directors) continue in office only until the
21
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
next AGM and are then eligible for re-election but are
not taken into account in determining the number of
Directors to retire by rotation at the AGM. Security
holders are provided with all material information in
the Group’s possession relevant to a decision on
whether or not to elect or re-elect a director
The terms and conditions of the appointment of all
new members of the Board must be specified in a
letter of appointment.
Service Agreements with Senior Management
and Company Secretary
The terms of appointment of senior management are
documented in a service agreement. Key details of
service agreements with key management personnel
are detailed in the remuneration report forming part
of the Directors’ Report in the annual report.
The terms of appointment of the company secretary
are documented in a service agreement including that
the company secretary is accountable directly to the
board, through the chair, on all matters to do with the
proper functioning of the board.
Diversity Policy
The Board aims to create a corporate culture that
embraces diversity by applying transparent merit
training and
based principles
promotion opportunities.
recruitment,
to
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.
Best practice recommendations
issued by ASX
recommend a separate disclosure of measurable
objectives for measuring gender diversity and the
in the whole
proportion of women employees
organisation, in senior positions and on the Board.
The Board is of the view that given the size of the
Group 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.
Board and Committee Evaluation Process
The performance of the Board, its committees, and
individual Directors is evaluated annually by the
Chairman in accordance with the Group’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
22
whose performance is unsatisfactory are asked to
retire. The Charter is available on the Company’s
website. It is considered that an informal annual
evaluation of the performance of the Board, its
committees and the Directors by the Chairman is
appropriate given the size and complexity of the
business.
Senior Management Evaluation Process
The process for evaluating the performance of senior
management includes a process of annual appraisals
measuring performance against goals and key
performance indicators including contributions to the
overall outcomes of the business.
Performance evaluations have
accordance with the process disclosed.
taken place
in
Principle 2: Structure the board
to add value
A listed entity should have a board of an appropriate
size, composition, skills and commitment to enable it
to discharge its duties effectively.
Recommendation 2.1
Complies: YES
The board of a listed entity should:
(a) have a nomination committee which:
(1) has at least three members, a majority of whom
are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of
the members at those meetings; or
(b) if it does not have a nomination committee, disclose
that fact and the processes it employs to address
board succession issues and to ensure that the
board has the appropriate balance of skills,
knowledge, experience, independence and diversity
to enable
its duties and
it
responsibilities effectively.
to discharge
Recommendation 2.2
Complies: YES
A listed entity should have and disclose a board skills
matrix setting out the mix of skills and diversity that
the board currently has or is looking to achieve in its
membership.
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
Recommendation 2.3
Complies: YES
A listed entity should disclose:
(a) the names of the directors considered by the
board to be independent directors;
(b) if a director has an interest, position, association
or relationship of the type described in Box 2.3 but
the board is of the opinion that it does not
compromise the independence of the director, the
nature of the interest, position, association or
relationship in question and an explanation of why
the board is of that opinion; and
(c) the length of service of each director.
Recommendation 2.4
Complies: NO
A majority of the board of a listed entity should be
independent directors.
Recommendation 2.5
Complies: NO
The chair of the board of a listed entity should be an
independent director and, in particular, should not be
the same person as the CEO of the entity.
Recommendation 2.6
Complies: YES
A listed entity should have a program for inducting
new directors and provide appropriate professional
development opportunities for directors to develop
and maintain the skills and knowledge needed to
perform their role as directors effectively.
Nominations Committee
Best practice recommendations
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 Group and of the Board the
responsibility for this function rests with the Board.
Composition of the Board
The Board performs its role and function in accordance
with the following principles:
a) The Board should comprise at least three and no
more than 10 Directors;
b) The Board must comprise of members with a
broad range of experience, expertise, skills and
contacts relevant to the Group 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
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
Group’s operations. In addition, the Chairman has the
deciding vote at any meetings where a vote is initially
tied.
Independence of Board Members
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:
a) is not a substantial shareholder of the Group or an
officer of, or otherwise associated, directly or
indirectly, with a substantial shareholder of the
Group;
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;
c) 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;
e) has no significant contractual relationship with the
Company or another Group member other than as
a Director;
f ) 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 Group; 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 Group.
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.
23
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
The Board composition does not comply with
recommendation 2.4 and 2.5 of the ASX Corporate
Governance Guidelines as the majority of Directors
are not independent Directors and the Chairman is
not an independent Director as discussed below.
At 30 June 2019, the Board comprised five members
including CL Baker (appointed 09/10/2001), a non-
executive Chairman, APS Kemp
(appointed
25/08/2006), an independent non-executive Director,
RQ Cole (appointed 28/02/2017), an independent
non-executive Director), PP Gunasekara (appointed
01/09/2017), a non-executive Director and SG Smith
(appointed 23/05/16) who is an executive Director
(Managing Director).
The board comprises only two out of five Directors
who meet the definition of independent Directors.
There are however four non-executive Directors. The
chairman is non-executive but does not meet the
definition of independent Director. The board is
satisfied the mix of skills within the board far outweigh
the benefits of simply complying with the guidelines.
This position will continue to be monitored over time.
The Board has adopted the following measures to
ensure that independent judgement is achieved and
maintained
its decision-making
processes:
respect of
in
» Two members of the Board are independent non-
executive Directors with significant experience in
corporate governance;
» The majority of the Board are non-executive
Directors;
» The Chairman is a non-executive Director;
» Directors are entitled
independent
professional advice at the Group’s expense,
subject to the approval of the Chairman;
to seek
» Directors having a conflict of interest in relation to
item of business must absent
a particular
themselves from the Board meeting before
commencement of discussion on the topic; and
Board Skills Matrix
A Board skills matrix has been adopted by the board
of PTB Group Limited (PTB) to ensure the board
maintains an appropriate mix of skills, knowledge,
experience, personal attributes and other criteria
appropriate for the governance of the Group.
The PTB Board is a skills-based board comprising
directors who collectively have the skills, knowledge
and experience to effectively govern and direct the
organisation including governance skills, industry
skills and personal attributes.
The Board skills matrix is reviewed and assessed
annually as part of the board evaluation process.
Individual board member skills are updated annually
as part of the director evaluation process.
A summary of skills, experience and special
responsibilities of each director is disclosed in the
Directors’ Report included in the annual report.
Induction of New Directors, Training and Advice
Directors are provided with relevant information in
relation to the Company and the Group before
accepting appointment, and also with a relevant
induction package on accepting appointment, in each
case appropriate
their
for
responsibilities in office.
to discharge
them
Directors are provided with access to continuing
education in relation to the Group extending to its
business, the industry in which it operates, and
generally information required by them to discharge
the responsibilities of their office.
Each Director has the right to seek independent legal
or other professional advice at the Group’s expense.
Prior approval from the Chairman is required but may
not be unreasonably withheld or delayed.
Principle 3: Act ethically and responsibly
A listed entity should act ethically and responsibly.
» Non-executive Directors confer on a needs basis
Recommendation 3.1
Complies: YES
without management in attendance.
A listed entity should:
The size and complexity of the business does not
warrant additional Directors at the present time.
(a) have a code of conduct for its directors, senior
executives and employees; and
(b) disclose that code or a summary of it.
Best practice commitment
The Group is committed to achieving and maintaining
the highest standards of conduct and has undertaken
various initiatives 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 Group’s own internal practices
24
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
and in its dealings with others. The Charter is available
on the Company’s website.
The following are a tangible demonstration of the
Group’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 Group’s operations or undertakings in order to
fulfil their duties and responsibilities as Directors. Any
costs incurred are borne by the Group.
Principle 4: Safeguard integrity
in corporate reporting
A listed entity should have formal and rigorous
processes that independently verify and safeguard
the integrity of its corporate reporting.
Recommendation 4.1
Complies: YES
The board of a listed entity should:
(a) have an audit committee which:
(1) has at least three members, all of whom are
non-executive directors and a majority of
whom are independent directors; and
Code of conduct for transactions in securities
(2) is chaired by an independent director, who is
The Group 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.
Charter
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:
» 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.
not the chair of the board, and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience of
the members of the committee; and
(5) in relation to each reporting period, the
number of
the committee met
throughout the period and the individual
attendances of
those
meetings; or
the members at
times
(b) if it does not have an audit committee, disclose
that fact and the processes it employs that
independently verify and safeguard the integrity of
its corporate reporting, including the processes
for the appointment and removal of the external
auditor and the rotation of the audit engagement
partner.
Recommendation 4.2
Complies: YES
The board of a listed entity should, before it approves
the entity’s financial statements for a financial period,
receive from its CEO and CFO a declaration that, in
their opinion, the financial records of the entity have
been properly maintained and that the financial
statements comply with the appropriate accounting
standards and give a
view
of the financial position and performance of the entity
and that the opinion has been formed on the basis of
a sound system of risk management and internal
control which is operating effectively.
true and
fair
Recommendation 4.3
Complies: YES
A listed entity that has an AGM should ensure that its
external auditor attends its AGM and is available to
answer questions from security holders relevant
to the audit.
25
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
Audit and Risk Management Committee
(‘ARM 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 Group. Its current members
are Russell Cole (Independent Non-Executive Director
- Chairman of ARM Committee), Craig Baker (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. Other matters for which the Committee is
responsible include the following:
a) Board and committee structure to facilitate a
proper review function by the Board;
b) Internal control framework including management
» The Group’s risk management and
internal
compliance and control framework is operating
efficiently and effectively in all material respects.
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 included in the annual report.
The Group’s auditor attends the AGM of the Company
and is available to answer questions in relation to the
audit of the financial report.
Principle 5: Make timely and
balanced disclosure
A listed entity should make timely and balanced
disclosure of all matters concerning it that a reasonable
person would expect to have a material effect on the
price or value of its securities.
information systems;
Recommendation 5.1
Complies: YES
c) Corporate risk assessment and compliance with
A listed entity should:
internal controls;
d) Management processes supporting external
reporting;
(a) have a written policy for complying with its
continuous disclosure obligations under
the
Listing Rules; and
e) Review of financial statements and other financial
(b) disclose that policy or a summary of it.
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 four times 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.
PTB Group’s Managing Director and Chief Financial
Officer report in writing to the ARM Committee that:
» The Group’s financial reports are complete and
present a true and fair view, in all material respects,
of the 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
system of
internal
compliance and control which implements the
policies adopted by the Board; and
risk management and
Continuous Disclosure Obligations
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 Group’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 Group’s activities in
light of its continuous disclosure policy. The Group’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.
26
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
Principle 6: Respect the rights
of security holders
A listed entity should respect the rights of its security
holders by providing
them with appropriate
information and facilities to allow them to exercise
those rights effectively.
Recommendation 6.1
Complies: YES
A listed entity should provide information about itself
and its governance to investors via its website.
Recommendation 6.2
Complies: YES
A listed entity should design and implement an
investor relations program to facilitate effective two-
way communication with investors.
Recommendation 6.3
Complies: YES
A listed entity should disclose the policies and
processes it has in place to facilitate and encourage
participation at meetings of security holders.
(2) is chaired by an independent director, and
disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
the committee met
number of
throughout the period and the individual
attendances of
those
meetings; or
the members at
times
(b) if it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s
risk management framework.
Recommendation 7.2
Complies: YES
The board or a committee of the board should:
(a) review the entity’s risk management framework at
least annually to satisfy itself that it continues to
be sound; and
(b) disclose, in relation to each reporting period,
Recommendation 6.4
Complies: YES
whether such a review has taken place.
receive communications
A listed entity should give security holders the option
to
from, and send
communications to, the entity and its security registry
electronically.
Shareholder Communications
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.
Company
announcements,
reporting results and main corporate governance
documents are available on the Company’s website.
information, news,
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 Group’s auditors will
always attend the annual general meeting and will be
available to answer shareholders’ questions.
Principle 7: Recognise and manage risk
A
listed entity should establish a sound risk
management framework and periodically review the
effectiveness of that framework.
Recommendation 7.1
Complies: YES
The board of a listed entity should:
Recommendation 7.3
Complies: YES
A listed entity should disclose:
(a) if it has an internal audit function, how the function
is structured and what role it performs; or
(b) if it does not have an internal audit function, that
fact and the processes it employs for evaluating
and continually improving the effectiveness of its
risk management and internal control processes.
Recommendation 7.4
Complies: YES
A listed entity should disclose whether it has any
material exposure to economic, environmental and
social sustainability risks and, if it does, how it
manages or intends to manage those risks.
Risk Management
in
fulfilling
the Board
The Board is responsible for oversight of the Group’s
risk management and control framework. The ARM
Committee assists
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
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.
framework
included
(a) have a committee or committees to oversee risk,
each of which:
(1) has at least three members, a majority of
whom are independent directors; and
This framework incorporates the maintenance of
comprehensive policies, procedures and guidelines
that encompass the Group’s activities. It addresses
areas such as, occupational health and safety,
IT
environmental management,
trade practices,
27
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
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:
» 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 team (and/or independent advisers,
where necessary) on the nature of particular risks
and details of the measures which are either in
place or can be adopted to manage or mitigate the
risk; and
» Any Director may request that operational and
project audits be undertaken by management.
The risk management framework included in the
Audit and Risk Management Committee Charter is
available on the Company’s website and is reviewed at
least annually. The last review was in June 2019.
Internal Audit
The Group currently does not have an internal audit
function. Considerable importance is placed on
maintaining a strong control environment both
financially and operationally. The audit committee and
the board continue to monitor the need for an internal
audit function as the business grows and through the
independent expertise on the audit committee in
conjunction with reporting from external auditors and
industry certification audits which regularly evaluate
the effectiveness of its risk management and internal
control processes.
Economic, Environmental and Social
Sustainability Risks
The Group is not subject to any material exposure to
economic, environmental and social sustainability
risks.
28
Principle 8: Remunerate fairly
and responsibly
A listed entity should pay director remuneration
sufficient to attract and retain high quality directors
and design its executive remuneration to attract,
retain and motivate high quality senior executives and
to align their interests with the creation of value for
security holders.
Recommendation 8.1
Complies: NO
8.1(a)(2) not complied with
The board of a listed entity should:
(a) have a remuneration committee which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director, and
disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the
number of
the committee met
throughout the period and the individual
attendances of
those
meetings; or
the members at
times
(b) if it does not have a remuneration committee,
disclose that fact and the processes it employs for
setting the level and composition of remuneration
for directors and senior executives and ensuring
that such remuneration is appropriate and not
excessive.
Recommendation 8.2
Complies: YES
A listed entity should separately disclose its policies
and practices regarding the remuneration of non-
executive directors and the remuneration of executive
directors and other senior executives.
Recommendation 8.3
Complies: YES
A listed entity which has an equity-based remuneration
scheme should:
(a) have a policy on whether participants are permitted
to enter into transactions (whether through the
use of derivatives or otherwise) which limit the
economic risk of participating in the scheme; and
(b) disclose that policy or a summary of it.
Remuneration Committee
The purpose of this Committee is to assist the Board
and report to it on remuneration and issues relevant
to remuneration policies and practices including
those for senior management and non-executive
Directors. These policies are included in the Group’s
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2019
Corporate Governance Charter. Its current members
are Craig Baker (Chairman), Russell Cole and Andrew
Kemp.
Russell Cole and Andrew Kemp are independent
Directors and its composition does not fully comply
with the recommendations in 8.1 of the ASX Corporate
Governance Guidelines as it is not chaired by an
independent director. The Board believes this is
acceptable given the size of the Group, the nature of
its business and the commercial experience of the
members.
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
Group’s remuneration policies and procedures;
c) Oversight of
the performance of
senior
management and non-executive Directors; and
d) Recommendations to the Board in relation to the
remuneration of senior management and non-
executive Directors.
The Group’s polices relating
to Non-Executive
Directors’ and Executive Directors and Senior
Executives’ remuneration are set out in the annual
report.
It is the Group’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.
Equity-Based Remuneration Scheme
The Group does not currently operate an equity-based
remuneration scheme.
29
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2019
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Revenue
Total Revenue
Changes in inventories of finished goods and work in progress
Raw materials and consumables used and finished goods purchased
for sale
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/(Loss) before income tax expense
Income tax (expense)/benefit
Profit/(Loss) for the year attributable to the owners
of the parent entity
Other comprehensive income net of tax:
Exchange differences on translation of foreign operations
Total comprehensive income/(loss) 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
2019
$’000
51,481
51,481
2018
$’000
40,611
40,611
(1,201)
2,166
(31,031)
(25,419)
(6,487)
(2,106)
(5,803)
(1,863)
(151)
131
(957)
263
1
(154)
(175)
(899)
246
-
(4,364)
(4,036)
(45,904)
(35,937)
5,577
(1,603)
3,974
4,674
(1,431)
3,243
2
3,976
(7)
3,236
Cents
Cents
5.71
5.71
5.17
5.17
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
30
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
Consolidated Statement of Financial Position
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
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
Note
2019
$’000
2018
$’000
19(a)
5
6
7
8
5
6
9
10
11
8
12
13
7
15
16
13
14
15
16
17
18
7,174
13,376
23,202
144
1,242
4,184
10,119
24,403
-
585
45,138
39,291
11,319
2,687
18,752
1,618
4,334
-
38,710
83,848
4,856
2,455
47
804
2,141
10,303
17,862
4,332
146
239
22,579
32,882
50,966
47,638
13,312
7,133
2,543
19,385
2,472
4,334
-
35,867
75,158
4,249
1,776
-
735
1,871
8,631
14,563
3,630
438
581
19,212
27,843
47,315
43,121
14,360
(9,984)
(10,166)
50,966
47,315
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
31
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019
Consolidated Statement of
Changes in Equity
Issued Capital
Reserves
Note
Share
Capital
Other Equity
Securities
Total
Issued
Capital
Dividend
Approp
-riation
Reserve
Foreign
Currency
Trans
-lation
Retained
Earnings
Total
Equity
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 1 July 2017
40,474
183
40,657
14,262
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
Dividends recognised
for the year
17
18
18
2,464
-
-
Balance at 30 June 2018
42,938
Balance at 1 July 2018
42,938
Total comprehensive income
Profit for the year
Other comprehensive
income
Total comprehensive
income for the year
-
-
-
-
-
-
183
183
-
-
-
Transactions with owners in their capacity as owners
and other transfers
Contributions of equity
net of transaction cost
Transfer to reserves
Dividends recognised
for the year
17
18
18
4,517
-
-
-
-
-
-
-
-
2,464
-
-
-
-
-
-
3,243
(3,138)
-
-
(10,166)
44,753
3,243
3,243
(7)
-
(7)
(7)
3,243
3,236
-
-
-
-
2,464
(3,243)
-
-
(3,138)
43,121
14,367
(7)
(10,166)
47,315
43,121
14,367
(7)
(10,166)
47,315
-
-
-
4,517
-
-
-
-
-
-
3,792
(4,842)
-
2
2
-
-
-
3,974
3,974
-
2
3,974
3,976
-
4,517
(3,792)
-
-
(4,842)
Balance at 30 June 2019
47,455
183
47,638
13,317
(5)
(9,984)
50,966
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
32
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2019
Consolidated Statement of
Cash Flows
Note
2019
$’000
2018
$’000
Cash Flow From Operating Activities
Cash receipts from customers (inclusive of GST)
Cash payments to suppliers and employees (inclusive of GST)
Interest received
Finance costs
Income tax refunded/(paid)
Net cash provided by/(used in) 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 provided by/(used in) investing activities
Cash Flow From Financing Activities
Proceeds from borrowings
Proceeds from issue of shares
Repayment of borrowings
Payment of dividends
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)
45,434
45,398
(40,707)
(40,916)
567
(957)
(144)
4,193
327
(899)
-
3,910
(3,329)
(2,432)
-
-
(3,329)
(2,432)
5,614
-
(2,194)
(1,294)
2,126
2,990
4,184
7,174
2,179
1,128
(2,204)
(824)
279
1,757
2,427
4,184
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
33
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
Notes to the Financial Statements
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
These general purpose financial statements have
been prepared in accordance with the Corporations
Act 2001, Australian Accounting Standards and
Interpretations of the Australian Accounting Standards
Board and International Financial Reporting Standards
as issued by the International Accounting Standards
Board. This Company is a for-profit entity for financial
reporting purposes under Australian Accounting
Standards. Material accounting policies adopted in
the preparation of these financial statements are
presented below and have been consistently applied
unless stated otherwise.
Except for cash flow information, the financial
statements have been prepared on an accruals basis
and are based on historical costs, modified, where
applicable, by the measurement at fair value of
selected non-current assets, financial assets and
financial liabilities.
The Financial Statements were authorised by the
Board of Directors for issue on 30 August 2019.
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 IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its
judgement in the process of applying the Company’s
accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where
assumptions and estimates are significant to the
financial statements are disclosed in note 1(ad).
(b) Principles of consolidation
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of PTB Group
Limited (“company” or “parent entity”) as at 30 June
2019 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. The parent controls
an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity
and has the ability to affect those returns through its
power over the entity. For details of the subsidiaries
refer note 28.
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)).
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.
(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
The
entity operates
consolidated financial statements are presented in
Australian dollars, which is PTB Group Limited’s
functional and presentation currency.
(‘functional currency’).
(ii) Transactions and balances
Foreign currency transactions are translated into the
functional currency using
rates
prevailing at the dates of the transactions. Foreign
losses resulting from the
exchange gains and
the exchange
34
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
settlement of such transactions and from the
translation at year-end exchange rates of monetary
foreign
liabilities denominated
assets and
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.
in
(e) Revenue recognition
The Group recognises revenue when it transfers
control over a product or service to a customer.
Revenue is measured based on the consideration
specified in a contract with a customer and excludes
amounts collected on behalf of third parties.
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
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.
income are
recognised
in
(iii) Group companies
The results and financial position of all the Group
entities (none of which has the currency of a
hyperinflationary economy) that have a functional
currency different from the presentation currency are
translated into the presentation currency as follows:
» Assets and liabilities for each 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 the Consolidated Statement of Profit or Loss.
On consolidation, exchange differences arising from
the translation of any net investment in foreign
entities, and of borrowings and other financial
such
instruments designated as hedges of
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.
35
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
(e) Revenue recognition (continued)
The following table provides further information about the major business activities of the Group, including the
nature and timing of the satisfaction of performance obligations in contracts with customers and the related
revenue recognition policies of the Group:
Type of product/service
Revenue recognition including nature and timing of satisfaction of
performance obligations and significant payment terms
Sale of goods, including turbine
engines, aircraft and related parts.
The Group recognises revenue once a customer takes control of the part,
engine or aircraft.
For parts sales, this is deemed to occur once the items have been
dispatched to the customer. While this is also generally the case for
engine and aircraft sales, there are occasions where customers are
deemed to have taken control of these goods prior to shipment. In these
cases, appropriately completed sales documents demonstrate the
transfer of control to the customer.
Payment terms will vary depending on the relationship with the customer.
These can include prepayment and credit terms (usually 30 days).
The services performed can range from minor part repairs to engine
overhauls. With repairs and overhauls, the Group is enhancing the state
of the engine/part, however the asset remains under the customer’s
control.
Revenue is recognised in line with the Group’s satisfaction of performance
obligations. In many cases, this is at the completion of the job, however
for larger jobs, revenue is taken up progressively in line with the
percentage of completion.
Payment terms will vary depending on the relationship with the customer.
These can include prepayment and credit terms (usually 30 days).
The Group enters into engine maintenance agreements with customers.
While the detailed terms of each contract vary, they all include the supply
of a combination of parts, engines and workshop services over the term
of the agreement.
The Group invoices customers monthly across the term of the contracts.
The monthly invoices are usually based on engine utilisation for the prior
month and are payable on credit terms of up to 30 days.
Revenue recognition is based on the timing of the supply of goods and
services under these agreements rather the timing of the invoicing. The
Group uses the same approaches explained above to determine when to
recognise revenue for parts, engines and workshop services supplied
under engine maintenance agreements.
Revenue from the lease, hire or rental of engines and aircraft is recognised
as the services are provided. These may include a combination of fixed
monthly charges and variable charges based on engine/aircraft utilisation
each month. These are billed and paid on a monthly basis and can
include credit terms of up to 30 days.
The Group recognises interest revenue in relation to financing
arrangements provided on aircraft and engines. This interest revenue is
recognised by the Group on a progressive basis over the term of the
contract.
Monthly instalments including interest and principal repayments are
paid by the customer as per the terms of the finance agreement.
Repair and overhaul of turbine
engines and related parts.
Engine maintenance contracts.
Lease, hire or rental of aircraft and
turbine engines.
Provision of finance for aircraft and
turbine
related
Interest income.
engines
and
36
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
(f) Unearned revenue
Tax consolidation legislation
Unearned revenue includes amounts received in
advance from customers. Such amounts are recorded
as revenue in the statement of profit or loss and other
comprehensive income when the above revenue
recognition criteria are met.
(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
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.
taxable
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
in other
this case, the tax
comprehensive income or directly in equity respectively.
is also recognised
the
implemented
PTB Group Limited and its wholly-owned Australian
tax
controlled entities have
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
its
interim funding amounts to assist with
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
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
leases are
37
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
lease. The corresponding liability to the lessor is
included in the statement of financial position as a
finance lease obligation, net of finance charges.
Lease payments are apportioned between finance
charges and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged
directly against income, unless they are directly
attributable to qualifying assets, in which case they
are capitalised in accordance with the consolidated
entity’s general policy on borrowing costs. Refer to
note 1(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.
(i) Business combinations
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 transferred, equity instruments issued or
liabilities 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.
liabilities assumed
Acquisition-related costs are expensed as incurred.
liabilities and
Identifiable assets acquired and
contingent
in a business
combination are, with limited exceptions, measured
initially at their fair values at the acquisition date. On
the Group
an acquisition-by-acquisition basis,
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.
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
in
impairment whenever events or changes
circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows
(cash generating units).
(k) Cash and cash equivalents
For 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
the
in current
within borrowings
statement of financial position.
liabilities on
(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 recognised in accordance
with AASB 9: Financial Instruments. Refer to note 1(n)
for further details on the Group’s financial asset
impairment policy.
The amount of the provision is recognised in the
statement of profit or loss and other comprehensive
income.
38
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
(m) Inventories
Raw materials, work in progress, and finished goods
Inventories are stated at the lower of cost and net
realisable value. Costs are assigned to individual
items of stock by specific identification. Net realisable
value is the estimated selling price in the ordinary
course of business less the estimated costs of
completion and the estimated costs necessary to
make the sale.
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) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised
when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from
the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.
Trade receivables that do not contain a significant
financing component are initially measured at the
transaction price.
Classification and subsequent measurement of
financial assets
Financial assets, other than those designated and
effective as hedging instruments, are classified into
the following categories:
» Amortised cost
»
»
Fair value through profit and loss (FVTPL)
Fair value through other comprehensive income
(FVOCI)
The classification is determined by both the entity’s
business model for managing the financial asset and
the contractual cash flow characteristics of the
financial asset.
Financial assets that meet the following conditions
are measured subsequently at amortised cost:
»
»
the financial asset is held within a business model
whose objective is to hold financial assets in order
to collect contractual cash flows; and
the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
The Group currently has no financial assets at FVTPL
or FVOCI.
Impairment of financial assets
In relation to the impairment of financial assets, an
expected credit loss model is adopted where expected
credit losses and changes in those expected credit
losses are accounted for at each reporting date to
reflect changes in credit risk since initial recognition
of the financial asset.
The Group measures the loss allowance for a financial
instrument at an amount equal to the lifetime expected
credit losses (ECL) if the credit risk on that financial
instrument has increased significantly since initial
recognition. However, if the credit risk on a financial
instrument has not increased significantly since initial
recognition, the Group measures the loss allowance
for that financial instrument at an amount equal to
12-months ECL.
The Group considers a broader range of information
when assessing credit risk and measuring expected
credit losses, including past events, current conditions,
reasonable and supportable forecasts that may affect
the expected collectability of the future cash flows of
the instrument. A more detailed analysis is performed
on the outstanding trade receivables listing as at 30
June to ensure the predicted current exposure is
adequately covered by the calculated ECL.
Classification and subsequent measurement of
financial liabilities
The Group’s financial liabilities include borrowings,
trade and other payables.
Financial liabilities are subsequently measured at
amortised cost using the effective interest method
except
liabilities
for derivatives and financial
designated at FVTPL, which are carried subsequently
at their fair value with gains or losses recognised in
profit or loss.
Derecognition
Financial assets are derecognised when
the
contractual rights to the cash flows from the financial
asset expire, or when the financial asset and
substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
(o) Leasehold improvements
The cost of improvements to or on leasehold
properties is amortised over the unexpired period of
the
life of the
improvement to the Group, whichever is the shorter.
Refer note 1(p).
lease or the estimated useful
39
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
(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
cash flow 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.
in
reserve
Increases
the carrying amounts arising on
revaluation of land and buildings are credited, net of
tax, in other comprehensive income and to the
revaluation
equity.
in
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.
shareholders’
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
de-recognised. 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
its estimated
carrying amount
recoverable amount (note 1 (j)).
is greater than
Gains and losses on disposals are determined by
comparing proceeds with the 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.
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
Life
40 years
5 years
Leasehold improvements - leased
6 years
Plant and equipment
3 - 15 years
Plant and equipment – leased
6–8 years
Basis
SL
SL
SL
DV
DV
Rental engines
3,600 - 7,000 hours
Actual hours as a proportion of
estimated total operating hours
Airframes
6-10 years
SL
Certain items of plant and equipment, primarily rental
engines, are required to be overhauled on a regular
basis. This is managed as part of an ongoing major
40
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
(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
Costs incurred in acquiring software and licenses that
will contribute to future period financial benefits
through revenue generation and/or cost reduction are
capitalised to software and systems. Costs capitalised
include external direct costs of materials and service,
direct payroll and payroll related costs of 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 profit or loss and other 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
Borrowings are
incurred.
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
interest method.
income over the period of the borrowings using the
effective
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) Derivatives and hedging activities
Derivatives are initially recognised at fair value on the
date a derivative contract is entered into and are
subsequently remeasured to their fair value at each
reporting date. The accounting for subsequent
changes in fair value depends on whether the
derivative is designated as a hedging instrument, and
if so, the nature of the item being hedged.
The Group designates certain derivatives as either:
» Hedges of the fair value of recognised assets and
liabilities or a firm commitment (fair value hedges);
» Hedges of the cash flows of recognised assets
forecast
liabilities and highly probable
and
transactions (cash flow hedges); or
» Hedges of a net investment in a foreign operation
(net investment hedges).
the
At the inception of the hedging transaction the Group
documents
relationship between hedging
instruments and hedged items, as well as its risk
management objective and strategy for undertaking
various hedge
The Group also
documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives
that are used in hedging transactions have been and
will continue to be highly effective in offsetting
changes in fair values or cash flows of hedged items.
transactions.
41
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
The full fair value of a hedging derivative is classified
as a non-current asset or liability when the remaining
maturity of the hedged item is more than 12 months.
If the remaining maturity of the hedged item is less
than 12 months it is classified as a current asset or
liability. Trading derivatives are classified as a current
asset or liability.
Fair value hedge
Changes in the fair value of derivatives that are
designated and qualify as fair value hedges are
recorded in the statement of profit or loss and other
comprehensive income, together with any changes in
the fair value of the hedged asset or liability that are
attributable to the hedged risk. The gain or loss
relating to the effective portion of interest rate swaps
hedging fixed rate borrowings is recognised in the
statement of profit or loss and other comprehensive
income within ‘finance costs’, together with changes
in the fair value of the hedged fixed rate borrowings
attributable to interest rate risk. The gain or loss
relating to the ineffective portion is recognised in the
statement of profit or loss and other comprehensive
income within ‘other income’ or ‘other expenses’.
If the hedge no longer meets the criteria for hedge
accounting, the adjustment to the carrying amount of
a hedged item for which the effective interest method
is used is amortised to the statement of comprehensive
income over the period to maturity using a recalculated
effective interest rate.
amounts are ultimately recognised in the statement of
profit or loss and other comprehensive income as
costs of goods sold in the case of inventory, or as
depreciation in the case of property, plant and
equipment.
When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain or
loss existing in equity at that time remains in equity
and is recognised when the forecast transaction is
of
in
ultimately
comprehensive income. When a forecast transaction
is no longer expected to occur, the cumulative gain or
loss that was reported in equity is immediately
transferred to the statement of profit or loss and other
comprehensive income.
recognised
statement
the
Net investment hedges
Hedges of net investments in foreign operations are
accounted for similarly to cash flow hedges. Any gain
or loss on the hedging instrument relating to the
effective portion of the hedges is recognised in other
comprehensive income and accumulated reserves in
equity. The gain or loss relating to the ineffective
portion is recognised immediately in the statement of
profit or loss and other comprehensive income, within
‘other income’ or ‘other expense’. Gains or losses
accumulated in equity are included in the statement
of comprehensive income when the foreign operation
is partially disposed of or sold.
Cash flow hedge
Derivatives that do not qualify for hedge accounting
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognised in the statement of profit or
loss and other comprehensive income and in the
hedging reserve in equity. The gain or loss relating to
the ineffective portion is recognised immediately in
the statement of profit or loss and other comprehensive
income within ‘other income’ or ‘other expense’.
Amounts accumulated in equity are recycled in the
statement of profit or loss and other comprehensive
income in the periods when the hedged item affects
profit or loss. The gain or loss relating to the effective
portion of interest rate swaps hedging variable rate
borrowings is recognised in the statement of profit or
loss and other comprehensive income within ‘finance
costs’. The gain or loss relating to the effective portion
of forward foreign exchange contracts hedging export
sales is recognised in the statement of profit or loss
and other comprehensive income within ‘sales’.
However, when the forecast transaction that is hedged
results in the recognition of a non-financial asset the
gains and losses previously deferred in equity are
transferred from equity and included in the initial
measurement of the cost of the asset. The deferred
Certain derivative instruments do not qualify for hedge
accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting
are recognised immediately in the statement of profit
or loss and other comprehensive income and are
included in ‘other income’ or ‘other expenses’.
(v) Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12 months of
the reporting date are recognised in the employee
benefits provision in respect of employees’ services
up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are
settled. 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.
42
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
Long service leave
The liability for long service leave is recognised in the
employee benefits provision and measured as the
present value of expected future payments to be
made in respect of services provided by employees up
to the reporting date. Consideration is given to
expected future wage and salary levels, experience of
employee departures and periods of service. Expected
future payments are discounted using market yields
at the reporting date on corporate 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.
Termination benefits
for restructuring pursuant
When applicable, the Group recognises a liability and
expense for termination benefits at the earlier of; (a)
the date when the Group can no longer withdraw the
offer for termination benefits; and (b) when the Group
to
recognises costs
AASB137: Provisions, Contingent Liabilities and
Contingent Assets and the costs include termination
benefits. In either case, unless the number of
employees affected is known, the obligation for
termination benefits is measured on the basis of the
number of employees expected to be affected.
Termination benefits that are expected to be settled
wholly before 12 months after the annual reporting
period in which the benefits are recognised at the
(undiscounted) amounts expected to be paid. All
other termination benefits are accounted for on the
same basis as other long-term employee benefits.
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.
(w) Provisions
Provisions for service warranties and make good
obligations are recognised when the Group has a
present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources
will be required to settle the obligation and the amount
has been reliably estimated.
Provisions are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at the
reporting date. The discount rate used to determine
the present value reflects current market assessments
of the time value of money and the risks specific to
the liability.
(x) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a
deduction, net of tax, from proceeds.
Share-based payments
(y) Dividends
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.
Provision is made for the amount of any dividend
declared, being appropriately authorised and no
longer at the discretion of the entity, on or before the
end of the year but not distributed at balance date.
(z) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to equity holders of the company,
excluding any costs of servicing equity other than
ordinary shares, by the weighted average number of
ordinary shares outstanding during the year, adjusted
for bonus elements in ordinary shares issued during
the year.
43
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
Diluted earnings per share
(ad) Critical accounting estimates
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.
(aa) Goods and services tax
and judgements
The Group evaluates estimates and judgements
incorporated into the financial report based on
historical knowledge and best available current
information. Estimates
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:
assume
a
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST), except:
Impairment
» 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.
(ab) Rounding of amounts
The company is of a kind referred to in legislative
instrument 2016/191 relating to the “rounding off” of
amounts in the financial statements. Amounts in the
financial statements have been rounded off in
accordance with that legislative instrument to the
nearest thousand dollars, or in certain cases, the
nearest dollar.
The Group tests six monthly whether goodwill has
suffered any impairment in accordance with the
accounting policy stated in note 1(j). The recoverable
amounts of cash-generating units have been
determined based on value-in-use calculations. These
calculations require the use of assumptions. Refer to
note 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
Management applies judgement 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.
(ac) General
(ae) Fair value of assets and liabilities
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:
The Group measures some of its assets and liabilities
at fair value on either a recurring or non-recurring
basis, depending on
the
applicable Accounting Standard.
the requirements of
22 Orient Avenue
Pinkenba QLD 4008
Fair value is the price the Group would receive to sell
an asset or would have to pay to transfer a liability in
an orderly (i.e. unforced)
transaction between
independent, knowledgeable and willing market
participants at the measurement date.
As fair value is a market-based measure, the closest
equivalent observable market pricing information is
used to determine fair value. Adjustments to market
values may be made having
the
characteristics of the specific asset or liability. The fair
values of assets and liabilities that are not traded in an
active market are determined using one or more
valuation techniques. These valuation techniques
regard
to
44
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
maximise, to the extent possible the use of the
observable market data.
To the extent possible, the market information is
extracted from either the principal market for the
asset or liability (i.e. the market with the greatest
volume and level of activity for the asset or liability) or,
in the absence of such a market, the most
advantageous market available to the entity at the end
of the reporting period (i.e. the market that maximises
the receipts from the sale of the asset or minimises
the payments made to transfer the liability, after
taking into account transaction costs and transport
costs).
For non-financial assets, the fair value measurement
also takes into account a market participants ability to
use the asset in its highest and best use or to sell it to
another market participant that would use the asset in
its highest and best use.
The fair value of liabilities and the entity’s own equity
instruments (excluding those related to share-based
payment arrangements) may be valued, where there
is no observable market price in relation to the transfer
of such financial instrument, by reference to observable
market information where such instruments are held
as assets. Where this information is not available,
other valuation techniques are adopted and, where
significant, are detailed in the respective note to the
financial statements.
(af) Changes in significant accounting policies
AASB 15: Revenue from Contracts with Customers
AASB 9: Financial Instruments
In the current year, the Group has initially applied
the classification,
AASB 9, which addresses
measurement and derecognition of financial assets
and financial liabilities as well as provides a new
impairment model for financial assets. The Group has
adopted this new standard from 1 July 2018, and
following a detailed assessment, has concluded there
has been no material impact on the Group and no
adjustments or
restatements of comparative
information in the current year were required.
(ag) New accounting standards and
interpretations
Certain new accounting standards and interpretations
have been published that are not mandatory for 30
June 2019 reporting periods and have not been early
adopted by the Group. The following new standards
are to be applied in future periods:
(i) AASB 16 Leases: significant revisions to accounting
for operational leases by Lessees of property and
high value equipment. Exemptions for short term
leases and leases of low value assets will reduce
the impact. Impact: The Group will adopt this
standard in July 2019. The adoption of this
standard has been assessed by reviewing existing
operating leases. The review has determined that
the adoption of the standard will have an
immaterial
liabilities and
expenses.
impact on assets,
a
provides
recognition
The Group has initially applied AASB 15 from 1 July
2018. The standard replaces existing guidance on
new
and
revenue
comprehensive framework for determining whether,
how much and when revenue is recognised. The core
principle of the standard is that revenue is recognised
when control of a good or service has been transferred
to the customer. The transitional provisions in AASB
15 require companies to adopt the new rules
retrospectively.
Following a comprehensive review of how revenue has
previously been recognised, the Group has determined
that existing recognition policies are already aligned
with the requirements of AASB 15 and that revenue
has historically only been recorded once control of
goods/services had been passed to a customer.
Therefore, the adoption of AASB 15 had no material
impact on revenue recognised and no adjustments or
restatements of comparative information in the
current year were required.
45
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
2. Revenue
The Group generates revenue primarily from the sale of goods (turbine engines, aircraft and related parts),
provision of services (repair services and maintenance), rental of engines/aircraft and interest income from
financing arrangements on the same. Other sources of revenue include other interest income and freight
collected.
Revenue from contracts with customers
Sale of goods
Services
Maintenance contract revenue
Rental of engines/aircraft
Interest on extended credit receivables (hire purchase agreements)
Other revenue
Total revenue
2019
$’000
2018
$’000
22,149
4,974
20,887
2,855
509
51,374
107
19,274
4,862
13,500
2,427
183
40,246
365
51,481
40,611
46
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
(a) Disaggregation of revenue from contracts with customers
In the following table, revenue from contracts with customers is disaggregated by primary geographical market,
major business activities and timing of revenue recognition. The table also includes a reconciliation of the
disaggregated revenue with the Group’s reportable segments (see Note 26)
PTB
PT USA
PT Leasing
IAP
Total
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
2018
$’000
Geographical
markets
AUS, PNG, NZ
5,305
7,251
453
7,120
4,889
-
828
593
3,654
2,698
-
-
2,073
1,591
1,338
1,305
9,169
10,147
290
(8)
92
44
30
36
7,440
5,016
2,925
2,200
7,399
5,536
18,721
13,013
652
1,224
693
746
2,998
3,033 23,064
18,016
115
2,211
55
552
4
49
-
69
40
-
36
39
63
198
154
-
1,844
756
4,104
1,377
34,300 26,353
4,812
3,991
3,088
2,509
9,174
7,393 51,374 40,246
Pacific
America
Asia
Africa
Europe
Total
Major business
activities
Sale of goods
8,167
8,137
4,808
3,755
Services
4,970
4,626
4
236
Maintenance
contract revenue
Rental of engines/
aircraft
Interest on hire
purchase
agreements
20,887
13,500
-
-
276
90
-
-
-
-
-
-
-
-
-
-
-
-
2,855
2,427
233
82
9,174
7,383
22,149
19,274
-
-
-
-
-
4,974
4,862
- 20,887
13,500
-
2,855
2,427
10
509
183
Total
34,300 26,353
4,812
3,991
3,088
2,509
9,174
7,393 51,374 40,246
Timing of
recognition
Point in time
34,024 26,263
4,812
3,991
2,855
2,427
9,174
7,383 50,865 40,063
Over-time
Total
276
90
-
-
233
82
-
10
509
183
34,300 26,353
4,812
3,991
3,088
2,509
9,174
7,393 51,374 40,246
Other revenue
46
223
16
85
27
21
18
36
107
365
External revenue
as reported in
Note 26
34,346 26,576
4,828
4,076
3,115
2,530
9,192
7,429 51,481 40,611
47
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
3. Profit/(Loss) before income tax expense
Profit/(Loss) before income tax expense includes the following specific items:
Depreciation
– Buildings
– Plant and equipment
– Rental engines/aircraft
– Leasehold improvements
Amortisation
– Leased engines/aircraft
Operating lease rentals – minimum lease payments
– Premises
– Equipment and software
Impairment losses/(write back)
– Trade debtors
Superannuation expense
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% (2018: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
- Non-deductible expenses
- Foreign income tax rate
- Adjustments for deferred tax assets of prior periods
2019
$’000
2018
$’000
124
169
1,755
8
50
180
33
(131)
503
124
135
1,546
9
49
127
61
175
437
2019
$’000
2018
$’000
47
1,576
(20)
1,603
5,577
1,673
3
(53)
(20)
-
1,410
21
1,431
4,674
1,402
6
2
21
Income tax expense/(benefit)
1,603
1,431
48
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
5. Trade and Other Receivables
Current
Trade receivables
Provision for impairment
Maintenance contract receivables
Contract receivables
Extended credit receivables
Non-Current
Trade receivables
Maintenance contract receivables
Contract receivables
Extended credit receivables
Loan to related party
Impaired trade receivables
2019
$’000
2018
$’000
10,312
(158)
10,154
1,646
641
935
8,182
(299)
7,883
1,437
176
623
13,376
10,119
275
4,232
2,976
2,011
1,825
11,319
557
1,409
3,280
150
1,737
7,133
In relation to the impairment of trade receivables, as at 30 June 2019, the Group had recognised an expected loss
allowance of $158,115 (2018: $299,468).
Movements in the provision for impairment of receivables are as follows:
At 1 July
Provision for impairment written back/(recognised) during the year
Receivables written off during the year as uncollectable
At 30 June
2019
$’000
(299)
131
10
(158)
2018
$’000
(130)
(176)
7
(299)
Further information on the Group’s policy concerning the impairment of financial assets are set out in Note 1(n).
Maintenance contract receivables
Maintenance contract receivables are generally unsecured. The relevant agreements require fixed monthly
payments over the term of the contracts which are generally up to 5 years.
Extended credit receivables
Extended credit receivables 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 expected to be retained by the customers.
49
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
5. Trade and Other Receivables (continued)
Payments in relation to the extended credit receivables 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 extended credit receivables
Representing receivables:
Current
Non-current
2019
$’000
2018
$’000
1,174
2,249
-
3,423
(239)
(238)
-
(477)
2,946
935
2,011
2,946
662
152
-
814
(39)
(2)
-
(41)
773
623
150
773
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
2019
$’000
2018
$’000
4,097
19,105
23,202
2,687
2,687
3,424
20,979
24,403
2,543
2,543
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.
50
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
7. Tax balances – Current
Current tax assets
Current tax liabilities
8. Other Assets
Current
Prepayments
Deposits
2019
$’000
144
47
2018
$’000
-
-
2019
$’000
2018
$’000
1,024
218
1,242
585
-
585
9. Property, Plant and Equipment
Rental arrangements – aircraft and engines
The Group rents aircraft and engines under two general arrangements:
» Contingent rentals - rented to customers under agreements with rentals payable monthly and no fixed term.
As such, the agreements are cancellable. The rent is calculated on the basis of an hourly rate and hours of
usage. There are no minimum hours of usage or minimum lease payments set out in the relevant agreements.
As such, in accordance with AASB 117 “Leases” the rental income comprises of contingent rentals not
minimum lease payments. Accordingly, there are no fixed lease commitments receivable; and
» Set or minimum rentals - the operating leases relate to aircraft and/or engines leased to third parties with
lease terms of between 3-7 years. The monthly rental payments are either set or per hour of usage with
minimum hours per annum. In addition, a contingent rental may be receivable based upon hours of usage.
The lessee may have an option to purchase the aircraft/engine at the expiry of the lease period. However, the
final purchase price is determined on a case by case basis in negotiation between the Group and the lessee.
Minimum lease payments in relation to aircraft and engine operating leases are receivable as follows:
No later than one year
Later than one year but not later than five years
Non-current assets pledged as security
Refer note 13 for information on non-current assets pledged as security.
2019
$’000
1,375
1,527
2,902
2018
$’000
1,206
2,417
3,623
51
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
9. Property, Plant and Equipment (continued)
Land &
Buildings
Leasehold
Improvements
Plant &
Equipment
Rental
Engines/
Aircraft
Assets Under
Construction
Total
Owned
$’000
Owned
$’000
Under
Lease
$’000
Owned
$’000
Under
Lease
$’000
Owned
$’000
Under
Lease
$’000
Owned
$’000
Under
Lease
$’000
$’000
Year ended 30
June 2018
Opening net book
value
Additions
Transfers1
Disposals
Impairment
Depreciation/
amortisation
FX translation
Closing net book
value
At 30 June 2018
Cost
Accumulated
depreciation
6,767
18
-
-
-
-
-
-
-
-
(124)
(9)
6,643
9
7,782
(1,139)
93
(84)
Net book value
6,643
Year ended 30
June 2019
Opening net book
value
Additions
Transfers1
Disposals
Impairment
Depreciation/
amortisation
FX translation
Closing net book
value
At 30 June 2019
Cost
Accumulated
depreciation
6,643
112
-
-
-
(124)
-
6,631
7,893
(1,262)
Net book value
6,631
9
9
-
-
(1)
-
(8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
660
208
-
-
-
(135)
3
736
2,091
(1,355)
736
736
1,639
1,994
-
-
(169)
5
4,205
5,730
(1,525)
4,205
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,447
223
56
231
642
-
-
-
-
-
(1,546)
(49)
1,993
-
-
-
-
-
-
-
-
-
-
18,171
2,432
642
-
-
(1,863)
3
9,774
174
2,049
-
19,385
17,996
263
2,049
- 30,274
(8,222)
(89)
-
- (10,889)
9,774
174
2,049
-
19,385
9,774
174
2,049
1,578
(1,805)
-
-
-
-
-
(1,755)
(50)
-
-
7,792
124
15,941
263
(8,149)
(139)
7,792
124
-
(2,049)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,385
3,329
(1,860)
(1)
-
(2,106)
5
18,752
- 29,827
-
-
(11,075)
18,752
1 Represents transfer of engine cores and aircraft frames (to)/from inventory.
52
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
10. Deferred Tax Assets
The balance comprises temporary differences attributable to:
2019
$’000
2018
$’000
530
47
285
47
709
1,618
1,007
43
250
77
1,095
2,472
Tax
losses
$’000
2,704
(1,697)
Accruals
$’000
45
(2)
Employee
benefits
$’000
Doubtful
debts
$’000
Other
Total
$’000
$’000
249
1
39
38
976
119
4,013
(1,541)
Tax losses
Accruals
Employee benefits
Doubtful debts
Other
Total deferred tax assets
Movements
At 1 July 2017
(Charged)/credited
to statement of profit
or loss and other
comprehensive
income
At 30 June 2018
1,007
(477)
(Charged)/credited
to statement of profit
or loss and other
comprehensive
income
43
4
250
77
1,095
2,472
35
(30)
(386)
(854)
At 30 June 2019
530
47
285
47
709
1,618
A deferred tax asset of $1.618 million (2018: $2.472 million) has been recognised at 30 June 2019. This includes
$0.530 million attributable to prior years’ income tax losses carried forward (2018: $1.007 million). Based on
management forecast of expected future taxable profits and the reversal of the temporary differences, it is
considered probable that these deferred tax assets will be recovered in the future.
53
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
11. Intangible Assets
Goodwill - cost
Impairment tests for goodwill
2019
$’000
4,334
2018
$’000
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 cash flow 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 13.4% (2018: 14.6%) based on the Group’s
weighted average cost of capital of 9.4% (2018: 10.2%). A perpetual growth rate beyond the forecast period of
3% (2018: 3%) has been used. Management determined budgeted cash flows based on past performance and
Directors’ best estimates over a five-year period.
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
Trade payables and accruals
Share subscription funds received in advance
Total trade and other payables
2019
$’000
4,856
-
4,856
2018
$’000
3,271
978
4,249
54
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
13. Borrowings
Current
Secured
Bank overdraft
Bank loans
Test cell loans
Lease liabilities
Non-Current
Secured
Bank loans
Test cell loans
Lease liabilities
2019
$’000
2018
$’000
-
1,704
276
475
2,455
11,134
2,806
3,922
-
1,602
174
-
1,776
12,453
1,837
273
17,862
14,563
Information concerning the effective interest rates is set out in note 25.
Bank Overdraft, Bank Loans and Bills Payable
The bank overdraft and 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 Pacific Turbine
Leasing Pty Ltd, Pacific Turbine USA Pty Ltd and IAP Group Australia Pty Ltd of $50.472 million (2018: $47.159
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 the bank’s
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.
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.
55
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
14. Deferred Tax Liabilities
The balance comprises temporary differences attributable to:
Property, plant and equipment
Other
Total deferred tax liabilities
Movements
At 1 July 2017
Charged/(credited) to statement of profit & loss and other
comprehensive income
At 30 June 2018
Charged/(credited) to statement of profit & loss and other
comprehensive income
At 30 June 2019
15. Provisions
Current
Employee benefits
Non-Current
Employee benefits
Remediation provisions
Movements in Provisions
Balance 1 July 2017
Provisions made during the year
Provisions used during the year
Balance at 30 June 2018
Provisions made during the year
Provisions used during the year
Balance at 30 June 2019
56
2019
$’000
2018
$’000
1,282
3,050
4,332
1,518
2,112
3,630
Other
Total
$’000
2,101
11
2,112
938
$’000
3,741
(111)
3,630
702
Property,
plant and
equipment
$’000
1,640
(122)
1,518
(236)
1,282
3,050
4,332
2019
$’000
2018
$’000
804
804
146
-
146
Employee
Benefits
$’000
Remed
-iation
Provisions
$’000
831
418
(416)
833
488
(371)
950
340
-
-
340
-
(340)
-
735
735
98
340
438
Total
$’000
1,171
418
(416)
1,173
488
(711)
950
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
(a) Remediation Provisions
Provision was made for the estimated expenditure required to restore the leasehold premises to an acceptable
standard at the end of the lease term. This lease was terminated during the 2019 year and a payment was made
as full and final settlement of the Group’s obligations under the lease.
(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. All of these amounts 2019: $314,000 (2018: $298,000) are 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.
16. Other Liabilities
Current
Deferred revenue
Deposits in advance
Non-Current
Deferred revenue
Deferred revenue
Deferred revenue relates to maintenance contract revenue received in advance.
17. Contributed Equity
2019
$’000
2018
$’000
1,111
1,030
2,141
1,473
398
1,871
239
581
2019
$’000
2018
$’000
Share capital
74,904,990 ordinary shares fully paid
(2018: 67,311,853 ordinary shares fully paid)
47,455
42,938
Other equity securities
Value of conversion rights (net of tax)
183
47,638
183
43,121
57
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
17. Contributed Equity (continued)
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
Closing balance 30 June 2017
Shares issued 2018
- under dividend reinvestment plan refer note 27
- share placement
Closing balance 30 June 2018
Shares issued 2019
- under dividend reinvestment plan refer note 27
- share placements
Closing balance 30 June 2019
No. of
Shares
$’000
62,749,389
40,474
4,284,685
277,779
2,314
150
67,311,853
42,938
5,741,285
1,851,852
3,547
970
74,904,990
47,455
Note that the Group received net funds of $977,500 on 29 June 2018, which was in advance of the placement of
1,851,852 shares on 2 July 2018. These proceeds were recorded in the 2018 accounts under payables – see note 12.
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 22 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. The Group defines capital as its equity
and net debt. There has been no change to capital risk management policies during the year.
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.
58
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
18. Reserves
Foreign currency translation reserve
Dividend appropriation reserve
Movements in Foreign Currency Translation Reserve:
Reserve balance 1 July
Translation of controlled entity
Reserve balance 30 June
Movements in Dividend Appropriation Reserve:
Reserve balance 1 July
Transfer from retained earnings
Dividend payment
Reserve balance 30 June
2019
$’000
(5)
13,317
13,312
(7)
2
(5)
14,367
3,792
(4,842)
13,317
2018
$’000
(7)
14,367
14,360
-
(7)
(7)
14,262
3,243
(3,138)
14,367
The dividend appropriation reserve is used to record the retained earnings which can be used for future dividend
payments. A fully franked dividend of 7 cents per share (2018: 5 cents per share) was paid from the dividend
appropriation reserve.
59
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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)
2019
$’000
7,174
-
7,174
(b) Reconciliation of Net Cash Flow from Operating Activities to Profit/(Loss) for the Year
2018
$’000
4,184
-
4,184
2018
$’000
3,243
1,863
-
169
(284)
2019
$’000
3,974
2,106
1
(141)
(87)
(6,664)
3,861
2,913
854
(802)
1,513
(223)
47
702
4,193
(3,044)
1,541
(356)
(2,975)
3
-
(111)
3,910
Profit/(loss) 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
60
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
20. Earnings Per Share
Basic earnings per share
Diluted earnings per share
Earnings used to calculate basic and diluted earnings per share
– Profit/(loss) after tax for the year
Weighted average number of ordinary shares used in calculating basic earnings
per share
Effect of dilutive securities
Weighted average number of ordinary shares and potential ordinary shares used
in calculating diluted earnings per share
2019
cents
5.71
5.71
2018
cents
5.17
5.17
$’000
$’000
3,974
3,243
Number
Number
69,646,247
62,774,389
-
-
69,646,247
62,774,389
21. Key Management Personnel Disclosures
Directors
The following persons were Directors of PTB Group Limited during the financial year:
Chairman – non-executive
CL Baker
Executive Directors
SG Smith, Managing Director
Non-executive Directors
APS Kemp
RQ Cole
PP Gunasekara
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
D Zgrajewski
Position
Company Secretary and CFO
Employer
PTB Group Limited
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
2019
$
2018
$
918,428
896,792
46,309
43,345
-
-
964,737
940,137
61
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
21. Key Management Personnel Disclosures (continued)
Short-term employee benefits
These amounts include fees and benefits paid to the non-executive directors as well as all salary, paid leave
benefits and fringe benefits awarded to executive directors and other KMP.
Post-employment benefits
These amounts represent superannuation contributions made during the year.
Other long-term benefits
These amounts represent long service leave benefits accrued during the year.
Further information in relation to the KMP disclosures can be found in the remuneration report contained in the
Directors’ Report.
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 received 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:
Audit Services – Hall Chadwick Qld
Audit or review of the financial reports
Total remuneration for audit services
2019
$
2018
$
145,000
140,000
145,000
140,000
There was no other remuneration paid to related practices of the auditor, or other non-related audit firms.
62
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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
2019
$’000
2018
$’000
667
4,147
–
4,814
(192)
(225)
–
4,397
475
3,922
4,397
12
301
–
313
(12)
(28)
–
273
–
273
273
Finance leases comprise aircraft and aircraft engines leased under commercial 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
2019
$’000
2018
$’000
110
26
-
136
195
205
-
400
Operating leases mainly comprise leases of equipment and premises (Miami, Florida). 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) Capital commitments
The Group’s commitments for capital expenditure as at 30 June 2019 were nil (2018: $1.050 million).
63
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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 transactions and recognised assets and liabilities are
denominated in a currency that is not the entity’s functional currency.
The Group operates internationally and is exposed to foreign exchange risk primarily arising from sale and
purchase transactions denominated in US dollars and UK pounds. The risk is measured using sensitivity analysis
and cash flow 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:
30 JUN 2019
30 JUN 2018
USD
$’000
3,926
9,660
3,949
601
55
(3,015)
(8,774)
(1,240)
GBP
£’000
5
–
–
–
-–
(6)
–
–
USD
$’000
1,654
7,981
4,388
–
78
(1,757)
(6,310)
(1,014)
GBP
£’000
5
–
–
–
–
–
–
–
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Property, plant and equipment
Trade and other payables
Borrowings
Other liabilities
Group sensitivity
Based on the financial instruments held at 30 June 2019, had the Australian dollar weakened/strengthened by
10% against the USD dollar, with all other variables held constant, the Group’s post tax position for the year
would have been $574,000 higher/$470,000 lower (2018: $532,000 higher/$435,000 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 $574,000 higher/$470,000 lower (2018: $532,000 higher/$435,000 lower) had the
Australian dollar weakened/strengthened by 10% against the US dollar due to the reasons noted above.
64
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
It is worth noting that the company undertakes the majority of its sales and purchases in US dollars. Therefore,
the majority of profit is generated in US dollars, with the reported AUD profit positively impacted by any weakening
of the Australian dollar.
As per above, the Group’s exposure to other foreign exchange movements is not material.
(ii) Price Risk
The Group is not directly exposed to material equity securities price risk or commodity price risk.
(iii) Cash flow and fair value interest rate risk
The Group has significant interest-bearing 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 Australian dollar denominated bank loans) 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:
2019
Effective
Weighted
Average
Interest
Rate
%
Fixed Interest Maturing
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
Total
Non-
interest
Bearing
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
0.00%
7,171
–
–
–
–
–
–
3
7,174
Financial Assets
Cash and cash
equivalents
Trade and other
receivables
Loan to related
party
Contract
receivables
8.00%
5.00%
5.00%
Extended credit
receivables
10.28%
–
–
–
–
95
93
101
–
–
1,825
–
–
–
–
642
824
866
910
375
935
938
738
335
–
–
–
–
–
–
16,018 16,307
–
–
–
1,825
3,617
2,946
16,021 31,869
Total financial assets
7,171
1,672
1,855
3,530
1,245
375
Financial liabilities
Trade and other
payables
–
Bank overdraft
–
–
–
–
–
–
–
Bank loans
4.94% 7,649
1,570
3,496
–
–
–
–
–
–
Lease liabilities
4.73%
Test cell loan
Insurance loan
3.00%
8.20%
–
–
–
475
276
123
2,063
1,201
284
293
–
–
658
302
–
Total financial liabilities
7,649
2,444
5,843
1,494
960
–
–
–
–
311
–
311
–
4,856
4,856
–
–
–
1,616
–
–
–
–
12,715
–
–
–
4,397
3,082
123
1,616
4,856
25,173
65
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
25. Financial Risk Management and Other Financial Instrument Disclosures (continued)
Fixed Interest Maturing
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
Total
Non-
interest
Bearing
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Effective
Weighted
Average
Interest
Rate
%
0.00%
4,179
–
5.00%
–
–
–
–
–
–
–
–
–
–
–
–
–
1,737
–
–
–
–
5
4,184
–
11,286
11,286
–
–
1,737
5.00%
–
176
546
741
779
818
396
8.00%
–
623
150
–
–
–
–
–
–
3,456
773
2018
Financial Assets
Cash and cash
equivalents
Trade and other
receivables
Loan to related
party
Contract
receivables
Extended credit
receivables
Total financial assets
4,179
799
696
741
2,516
818
396
11,291 21,436
Financial liabilities
Trade and other
payables
Bank overdraft
–
–
–
–
–
–
–
–
–
–
Bank loans
5.12% 7,645
1,491
1,486
3,330
–
–
–
Lease liabilities
Test cell loan
Insurance loan
4.50%
3.00%
3.79%
–
–
–
–
174
103
–
–
297
307
273
316
–
–
–
–
–
–
–
326
–
–
4,249
4,249
–
–
–
591
–
–
–
–
13,952
–
–
273
2,011
–
103
Total financial liabilities
7,645
1,768
1,783
3,637
589
326
591
4,249 20,588
There are no other interest-bearing financial assets and liabilities.
Group sensitivity
As the majority of the interest rates are fixed, at 30 June 2019 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 (2018: 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.
66
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
(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:
» The Group’s customers are involved in the airline passenger and freight operation industries;
» There are a number of individually significant receivables. For example, at 30 June 2019 the largest 10 debtors
made up approximately 73% (2018: 71%) of total receivables. The largest debtor is a long-term customer in
the Maldives and includes trade receivables and maintenance contract receivables. This customer accounts
for 32% (2018: 25%) of total receivables.
» 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 and Chase Bank.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of committed credit facilities. The Group manages liquidity risk by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
The Group also ensures that adequate unutilised borrowing facilities and cash reserves are maintained. The
Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts, bank loans, unsecured notes, finance leases and finance company loans.
67
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
25. Financial Risk Management and Other Financial Instrument Disclosures (continued)
Finance Facilities
Available facilities
Bank overdraft
Bank loans – chattel mortgage
– other
Finance company leases & loans
Test cell loan
Amounts utilised
Bank overdraft
Bank loans – chattel mortgage
– other
Finance company leases & loans
Test cell loan
Unused facilities
Bank overdraft
Bank loans – other
Test cell loan
Consolidated
2019
$’000
2018
$’000
716
–
12,969
4,397
3,082
21,164
–
–
12,838
4,397
3,082
20,317
716
131
–
847
682
–
14,193
273
3,374
18,522
–
–
14,055
273
2,011
16,339
682
138
1,363
2,183
68
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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 cash flows.
1 year
or less
$’000
1 to 2
years
$’000
2 to 3
years
$’000
3 to 4
years
$’000
4 to 5
years
$’000
Over 5
years
$’000
Total
$’000
Group 2019
Non-derivatives
Non-interest
bearing
Variable rate
4,856
12
–
–
–
–
Fixed rate
2,444
5,843
1,494
–
7,637
960
Total financial
liabilities
Group 2018
Non-derivatives
Non-interest
bearing
Variable rate
Fixed rate
Total financial
liabilities
Bank overdraft
7,312
5,843
1,494
8,597
4,249
7
1,769
–
7,638
1,783
–
–
3,636
6,025
9,421
3,636
–
–
589
589
–
–
311
311
–
–
326
326
–
–
4,856
7,649
1,616
12,668
1,616
25,173
–
–
591
4,249
7,645
8,694
591
20,588
The bank overdraft facilities are subject to annual review and may be drawn at any time. The interest rate is
variable and is based on prevailing market rates.
Bank loans
The loans are repayable by monthly instalments of principal and interest over a period of 2 to 4 years from each
draw down date.
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 cash flows.
69
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
26. Segment Information
The Group has four reportable segments:
» PTB: Covering the operations of the holding company PTB Group Limited specialising in PT6 and TPE331
Turboprop engines. The business repairs and sells PT6 and TPE331 engines, maintains related engines
under contract, and trades in related engine and airframe parts.
» PT USA: This covers the operations of Pacific Turbine USA, LLC and Pacific Turbine USA Pty Ltd specialising
in PT6 Turboprop engines. The business repairs and sells PT6 engines, maintains related engines under
contract and trades in related engine parts.
» PT Leasing: Covers the operations of Pacific Turbine Leasing Pty Ltd. This business is an aircraft and engine
owner and leases aircraft and engines to operators under both operating and finance leases.
»
IAP: Covering the operations of IAP Group Australia Pty Ltd trading in aircraft, aircraft engines, airframes and
related parts.
Geographical Segments (Secondary Reporting)
The Group’s management and operations are based in Brisbane and Sydney, Australia. The company also
operates a facility in Miami, Florida USA. 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.
70
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
AUS,
PNG
& NZ
$’000
Pacific
$’000
America
North &
South
$’000
Asia
Africa
Europe
Unallo
-cated
Total
$’000
$’000
$’000
$’000
$’000
2019
i) Revenue
PTB
Total Segment
Revenue
Inter-segment
Revenue
Revenue from
External customers
PT USA
Total Segment
Revenue
Inter-segment
Revenue
PT Leasing
Total Segment
Revenue
Inter-segment
Revenue
Revenue from
External customers
IAP
Total Segment
Revenue
Inter-segment
Revenue
Revenue from
External customers
Unallocated
Total Unallocated
Revenue
Total Revenue from
External Customers
11,139
(10,683)
–
–
–
3,654
664
–
–
3,654
664
Revenue from
External customers
456
12,770
7,132
1,488
18,741
115
2,212
(7,456)
–
(656)
–
–
–
5,314
7,132
832
18,741
115
2,212
4
–
4
41
–
41
50
–
50
–
–
–
3,627
290
346
694
(1,529)
–
(354)
–
2,098
290
(8)
694
1,466
32
2,932
3,004
40
1,845
(127)
–
–
–
–
–
1,339
32
2,932
3,004
40
1,845
–
–
–
–
–
–
9,207
7,454
7,410
23,103
200
4,107
–
–
-
–
–
–
–
–
–
–
–
–
–
-
42,458
(8,112)
34,346
15,511
(10,683)
4,828
4,998
(1,883)
3,115
9,319
(127)
9,192
–
51,481
71
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
26. Segment Information (continued)
2019
AUS,
PNG
& NZ
$’000
Pacific
$’000
America
North &
South
$’000
Asia
Africa
Europe
Unallo
-cated
Total
$’000
$’000
$’000
$’000
$’000
ii) Adjusted EBITDA
PTB
PT USA
PT Leasing
IAP
Unallocated
492
58
1,722
333
–
574
–
326
8
–
67
439
(9)
724
–
1,508
84
778
742
–
Adjusted EBITDA
2,605
908
1,221
3,112
iii) Segment Disclosure Items
9
1
46
10
–
66
–
–
3
–
3
178
6
–
456
–
640
–
–
–
–
–
–
–
632
–
632
(228)
(1)
(27)
–
209
(7)
(26)
–
12
–
11
–
–
(3)
(30)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,828
588
2,863
2,273
–
8,552
195
32
1,806
73
2,106
(353)
(26)
306
(15)
(88)
Depreciation &
Amortisation
PTB
PT USA
PT Leasing
IAP
Total
Unrealised (Gain)/
Loss on Foreign
Currency
PTB
PT USA
PT Leasing
IAP
Total
195
–
1,091
73
1,359
–
–
–
–
–
–
–
60
–
60
(87)
–
87
–
–
–
32
20
–
52
(10)
(26)
(2)
(5)
(43)
72
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
Pacific
$’000
America
North &
South
$’000
Asia
Africa
Europe
Unallo
-cated
Total
$’000
$’000
$’000
$’000
$’000
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
2019
Capital Expenditure
PTB
PT USA
PT Leasing
IAP
Total
AUS,
PNG
& NZ
$’000
1,744
–
1,578
7
3,329
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
–
Total Segment Assets
PTB
PT USA
31,730
3,361
370
8,417
141
–
6,359
841
PT Leasing
12,864
357
–
2,091
267
IAP
Unallocated
Total
11,878
–
12
–
1,298
2,010
–
–
4
–
56,613
3,730
8,027
13,359
272
Total assets includes:
Non-current Assets (other than financial assets and deferred tax)
PTB
PT USA
PT Leasing
IAP
Total
14,325
–
7,891
6,308
912
–
336
–
–
79
–
–
5,348
–
–
–
1,665
228
–
–
28,524
1,248
79
7,013
228
Total Segment Liabilities
PTB
PT USA
PT Leasing
IAP
Total
2,112
179
722
240
–
669
469
–
–
–
1,889
–
85
–
845
261
3,250
179
2,696
1,346
–
–
9
–
9
–
–
–
–
–
–
–
–
–
–
1,744
–
1,578
7
3,329
3
10,249
54,131
–
–
(5,099)
2,242
(830)
14,749
82
(4,320)
10,964
–
85
–
–
–
82,086
–
–
–
–
–
17
11
487
191
706
10,249
30,834
(5,099)
(5,020)
(830)
9,290
(4,320)
1,988
–
–
–
–
–
–
37,092
3,270
1,900
2,010
1,006
8,186
73
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
26. Segment Information (continued)
2018
i) Revenue
PTB
Total Segment
Revenue
Inter-segment
Revenue
Revenue from
External customers
PT USA
Total Segment
Revenue
Inter-segment
Revenue
Revenue from
External customers
PT Leasing
Total Segment
Revenue
Inter-segment
Revenue
Revenue from
External customers
IAP
Total Segment
Revenue
Inter-segment
Revenue
Revenue from
External customers
Unallocated
Total Unallocated
Revenue
Total Revenue from
External Customers
AUS,
PNG
& NZ
$’000
Pacific
$’000
America
North &
South
$’000
Asia
Africa
Europe
Unallo
-cated
Total
$’000
$’000
$’000
$’000
$’000
7,915
5,279
1,846
13,089
58
552
(913)
–
(1,250)
–
–
–
7,002
5,279
596
13,089
58
552
4,260
(4,232)
28
2,556
(945)
1,611
–
–
–
91
–
91
2,700
1,279
–
–
2,700
1,279
45
747
–
–
45
747
1,971
37
2,259
3,033
(661)
–
(54)
–
1,310
37
2,205
3,033
–
–
–
36
–
36
72
–
72
69
–
69
–
–
–
772
–
772
–
–
–
–
–
–
9,951
5,407
5,546
18,148
166
1,393
–
–
–
–
–
–
–
–
–
–
–
–
–
–
28,739
(2,163)
26,576
8,308
(4,232)
4,076
3,475
(945)
2,530
8,144
(715)
7,429
–
40,611
74
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
2018
AUS,
PNG
& NZ
$’000
Pacific
$’000
America
North &
South
$’000
Asia
Africa
Europe
Unallo
-cated
Total
$’000
$’000
$’000
$’000
$’000
ii) Adjusted EBITDA
PTB
PT USA
PT Leasing
IAP
Unallocated
931
–
1,391
302
–
647
–
81
8
–
73
(17)
39
480
–
1,605
1
659
661
–
Adjusted EBITDA
2,624
736
575
2,926
iii) Segment Disclosure Items
Depreciation &
Amortisation
PTB
PT USA
PT Leasing
IAP
Total
Unrealised (Gain)/
Loss on Foreign
Currency
PTB
PT USA
PT Leasing
IAP
Total
174
–
920
66
1,160
–
–
–
–
–
–
–
20
–
20
(55)
–
2
–
(53)
–
27
38
–
65
(7)
(19)
1
(28)
(53)
–
–
615
–
615
(135)
–
13
(39)
(161)
7
–
32
16
–
55
–
–
3
–
3
(1)
–
1
(1)
(1)
68
–
–
168
–
236
–
–
–
–
–
(6)
–
–
(10)
(16)
–
–
–
–
–
-
–
–
–
–
–
–
–
–
–
–
3,331
(16)
2,202
1,635
–
7,152
174
27
1,596
66
1,863
(204)
(19)
17
(78)
(284)
75
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
Pacific
$’000
America
North &
South
$’000
Asia
Africa
Europe
Unallo
-cated
Total
$’000
$’000
$’000
$’000
$’000
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
26. Segment Information (continued)
2018
Capital Expenditure
PTB
PT USA
PT Leasing
IAP
Total
AUS,
PNG
& NZ
$’000
2,147
–
231
24
2,402
–
–
–
–
–
–
30
–
–
30
–
–
–
–
–
49,940
2,777
8,327
10,919
574
Total Segment Assets
PTB
PT USA
30,463
2,372
206
5,257
1
–
7,222
957
PT Leasing
7,793
404
11,683
–
1
–
383
516
–
3,201
1,504
–
IAP
Unallocated
Total
Total assets includes:
Non-current Assets (other than financial assets and deferred tax)
PTB
PT USA
PT Leasing
IAP
Total
11,945
1,173
–
3,450
–
7,009
6,285
–
396
–
107
352
–
–
2,447
–
25,239
1,569
459
5,897
Total Segment Liabilities
2,284
723
–
262
884
–
–
1
857
962
–
87
126
–
1,214
153
3,430
724
1,906
1,493
121
–
–
–
–
–
19
307
238
10
–
–
–
231
–
231
113
–
8
–
–
–
–
–
–
–
–
–
–
–
2,147
30
231
24
2,432
71
21,167
59,555
–
–
78
–
149
(7,080)
1,407
(13,250)
(1,231)
(837)
12,955
–
–
–
72,686
–
–
–
–
–
18
11
–
171
200
21,167
37,735
(7,080)
(6,973)
(13,250)
(2,815)
(837)
5,448
–
–
–
–
–
–
33,395
4,121
973
1,484
1,296
7,874
PTB
PT USA
PT Leasing
IAP
Total
76
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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 and PT USA are derived from repairing, selling, 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. PT Leasing’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
Inter-segment eliminations
Interest revenue
Total revenue from continuing operations (note 2)
2019
$’000
2018
$’000
72,286
48,666
(20,805)
(8,055)
–
–
51,481
40,611
The Group is predominantly domiciled in Australia. The amount of its revenue from external customers in
Australia is $9.207 million (2018: $9.951 million) and the total revenue from external customers in other countries
is $42.274 million (2018: $30.660 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 movements, impairments of aircraft, inventory and extended
credit receivables. 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
Depreciation and amortisation
Finance costs
Profit/(Loss) before income tax from continuing operations
2019
$’000
8,552
88
(2,106)
(957)
5,577
2018
$’000
7,152
284
(1,863)
(899)
4,674
77
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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:
Current tax assets
Deferred tax assets
Total assets as per the statement of financial position
2019
$’000
2018
$’000
82,086
72,686
144
1,618
83,848
–
2,472
75,158
The total of non-current assets other than financial instruments and deferred tax assets located in Australia is
$28.524 million (2018: $25.239 million), and the total of these non-current assets located in other countries is
$8.568 million (2018: $8.156 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
2019
$’000
8,186
47
4,332
2,455
17,862
32,882
2018
$’000
7,874
–
3,630
1,776
14,563
27,843
78
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
27. Dividends
Dividends paid during the year
Interim dividend for 30 June 2019 of 7 cents per share (2018: 5 cents per share)
fully franked (at 27.5%) paid on 31 May 2019.
2019
$’000
4,842
2018
$’000
3,138
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
Franking credits
Franking credits available for subsequent financial
years based on a tax rate of 30% (2018: 30%)
2019
$’000
1,294
3,548
4,842
2018
$’000
824
2,314
3,138
Consolidated
Parent Entity
2019
$’000
2018
$’000
2019
$’000
2018
$’000
5,167
6,859
5,167
6,859
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted
for:
a) franking credits that will arise from the payment of the amount of the provision for income tax;
b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
and
c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The consolidated amounts include franking credits that would be available to the parent entity if distributable
profits of subsidiaries were paid as dividends.
79
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
28. Subsidiaries
Name
Country of Incorporation
2019
Equity Holding
100%
100%
100%
100%
100%
100%
100%
100%
100%
PTB Finance Limited (1)
Pacific Turbine USA Pty Ltd (1)(8)
Pacific Turbine, Inc (2)
Pacific Turbine Leasing Pty Ltd (3)
IAP Group Australia Pty Ltd (4)
Australia
Australia
USA
Australia
Australia
International Air Parts UK Limited (5)
United Kingdom
PTB Emerald Limited (6)
748 Cargo Pty Ltd (7)
Pacific Turbine USA, LLC (9)
(1) Incorporated 14 October 2005
(2) Incorporated 29 September 2005
United Kingdom
Australia
USA
(3) Incorporated 4 October 2006 (previously PTB (Emerald) Pty Ltd)
(4) Purchased as part of business combination on 21 September 2006
Aeropelican Air Services disposed on 30 September 2008
(5) Incorporated 18 October 2006
(6) Incorporated 13 October 2006
(7) Incorporated 21 June 2007 (Previously PTB Asset Management Pty Ltd)
(8) Change of name on 1 February 2016 (Previously PTB Rentals Australia Pty Ltd)
(9) Incorporated 27 March 2017
2018
100%
100%
100%
100%
100%
100%
100%
100%
100%
All subsidiaries are 100% owned by PTB Group Limited. 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.
There are no significant restrictions over the Group’s ability to access these assets, and settle liabilities, of the
Group.
80
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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 legislative instrument 2016/785 (as
amended) issued by the Australian Securities and Investments Commission.
(a) Consolidated statement of profit & 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 legislative instrument, 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 & loss and other comprehensive income and a summary of
movements in consolidated retained profits for the year ended 30 June 2019 of the Closed Group:
Revenue
Total Revenue
2019
$’000
51,481
51,481
2018
$’000
40,611
40,611
Changes in inventories of finished goods and work in progress
(1,201)
2,166
Raw materials and consumables used and finished goods purchased for sale
(31,031)
(25,419)
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/(Loss) before income tax expense
Income tax expense
Profit/(Loss) for the year
Statement of Comprehensive Income Profit/(Loss) 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/(losses)
Retained (losses)/profits at the beginning of the financial year
Transfer to dividend appropriation reserve
Profit/(loss) for the year
Retained (losses)/profits at the end of the financial year
(6,487)
(2,106)
(5,803)
(1,863)
(151)
131
(957)
263
(1)
(154)
(175)
(899)
246
–
(4,364)
(4,036)
(45,904)
(35,937)
5,577
(1,603)
3,974
3,974
2
4,674
(1,431)
3,243
3,243
(7)
3,976
3,236
(10,292)
(10,292)
(3,792)
(3,243)
3,974
3,243
(10,110)
(10,292)
81
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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 2019 of the Closed Group:
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current 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
82
2019
$’000
2018
$’000
7,174
13,376
23,202
144
1242
4,184
10,119
24,403
–
585
45,138
39,291
11,005
2,687
265
18,752
1,618
4,334
–
38,661
83,799
4,856
2,455
47
804
2,141
10,303
17,862
4,332
146
239
22,579
32,882
50,917
6,819
2,543
265
19,385
2,472
4,334
–
35,818
75,109
4,249
1,776
–
735
1,871
8,631
14,563
3,630
438
581
19,212
27,843
47,266
47,715
13,312
(10,110)
50,917
43,198
14,360
(10,292)
47,266
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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 the Directors’ Report and note 21.
c) Other Transactions with Subsidiaries
The following transactions occurred with subsidiaries:
Revenue – sale of engines
Revenue – sale of goods and services
Purchase – engines
Purchase – goods and services
Purchase – engine rentals
Parent Entity
2019
$’000
2018
$’000
1,062,474
1,562,055
1,137,324
600,775
6,548,505
1,697,193
5,221,582
2,516,871
20,525
57,921
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
The loans are non-interest bearing, unsecured, at call and repayable in cash.
e) Outstanding balances arising from sales/purchases of goods and services
Trade and extended credit receivables
Trade payables
Parent Entity
2019
$’000
2018
$’000
9,932,400
20,850,534
Parent Entity
2019
$’000
2018
$’000
–
–
–
–
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.
83
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
31. Parent Entity Financial Information
a) Summary financial information
Statement of Financial Position
Current assets
Total Assets
Current liabilities
Total Liabilities
Shareholders’ equity
Issued Capital
Reserves
Retained earnings
Profit / (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
2019
$’000
2018
$’000
23,299
78,123
4,307
16,412
47,716
12,463
1,532
61,711
7,648
7,648
21,819
70,412
4,648
16,025
43,198
14,367
(3,178)
54,387
1,577
1,577
2019
$’000
–
2018
$’000
–
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:
Favouree
Bank
Date
Bankstown Airport Limited
CBA
27/03/2007
2019
$’000
2018
$’000
18
18
18
18
84
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
DIRECTORS’ DECLARATION
For the year ended 30 June 2019
The Directors of the Company declare that:
(a) the attached financial statements and notes, as set out on pages 30 to 84 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 2019 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 2019 required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
CL Baker
Chairman
Brisbane
30 August 2019
85
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2019
INDEPENDENT AUDITOR’S REPORT – TO THE MEMBERS OF PTB GROUP LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the accompanying financial report of PTB Group Ltd and controlled entities (the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, 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 ended
and notes comprising a summary of significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the company, would be in the same terms if given to the directors as at
the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Limited Liability by a scheme approved
under the Professional Standards Legislation
National Association | Hall Chadwick
International Association | Prime Global
Associations of Independent Firms
86
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2019
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the year ended 30 June 2019. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Key Audit Matter
Value of Goodwill
Refer to Note 1 (q), Note 11 and Note 1 (ad) –
Intangible Assets
recognised
the
The value of goodwill
acquisition of International Air Parts (IAP) has been
considered as a key audit matter. Conditions
giving rise to our focus on this area included the
significant level of judgement in respect of factors
such as:
for
How our audit addressed the key audit matter
Our procedures included, amongst others:
• Evaluation of management’s goodwill
impairment assessment process and
testing controls such as the review of
forecasts by management.
• Obtaining the Group’s value
in use
models and agreeing amounts to the
Group’s FY20 budget.
• budgeted future revenue and costs;
• discount rates; and
•
the terminal growth rate
•
Testing key inputs to the value in use
model included forecast revenue, costs,
capital expenditure, discount rates and
terminal growth rates. We challenged
these inputs by corroborating the key
market based assumptions to external
published
rates and
industry growth
industry reports. For non-market based
assumptions we corroborated
those
assumptions by comparing forecasts to
historical costs incurred or margins on
similar projects. We also assessed the
inclusion of
revenue
contracts by comparing the margins in
the
to historical
contract margins.
impairment model
key ongoing
• Assessment of the accuracy of previous
forecasts as part of our evaluation of
forecasts included in the value in use
model. We applied scepticism to current
period forecasts in areas where previous
forecasts were not achieved and/or
where future uncertainty is greater or
volatility is expected.
• Performing sensitivity analysis on the Cash
Generating Unit (CGU) in two main areas
being the discount rate and the terminal
growth rate assumptions.
2
87
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2019
Key Audit Matter
How our audit addressed the key audit matter
Inventory Valuation & Existence
Our procedures included, amongst others:
Refer to Note 1 (m) and Note 6 – Inventories
The Group recognised inventory of $26 million at
30 June 2019. We focussed on this matter
because of the:
•
•
significance of the inventory balance to the
profit and statement of financial position;
and
slow moving nature of some major stock
items due to the fragmented landscape of
the aviation spare parts industry.
• Attending inventory counts at all locations
and performed the following procedures at
each site:
- Selected a sample of inventory items
the quantities we
and comparing
counted to the quantities recorded.
- Observed a sample of management’s
inventory count procedures to assess
compliance with the Group’s inventory
policy.
- Made enquiries
inventory
condition of items counted.
items and
regarding obsolete
looked at the
• A sample of inventory items was tested to
assess whether they were recorded at the
lower of cost or net realisable value.
Procedures performed
the
following:
included
- Evaluated
the methods used by
management in the costing of finished
goods.
- Selected a sample of inventory items
and compared cost to sales prices
realised subsequent to period end by
checking sales invoices, price lists and
contracts.
Information Other Than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
in the Group’s annual report for the year ended 30 June 2019, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
3
88
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2019
Director’s Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud of error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal controls.
• Obtain an understanding of internal controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
4
89
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2019
responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included in pages 9 to 18 of the directors’ report for the
year ended 30 June 2019.
In our opinion the remuneration report of PTB Group Limited for the year ended 30 June 2019 complies
with s 300A of the Corporations Act 2001.
Responsibilities
The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance
with Australian Auditing Standards.
Geoffrey Stephens
Hall Chadwick Qld
Chartered Accountants
At Brisbane
Dated this 30th day of August 2019
5
90
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
SHAREHOLDER INFORMATION
For the year ended 30 June 2019
The shareholder information set out below was applicable as at 6 August 2019.
(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
90
278
190
496
92
1,146
–
–
–
–
–
–
(b) The number of ordinary shareholdings held in less than marketable parcels is 37.
(c) The names of the substantial shareholders (including related entities) listed in the company’s register are:
Asir & Nek Private Limited
SG Smith and Judith Flintoft
Kiowa 2018 Corporate Trustee Company Limited
(d) Voting Rights
Percentage
Number of
Ordinary
Shares
Held
13,682,774
18.27%
6,568,966
3,832,689
8.77%
5.12%
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.
91
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
SHAREHOLDER INFORMATION
For the year ended 30 June 2019
(e) 20 Largest Shareholders — Ordinary Shares (Quoted):
ASIR & NEK PRIVATE LIMITED
JUDITH ANN MARGARET FLINTOFT
KIOWA 2018 CORPORATE TRUSTEE COMPANY LIMITED
PRINCE PRIYANTHA GUNASEKARA
BAKER SUPERANNUATION PTY LTD
MILTON YANNIS
MR STEPHEN GARRY SMITH & MRS JUDITH ANN FLINTOFT
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MR ROSS GEORGE YANNIS
EST GEORGE YANNIS & MRS THELMA YANNIS
MARGARET HILLS
GRAEME HILLS
JUDITH FLINTOFT
KIOWA 2018 CORP TRUST CPY LTD
LORNETTE PTY LTD
COSELL PTY LIMITED
MR SIMON ROBERT EVANS & MRS KATHRYN MARGARET EVANS
HUNTINGTON SUPER PTY LTD
MR HARVEY PARKER & MRS SUSAN PARKER
STANBOX PTY LIMITED
Unquoted equity securities
Options issued under the PTB Group Ltd Share Option Scheme
to take up ordinary shares
Percentage
Number of
Ordinary
Fully Paid
Shares
Held
13,682,774
18.27%
3,647,850
2,973,921
2,719,137
2,477,451
2,053,890
2,033,116
1,661,241
1,514,205
991,924
913,911
906,007
888,000
858,768
742,739
723,388
556,955
520,453
509,290
500,000
4.87%
3.97%
3.63%
3.31%
2.74%
2.71%
2.22%
2.02%
1.32%
1.22%
1.21%
1.19%
1.15%
0.99%
0.97%
0.74%
0.69%
0.68%
0.67%
40,875,020
54.57%
Number
on issue
Number
of holders
–
–
92
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2019
COMPANY STATISTICS
For the year ended 30 June 2019
Revenue ($’000)
+-Net profit/(loss) ($’000)
Net Assets ($’000)
Cash Flow from
Operating Activities ($’000)
2019
51,481
3,974
50,966
4,193
2018
40,611
3,243
47,315
3,910
2017
46,551
2,948
2016
2015
43,170
35,996
2,567
44,753
37,686
(3,210)
1,671
1,963
35,101
1,183
Ordinary Shares fully paid (‘000)
74,905
67,312
62,749
47,891
42,008
Return on average
shareholders’ funds (%)
8.09
7.04
7.38
7.21
4.92
Share price at year-end ($)
0.677
0.56
0.485
0.42
0.30
NTA backing per Share (Cents)
Dividend paid (Cents) per share in
respect of each financial year
62
7
64
5
64
5
70
5
73
5
Average AUD/USD exchange rate
$0.72
$0.76
$0.79
$0.73
$0.84
ABN 99 098 390 991
PO Box 90 PINKENBA QLD 4008
22 Orient Avenue PINKENBA QLD 4008
t +61 7 3637 7000
f +61 7 3260 1180