ANNUAL REPORT
2020
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 1185
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 2020
Table of Contents
Corporate Directory and Information
Inside cover
Chairman’s Report
Managing Director’s Report
About PTB Group
Acquisition of Prime Turbines
COVID-19 Impacts and Response
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Statements and Notes
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Company Statistics
2
3
6
12
14
15
27
28
37
95
96
101
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 2020 CHAIRMAN’S REPORT
For the year ended 30 June 2020
“2020 was a
landmark year
for PTB Group”
Craig Baker, Chairman
This year PTB Group delivered a record financial result, achieving sales revenue of $78 million, up 52% on the
prior year. This included a four-month contribution from our acquisition of Prime Turbines. Profit Before Tax,
Foreign Exchange and Acquisition Costs was also a record result, up 50% on the prior period to $7.959 million.
On the back of this record result and the strong level of liquidity, the Board has declared a fully franked final
dividend of $0.025 per share, thereby taking the full year dividend to $0.05 per share.
2020 was a landmark year for PTB Group, not only for the record financial results, but also due to the acquisition
of Prime Turbines. This acquisition significantly strengthens our position in the United States, the largest market
in the world, adding further diversity to the end markets and customers which PTB serves.
The management team, led by Stephen Smith, have done a tremendous job of successfully integrating the
operations of Prime Turbines and I would like to take this opportunity to welcome all of our newest employees
and customers to the PTB Group family.
As we enter FY2021 we continue to see the effects of COVID-19 unfold in global aviation markets. While we are
not immune to those effects, the resilience of our business model and the strength of our balance sheet ensures
we are well placed to respond to the challenges that may present.
Craig Baker
Chairman
2
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
MANAGING DIRECTOR’S REPORT
For the year ended 30 June 2020
Stephen Smith, Managing Director
FY2020 was a significant year of growth in our company, fuelled by the acquisition
of Prime Turbines and the continued strong performance from the existing PTB
Group. This financial year we recorded our highest ever revenues and earnings
and we finished the year with a robust balance sheet with over $15 million of
cash on hand. This result was extremely pleasing in the face of unprecedented
market conditions and is a testament to the resilience of the operations of the
Group and our people.
BUSINESS UPDATE
The past 12 months have represented a landmark year in the history of our business. FY2020 saw PTB Group
deliver a record financial result, complete the acquisition of Prime Turbines, successfully raise $34.9 million of
new equity, welcome a suite of new and supportive investors to the register and successfully navigate the
challenges presented by the outbreak of COVID-19.
ACQUISITION UPDATE
On 31 January 2020 we announced our intention to acquire Prime Turbines, along with selected CT Aerospace
inventory from VSE Corporation (VSEC.NASDAQ). This acquisition was completed on 26 February 2020 and the
results incorporated under PTB ownership from 1 March 2020.
To fund the acquisition, PTB Group raised $34.9 million of new equity from new and existing shareholders. The
equity issuance was oversubscribed, reflecting the growth platforms available to the business and the strong
strategic rationale underpinning the acquisition.
With the acquisition complete, we welcome to the PTB family our newest members from Prime Turbines. Prime
Turbines conducts the same type of business as PTB, with a strong focus on the Pratt and Whitney PT6 series
of engines. The business is led by Bruce Weaver and John Waldrop, with whom I share professional relationships
of over 15 years.
This talented management team, in combination with the seamless overlap of operational footprint, has resulted
in a smooth and efficient integration.
FINANCIAL UPDATE
FY2020 marked another year of continued growth for PTB Group with all the business units continuing to perform
at or above expectations, culminating in a record financial result. PTB Group posted revenues of $78 million, up
52% on last financial year. At an earnings level, PTB Group posted Net Profit Before Tax (excluding foreign exchange
gains and acquisition costs) (“NPBTFX”) of $7.959 million, up 50% on the previous corresponding period.
The FY2020 results include $331,500 from payments received under the JobKeeper Payment scheme.
Importantly, our balance sheet remains liquid, ending the year with a cash balance of $15.207 million. This positions
the business to selectively pursue further growth initiatives as they arise.
The management team have delivered under demanding conditions and continue to implement growth strategies
which augur well for future financial years.
3
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 MANAGING DIRECTOR’S REPORT
For the year ended 30 June 2020
GROUP HIGHLIGHTS
Several financial milestones were achieved throughout the year, a few of which are highlighted below:
» Record revenues of $78 million, up 52% on the previous year
» Record NPBTFX of $7.959 million, up 50% on the previous year
» Ending cash balance of $15.207m, up $8.033m over the previous year
» Sale and lease back of three test cells acquired as part of the Prime Turbines transaction, increasing available
cash by $3.659 million
» Extension of the USD component of the CBA loan facilities by $3.162m and for a further 3 years with a
reduced fixed rate
» A four-month contribution from Prime Turbines (from 1 March)
PACIFIC TURBINE BRISBANE
Pacific Turbine Brisbane delivered a NPBTFX of $5.596 million (2019: $3.928 million). Increased volumes of
engine overhaul work completed by the workshop was the main driver of this result. The part sales team also
contributed an improved result, building on the deep customer relationships and proving to be a valued partner
in the supply of parts and equipment.
PACIFIC TURBINE USA GROUP
Pacific Turbine USA Group returned a NPBTFX of $2.145 million (2019: $0.549 million). Prime Turbines has been
included in this division since 1 March 2020 and was the main driver of the improved result.
The existing PTUSA operations continue to supply a large portion of the parts used by the PT6 workshop in
Brisbane, and now also supplies the three workshops acquired as part of the Prime Turbines acquisition. The
inventory acquired from CT Aerospace has now been relocated to the Miami facility.
PACIFIC TURBINE LEASING
Pacific Turbine Leasing delivered a NPBTFX of $0.288 million (2019: $0.641 million). The business continues to
generate stable returns from its customers, leasing engines and/or aircraft. The business has a number of
additional leasing deals being negotiated at present that are expected to add to future returns.
The addition of Prime Turbines and the addition of EASA and FAA certification positions this division well for
future growth opportunities.
INTERNATIONAL AIR PARTS
The IAP business posted a NPBTFX of $1.969 million (2019: $1.855 million). The business continues to invest in
stock for the engine parts business and is expected to continue to provide consistent results into the future.
OPERATIONAL RESULTS BY BUSINESS
Pacific Turbine Brisbane
Pacific Turbine USA Group
Pacific Turbine Leasing
International Air Parts
Corporate Overheads
2020
$’000
2019
$’000
2018
$’000
$5,596
$3,928
$4,142
$2,145
$288
$549
$641
($74)
$565
$1,969
$1,855
$1,393
($2,039)
($1,659)
($1,598)
Profit/(Loss) excluding FX & Acquisition Costs
$7,959
$5,314
$4,428
Foreign Exchange (FX) Gains/(Losses)
Acquisition Costs
($1,097)
$263
($949)
–
$246
–
Profit/(Loss) before Income Tax Expense
$5,913
$5,577
$4,674
4
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
MANAGING DIRECTOR’S REPORT
For the year ended 30 June 2020
CORPORATE OVERHEADS
Costs relating to corporate overheads were $2.039 million (2019: $1.659 million). These costs include all head
office and corporate costs, including group management, the board and the central finance function. These
costs are expected to continue to increase in line with the increase in the size and complexity of the Group’s
operations.
BALANCE SHEET ITEMS
PTB Group ended the financial year with a robust Balance Sheet. Cash on hand was the highest ever at $15.207
million and net debt was $25.531 million (2019: $13.143 million).
Total debt increased from $20.317 million to $40.738 million mainly due to:
»
»
»
sale and lease back of the 3 test cells
extension of the CBA facility
vendor loan for CT Aerospace inventory
Net assets increased from $50.966 million to $86.312 million mainly due to the acquisition of Prime Turbines,
which was fully funded via new equity issues of $34.9 million.
CASH FLOWS
The cash balance at the end of the year was $15.207 million (2019: $7.174 million). Cash flows from operating
activities were ($8.414) million (2019: $4.193 million). Operating cash flows were reduced due to the acquisition
of the $12.177 million of inventory from CT Aerospace.
Cash flows from financing activities were $49.203 million. This included the issuance of new equity and the
additional loan facilities. These were partly offset by principal repayments of $4.015 million and $1.873 million of
dividend payments.
FY2020 REVENUE BY DIVISION
FY2020 REVENUE BY SERVICE
IAP
14%
PT Leasing
5%
Rental of
engines/aircraft
3%
Hire Purchase
Agreements
1%
Services
25%
Sale of goods
39%
PTB
50%
Note: Excludes Other Revenue
Note: Excludes Other Revenue
Maintenance
contract revenue
32%
PT USA
31%
OUTLOOK
I remain confident in the outlook for FY2021 and beyond as we are well positioned to grow our share of global
markets.
Stephen Smith
Managing Director
5
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 ANNUAL REPORT
For the year ended 30 June 2020
ABOUT PTB GROUP
OVERVIEW OF PTB GROUP
PTB Group is an ASX listed aviation company which provides the following services globally:
» Maintenance, repair and overhaul (“MRO”) services for turboprop aircraft engines
» Aircraft and engine leasing
» Aircraft and engine spare parts
PTB Group provides these services through its four operating divisions.
Pacific Turbine Brisbane specialises in PT6 and TPE331
Turboprop engines. It repairs and sells PT6 and TPE331
engines, maintains related engines under contract, and
trades related engine and airframe parts.
Pacific Turbine USA Group, including Prime Turbines
and Pacific Turbine USA, provides MRO services on
turboprop engines including PT6A, PT6T and T53, as
well as Bell drivetrain components. It operates from
locations in Texas, Arizona, Miami and Pennsylvania.
The division also supplies and manages spare parts.
Pacific Turbine Leasing owns aircraft and engines and
leases these to operators under both operating and
finance leases (PT6, TPE331, Rolls Royce).
The division trades in aircraft, aircraft engines, airframe
parts and engine parts.
6
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 ANNUAL REPORT
For the year ended 30 June 2020
PTB Group’s Integrated business model aims to provide multiple touchpoints over the asset lifecycle. PTB
Group’s leasing division provides an initial entrée into life of an engine or airframe, thereafter allowing the
provision of further ancillary support services such as Maintenance Repair and Overhaul (“MRO”) services and
the sale of engines or spare parts. At the end of the engine or airframe’s serviceable life, PTB Group again has
an opportunity to remarket the asset or derive value from component sales.
PTB’s INTEGRATED BUSINESS MODEL
PTB Group offers a range of services over the asset lifecycle from the arranging and provision of financing
services in the form of:
»
Finance or operating leases (either on balance sheet or through one of PTB’s global financing partners)
» Power By The Hour programs: engine management programs which provide an agreed rate per flying hour
over an asset’s life (engine or airframe)
» Spare parts sales
» End of lease remarketing and tear down services
7
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 ANNUAL REPORT
For the year ended 30 June 2020
An Aviair plane flies over the Kununurra region of Western Australia
8
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 ANNUAL REPORT
For the year ended 30 June 2020
ABOUT PTB GROUP
ANNUAL REPORT
For the year ended 30 June 2020
PTB Group provides its services to predominantly two turboprop engine types, being the Pratt and
Whitney PT6 series and the Honeywell TPE331 engines that are used on narrow bodied planes of
less than 25 seat capacity. PTB Group also retains capability to service Bell helicopter components
and to tear down and sell spare parts for other engine variants.
PTB Group provides its services to predominantly two turboprop engine types, being the Pratt and Whitney PT6
series and the Honeywell TPE331 engines that are used on narrow bodied planes of less than 25 seat capacity.
PTB Group also retains capability to service Bell helicopter components and to tear down and sell spare parts
for other engine variants.
PTB Group operates out of its workshop facilities in Australia (Pacific Turbine Brisbane) and the USA
(Arizona, Texas and Pennsylvania). Spare parts services are provided out of the Warriewood facility
in Australia and the Miami facility in the US.
PTB Group operates out of its workshop facilities in Australia (Pacific Turbine Brisbane) and the USA (Arizona,
Texas and Pennsylvania). Spare parts services are provided out of the Warriewood facility in Australia and the
Miami facility in the US.
USA Operating Footprint
Australian Operating Footprint
Australian Operating Footprint
USA Operating Footprint
Butler,
Pennsylvania
Pinkenba
Brisbane
Warriewood,
Sydney
Mesa, Arizona
Dallas, Texas
Miami, Florida
MRO Operations
Spare Parts Facility
PTB Group maintains a diverse customer base throughout the world including Australia, North and
South America, Asia and the Pacific Islands. PTB’s diversified business model provides operational
resilience. PTB provides MRO, sales and support services to its customers in essential end markets
such as fly-in fly-out (“FIFO”) services, aero-medical evacuations, regional transportation between
Pacific Island communities, agricultural crop spraying markets, corporate travel, government and
tourism markets.
PTB Group maintains a diverse customer base throughout the world including Australia, North and South
America, Asia and the Pacific Islands. PTB’s diversified business model provides operational resilience. PTB
provides MRO, sales and support services to its customers in essential end markets such as fly-in fly-out (“FIFO”)
services, aero-medical evacuations, regional transportation between Pacific Island communities, agricultural
crop spraying markets, corporate travel, government and tourism markets.
9
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
Sales Revenue
Ending Cash Balance
ANNUAL REPORT
For the year ended 30 June 2020
FINANCIAL HIGHLIGHTS
78,144
43,170
46,551
40,611
51,481
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
Sales Revenue
SALES REVENUE
NPBTFX
NPBTFX
Ending Cash Balance
78,144
43,170
46,551
40,611
51,481
4,193
4,115
4,428
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
6
6
1
1
Y
Y
F
F
7
1
Y
F
1,982
6
1
Y
F
8
1
Y
2,427
F
7
1
Y
F
NPBTFX
CASH BALANCE
DIVIDENDS PER SHARE
15,207
7,959
5,314
4,184
9
1
Y
F
8
1
Y
F
7,174
0
2
Y
F
9
1
Y
F
0
2
Y
F
7,959
15,207
7,174
1,982
6
1
Y
F
2,427
7
1
Y
F
4,184
8
1
Y
F
9
1
Y
F
0
2
Y
F
Sales Revenue
Ending Cash Balance
78,144
4,193
4,115
4,428
43,170
46,551
40,611
51,481
6
6
1
1
Y
Y
F
F
7
1
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
NPBTFX
7,959
4,193
4,115
4,428
5,314
6
6
1
1
Y
Y
F
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
7,959
Dividends Per Share
5,314
15,207
2016
2017
2018
2019
2020
9
1
Y
7,174
F
$0.05
$0.05
$0.05
$0.07
$0.05
0
2
$0.27
Y
F
3,319
$0.05
5
1
0
2
4,193
4,115
5,314
4,428
$0.07
$0.05
6
1
0
2
$0.05
7
1
0
2
8
1
0
2
$0.05
9
1
0
2
0
2
0
2
CAGR
19%
9
1
Y
F
7,959
0
2
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
8
1
Y
F
4,184
8
1
Y
F
2,427
7
1
Y
F
1,982
6
1
Y
F
3,319
4,193
4,115
4,428
5,314
5
1
0
2
6
1
0
2
7
1
0
2
Dividend Amount
Share Price
8
1
0
2
Cash Rate
9
1
0
PTB Yield
2
PTB Gross Yield
$0.05
0.69
0.25%
0
2
0
7.25%
2
10.35%
CAGR
19%
7.25%
10.35%
0.25%
Cash Rate
PTB Yield
PTB Gross Yield
7,959
5,314
4,193
4,115
4,428
3,319
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
CAGR
19%
10
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 ANNUAL REPORT
For the year ended 30 June 2020
GLOBAL AND GROWING MARKET
PTB Group is a relatively small player in a global and growing market. It is estimated there are in excess of 20,000
PT6 engines in global circulation, with PTB’s market share currently estimated to be less than 2%. The acquisition
of Prime Turbines brings with it FAA and EASA accreditation which positions PTB Group well to grow its global
market share.
The global population of turboprop engines is estimated to
be in excess of 25,000 residing in over 180 different countries
More than one-third of the world’s commercial airports rely
exclusively on planes with turboprop engines
Turboprop aircraft connect remote locations and therefore
play an essential role in regional economic development.
Pacific, Caribbean, Asian and other regional markets depend
on turboprop aircraft as a key mode of transportation
Global sales of turboprop aircraft continue to display upward
momentum over the long term growing at a CAGR of 6.3%
over the 2010 to 2018 period
2018 GAMA Annual Report:
https://gama.aero/facts-and-statistics/
consensus-standards/publications/
11
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 ANNUAL REPORT
For the year ended 30 June 2020
ACQUISITION OF PRIME TURBINES
PTB Group announced its intention to acquire Prime Turbines from VSE Corporation on 31 January 2020 and
subsequently completed the transaction on 26 February 2020. Prime Turbines is a US based Maintenance
Repair and Overhaul provider supplying services to ostensibly the same engine types as PTB’s existing business.
The merger extended the service offering of the Group for selected Pratt and Whitney and Honeywell engine
variants.
ENGINE
MANUFACTURER
ENGINE TYPE
COMBINED
PT6A – Small
PT6A – Medium
PT6A – Large
PT6T
TPE331
T53
Pratt and Whitney
Honeywell
GE Aviation
M601 and H Series
Bell / Textron
Bell Helicopter
Components
12
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 ANNUAL REPORT
For the year ended 30 June 2020
Prime Turbines offices in Dallas, Texas
Prime Turbines Dallas, Texas maintenance repair and
overhaul facilities span over 65,000 square feet
Prime operates out of three facilities in the USA
Dallas, Texas
»
65,000 sq. ft.
» PT6A independent – GE M601 and H Series Licensed
» PT6A test cell (PWC Correlated)
Mesa, Arizona
»
30,000 sq. ft.
» Honeywell T53 Licensed – PT6A & T independent
»
Light & Medium Bell Helicopter static component repair
» Two test cells
Butler, Pennsylvania
»
2,500 sq. ft.
» PT6A independent quick turn shop for Hot Sections/
Power Sections
Prime Turbines is an independent Maintenance, Repair and Overhaul (MRO) company specialising in Pratt &
Whitney Canada PT6A & PT6T, Honeywell T53, Bell Drivetrain and GE M601 & H series engines.
Prime offers more than three decades of expertise on major turboprop and turboshaft engine platforms used on
business and general aviation, military and agricultural fixed and rotor wing aircraft.
13
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
ANNUAL REPORT
For the year ended 30 June 2020
COVID-19 Impacts and Response
The effects of COVID-19 on PTB’s operations were mainly contained to those customers impacted by slowing
tourism markets, with other customers generally maintaining, and in some cases increasing, their demand for
services.
PTB’s main exposure to tourism markets lies within the Maldives, which closed to international visitors and saw
very limited hours flown during the fourth quarter of FY2020. However, as of 15 July 2020, the Maldives reopened
its borders and recommenced accepting international tourists. While we expect the rate of recovery to full
operations in the Maldives to be slow, PTB should experience growing revenues from this region in FY2021.
The increased customer and end market diversification delivered by the acquisition of Prime Turbines
(management estimates 2% of Prime’s revenues are derived from tourism) also assisted to cushion the impacts
of COVID-19 on PTB Group overall.
In addition to its increased customer and end market diversification, PTB’s strategy of focusing on the whole of
asset lifecycle value chain allowed it to pivot its strategy to focus on other revenue streams including engine and
parts sales. Further to this, the reduced demand from contract customers in the Maldives allowed the workshops
to focus on higher margin non-contract services. The graphs below demonstrate the shift in revenue streams.
FY2019 REVENUE BY TYPE
FY2020 REVENUE BY TYPE
Rental of
engines/aircraft
5%
Hire Purchase
Agreements
1%
Services
10%
Rental of
engines/aircraft
3%
Hire Purchase
Agreements
1%
Services
25%
Sale of goods
43%
Sale of goods
39%
Maintenance
contract revenue
41%
Maintenance
contract revenue
32%
Note: Excludes Other Revenue
Note: Excludes Other Revenue
Overall, PTB’s focus on the narrow-bodied sub-25 seat capacity aviation market, in conjunction with its integrated
business model and diverse customer base, allowed it to deliver a record financial result despite the challenging
market conditions.
14
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 DIRECTORS’ REPORT
For the year ended 30 June 2020
Your directors present the financial report of PTB Group Limited and its controlled entities (“the Group”) for the
year ended 30 June 2020.
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:
» Specialist Pratt & Whitney PT6A/PT6T and Honeywell TPE331/T53 turbine engine repair and overhaul
businesses based in Brisbane, Australia and three locations in the USA;
» 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 $4.020 million (2019: $3.974 million profit).
Financial Position
The net assets of the Group are $86.312 million as at 30 June 2020 (2019: $50.966 million).
Dividends
An interim fully franked dividend of 2.5 cents per share was declared and paid for the 30 June 2020 financial year
(2019: nil). A final dividend of 2.5 cents per share has also been declared but not yet paid (2019: 7 cents per
share).
Franking Credits
Franking credits available for subsequent financial years based on a tax rate of 30 per cent are $4.661 million
(2019: $5.167 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
The acquisition of Prime Turbines was identified as a key building block for the long-term growth of PTB Group,
providing increased workshop capacity and the ability to access the US and global markets.
Over the next few years, the Group will be focusing on selling engine management programs and other services
into the expanded markets. This will include aircraft leasing with engine management programs attached.
15
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 DIRECTORS’ REPORT
For the year ended 30 June 2020
Other than as detailed in the Chairman and Managing Director’s Reviews, 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 in Australia as well as Texas, Arizona, Florida and Pennsylvania
in the USA. It is required to meet the Commonwealth’s Airports (Environment Protection) Regulations 1997 as
well as other legislation relevant to the various locations. There have been no non-compliances while the Group
has operated from these various locations.
Information on Current Directors and Company Secretary
Craig Baker - Founder, Chairman
Craig is a founding shareholder and director of PTB Group Ltd and was the
Managing Director until 2017. Craig is a qualified accountant and has worked as
General Manager, Director and Finance Manager in a range of aviation businesses
for over 35 years. Craig was also involved in the development of Airwork (NZ)
Limited.
Craig is the Chairman of the Remuneration Committee and a member of the Audit
and Risk Management Committee. He has held no director positions with other
listed companies in the last three years.
Stephen Smith - Founder, Managing Director
Stephen is a founding shareholder and director of PTB Group Ltd 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’s extensive
knowledge of the business provides unique insight into the strategic direction and
growth of the company. Stephen has 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 - Independent Non-Executive Director
Andrew is a Chartered Accountant and has worked for KPMG, Littlewoods Chartered
Accountants, Coutts Group and as Qld Manager of AIFC, the merchant banking
affiliate of the ANZ Banking Group. Andrew formed Huntington Group in 1987 and
has been involved in a range of listings, acquisitions and divestments. He is a
member of the Audit and Risk Management and Remuneration Committees of the
Company.
Andrew is currently Chairman of SIV Capital Ltd (from November 2019). He had
previously been a director of the company (from April 2005). Andrew is also a
director of the unlisted Firstmac Limited (home loans) and Investors Central
Limited (second tier motor vehicle finance).
16
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 DIRECTORS’ REPORT
For the year ended 30 June 2020
Russell Cole - Independent Non-Executive Director
Russell has over 25 years of experience in public practice as a Chartered Accountant
specialising in the corporate sector with significant experience in audit, risk
management and corporate governance. He 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 a member of the Remuneration Committee.
Russell has held no director positions with other listed companies in the last three
years.
Prince Gunasekara - Non-Executive Director
Prince is an aviation expert with over 20 years of 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 Prince has been instrumental
in introducing key Japanese investors and business partners.
Prince has held no director positions with other listed companies in the last three
years.
Daniel Zgrajewski - Company Secretary
Daniel was appointed Chief Financial Officer and Company Secretary effective 27
November 2013. Daniel holds a Bachelor of Business from Queensland University
of Technology and is a Certified Practicing Accountant.
Daniel has over 25 years of experience in finance and has worked in a number of
roles. This includes a range of commercial and financial accounting roles within
commercialised business units of Brisbane City Council.
17
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 DIRECTORS’ REPORT
For the year ended 30 June 2020
Remuneration Report (Audited)
The remuneration report is set out under the following main headings:
A
B
Key management personnel
Principles used to determine the nature and amount of remuneration
C Details of remuneration
D
E
F
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. The maximum aggregate amount 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.
18
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 DIRECTORS’ REPORT
For the year ended 30 June 2020
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 (2019: Nil).
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
19
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 DIRECTORS’ REPORT
For the year ended 30 June 2020
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 (2019: 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.
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
$
$
2020 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
579,990
21,800
30,000
190,000
Total Directors
842,929
–
–
–
–
–
–
Other Key
Management
Personnel
D Zgrajewski
(Company
Secretary and
CFO)
235,952
10,000
Total Other
Key Management
Personnel
235,952
10,000
–
22,661
–
–
–
–
–
–
–
–
–
–
–
22,661
22,781
22,781
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
43,800
–
579,990
–
21,800
–
–
–
–
–
30,000
190,000
865,590
268,733
268,733
20
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
DIRECTORS’ REPORT
For the year ended 30 June 2020
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
There were no other executives in the current or prior year.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
43,800
–
439,980
–
21,800
–
–
–
–
–
30,000
190,000
725,580
239,157
239,157
21
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
DIRECTORS’ REPORT
For the year ended 30 June 2020
D. Service Contracts
Major provisions of service agreements with executive directors and other key management personnel as at 30
June 2020 are set out below:
S G Smith (Managing Director)
» Commencement date of consultancy agreement – 1 May 2017;
» Service fee – $750,000 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 2019;
» Base annual salary – $260,000 excluding superannuation; and
» Notice period – Termination by six 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.
22
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 Name
2020
Directors
CL Baker
SG Smith
DIRECTORS’ REPORT
For the year ended 30 June 2020
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
2,531,069
6,568,966
APS Kemp
1,472,698
RQ Cole
77,631
PP Gunasekara
2,719,137
Other key management personnel of the Group
D Zgrajewski
77,056
2019
Directors
CL Baker
SG Smith
APS Kemp
RQ Cole
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
Loans to key management personnel
–
–
–
–
–
–
–
–
–
–
–
–
402,461
–
626,683
–
1,157,080
70,724
256,776
576,331
143,384
7,876
275,855
7,818
–
–
–
–
–
–
–
–
–
–
–
–
2,933,530
6,568,966
2,099,381
77,631
3,876,217
147,780
2,531,069
6,568,966
1,472,698
77,631
2,719,137
77,056
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 $92,146. 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.
23
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 DIRECTORS’ REPORT
For the year ended 30 June 2020
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.
Aggregate amounts receivable/payable arising from the above types of transactions with key management
personnel of the Group:
– Non-current receivables (Loan to SG Smith)
2020
$
2019
$
1,826,351
1,825,401
There were no other transactions between the Group and KMP or their related parties 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 2020 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 2020. No options were issued subsequent to year end.
Shares Under Option
At the date of this report, PTB Group Limited has no unissued ordinary shares under option.
Loans to Directors and Executives
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 $92,146.
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.
24
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
DIRECTORS’ REPORT
For the year ended 30 June 2020
Meetings of Directors
Attendances by each director during the financial year were as follows:
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
Number of
Meetings Held
While a Director
Number of
Meetings
Attended
12
12
12
12
12
2
2
2
4
4
4
12
12
11
12
11
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.
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.
25
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 DIRECTORS’ REPORT
For the year ended 30 June 2020
During the year no non-audit service fees were paid or payable for services provided by the auditor of the Group
(2019: Nil).
The lead auditor’s independence declaration is set out on page 27 and forms part of the Directors’ Report for the
year ended 30 June 2020.
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
28 August 2020
26
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
AUDITOR’S INDEPENDENCE DECLARATION
For the year ended 30 June 2020
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 2020, 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.
Clive Massingham
Director
HALL CHADWICK QLD
Dated this 28th day of August 2020
Limited Liability by a scheme approved
under the Professional Standards Legislation
National Association | Hall Chadwick
International Association | Prime Global
Associations of Independent Firms
27
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2020
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
in most situations. The
of most
Recommendations are not mandatory and do not
seek to prescribe the corporate governance practices
that a listed entity must adopt.
investors
Under Listing Rule 4.10.3 PTB is required to provide a
statement disclosing the extent to which it has
followed
a
Recommendation has not been followed, this fact
must be disclosed together with the reasons for the
departure.
Recommendations. Where
the
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
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.
A listed entity should disclose:
Recommendation 1.6
Complies: YES
(a) the respective roles and responsibilities of its
A listed entity should:
board and management; and
(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
(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 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
A listed entity should:
(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
28
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2020
in the reporting period in accordance with that
process.
appropriate policies, procedures, and practices for
the management and control of the business; and
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
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:
Group;
a) A detailed definition of ‘independence’;
b) Monitor the implementation and execution of
strategy and performance against financial
targets; and
b) A framework for the identification of candidates
for appointment to the Board and their selection;
c) A framework for individual performance review
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
(g) Approving and monitoring financial and other
reporting and the operation of committees.
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
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:
a) what may be appropriate for the Company and the
Group;
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
29
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2020
appropriate. The Board then appoints the most
suitable candidates who (assuming that they consent
to act as directors) continue in office only until the
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.
contribution of individual members in terms of the
execution of the required Board functions as described
above, for the relevant year. Members of the Board
whose performance is unsatisfactory are asked to
retire. The Charter is available on the Company’s
website. 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 taken place in accordance with the
process disclosed.
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.
Diversity Policy
Recommendation 2.1
Complies: YES
The Board aims to create a corporate culture that
embraces diversity by applying transparent merit
based principles
training and
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
suitably qualified employees,
appointment of
management and Board candidates who will maximise
the achievement of the corporate goals.
issued by ASX
Best practice recommendations
recommend a separate disclosure of measurable
objectives for measuring gender diversity and the
proportion of women employees
in the whole
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
the performance and
Board processes, and
30
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
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 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 it to discharge its duties and
responsibilities effectively.
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 2020 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2020
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.
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.
31
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2020
At 30 June 2020, the Board comprised five members
including CL Baker (appointed 09/10/2001), a non-
(appointed
executive Chairman, APS Kemp
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
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.
» 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;
Principle 3: Act ethically and responsibly
A listed entity should act ethically and responsibly.
Recommendation 3.1
Complies: YES
» The Chairman is a non-executive director;
A listed entity should:
» 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
a particular
item of business must absent
themselves from the Board meeting before
commencement of discussion on the topic; and
» Non-executive directors confer on a needs basis
without management in attendance.
The size and complexity of the business does not
warrant additional directors at the present time.
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.
32
(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
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.
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2020
Code of conduct for transactions in securities
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.
(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.
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.
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
(2) is chaired by an independent director, who is
not the chair of the board, and disclose:
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 true and fair 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.
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.
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
information systems;
c) Corporate risk assessment and compliance with
(3) the charter of the committee;
internal controls;
(4) the relevant qualifications and experience of
the members of the committee; and
d) Management processes supporting external
reporting;
(5) in relation to each reporting period, the
number of
the committee met
throughout the period and the individual
those
attendances of
meetings; or
the members at
times
e) Review of financial statements and other financial
information distributed externally;
f ) Review of the effectiveness of the audit function;
33
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2020
g) Review of the performance and independence of
Continuous Disclosure Obligations
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
» 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.
Recommendation 5.1
Complies: YES
A listed entity should:
(a) have a written policy for complying with its
the
continuous disclosure obligations under
Listing Rules; and
(b) disclose that policy or a summary of it.
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.
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.
Recommendation 6.4
Complies: YES
receive communications
A listed entity should give security holders the option
from, and send
to
communications to, the entity and its security registry
electronically.
34
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2020
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:
(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
(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,
whether such a review has taken place.
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
its
Committee assists
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
the Corporate
included
policy
Governance Charter, designed to ensure that the
Group’s risks are identified and that controls are
adequate, in place, and functioning effectively.
framework
in
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,
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.
trade practices,
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 2020.
35
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 CORPORATE GOVERNANCE STATEMENT
For the year ended 30 June 2020
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.
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
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 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-
36
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
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.
relating
The Group’s polices
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.
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2020
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
Acquisition costs
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
Note
2
9
5
3
4
2020
$’000
78,144
78,144
2019
$’000
51,481
51,481
31,670
(1,201)
(78,417)
(31,031)
(11,230)
(3,085)
(270)
(1,080)
(1,271)
(1,097)
–
(949)
(6,487)
(2,106)
(151)
131
(957)
263
(1)
–
(6,502)
(4,364)
(72,231)
(45,904)
5,913
(1,893)
4,020
5,577
(1,603)
3,974
(201)
3,819
2
3,976
Basic earnings per share
Diluted earnings per share
Cents
Cents
4.32
4.32
5.71
5.71
21
21
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
37
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
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
Derivative financial liabilities
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
19(a)
5
6
7
8
5
6
9
10
11
8
12
13
7
15
16
13
14
15
16
17
18
2020
$’000
2019
$’000
15,207
20,234
54,872
–
1,698
92,011
11,321
2,662
28,522
3,644
12,673
–
58,822
150,833
9,529
9,437
7
1,168
1,387
3,039
7,174
13,376
23,202
144
1,242
45,138
11,319
2,687
18,752
1,618
4,334
–
38,710
83,848
4,856
2,455
–
47
804
2,141
24,567
10,303
31,301
6,645
148
1,860
39,954
64,521
86,312
81,038
13,514
(8,240)
86,312
17,862
4,332
146
239
22,579
32,882
50,966
47,638
13,312
(9,984)
50,966
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
38
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
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
Balance at 1 July 2018
42,938
183
43,121
14,367
(7)
(10,166)
47,315
$’000
$’000
$’000
$’000
$’000
$’000
$’000
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
4,517
-
-
Balance at 30 June 2019
47,455
Balance at 1 July 2019
47,455
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
33,400
-
-
-
-
-
-
-
-
4,517
-
-
-
-
-
-
3,792
(4,842)
-
2
2
-
-
-
3,974
3,974
-
2
3,974
3,976
-
4,517
(3,792)
-
-
(4,842)
47,638
13,317
(5)
(9,984)
50,966
47,638
13,317
(5)
(9,984)
50,966
-
-
-
33,400
-
-
-
-
-
-
2,276
(1,873)
-
4,020
4,020
(201)
-
(201)
(201)
4,020
3,819
-
-
-
-
33,400
(2,276)
-
-
(1,873)
Balance at 30 June 2020
80,855
183
81,038
13,720
(206)
(8,240)
86,312
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
39
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2020
Consolidated Statement of
Cash Flows
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)
Note
2020
$’000
2019
$’000
70,710
45,434
(78,103)
(40,707)
547
(1,271)
(297)
567
(957)
(144)
Net cash provided by/(used in) operating activities*
19(b)
(8,414)
4,193
Cash Flow From Investing Activities
Payments for property, plant and equipment
(1,566)
(3,329)
Proceeds on disposal of property, plant and equipment
–
Payments relating to acquisition of subsidiary
20
(31,190)
–
–
Net cash provided by/(used in) investing activities
(32,756)
(3,329)
Cash Flow From Financing Activities
Proceeds from borrowings
Proceeds from issue of shares
Repayment of borrowings
Repayment of lease liabilities
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)
21,692
33,399
5,614
–
(3,602)
(2,194)
(413)
–
(1,873)
(1,294)
49,203
8,033
7,174
15,207
2,126
2,990
4,184
7,174
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
* Note that these amounts include acquisition of $12,177 million of inventory from CT Aerospace, LLC in February 2020.
The acquisition was funded by a loan from the vendor.
40
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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 28 August 2020.
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
2020 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 29.
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
entity
currency’). The
(‘functional
consolidated financial statements are presented in
Australian dollars, which is PTB Group Limited’s
functional and presentation currency.
operates
(ii) Transactions and balances
Foreign currency transactions are translated into the
rates
functional currency using
prevailing at the dates of the transactions. Foreign
the exchange
41
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 » 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
instruments designated as hedges of
such
investments, are recognised in other comprehensive
income. When a foreign operation is sold or any
borrowings forming part of the net investment are
repaid, a proportionate share of such exchange
differences are recognised in the statement of profit
or loss and other comprehensive income statement,
as part of the gain or loss on sale where applicable.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
exchange gains and
losses resulting from the
settlement of such transactions and from the
translation at year-end exchange rates of monetary
assets and
foreign
liabilities denominated
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
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:
42
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(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.
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).
Repair and overhaul of
turbine engines and
related parts.
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.
Engine maintenance
contracts.
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.
Lease, hire or rental of
aircraft and turbine
engines.
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.
Provision of finance for
aircraft and turbine
engines and related
Interest income.
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.
43
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(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
44
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
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
Rental contracts are typically made for fixed periods,
but may have extension options. Lease agreements
do not impose any covenants other than the security
interests in the leased assets held by the lessor.
Leased assets may not be used as security for
borrowing purposes.
From 1 July 2019, the Group accounts for leases with
the recognition of a right-of-use (ROU) asset and a
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
corresponding lease liability at the date of which the
lease is available for use by the Group.
recognised directly in profit and loss as a bargain
purchase.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
include the net present value of the following lease
payments:
»
Fixed payments, less any lease incentives available
» Amounts expected to be payable under residual
value guarantees
» Payments of penalties for terminating the lease, if
the lease term reflects the Group exercising that
option.
Lease payments to be made under reasonably certain
the
extension options are also
measurement of the liability.
included
in
Lease payments are discounted using the interest
rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case, the Group’s
incremental borrowing rate is used, being the rate
that the Group would have to pay to borrow the funds
necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment
with similar terms, security and conditions.
(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
is
amounts has been reviewed, the difference
Where settlement of any part of cash consideration is
deferred, the amounts payable in the future are
discounted to their present value as at the date of
exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a
similar borrowing could be obtained
from an
independent financier under comparable terms and
conditions.
(j) Impairment of assets
Goodwill and intangible assets that have an indefinite
useful life are not subject to amortisation and are
tested annually for impairment or more frequently if
events or changes in circumstances indicate that they
might be impaired. Other assets are reviewed for
impairment whenever events or changes
in
circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows
(cash generating units).
(k) Cash and cash equivalents
For the purpose of presentation in the statement of
cash flows, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions,
other short-term, highly liquid investments with
original maturities of three months or less that are
readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in
value, and bank overdrafts. Bank overdrafts are shown
within borrowings
the
in current
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.
45
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(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)
»
»
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.
Fair value through other comprehensive income
(FVOCI)
Derecognition
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.
the
Financial assets are derecognised when
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.
Financial assets that meet the following conditions
are measured subsequently at amortised cost:
A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
»
»
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.
(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
46
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(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.
Increases in the carrying amounts arising on revaluation of land and buildings are credited, net of tax, in other
comprehensive income and to the revaluation reserve in shareholders’ equity. Decreases that reverse previous
increases of the same asset are first recognised in other comprehensive income to the extent of the remaining
surplus attributable to the asset, all other decreases are to profit or loss.
Land is not depreciated. Depreciation on other assets is generally calculated on a straight-line (SL) or diminishing
value (DV) basis so as to allocate the cost, net of residual values, of each item of property, plant and equipment
(excluding land and rental engines) over its estimated useful life to the Group. For rental engines, depreciation
is based on the estimated operating hours. The line item in the statement of profit or loss and other comprehensive
income in which the depreciation and amortisation of property, plant and equipment is included is ‘depreciation
and amortisation’.
The estimated useful lives are as follows:
Class
Buildings
Leasehold improvements
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 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 carrying amount
is greater than its estimated recoverable amount (note 1 (j)).
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 revalued assets are sold, it is
Group policy to transfer the amounts included in revaluation reserves in respect of those assets to retained
earnings.
(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
47
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
accumulated impairment losses. Gains and losses on
the disposal of an entity include the carrying amount
of goodwill relating to the entity sold.
another party and the consideration paid, including
any non-cash assets transferred or liabilities assumed,
is recognised in ‘other income’ or ‘other expense’.
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 27).
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
costs
incurred. Borrowings
Borrowings are initially recognised at fair value, net of
transaction
are
subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in
the statement of profit or loss and other comprehensive
income over the period of the borrowings using the
effective
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.
interest method. Fees paid on
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
48
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 transactions. The Group also documents
its assessment, both at hedge inception and on an
ongoing basis, of whether the derivatives that are
used in hedging transactions have been and will
continue to be highly effective in offsetting changes in
fair values or cash flows of hedged items.
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
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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.
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.
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
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
recognised
statement
the
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.
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.
49
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
Superannuation
Profit sharing and bonus plans
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
recognises costs
to
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.
Share-based payments
Share based compensation benefits are provided to
employees via the PTB Group Limited Employee
Share Option Scheme as detailed in note 23.
The fair value of options granted under the PTB Group
Limited Employee Share Option Scheme is recognised
as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant
date and recognised over the period during which the
employees become unconditionally entitled to the
options.
The fair value at grant date is determined using a
Binomial option pricing model that takes into account
the exercise price, the term of the option, the share
price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the
risk free interest rate for the term of the option.
The fair value of the options granted excludes the
impact of any non market vesting conditions (for
example, profitability and sales growth targets and
performance and service criteria). Non market vesting
conditions are included in assumptions about the
number of options that are expected to become
exercisable. At each balance sheet date, the entity
revises its estimate of the number of options that are
expected to become exercisable. The employee
benefit expense recognised each period takes into
account the most recent estimate.
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.
(y) Dividends
Provision is made for the amount of any dividend
declared, being appropriately authorised and no
longer at the discretion of the entity, on or before the
end of the year but not distributed at balance date.
(z) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to equity holders of the company,
excluding any costs of servicing equity other than
ordinary shares, by the weighted average number of
ordinary shares outstanding during the year, adjusted
for bonus elements in ordinary shares issued during
the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest
and other financing costs associated with dilutive
potential ordinary shares and the weighted average
number of shares that would have been outstanding
assuming the conversion of all dilutive potential
ordinary shares.
50
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(aa) Goods and services tax
Long Service Leave (LSL)
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST), except:
» 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.
(ac) General
PTB Group Limited is a public company limited by
shares, incorporated and domiciled in Australia. Listed
below is the registered office, principal place of
business, and its principal administrative office:
22 Orient Avenue
Pinkenba QLD 4008
(ad) Critical accounting estimates 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
Impairment of goodwill
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.
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.
Allowance for expected credit losses
The allowance for expected credit losses assessment
requires a degree of estimation and judgement. It is
based on the lifetime expected credit loss, grouped
based on days overdue, and makes assumptions to
allocate an overall expected credit loss rate for each
group. These assumptions include recent sales
experience and historical collection rates.
Provision for impairment of inventories.
for
impairment of
inventories
The provision
assessment requires a degree of estimation and
judgement. The level of provision is assessed by
taking into account the recent sales experience, the
ageing of inventories and other factors that affect
inventory obsolescence.
Estimation of useful lives of assets
The Group determines the estimated useful lives and
related depreciation and amortisation charges for its
plant and equipment and finite life intangible assets.
The useful lives could change significantly as a result
of technical innovations or some other event. The
depreciation and amortisation charge will increase
where the useful lives are less than previously
estimated lives, or technically obsolete or non-
strategic assets that have been abandoned or sold will
be written off or written down as the Group considers
this to be a better estimation of likely useful life.
Business combinations
Business combinations are initially accounted for on a
provisional basis. The fair value of assets acquired,
liabilities and contingent liabilities assumed are
into
initially estimated by
consideration all available information at the reporting
date. Fair value adjustments on the finalisation of the
business combination accounting is retrospective,
where applicable, to the period the combination
occurred and may have an impact on the assets and
the Group
taking
51
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
liabilities, depreciation and amortisation reported.
(ae) Fair value of assets and liabilities
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
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
maximise, to the extent possible the use of the
observable market data.
regard
to
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 participant’s 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
to
of such financial
observable market
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.
instrument, by reference
information where
(af) Changes in significant accounting policies
AASB 16 Leases: The Group has adopted AASB 16
Leases from 1 July 2019. The standard replaces
existing accounting requirements under AASB 117
Leases and eliminates the classification between
operating and finance leases, introducing a single
lessee accounting model.
52
Previously, leases were classified based on their
nature as either finance leases or operating leases.
Finance leases were recognised in the Consolidated
Statement of Financial Position and operating leases
were recognised on a straight-line basis over the term
of the lease.
Under AASB 16, the Group’s accounting for operating
leases as a lessee will now result in the recognition of
a right-of-use (ROU) asset and a corresponding lease
liability, with the exception of short term leases under
12 months and where the underlying ROU asset is of
a low value. The lease liability will represent the
present value of future lease payments. There will be
a separate recognition of the depreciation charge on
the ROU asset and interest expense on the lease
liability.
The Group adopted AASB 16 using the modified
retrospective method of adoption. The reclassifications
and adjustments arising from the new leasing
standard are therefore recognised in the opening
statement of financial position on 1 July 2019. As the
Group adopted
there was no
this approach,
restatement of previous financial statements required.
When applying this modified approach, the Group has
elected to apply practical expedients allowed under
the standard, including the use of hindsight in
determining the lease term where the contract
contains options to extend the lease. The group has
also elected not to reassess whether a contract is, or
contains a lease at the date of initial application.
Instead, for contracts entered into before the transition
date the group relied on its assessment made applying
AASB 117.
On adoption of AASB 16, the Group recognised lease
liabilities in relation to leases which had previously
been classified as operating leases under AASB 117
Leases. These liabilities were measured at the present
value of the remaining lease payments, discounted
using the incremental borrowing rate at date of
transition.
The change in accounting policy affected the following
items in the balance sheet at 1 July 2019:
» Right-of-use assets – increase $179,000
» Borrowings – increase $179,000
There was no impact to retained earnings.
The Group has recognised a charge of $470,000 in
relation to depreciation of right-of-use assets (note 9),
and additional finance costs of $80,000 due to
interest expense on the lease liability.
The Group did not need to make any adjustments to
the accounting for assets held as lessor under
operating leases as a result of the adoption of AASB
16.
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(ag) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2020 reporting periods and have not been early adopted by the group. These standards are not expected to have
a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
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
2020
$’000
2019
$’000
30,130
24,622
19,825
2,604
528
77,709
435
22,149
4,974
20,887
2,855
509
51,374
107
78,144
51,481
53
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(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 27). Note that the PT USA segment
includes revenues for the Prime Turbines, LLC business that was acquired in February 2020.
PTB
PT USA
PT Leasing
IAP
Total
2020
$’000
2019
$’000
2020
$’000
2019
$’000
2020
$’000
2019
$’000
2020
$’000
2019
$’000
2020
$’000
2019
$’000
Geographical
markets
AUS, PNG, NZ
8,439
5,305
Pacific
America
Asia
Africa
Europe
Total
Major business
activities
8
-
453
3,033
2,073
1,529
1,338 13,009
9,169
5,656
7,120
-
2,820
828 23,222
3,654
48
-
290
41
30
5,745
7,440
(8)
4,983
2,925 31,025
7,399
18,550
18,721
13
115
2,940
2,211
87
745
333
652
581
693
4,438
2,998 23,656 23,064
4
49
36
-
40
-
4
39
798
198
203
1,844
3,476
4,104
38,418 34,300 24,395
4,812
3,698
3,088
11,198
9,174 77,709 51,374
Sale of goods
9,785
8,167
8,101
4,808
1,046
Services
8,534
4,970 16,088
Maintenance
contract revenue
Rental of engines/
aircraft
Interest on hire
purchase
agreements
19,825 20,887
-
-
-
206
274
276
-
4
-
-
-
-
-
-
-
-
2,398
2,855
254
233
11,198
9,174 30,130 22,149
-
-
-
-
- 24,622
4,974
-
-
-
19,825 20,887
2,604
2,855
528
509
Total
38,418 34,300 24,395
4,812
3,698
3,088
11,198
9,174 77,709 51,374
Timing of
recognition
Point in time
38,144 34,024 24,395
4,812
3,444
2,855
11,198
9,174
77,181 50,865
Over-time
Total
274
276
-
-
254
233
-
-
528
509
38,418 34,300 24,395
4,812
3,698
3,088
11,198
9,174 77,709 51,374
Other revenue
315
46
3
16
19
27
98
18
435
107
External revenue
as reported in
Note 27
38,733 34,346 24,398
4,828
3,717
3,115 11,296
9,192 78,144 51,481
54
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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
– Right-of-use assets
– Leased engines/aircraft
Short-term/low value leases
– 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% (2019: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
- Acquisition costs
- Non-deductible expenses
- Foreign income tax rate
- Adjustments for deferred tax assets of prior periods
2020
$’000
2019
$’000
129
1,016
1,445
10
470
15
–
53
1,080
641
124
169
1,755
8
–
50
180
33
(131)
503
2020
$’000
2019
$’000
1,609
264
20
1,893
5,913
1,774
286
7
(193)
19
47
1,576
(20)
1,603
5,577
1,673
–
3
(53)
(20)
Income tax expense/(benefit)
1,893
1,603
55
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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
2020
$’000
2019
$’000
17,773
(2,357)
15,416
2,099
704
2,015
10,312
(158)
10,154
1,646
641
935
20,234
13,376
260
5,349
2,722
1,164
1,826
11,321
275
4,232
2,976
2,011
1,825
11,319
Impaired trade receivables
In relation to the impairment of trade receivables, as at 30 June 2020, the Group had recognised an expected loss
allowance of $2,357,000 (2019: $158,000). This includes $1,186,000 that was included in the balance sheet for
Prime Turbines at acquisition date.
Movements in the provision for impairment of receivables are as follows:
At 1 July
Provision for impairment written back/(recognised) during the year
Acquisition of subsidiary balance
Exchange movements
Receivables written off during the year as uncollectable
2020
$’000
(158)
(1,080)
(1,186)
46
21
2019
$’000
(299)
131
–
–
10
At 30 June
(2,357)
(158)
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.
56
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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.
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
2020
$’000
2019
$’000
2,213
1,247
-
1,174
2,249
-
Minimum hire purchase payments receivable
3,460
3,423
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
Risk exposure
(198)
(83)
-
(281)
3,179
2,015
1,164
3,179
(239)
(238)
-
(477)
2,946
935
2,011
2,946
Information concerning the exposure to credit risk, foreign exchange and interest rate risk is set out in note 26.
6. Inventories
Current
Work in progress – at cost
Finished goods – at cost
Non-current
Finished goods – at cost
2020
$’000
2019
$’000
6,521
48,351
54,872
2,662
2,662
4,097
19,105
23,202
2,687
2,687
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.
57
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
7. Tax balances – Current
Current tax assets
Current tax liabilities
8. Other Assets
Current
Prepayments
Deposits
2020
$’000
–
1,168
2019
$’000
144
47
2020
$’000
2019
$’000
1,444
254
1,698
1,024
218
1,242
–
9. Property, Plant and Equipment
Leases
Lessor 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 16 “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.
2020
$’000
826
888
1,714
2019
$’000
1,375
1,527
2,902
58
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
Lessee arrangements
The balance sheet shows the following amounts relating to leases:
Right-of-use assets
Buildings
Lease liabilities
Current
Non-current
2020
$’000
2019*
$’000
3,764
3,764
1,049
2,772
3,821
–
–
–
–
–
–
–
*In the previous year, the Group only recognised lease assets and lease liability in relation to leases that were classified as ‘finance
leases’ under AASB 117 Leases. The assets were presented in property, plant and equipment and the liabilities as part of the Group’s
borrowings. For adjustments recognised on adoption of AASB 16 on 1 July 2019, please refer to Note 1(af).
Additions to the right-of-use assets during the 2020 financial year were $590,000.
The statement of profit or loss shows the following amounts relating to leases:
Depreciation charge of right-of-use assets
Buildings
Interest expenses included in finance costs
Expense relating to short-term leases
2020
$’000
2019*
$’000
470
470
80
46
–
–
–
–
–
59
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
9. Property, Plant and Equipment (continued)
Land &
Buildings
Leasehold
Improvements
Plant &
Equipment
Rental
Engines/
Aircraft
Assets
Under
Con-
struction
Total
Owned
$’000
Under
Lease
$’000
Owned
$’000
Under
Lease
$’000
Owned
$’000
Under
Lease
$’000
Owned
$’000
Under
Lease
$’000
Owned
$’000
$’000
Year ended 30 June 2019
Opening net book
value
Additions
6,643
112
Transfers1
Disposals
Impairment
Depreciation/
amortisation
FX translation
Closing net book
value
At 30 June 2019
Cost
Accumulated
depreciation
-
-
-
(124)
-
6,631
7,893
(1,262)
Net book value
6,631
Year ended 30 June 2020
-
-
-
-
-
-
-
-
-
-
-
Opening net book
value
Adjustment for
change in
accounting policy
Adjusted opening
net book value
Additions
Acquisition of
subsidiary
Transfers1
Disposals
Impairment
Depreciation/
amortisation
FX translation
Closing net book
value
At 30 June 2020
6,631
-
-
179
6,631
179
590
3,447
396
-
-
-
-
-
(129)
(470)
-
18
6,502
3,764
371
9
-
-
(1)
-
(8)
-
-
-
-
-
-
-
-
-
-
-
-
(10)
(15)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
736
1,639
1,994
-
-
(169)
5
4,205
5,730
(1,525)
4,205
4,205
-
4,205
431
7,409
-
-
-
(1,016)
(273)
10,756
Cost
7,893
4,191
381
-
13,260
Accumulated
depreciation
(1,391)
(427)
Net book value
6,502
3,764
(10)
371
- (2,504)
-
10,756
1 Represents transfer of engine cores and aircraft frames (to)/from inventory.
60
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,774
174
2,049
19,385
1,578
(1,805)
-
-
-
-
-
(1,755)
(50)
-
-
7,792
124
15,941
263
(8,149)
(139)
7,792
124
7,792
124
-
-
7,792
124
1,135
-
(462)
-
-
-
-
-
-
(1,445)
(15)
-
-
7,020
109
16,431
263
(9,411)
(154)
7,020
109
-
3,329
(2,049)
(1,860)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1)
-
(2,106)
5
18,752
29,827
(11,075)
18,752
18,752
179
18,931
2,156
11,252
(462)
-
-
(3,085)
(270)
28,522
42,419
(13,897)
28,522
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
10. Deferred Tax Assets
The balance comprises temporary differences attributable to:
2020
$’000
2019
$’000
398
110
297
598
366
1,875
3,644
530
47
285
47
–
709
1,618
Accruals
$’000
Employee
benefits
$’000
Doubtful
debts
$’000
Acquisition
costs
$’000
Other
Total
$’000
$’000
43
4
47
63
250
35
77
(30)
285
47
–
–
–
1,095
(386)
2,472
(854)
709
1,618
12
551
366
1,166
2,026
Tax losses
Accruals
Employee benefits
Doubtful debts
Acquisition costs
Other
Total deferred tax assets
Movements
At 1 July 2018
(Charged)/credited
to statement of profit
or loss and other
comprehensive
income
Tax
losses
$’000
1,007
(477)
At 30 June 2019
530
(132)
(Charged)/credited
to statement of profit
or loss and other
comprehensive
income
At 30 June 2020
398
110
297
598
366
1,875
3,644
A deferred tax asset of $3.644 million (2019: $1.618 million) has been recognised at 30 June 2020. This includes
$0.398 million attributable to prior years’ income tax losses carried forward (2019: $0.530 million) as based on
management forecast of expected future taxable profits and the reversal of the temporary differences, it was
considered probable that these deferred tax assets would be recovered in the future.
61
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
11. Intangible Assets
Goodwill – IAP
Goodwill – Prime Turbines
Total Goodwill
Impairment tests for goodwill
2020
$’000
4,334
8,339
12,673
2019
$’000
4,334
–
4,334
Goodwill is allocated to the IAP operations as a single cash-generating unit (CGU) which is included in the IAP
business segment, and to Prime Turbines following the acquisition (see note 20) as a single cash-generating unit
included in the PT USA 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
IAP:
The calculations utilise a pre-tax risk adjusted discount rate of 12.7% (2019: 13.4%) based on the Group’s
weighted average cost of capital of 8.9% (2019: 9.4%). A perpetual growth rate beyond the forecast period of 3%
(2019: 3%) has been used. Management determined budgeted cash flows based on past performance and
directors’ best estimates over a five-year period.
Prime Turbines:
The calculations utilise a pre-tax risk adjusted discount rate of 12.7% (2019: n/a) based on the Group’s weighted
average cost of capital of 8.9% (2019: 9.4%). A perpetual growth rate beyond the forecast period of 3% (2019:
n/a) 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 are no reasonably possible changes in key assumptions, which management
has based its determination of recoverable amounts, which would cause the carrying amount of the CGU’s to
exceed their recoverable amounts.
12. Trade and Other Payables
Trade payables and accruals
2020
$’000
9,529
2019
$’000
4,856
62
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
13. Borrowings
Current
Secured
Bank overdraft
Bank loans
Test cell loans
Inventory loan
Lease liabilities
Non-Current
Secured
Bank loans
Test cell loans
Inventory loan
Lease liabilities
2020
$’000
2019
$’000
–
3,461
774
2,040
3,162
9,437
13,431
5,381
7,819
4,670
31,301
–
1,704
276
–
475
2,455
11,134
2,806
–
3,922
17,862
Information concerning the effective interest rates is set out in note 26.
Bank Overdraft, Bank Loans and Bills Payable
The bank overdraft and bank loans 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 $84.364 million (2019: $50.472 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 26.
Finance Facilities
Information concerning available facilities including used and unused portion of the finance facilities is set out in
note 26.
Assets Pledged as Security
All assets of the Group are pledged as security for the facilities as noted above.
63
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
14. Deferred Tax Liabilities
The balance comprises temporary differences attributable to:
Property, plant and equipment
Other
Total deferred tax liabilities
Movements
At 1 July 2018
Charged/(credited) to statement of profit & loss and other
comprehensive income
At 30 June 2019
Charged/(credited) to statement of profit & loss and other
comprehensive income
At 30 June 2020
15. Provisions
Current
Employee benefits
Service warranties
Non-Current
Employee benefits
Remediation provisions
Movements in Provisions
Balance 1 July 2018
Provisions made during the year
Provisions used during the year
Balance at 30 June 2019
Acquisition of subsidiary
Provisions made during the year
Provisions used during the year
Balance at 30 June 2020
64
2020
$’000
2019
$’000
3,453
3,192
6,645
1,282
3,050
4,332
Other
Total
$’000
2,112
938
3,050
142
$’000
3,630
702
4,332
2,313
Property,
plant and
equipment
$’000
1,518
(236)
1,282
2,171
3,453
3,192
6,645
2020
$’000
2019
$’000
1,224
163
1,387
148
–
148
Employee
Benefits
Service
warranties
$’000
$’000
Remed
-iation
Provisions
$’000
833
488
(371)
950
318
625
(521)
1,372
–
–
–
–
151
56
(44)
163
340
–
(340)
–
–
–
–
–
804
–
804
146
–
146
Total
$’000
1,173
488
(711)
950
469
681
(565)
1,535
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(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) Warranty Provisions
General provision was made for potential future claims against work carried out to 30 June 2020.
(c) 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 2020: $349,000 (2019: $314,000) 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
2020
$’000
2019
$’000
1,539
1,500
3,039
1,111
1,030
2,141
1,860
239
2020
$’000
2019
$’000
Share capital
125,475,728 ordinary shares fully paid
(2019: 74,904,990 ordinary shares fully paid)
80,855
47,455
Other equity securities
Value of conversion rights (net of tax)
183
183
81,038
47,638
65
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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 2018
Shares issued 2019
- under dividend reinvestment plan refer note 28
- share placement
Closing balance 30 June 2019
Shares issued 2020
- under dividend reinvestment plan refer note 28
- rights issue
- share placements
Closing balance 30 June 2020
No. of
Shares
$’000
67,311,853
42,938
5,741,285
1,851,852
3,547
970
74,904,990
47,455
–
31,875,086
18,695,652
–
21,058
12,342
125,475,728
80,855
The purpose of the rights issue and share placements were to fund the acquisition of Prime Turbines, LLC (see
note 20), plus associated costs and additional working capital.
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.
Options
As at balance date there are no outstanding options to purchase ordinary shares in the parent entity. All options
previously outstanding expired without being exercised in the year ended 30 June 2011.
An employee share option scheme was approved by shareholders on 3 June 2005. Refer to note 23 for details.
Capital Risk Management
The Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to continue
as a going concern, so that they can continue to provide returns to shareholders, benefits to other stakeholders,
and to maintain an optimal capital structure to reduce the cost of capital. 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.
66
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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
2020
$’000
(206)
13,720
13,514
(5)
(201)
(206)
2019
$’000
(5)
13,317
13,312
(7)
2
(5)
13,317
2,276
14,367
3,792
(1,873)
(4,842)
13,720
13,317
The dividend appropriation reserve is used to record the retained earnings which can be used for future dividend
payments. A fully franked interim dividend of 2.5 cents per share (2019: nil) was paid from the dividend
appropriation reserve. A final dividend of 2.5 cents per share has also been declared (2019: 7 cents per share)
and will be paid from the reserve.
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)
2020
$’000
15,207
–
15,207
2019
$’000
7,174
–
7,174
67
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(b) Reconciliation of Net Cash Flow from Operating Activities to Profit/(Loss) for the Year
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
Acquisition costs included in expenses
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
2020
$’000
4,020
3,085
–
1,013
865
949
2019
$’000
3,974
2,106
1
(141)
(87)
–
(8,773)
(6,664)
(13,892)
(2,026)
(312)
2,638
585
1,121
2,313
2,913
854
(802)
1,513
(223)
47
702
Net cash flow from operating activities
(8,414)
4,193
*net of transfers to/from property, plant and equipment. Note that this includes the acquisition of $12.177 million
of inventory from CT Aerospace, LLC in February 2020. The acquisition was funded by a loan from the vendor.
68
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
20. Business combinations
On 26 February 2020, the Group acquired 100% of the issued share capital of Prime Turbines LLC, an established
US based independent aircraft engine maintenance, repair and overhaul company, from VSE Corporation
following the raising of $34.9m via a Placement and an Entitlement Offer (refer note 17). The acquisition has
further strengthened the Group’s position in the aviation services market.
Details of the purchase consideration, the fair value of net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
Net assets acquired
Cash
Trade receivables
Prepayments
Inventories
Property, Plant and Equipment
Right-of-use assets
Trade and other payables
Employee benefits
Lease liabilities
Net identifiable assets acquired:
Add: goodwill
Net assets acquired
$’000
30,241
–
1,461
494
17,022
7,805
3,447
(4,562)
(318)
(3,447)
21,902
8,339
30,241
The goodwill is attributable to the expected synergies from the combined operations and the existing profitability
of Prime Turbines. It will not be deductible for tax purposes.
The fair value of acquired trade receivables is $1.461 million. The gross contractual amount for trade receivables
is $2.647 million, with a loss allowance of $1.186 million recognised.
Prime Turbines, LLC contributed revenues of $16.825 million and net profit of $1.215 million to the Group for the
period 1 March 2020 to 30 June 2020. Had the acquisition occurred at 1 July 2019, Prime Turbines would have
contributed revenues of $48.086 million to the Group.
Acquisition costs of $0.949 million that were not attributable to the issue of shares are included within expenses
in the statement of profit and loss and as part of the payments relating to acquisition of subsidiary in the
statement of cash flows.
69
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
21. 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
2020
cents
4.32
4.32
2019
cents
5.71
5.71
$’000
$’000
4,020
3,974
Number
Number
92,978,642
69,646,247
–
–
92,978,642
69,646,247
22. 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
70
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Short-term employee benefits
2020
$
2019
$
1,088,881
918,428
45,442
46,309
–
–
1,134,323
964,737
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.
23. 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.
71
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
24. 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
2020
$
2019
$
195,000
145,000
195,000
145,000
There was no other remuneration paid to related practices of the auditor, or other non-related audit firms.
25. 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
2020
$’000
2019
$’000
3,483
4,913
-
8,396
(321)
(243)
-
667
4,147
–
4,814
(192)
(225)
–
7,832
4,397
3,162
4,670
7,832
475
3,922
4,397
Finance leases comprise aircraft and aircraft engines leased under commercial terms and conditions, as well as
property leases 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.
(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
72
2020
$’000
2019
$’000
41
30
-
71
110
26
-
136
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
Operating leases mainly comprise leases of equipment. 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. Leases for premises previously disclosed as operating leases are now disclosed in
accordance with note 1 (h).
(c) Capital commitments
The Group’s commitments for capital expenditure as at 30 June 2020 were nil (2019: Nil).
26. 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. 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. The Group holds
a fair value foreign exchange hedge for JPY193.7 million maturing October 2021. All transactions which are
exposed to foreign exchange risk are authorised by senior management.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Property, plant and equipment
Trade and other payables
Borrowings
Financial derivatives
Other liabilities
30 JUN 2020
30 JUN 2019
USD
$’000
8,892
11,756
20,909
1,037
7,492
(5,906)
JPY
¥’000
–
–
–
–
–
–
(20,128)
(242,163)
(4)
(3,106)
–
–
USD
$’000
3,926
9,660
3,949
601
55
(3,015)
(8,774)
–
(1,240)
JPY
¥’000
–
–
–
–
–
–
–
–
–
73
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
Group sensitivity
Based on the financial instruments held at 30 June 2020, 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 $2,380,000 higher/$1,947,000 lower (2019: $574,000 higher/$470,000 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 $2,380,000 higher/$1,947,000 lower (2019: $574,000 higher/$470,000 lower) had the
Australian dollar weakened/strengthened by 10% against the US dollar due to the reasons noted above.
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.
74
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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:
2020
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
Financial Assets
Cash and cash
equivalents
Trade and other
receivables
Loan to related
party
Contract
receivables
Extended credit
receivables
0.00% 15,203
–
–
–
8.00%
–
84
99
26
5.00%
–
–
1,826
–
–
–
–
5.00%
–
704
1,052
1,105
565
9.77%
–
2,015
822
342
–
Total financial assets
15,203
2,803
3,799
1,473
565
Financial liabilities
Trade and other
payables
–
Bank overdraft
–
–
–
–
–
–
–
–
–
Bank loans
3.24% 7,649
1,394
1,659
4,135
–
–
–
–
Finance Lease
liabilities
Operating lease
liabilities
Test cell loans
Vendor
financed
inventory loan
Paycheck
Protection
Program loans
(USA)
4.73%
5.00%
4.36%
4.00%
–
Insurance loan
8.20%
–
–
–
–
–
–
2,113
1,227
671
1,049
1,138
774
3,105
1,191
308
443
318
328
1,322
2,040
2,124
2,210 2,300
1,185
1,949
106
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4 15,207
– 22,915 23,124
–
–
–
–
–
–
–
–
–
–
1,826
–
3,426
–
3,179
22,919 46,762
9,529
9,529
–
–
–
–
-
-
14,837
4,011
3,821
6,155
–
9,859
–
–
1,949
106
Total financial liabilities
7,649
9,425
9,253
8,515
3,061
1,513
1,322
9,529 50,267
75
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
26. Financial Risk Management and Other Financial Instrument Disclosures (continued)
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
There are no other interest-bearing financial assets and liabilities.
Group sensitivity
As the majority of the interest rates are fixed, at 30 June 2020 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 (2019: 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.
76
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(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 2020 the largest 10 debtors
made up approximately 65% (2019: 73%) 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 33% (2019: 32%) of total receivables.
» The receivables are concentrated in six main geographical areas. Refer to note 27 for further information.
At balance date, cash was held with the Commonwealth Bank of Australia, Chase Bank and Citizen’s Bank.
77
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(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.
Consolidated
2020
$’000
2019
$’000
731
-
716
–
15,088
12,969
4,011
3,821
9,859
1,949
6,155
41,614
–
–
–
4,397
–
–
3,082
21,164
–
–
14,943
12,838
4,011
3,821
9,859
1,949
6,155
40,738
731
145
876
–
4,397
–
–
3,082
20,317
716
131
847
Finance Facilities
Available facilities
Bank overdraft
Bank loans – chattel mortgage
– other
Finance lease liabilities
Operating lease liabilities
Vendor financed inventory loan
Paycheck Protection Program loans (USA)
Test cell loans
Amounts utilised
Bank overdraft
Bank loans – chattel mortgage
– other
Finance lease liabilities
Operating lease liabilities
Vendor financed inventory loan
Paycheck Protection Program loans (USA)
Test cell loans
Unused facilities
Bank overdraft
Bank loans – other
78
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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 2020
Non-derivatives
Non-interest
bearing
Variable rate
9,529
11
–
–
Fixed rate
9,426
9,252
–
7,638
8,516
–
–
–
–
–
–
9,529
7,649
3,061
1,513
1,321
33,089
18,966
9,252
16,154
3,061
1,513
1,321
50,267
Total financial
liabilities
Group 2019
Non-derivatives
Non-interest
bearing
Variable rate
4,856
12
–
–
–
–
–
7,637
960
Fixed rate
2,444
5,843
1,494
Total financial
liabilities
Bank overdraft
7,312
5,843
1,494
8,597
–
–
311
311
–
–
4,856
7,649
1,616
12,668
1,616
25,173
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.
79
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
27. 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 Prime Turbines LLC, Pacific Turbine USA, LLC and Pacific Turbine USA
Pty Ltd specialising in PT6 and T53 turboprop engines. The businesses repair and sell PT6 and T53 engines,
maintain related engines under contract and trade 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 facilities in the USA in Florida, Arizona, Texas and Pennsylvania. 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.
80
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 AUS,
PNG
& NZ
$’000
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 2020
Revenue from
External customers
8
2020
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
13,117
5,673
3,653
18,555
13
2,940
(4,395)
–
(823)
–
–
–
8,722
5,673
2,830
18,555
13
2,940
18,689
(18,681)
3,601
(552)
3,049
–
–
–
48
–
48
25,031
(1,806)
23,225
–
–
–
87
–
87
581
–
581
1,670
41
5,007
4,445
(72)
–
(4)
–
1,598
41
5,003
4,445
–
–
–
–
745
333
–
–
745
333
39
–
39
5
–
5
–
–
–
–
204
–
204
–
13,377
5,762
31,058
23,668
802
3,477
–
–
–
–
–
–
–
–
–
–
–
–
–
–
43,951
(5,218)
38,733
44,885
(20,487)
24,398
4,269
(552)
3,717
11,372
(76)
11,296
–
78,144
81
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
27. Segment Information (continued)
2020
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
541
1
1,768
306
–
486
243
1,590
–
22
9
–
3,369
–
1,058
–
12
270
940
–
1
144
18
1
–
252
59
–
43
–
Adjusted EBITDA
2,616
517
4,670
2,812
164
354
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
439
–
1,035
64
1,538
–
–
–
–
–
–
–
16
–
16
134
–
(6)
1
129
–
1,122
–
–
1,122
68
40
–
100
208
–
–
409
–
409
438
–
(66)
88
460
–
–
–
–
–
–
–
(5)
–
(5)
–
–
–
–
–
69
–
–
4
73
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,113
3,585
2,078
2,357
-
11,133
439
1,122
1,460
64
3,085
709
40
(77)
193
865
82
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
2020
AUS,
PNG
& NZ
$’000
Pacific
$’000
America
North &
South
$’000
Asia
Africa
Europe
Unallo
-cated
Total
$’000
$’000
$’000
$’000
$’000
Capital Expenditure
PTB
PT USA
PT Leasing
IAP
Total
Total Segment Assets
PTB
PT USA
PT Leasing
IAP
Unallocated
Total
190
–
1,135
2
1,327
–
–
–
–
–
–
829
–
–
829
–
–
–
–
–
41,518
3,433
973
11,432
–
–
59,362
9,832
15,454
–
329
12
–
–
571
–
–
1,795
1,737
–
–
–
–
–
–
16
4
236
1
–
–
–
–
–
–
316
154
–
14
–
66,804
3,774
60,906
14,964
257
484
Total assets includes:
Non-current Assets (other than financial assets and deferred tax)
PTB
PT USA
PT Leasing
IAP
Total
9,786
234
–
6,762
–
–
19,287
321
–
–
–
–
977
–
555
19,287
7,739
7,027
10,556
27,369
Total Segment Liabilities
PTB
PT USA
PT Leasing
IAP
Total
1,942
269
1
2,008
887
441
–
–
1,654
6,251
–
765
783
13
589
5
3,271
2,277
8,670
1,390
–
–
228
–
228
22
2
9
–
33
–
–
–
–
–
25
1
–
296
322
–
–
–
–
–
190
829
1,135
2
2,156
36,435
94,123
(34,777)
24,743
960
13,152
(2,618)
15,171
–
–
-
147,189
36,435
53,217
(34,777)
(15,490)
960
9,513
(2,618)
7,938
–
–
–
–
–
–
55,178
4,695
8,276
1,485
1,507
15,963
83
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
27. Segment Information (continued)
11,139
(10,683)
–
–
–
3,654
664
–
–
3,654
664
Revenue from
External customers
456
AUS,
PNG
& NZ
$’000
Pacific
$’000
America
North &
South
$’000
Asia
Africa
Europe
Unallo
-cated
Total
$’000
$’000
$’000
$’000
$’000
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
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
84
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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
–
–
632
–
632
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)
9
1
46
10
–
66
–
–
3
–
3
178
6
–
456
–
640
–
–
–
–
–
(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)
85
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
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 2020
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
86
–
–
–
–
–
–
–
–
–
–
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
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
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,
T53 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)
2020
$’000
2019
$’000
104,477
72,286
(26,333)
(20,805)
–
–
78,144
51,481
The Group is predominantly domiciled in Australia. The amount of its revenue from external customers in
Australia is $13.377 million (2019: $9.207 million) and the total revenue from external customers in other countries
is $64.767 million (2019: $42.274 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 and 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
2020
$’000
11,133
(865)
(3,085)
(1,270)
5,913
2019
$’000
8,552
88
(2,106)
(957)
5,577
87
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(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
2020
$’000
2019
$’000
147,189
82,086
–
3,644
144
1,618
150,833
83,848
The total of non-current assets other than financial instruments and deferred tax assets located in Australia is
$27.369 million (2019: $28.524 million), and the total of these non-current assets located in other countries is
$27.809 million (2019: $8.568 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
Derivative financial liabilities
Current borrowings
Non-current borrowings
2020
$’000
15,963
1,168
6,645
7
9,437
31,301
2019
$’000
8,186
47
4,332
–
2,455
17,862
Total liabilities as per the statement of financial position
64,521
32,882
88
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
28. Dividends
The directors have determined a fully franked (at 30%) final dividend of 2.5 cents per share amounting to $3.137
million. The dividend will be payable on 30 October 2020 to shareholders on the register at 5.00pm AEST on 2
October 2020.
Dividends paid during the year
Interim dividend for 30 June 2020 of 2.5 cents per share (2019: 7 cents per
share) fully franked (at 30%) paid on 2 March 2020.
2020
$’000
1,873
2019
$’000
4,842
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% (2019: 30%)
2020
$’000
1,873
–
1,873
2019
$’000
1,294
3,548
4,842
Consolidated
Parent Entity
2020
$’000
2019
$’000
2020
$’000
2019
$’000
4,661
5,167
4,661
5,167
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.
89
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
29. Subsidiaries
Name
PTB Finance Limited(1)
Pacific Turbine USA Pty Ltd(1)(5)
Pacific Turbine Leasing Pty Ltd(2)
IAP Group Australia Pty Ltd(3)
748 Cargo Pty Ltd(4)
Pacific Turbine USA, LLC(6)
PTB USA Holdings, LLC(7)
Prime Turbines, LLC(8)
(1) Incorporated 14 October 2005
Country of Incorporation
2020
Equity Holding
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
100%
100%
100%
100%
100%
100%
100%
100%
2019
100%
100%
100%
100%
100%
100%
–
–
(2) Incorporated 4 October 2006 (previously PTB (Emerald) Pty Ltd)
(3) Purchased as part of business combination on 21 September 2006
(4) Incorporated 21 June 2007 (Previously PTB Asset Management Pty Ltd)
(5) Change of name on 1 February 2016 (Previously PTB Rentals Australia Pty Ltd)
(6) Incorporated 27 March 2017
(7) Incorporated 6 January 2020
(8) Purchased as business combination on 26 February 2020
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 current and prior
years.
There are no significant restrictions over the Group’s ability to access these assets, and settle liabilities, of the
Group.
90
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
30. Deed of Cross Guarantee
On 29 June 2007, PTB Group Limited and all of its subsidiaries, excluding PTB Finance Limited and Pacific
Turbine Inc (dissolved), 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, 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 2020 of the Closed Group:
Revenue
Total Revenue
2020
$’000
78,144
78,144
2019
$’000
51,481
51,481
Changes in inventories of finished goods and work in progress
31,670
(1,201)
Raw materials and consumables used and finished goods purchased for sale
(78,417)
(31,031)
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
Acquisition costs
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
(11,230)
(3,085)
(270)
(1,080)
(1,271)
(1,097)
-
(949)
(6,487)
(2,106)
(151)
131
(957)
263
(1)
–
(6,502)
(4,364)
(72,231)
(45,904)
5,913
(1,893)
4,020
4,020
(201)
5,577
(1,603)
3,974
3,974
2
3,819
3,976
(10,110)
(10,292)
(2,276)
(3,792)
4,020
3,974
(8,366)
(10,110)
91
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
(b) Consolidated Statement of Financial Position
Set out below is a consolidated statement of financial position as at 30 June 2020 of the Closed Group:
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other current assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Inventories
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Other non-current assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Derivative financial instruments
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
92
2020
$’000
2019
$’000
15,207
20,234
54,872
-
1,698
92,011
11,007
2,662
265
28,522
3,644
12,673
–
58,773
150,784
9,529
9,437
7
1,168
1,387
3,039
7,174
13,376
23,202
144
1,242
45,138
11,005
2,687
265
18,752
1,618
4,334
–
38,661
83,799
4,856
2,455
–
47
804
2,141
24,567
10,303
31,301
6,645
148
1,860
39,954
64,521
86,263
81,115
13,514
(8,366)
86,263
17,862
4,332
146
239
22,579
32,882
50,917
47,715
13,312
(10,110)
50,917
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
31. 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 29.
b) Key management personnel
Disclosures relating to key management personnel are set out in the Directors’ Report and note 22.
c) Other transactions with subsidiaries
All transactions with subsidiaries are eliminated for the purposes of this report.
d) Outstanding balances of loans to subsidiaries
There are no outstanding, uneliminated loans to subsidiaries as at 30 June 2020 (2019: nil).
e) Outstanding balances arising from sales/purchases of goods and services
There are no outstanding other related party transactions or balances as at 30 June 2020 (2019: nil).
32. 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
2020
$’000
2019
$’000
40,905
122,431
7,630
25,247
81,115
14,410
1,659
97,184
2,615
2,615
23,299
78,123
4,307
16,412
47,716
12,463
1,532
61,711
7,648
7,648
2020
$’000
–
2019
$’000
–
93
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2020
33. Events after the Balance Date
No matters or circumstances have arisen since the end of the financial year which have significantly affected or
may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the
Group in future years.
34. Contingent liabilities
The Group had the following bank guarantees as at 30 June:
Favouree
Bank
Date
Bankstown Airport Limited
CBA
27/03/2007
2020
$’000
2019
$’000
–
–
18
18
94
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
DIRECTORS’ DECLARATION
For the year ended 30 June 2020
The directors of the Company declare that:
(a) the attached financial statements and notes, as set out on pages 37 to 94 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 2020 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 30 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 30; 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 2020 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
28 August 2020
95
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2020
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 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity, and the consolidated statement of cash flows for the year then
ended and notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2020 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 for the audit of the
financial report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We 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.
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 2020. 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.
Limited Liability by a scheme approved
under the Professional Standards Legislation
National Association | Hall Chadwick
International Association | Prime Global
Associations of Independent Firms
96
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2020
Key Audit Matter
How our audit addressed the key audit matter
Business Combinations
Our procedures
limited to, the following:
included, but were not
Refer to Note 1 (i) and Note 20 – Business
Combinations
During the year the Group acquired 100% of the
Turbines LLC, an
issued capital of Prime
independent aircraft
established US based
engine maintenance,
repair and overhaul
company.
result of
As a
the business combination
transactions, the Group recognised goodwill of
$8.34m.
The Business combination is considered a key
audit matter due to the significant judgement
involved in the recognition and measurement of
identifiable assets and liabilities at their fair value.
Key Audit Matter
Value of Goodwill
Refer to Note 1 (q), Note 11 and Note 1 (ad) –
Intangible Assets
from
recognised
Goodwill of $12.67m
the
acquisition of Prime Turbines LLC in 2020 and
International Air Parts (IAP) acquired in 2006 has
been considered as a key audit matter due to
the carrying value of goodwill at year-end and
the
impairment.
Conditions giving rise to our focus on this area
included the significant level of judgement in
respect of factors such as:
calculations
regarding
• budgeted future revenue and costs;
• discount rates; and
•
the terminal growth rate
2
• Reading
the
sale and purchase
agreements to understand the key
terms and conditions.
• Considering the Group’s assessment
of the application of AASB 3 Business
Combinations.
• Reviewing the provisional accounting
entries associated with the business
combination.
• Assessing the methodology applied to
recognise the fair value of identifiable
assets and liabilities and agreeing to
supporting documentation.
• Assessing the adequacy of the related
financial
the
disclosures within
statements.
How our audit addressed the key audit matter
Our procedures
limited to, the following:
included, but were not
• Evaluation of management’s goodwill
impairment assessment process.
•
Testing of internal controls, including the
review of forecasts by management.
• Obtaining the Group’s value
in use
models and agreeing amounts to the
Group’s FY21 budget.
•
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
revenue
inclusion of key ongoing
97
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2020
Key Audit Matter
Key Audit Matter
How our audit addressed the key audit matter
contracts by comparing the margins in
the
to historical
contract margins.
impairment model
• 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.
How our audit addressed the key audit matter
Valuation of trade and other receivables
Our procedures
limited to, the following:
included, but were not
Refer to Note 1 (l) and Note 5 – Trade and other
receivables
Net trade receivables total $31.55m, including an
impairment provision of $2.36m, and includes
$11.32m in long-term trade receivables.
receivables are
their
Trade
anticipated realisable value, which is the original
invoiced amount
less an estimated provision
allowance.
recognised at
Valuation of trade receivables is a key audit
matter in the audit due to the size of the trade
receivable balance, the challenging conditions
currently in the aviation industry and the high
level of management
in
determining the impairment provision.
judgement used
• Obtained trade receivables balance
confirmations.
• Analysed
the aging of
trade
receivables.
• Obtained a list of long outstanding
receivables
the
and
recoverability of these through inquiry
with management and by obtaining
sufficient corroborative evidence to
support the conclusions.
assessed
• Performed subsequent receipts testing
on a sample of trade and other
debtors.
•
impairment of
Scrutinised managements’ provision
for
in
conjunction with
detailed
assessment.
receivables
our
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 2020 but does not include the
financial report and our auditor’s report thereon.
3
98
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2020
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.
Directors’ 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
4
99
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 June 2020
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group audit. We
remain solely responsible for our audit opinion.
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 18 to 24 of the directors’ report for
the year ended 30 June 2020.
In our opinion the remuneration report of PTB Group Limited for the year ended 30 June 2020
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
Clive Massingham
Director
Hall Chadwick Qld, Chartered Accountants
Dated at Brisbane this 28th August 2020
5
100
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020 SHAREHOLDER INFORMATION
For the year ended 30 June 2020
The shareholder information set out below was applicable as at 7 August 2020.
(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
87
359
242
617
161
1,466
–
–
–
–
–
–
(b) The number of ordinary shareholdings held in less than marketable parcels is 60.
(c) The names of the substantial shareholders (including related entities) listed in the company’s register are:
Asir & Nek Private Limited
Kiowa Two Thousand Corporate Trustee Company Limited
SG Smith and Judith Flintoft
(d) Voting Rights
Percentage
Number of
Ordinary
Shares
Held
19,505,232
15.55%
12,731,650
6,568,966
10.15%
5.24%
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.
101
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
SHAREHOLDER INFORMATION
For the year ended 30 June 2020
(e) 20 Largest Shareholders — Ordinary Shares (Quoted):
ASIR & NEK PRIVATE LIMITED
KIOWA TWO THOUSAND CORPORATE TRUSTEE COMPANY LIMITED
KIOWA TWO THOUSAND CORPORATE TRUSTEE COMPANY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
PRINCE PRIYANTHA GUNASEKARA
JUDITH ANN MARGARET FLINTOFT
THREE HUNDRED CAPITAL PTY LTD
BAKER SUPERANNUATION PTY LTD
MILTON YANNIS
MR STEPHEN GARRY SMITH & MRS JUDITH ANN FLINTOFT
HACKETT CP NOMINEES PTY LTD
MR ROSS GEORGE YANNIS
MR WENDELL FLETCHER PHILLIPS & MRS BAILEY BAKER & MR SIMON
JEREMEY KEMBER
COSELL PTY LIMITED
EST GEORGE YANNIS & MRS THELMA YANNIS
PROF ALAN JONATHAN BERRICK
LORNETTE PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
JUDITH FLINTOFT
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
19,505,232
15.55%
6,945,115
5,786,535
4,650,316
4,579,401
3,876,217
3,647,850
3,417,782
2,857,095
2,322,854
2,033,116
1,830,640
1,714,205
1,449,275
1,031,213
991,924
948,627
926,878
900,101
888,000
5.54%
4.61%
3.71%
3.65%
3.09%
2.91%
2.72%
2.28%
1.85%
1.62%
1.46%
1.37%
1.16%
0.82%
0.79%
0.76%
0.74%
0.72%
0.71%
70,302,376
56.03%
Number
on issue
Number
of holders
–
–
102
PTB GROUP LIMITED AND CONTROLLED ENTITIES | ANNUAL REPORT 2020
COMPANY STATISTICS
For the year ended 30 June 2020
Revenue ($’000)
+-Net profit/(loss) ($’000)
2020
78,144
4,020
2019
51,481
3,974
2018
40,611
3,243
2017
46,551
2,948
2016
43,170
2,567
Net Assets ($’000)
86,312
50,966
47,315
44,753
37,686
Cash Flow from
Operating Activities ($’000)
(8,414)
4,193
3,910
(3,210)
1,671
Ordinary Shares fully paid (‘000)
125,476
74,905
67,312
62,749
47,891
Return on average
shareholders’ funds (%)
5.86
8.09
7.04
7.38
7.21
Share price at year-end ($)
0.68
0.677
0.56
0.485
0.42
NTA backing per Share (Cents)
Dividend (Cents) per share in
respect of each financial year
59
5
62
7
64
5
64
5
70
5
Average AUD/USD exchange rate
$0.67
$0.72
$0.76
$0.79
$0.73
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 1185