TPC CONSOLIDATED LIMITED
A.B.N. 99 073 079 268
Annual Report
For the year ended 30 June 2017
Contents
Chairman's Letter
CEO and Managing Director's Review
Board of Directors
Directors' Report
Corporate Governance Statement
Auditor's Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor's Report
Shareholder Information
Corporate Directory
Page
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64
Chairman's Letter
Dear Shareholder,
On behalf of the Board of TPC Consolidated Limited, I am pleased to present the Annual Report for the financial year
ending 30 June 2017.
Our industry is undergoing unprecedented change. This brings with it new challenges as well as opportunities. Every
aspect of our industry is faced with the move to becoming more environmentally responsible. This has produced volatility in
the short term for example in the wholesale prices of both electricity and gas. As a retailer we have spent much of our
effort in managing this in the best possible way and managing our customers experience with these changes. Within this
context CovaU continues to grow with key financial metrics trending in the right direction. We continue our management
approach of profitable growth with both organic and acquisition scenarios.
Revenue of the consolidated entity for the year increased to $68.9 million, up by 44.6% from the previous year. Gross
profit increased to $12.5 million, up by 62.7%. EBITDA was $1.1 million up by 134.7%, representing a turn-around of $4.2
million from the last year loss of ($3.1 million). NPAT was $0.8 million, improved by 131.9% compared with last year loss
of ($2.5 million). The results were attributable to the growth of the energy business and efficiency achieved.
The Company expects to maintain its profitability and cash flow in the next
financial year as the energy business
contribution gains momentum. This will be achieved by diligent management and stringent cost control alongside growth of
the energy business.
On behalf of the Board, I would like to thank Management for their hard work and also shareholders for their patience and
continued support.
I believe that we will be able to report better financial results for the Company in the coming years to
reward that continuing support.
Yours sincerely,
Greg McCann
Chairman
2 CEO and Managing Director’s Review
I believe we have just completed a defining year, with CovaU now better positioned and focused to serve its customers.
I
would like to thank everyone at CovaU for their contribution. While I am proud of our achievements it has not been without
its challenges.
Our industry is experiencing change unlike any in its long history. This year, in particular, we have experienced major
events which have resulted in severe market disruptions. Events such as the state wide blackout in South Australia, major
generator closure and lack of gas for domestic consumption have driven electricity and gas prices to historically high
wholesale cost, which ultimately gets translated to higher energy bills for both residential and business customers alike.
These events in both electricity and gas have been a challenging area for Management. Average energy prices rose and
stayed at significantly high levels for the whole second half of the financial year. Normally we will absorb any short term
prices increases, however due to both the level of the price increase and the duration, we as with most other retailers, have
reluctantly had to respond with price increases.
Every participant in our industry as well as Federal and State governments are looking at options to better serve our
community and businesses in this new era. As we navigate forward we ensure CovaU is well positioned to take advantage
of this new operating environment.
We are constantly exploring opportunities to further improve operational efficiencies in our business and we expect to see
the fruits of our efforts in the next financial year where we expect it will help to further improve our cash flow and profitability.
In the immediate term we continue to manage our business profitability and prudently. Customer acquisition has been
mainly organic and driven by our direct sale teams this year. We are confident that this is the right approach to continue to
grow our revenues.
Longer term we have invested in iGENO Pty Limited, a subsidiary of TPC Consolidated Limited, providing facility based
electricity and gas services (embedded network operator) as well as renewable solutions into residential strata
developments.
iGENO will operate in New South Wales and Victoria, partnering with property developers, strata bodies and
architects. Our Chief Strategy Officer will lead this business.
Our business is subject to risks that may impact on our strategy even after careful planning and management. Such risks
include:
• sales competition with no regard to commercial viability; and
• unpredictable weather conditions or industry uncertainty which may result in extreme or prolonged high wholesale
energy prices.
In summary we will to continue to manage our business well and position ourselves for profitable growth whilst continuing to
provide competitive energy services to our customers.
Chiao-Heng (Charles) Huang
CEO and Managing Director
3 Board of Directors
Greg McCann B Bus, FCA, FAICD
Non-Executive Chairman
Appointed 2 April 2007
Greg holds a Bachelor of Business (Accounting) degree and is a Fellow of the Institute of Chartered Accountants in Australia
and the Australian Institute of Company Directors.
He has had 24 years of financial consulting experience with Deloitte Touche Tohmatsu. During this time he held a variety of
senior leadership positions including the roles of Managing Partner for Papua New Guinea (1987 to 1990), Managing Partner
for Queensland (1990 to 1995), Managing Partner for New South Wales (1995 to 1997), Managing Director of Deloitte
Consulting / ICS Australia (1979 to 2001) and most recently Associate Managing Director of Deloitte Consulting for Australia
and New Zealand (1999 to 2004).
Greg has extensive experience with boards and senior executives at CEO level. He is currently the Executive Chairman of the
Executor Group of Companies, an independent software and consulting services supplier to the Asia Pacific region, employing
over 1200 professionals. Greg has also chaired other ASX and NASDAQ listed companies and was on the board of the law
firm, Lander & Rogers for ten years. He was also Chairman of NBN Tasmania. Greg is also Chairman of Long Tail Properties
Pty Ltd, a utilities and apartment concierge company.
He has not held any other directorships in the last 3 year.
Chiao-Heng (Charles) Huang B Eng
Managing Director and Chief Executive Officer
Appointed 28 February 1996
Charles founded the Company in 1996 as an ISP whilst in his third year of studying towards a Bachelor of Mechanical
Engineering degree at Sydney University. Following the deregulation of the telecommunications industry, Charles sought the
opportunity to resell voice products in Australia and in 1999 he decided to transform the Company from a technology oriented
ISP to a marketing and innovation-oriented player in the prepaid calling card sector.
He has successfully steered Tel.Pacific (now TPC Consolidated Ltd) from a start-up company to a public company which was
listed on the Australian Securities Exchange in 2007.
He has not held any other directorships in the last 3 year.
Jeffrey Ma B A, FCA, F Fin
Executive Director, Chief Financial Officer and Company Secretary
Appointed 22 November 2004
Jeffrey joined the Company in 2000 with more than 15 years financial services experience. He holds a Bachelor of Arts
(Accounting and Financial Management) degree from the University of Sheffield, England and is a Fellow of the Institute of
Chartered Accountants in England and Wales. He is also a Fellow of the Institute of Chartered Accountants in Australia and a
Fellow of the Financial Services Institute of Australia.
He has over 11 years of financial services experience gained with Credit Lyonnais Australia Limited, a merchant bank, where
he held the position of Company Secretary and Head of Finance and Administration in his last five years and was a Member of
the Management Committee. Jeffrey also worked for two years in Westfield Holdings Limited; a listed property management
and development company. He has an extensive professional background, having also worked for Coopers and Lybrand (now
PricewaterhouseCoopers) in Hong Kong and with a chartered accounting firm in London.
He has not held any other directorships in the last 3 year.
4 Board of Directors
Steven Goodarzi B A
Executive Director and Chief Strategy Officer
Appointed 30 November 2015
Steven joined the Company as Chief Strategy Officer in 2013.
Steven has extensive management and operational experience internationally in strategy, business development, sales and
marketing across the telecommunications and IT industries. He has been involved in leading the development of strategy of
the financial markets across the major financial centres of Asia, North America and Europe. Most recently, Steven was based
in Tokyo with KVH, a Fidelity Investment company, as Director of Strategy and Business Development. Steven is also a board
member of Long Tail Properties Pty Ltd, a utilities and apartment concierge company.
Steven’s vision and leadership is the driver behind the establishment of the energy business.
He has not held any other directorships in the last 3 year.
5 Directors' Report
Your directors present their report on the consolidated entity consisting of TPC Consolidated Limited (the Company) and the
entities it controlled during the year ended 30 June 2017.
Directors
The names of the directors in office during the year and until the date of this report are as below. Other than as noted,
directors were in office for this entire period.
Greg McCann
Chiao-Heng (Charles) Huang Managing Director, Chief Executive Officer
Jeffrey Ma
Steven Goodarzi
Director, Chief Financial Officer, Company Secretary
Director, Chief Strategy Officer
Chairman (Non-executive)
Principal Activities
The principal activities of the consolidated entity during the year were the provision of retail electricity and gas services to
residential and business customers and of the provision of pre-paid mobile and related services in Australia. These
activities have not changed during the period.
Operating Result for the Financial Year
Operating revenue from operations was $68,885,869, up by 44.6% from the previous year of $47,642,543.
Earnings before interest expense, taxation, depreciation, amortisation and impairment (EBITDA) from operations was
$1,062,813, up by 134.7% from the previous year loss of ($3,066,582). Net profit from operations after tax was $810,165,
up by 131.9% compared to the loss in previous year of ($2,540,217).
Review of Operations
$000’s
Revenue
EBITDA (1)
NPAT
Year ended
30 June 2016
Year ended
30 June 2017
% Change on
PCP
47,643
(3,067)
(2,540)
68,886
1,063
810
44.6%
134.7%
131.9%
(1) EBITDA is a non-IFRS measure and is used internally by management to assess the performance of the business.
EBITDA has been extracted from the full financial report.
Revenue of the consolidated entity for the year increased by $21.2 million from $47.6 million to $68.9 million, up by 44.6%
compared to the previous corresponding period (PCP), which was attributable to the increase in energy revenue. The
energy revenue increased by $22.8 million to $64.5 million, representing an increase of $13.3 million (up 39.0%) in
electricity service and of $9.5 million (up 124.8%) in gas service. The telecommunication revenue however decreased by
$1.5 million (down 25.7%) from $5.9 million to $4.4 million during the same period due to the further decline in mobile
revenue as a result of continuing fierce competition in the prepaid mobile market.
Gross profit of the consolidated entity increased by $4.8 million from $7.7 million to $12.5 million, up by 62.7% over the
PCP, while the gross margin increased from 16.1% to 18.1%. The 2.0% increase in gross margin was attributable to the
overall improvement in energy gross margins in the first half of the financial year, despite the adverse increase of energy
costs in the second half, borne from the industry volatility caused by wholesale energy market events.
Total operating expenses and employee benefit expense of the consolidated entity increased to $11.8 million, up 8.7% over
the PCP of $10.8 million. The efficiency ratio of expenses over revenue improved by 5.6%, reducing from 22.7% to 17.1%
due to the economic of scale and tight control of expenses in the year.
Earnings before interest expense, taxation, depreciation and amortisation (EBITDA) of the consolidated entity for the year
ended 30 June 2017 was $1.1 million, up by 134.7%, representing a turn-around of $4.2 million from the last year loss of
($3.1 million).
6
Directors' Report
Net profit after tax (NPAT) of the consolidated entity for the year was $0.8 million, improved by 131.9% compared with the
year loss of ($2.5 million).
Over the year, net assets decreased by $2.0 million, down 88.5%, to $0.3 million, which was mainly due to the current years
profit after tax $0.8 million, increase in share capital $1.1 million and decreased in fair value of derivatives held at year end
of ($3.5 million).
Current assets decreased by $1.0 million, down 6.7%, to $14.4 million, which was mainly attributable to the derivatives held
at fair value decreased by $2.5 million and the trade receivables increased by $1.5 million. Non-current assets increased by
$0.1 million, up 24.8%, to $0.5 million, in the current period.
Current liabilities increased by $1.1 million, up 7.9%, to $14.6 million largely due to the trade payables increased by $1.5
million, the borrowing decreased by $1.2 million and the derivatives held at fair value increased by $1.0 million. Non-current
liabilities remained relatively the same as last period.
As at 30 June 2017, cash and bank deposits stood at $3.6 million (including $3.0 million held as security for bank facilities),
representing a decrease of $0.1 million (down 3.6%) during the year.
Dividends
A fully franked interim dividend $337,068 equivalent to 3 cents per share (11,235,613 shares) was declared on 24 February
2017 with a record date of 8 March 2017 and was paid on 23 March 2017.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the consolidated entity during the financial year ended 30 June
2017.
Events Subsequent to the End of the Financial Year
No matter nor circumstance, other than those referred to in the financial statements or notes thereto, has arisen since the
end of the financial year that has significantly affected, or may significantly affect, the operations of the consolidated entity,
the results of operations or the state of affairs of the consolidated entity in future financial years.
Likely Developments and Expected Results
The directors expect continued growth in the energy business going forward and that the Company will maintain its
profitability and cash flow in the financial year ending 30 June 2018. Management are exploring strategies to grow the
energy business through strategic partnerships, acquisitions and organic means.
Environmental Issues
As a reseller of the electricity and gas services, CovaU Pty Limited is required to purchase renewable energy certificates
and surrender to regulation authority. Apart from that, the consolidated entity's operations are not subject to any significant
environmental regulation under any law of the Commonwealth or a State or Territory.
Directors' Securities Holdings
As at the date of this report, the interests of the directors in the shares of the Company were:
Director
Greg McCann
Chiao-Heng (Charles) Huang
Jeffrey Ma
Steven Goodarzi
See the Remuneration Report for further details.
Number of
Ordinary
Shares
85,000
4,463,393
423,003
210,335
7
Directors' Report
Directors' Meetings
The number of directors' meetings (including meeting of committees of directors) held during the year and the number of
meetings attended by each director were as follows:
Number of Meetings
Greg McCann
Chiao-Heng (Charles) Huang
Jeffrey Ma
Steven Goodarzi
Board
Meetings
Attend /
Held (1)
6/6
6/6
6/6
6/6
Audit and Risk
Committee
Attend /
Held (1)
2/2
2/2
n/a
n/a
(1) Number of meetings held while a director or a member.
n/a denotes director is not and was not a member of the committee during the year.
Members acting on the committee of the Board were:
Audit and Risk Committee
Greg McCann (Chairman)
Chiao-Heng (Charles) Huang
As at the date of this report the Company had an Audit and Risk Committee and the functions of the previously established
Remuneration and Nomination Committee were handled by the full Board.
Indemnification and Insurance of Directors and Officers and Auditors
The entity has entered into a directors' & officers' insurance contract on 5 January 2017 for the purpose of insuring against
any liability that may arise from the directors carrying out their duties and responsibilities in their capacity as officers of the
Company. The amount of the premium was $39,257.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an auditor of the entity or of any related body corporate against a liability incurred as
such an auditor.
8 Directors' Report
Remuneration Report (Audited)
The remuneration report, which has been audited, outlines the key management personnel remuneration arrangements for
the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Details of Directors and Executives
The names and positions of each director and executive in the Company who received the highest remuneration and having
the greatest authority within the Company, along with the components of their remuneration are provided below.
Directors
Greg McCann
Chiao-Heng (Charles) Huang
Jeffrey Ma
Steven Goodarzi
Chairman (Non-executive)
Managing Director, Chief Executive Officer
Director, Chief Financial Officer, Company Secretary
Director, Chief Strategy Officer
Executives
Bing Zhou
Charles Hsieh
Gang Gu
Huy Nguyen
Sales Director
Commercial Director
Head of Information System
Sales Director
Remuneration Policy
The Board of Directors of the Company is responsible for determining remuneration arrangements for the directors, the
Managing Director and the senior management team. The Board assesses the appropriateness of the nature and amount
of the remuneration of directors and senior executives on a periodic basis by reference to relevant employment market
conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and
executive team.
Employee Share Ownership Plan
The 2009 Employee Share Ownership Plan, which was implemented on 30 November 2009, was amended and approved
by shareholders at the Annual General Meeting on 30 November 2015 (2009 ESOP). This plan replaced the previously
approved Employee Option Plan instituted on 23 May 2007, which the Board believed was no longer as effective following
changes to the taxation of options in recipients hands.
the Company to create a
The 2009 ESOP aims to motivate, retain and attract quality employees and directors of
commonality of purpose between the employees and directors and the Company. The 2009 ESOP is operated by way of
the Company issuing new shares to participants, with an amount equal to the subscription price for those shares being
loaned to the participant by the Company. That loan is secured by the Company taking security over the shares which are
subject to a holding lock period of five years, and is interest free with recourse only to the shares. The loan is to be repaid
over time by the participant (whether through dividends, specific payments to reduce the loan, or on sale of the underlying
shares).
Shares issued under the 2009 ESOP will rank from the date of issue equally with the other shares in the Company then on
issue.
9 Directors' Report
Non-executive Director Remuneration
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be
determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided
among the directors as agreed. The latest determination was at the Annual General Meeting held on 20 April 2007 when
shareholders approved an aggregate remuneration of $350,000 per year payable to non-executive directors for their
services as directors, including their services on a committee of directors.
The Board determines payments to the non-executive directors and will review their remuneration annually, based on
market practice, duties and accountability. Independent external advice is sought when required.
Each non-executive director receives a fee for being a director of the Company. An additional fee may also be paid for each
Board committee on which a director sits.
Non-executive directors are eligible to be granted shares under the Employee Share Ownership Plan.
Executive Director and Executives Remuneration
Remuneration granted to the executive directors and other executives has regard to the Company's financial and
operational performance.
The Board determines the base salary of the executive directors and will review their remuneration annually against the
external market and individual contribution to the Company. Performance pay based on overall corporate performance may
be made available to the executive team.
Each executive director and executive receives remuneration commensurate with their position and responsibilities within
the Company.
Executive directors and executives are eligible to be granted shares under the Employee Share Ownership Plan.
Voting and comments made at the Company's 2016 Annual General Meeting ("AGM")
At the 2016 AGM, shareholders voted to approve the adoption of the remuneration report for the year ended 30 June 2016.
The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Remuneration of Directors and Executives
The following tables set out the remuneration received by the directors and executives of the Company during the financial
years ended 30 June 2017 and 30 June 2016.
2017
Short Term Benefits
Post
Employment
Long Term
Benefits
Equity
Based
Total
Salary and
Fees
$
Cash
Benefits (1)
$
Non-Cash
Benefits
$
Super-
annuation
$
Accrued Leave
Entitlement
$
Share-based
Payments (2)
$
Directors
Greg McCann
Chiao-Heng (Charles) Huang
Jeffrey Ma
Steven Goodarzi
Executives
Bing Zhou
Charles Hsieh
Gang Gu
Huy Nguyen
72,765
300,000
184,115
200,692
140,640
137,336
126,919
147,320
1,309,787
-
-
-
-
-
-
-
-
-
-
-
1,894
32,604
1,589
-
4,332
-
40,419
6,913
30,000
35,000
19,308
12,353
11,796
12,469
12,855
140,694
-
7,258
4,624
-
2,709
(6)
7,302
-
21,887
-
-
-
-
-
-
-
-
-
$
79,678
337,258
225,633
252,604
157,291
149,126
151,022
160,175
1,512,787
10
Directors' Report
2016
Short Term Benefits
Post
Employment
Long Term
Benefits
Equity
Based
Total
Directors
Greg McCann
Chiao-Heng (Charles) Huang
Jeffrey Ma
Steven Goodarzi
Executives
Barry Chan
Bing Zhou
Charles Hsieh
Gang Gu
Huy Nguyen
Salary and
Fees
$
Cash
Benefits (1)
$
Non-Cash
Benefits
$
Super-
annuation
$
Accrued Leave
Entitlement
$
Share-based
Payments (2)
$
72,765
195,547
186,008
200,692
25,114
123,648
129,943
120,793
142,980
1,197,490
-
-
17,686
104,453
-
-
-
13,238
-
-
-
-
-
17,686
-
2,164
1,100
4,207
-
125,162
6,913
30,000
35,000
19,308
2,386
10,672
11,400
11,875
12,443
139,997
-
7,902
4,402
-
591
8,500
(285)
1,653
-
22,763
1,002
6,679
5,677
3,339
3,339
1,002
501
1,002
334
22,875
$
80,680
362,267
231,088
236,577
31,430
145,985
142,659
139,530
155,757
1,525,973
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed Remuneration
2017
2016
Performance
2017
2016
Directors
Greg McCann
Chiao-Heng (Charles) Huang
Jeffrey Ma
Steven Goodarzi
Executives
Barry Chan
Bing Zhou
Charles Hsieh
Gang Gu
Huy Nguyen
100%
100%
100%
100%
n/a
100%
100%
100%
78%
100%
100%
100%
100%
100%
97%
100%
100%
80%
0%
0%
0%
0%
0%
0%
0%
0%
22%
0%
0%
0%
0%
0%
3%
0%
0%
20%
(1) Cash benefits represented the payout of unused annual leave entitlements.
(2) This represents the value of shares that have been issued to the named directors and executives under the 2009
Employee Share Ownership Plan (2009 ESOP). The 2009 Employee Share Ownership Plan, which was implemented on
30 November 2009, was amended and approved by shareholders at the Annual General Meeting on 30 November 2015
(2009 ESOP). The 2009 ESOP aims to motivate, retain and attract quality employees and directors of the company to
create commonality of purpose between the employees and directors and the company. The share of issue of shares
under the 2009 ESOP has been treated as issue of share options and accounted for the Australian Accounting Standards
AASB 2 Share-based Payment. On 15 January 2016, a total of 1,600,000 shares were granted to the employees and
directors of the company under the 2009 ESOP.
11
Directors' Report
Key Terms of Employment Agreements
Apart from the non-executive directors, all key management personnel are employed under standard company employment
agreements. With the exception of the executive directors (where either party may terminate the agreement by giving a
three months notice to the other), the notice period of standard company employment agreements is one month.
None of these agreements provide for termination conditions or payments. The Board considers that the significant equity
holding of executive directors mitigates any risk of not having formal termination clauses.
Any termination entitlements payable to the key management personnel would be considered in light of the relevant
circumstances and would be determined after consideration of entitlements of common law rights.
Directors and Executives Share Holdings
The number of ordinary shares in the Company held directly, indirectly or beneficially during the financial year by key
management personnel and their related entities are as follows:
Greg McCann
Chiao-Heng (Charles) Huang
Jeffrey Ma
Steven Goodarzi
Barry Chan
Bing Zhou
Charles Hsieh
Gang Gu
Huy Nguyen
Total Shares
Held at
Beginning of
Year
Total
Shares Held
at End of
Year
Shares
Acquired
85,000
4,453,958
423,003
210,335
809,012
61,000
30,000
83,826
56,127
6,212,261
-
9,435
-
-
-
-
-
-
16,636
26,071
85,000
4,463,393
423,003
210,335
809,012
61,000
30,000
83,826
72,763
6,238,332
Total shareholdings include shares held by key management personnel and their related entities. Unless related to the
Employee Share Ownership Plan (2009 ESOP) - see Note 27 (a), shares acquired or disposed during the year were on an
arm's length basis at market price.
No director or key management personnel were issued options to acquire shares during the year, held any options at the
end of the year or had any options that expired during the year.
12
Directors' Report
Company Performance, Shareholder Wealth and Director and Executive Remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives.
There have been two methods applied in achieving this aim, the first being a performance based bonus based on key
performance indicators, and the second being the issue of equity to the majority of directors and executives to encourage
the alignment of personal and shareholder interests. No bonus have been paid in the current year.
The following table shows gross revenue, profits and dividends over the last
discontinued operations).
five years (including continuing and
Revenue (1)
2017
2016
2015
2014
2013
$68.89 m
$47.64 m
$24.57 m
$53.45 m
$81.15 m
Profit/(loss) after tax
Underlying profit/(loss) after tax (2)
$0.81 m
$0.81 m
($2.54 m)
($2.54 m)
($4.73 m)
($4.73 m)
$5.40 m
$1.79 m
$3.84 m
$2.03 m
Share price at year end (3)
Interim/Special dividend
Final dividend
$0.85
$0.55
$0.95
$0.75
$0.06
3.00 cents
0.00 cents
0.00 cents
0.00 cents
0.00 cents
0.00 cents
3.00 cents
0.00 cents
0.00 cents
0.00 cents
(1) Revenue includes discontinued operations of $Nil for 2015 and $40.34m for 2014.
(2) Underlying profit for 2014 is excluding net of tax, the gain on disposal of calling card business of $11.5 million, provision
for impairment of goodwill of $6.3 million and the derecognition of in net deferred tax assets of $1.5 million.
(3) The ordinary shares on issue were consolidated on a 1 for 10 basis, pursuant to the special resolution approved at an
Extraordinary General Meeting on 28 April 2014.
This concludes the Remuneration Report which has been audited.
Shares under Options
There were no ordinary shares of the company issued on exercise of options during the year (2016:Nil), nor are there any
ordinary shares under option at the end of the financial year and the date of this report.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity or intervene in any
proceedings to which the consolidated entity is a party for the purpose of taking responsibility on behalf of the consolidated
entity for all or any part of those proceedings.
The consolidated entity was not a party to any such proceedings during the year.
Auditor's Independence Declaration
A copy of the Auditor's independence declaration as required under section 307C of the Corporations Act 2001 has been
provided to the directors and is set out on page 16, and forms part of this report.
Non-Audit Services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 7 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
13 Directors' Report
The directors are of the opinion that the services as disclosed in note 7 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of
the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risks and rewards.
Corporate Governance Statement
The directors of the Company support and adhere to the principle of corporate governance, recognising the need for the
highest standard of corporate behaviour and accountability. A review of the Company's corporate governance practices was
undertaken during the year to ensure they remained optimal. Please refer to the corporate governance statement in this
report.
Rounding of Amounts
The Company is of a kind referred to in Legislative Instrument 2016/191, issued by the Australian Securities and Investment
Commission, relating to "rounding-off". Amounts in this report have been rounded off in accordance with that Class Order to
the nearest dollar. Amounts could have been rounded off to nearest thousand, but management has selected not to do so at
this point in time.
This report is made in accordance with a resolution of Directors, pursuant to Section 298 (2) (a) of the Corporation Act 2001.
On behalf of the Directors
Greg McCann
Chairman
Dated this 29 August 2017
Chiao-Heng (Charles) Huang
Managing Director
14 Corporate Governance Statement
The Company is committed to implementing standards of corporate governance consistent with the ASX Corporate
Governance Council's Corporate Governance Principles and Recommendations (3rd Edition).
Where the Company's corporate governance practices do not correlate with the Recommendations, the Company does not
currently regard it appropriate to meet that specific Recommendation, due to the nature and size of the Company's
operations. The Board's reasoning for any departure to the Recommendations is explained in the Corporate Governance
Statement which is available on the Company website http://www.tpc.com.au/investor_reports.asp.
15 Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
to the Directors of TPC Consolidated Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of TPC Consolidated Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M R Leivesley
Partner - Audit & Assurance
Sydney, 29 August 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
16
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2017
Revenue
Delivery of services
Gross profit
Other income
Operating expenses
Employee benefits expense
Earnings before interest, taxation, depreciation, amortisation and
impairment (EBITDA)
Depreciation and amortisation
Impairment
Earnings before interest and taxation (EBIT)
Finance revenue
Finance costs
Share of loss of equity-accounted investees
Profit/(Loss) before income tax
Income tax benefit
Profit/(Loss) for the year
Other comprehensive income
Amounts that may subsequently be transferred to profit or loss
Exchange differences on translating foreign operations
Fair value movement on derivatives designated for Hedge Accounting
Tax relating to gain in fair value of cash flow hedges
Other comprehensive income for the period, net of tax
Total comprehensive loss for the year
Note
2017
$
2016
$
2
2
3
3
3
3
3
4
68,885,869
(56,434,590)
12,451,279
396,215
(6,049,938)
(5,734,743)
47,642,543
(39,992,147)
7,650,396
121,055
(5,419,320)
(5,418,713)
1,062,813
(3,066,582)
(195,739)
-
867,074
52,756
(70,242)
(39,423)
810,165
-
810,165
(238,394)
-
(3,304,976)
80,128
(47,804)
-
(3,272,652)
732,435
(2,540,217)
-
(3,510,712)
-
(3,510,712)
3,600
2,441,451
(732,435)
1,712,616
(2,700,547)
(827,601)
Profit/(Loss) attributable to Members of TPC Consolidated Limited
810,165
(2,540,217)
Total comprehensive loss attributable to Members of TPC Consolidated Limited
(2,700,547)
(827,601)
Earnings per share for the year attributable to the members of TPC
Limited
Cents
Cents
Earnings per share
- Basic earnings per share
- Diluted earnings per share
5
5
7.41
7.41
(25.05)
(25.05)
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
17
Consolidated Statement of Financial Position
As at 30 June 2017
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivatives held at fair value
Bank deposits
Other assets
Total Current Assets
Non-Current Assets
Property, plant and equipment
Equity-accounted investments
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Borrowings
Derivatives held at fair value
Short term provisions
Unearned revenue
Total Current Liabilities
Non-Current Liabilities
Long term provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated Losses
TOTAL EQUITY
Note
2017
$
2016
$
8
9
10
25
11
12
14
15
16
17
25
18
19
18
20
21
585,376
10,163,714
110,103
-
2,996,932
513,283
14,369,408
1,198,069
8,660,001
119,425
2,491,126
2,517,893
417,633
15,404,147
250,333
290,577
540,910
363,345
70,000
433,345
14,910,318
15,837,492
9,887,629
559,494
1,069,261
1,063,673
1,977,184
14,557,241
8,411,774
1,747,156
49,675
852,069
2,429,140
13,489,814
96,909
96,909
121,897
121,897
14,654,150
13,611,711
256,168
2,225,781
9,825,028
(1,774,981)
(7,793,879)
256,168
8,757,026
1,735,731
(8,266,976)
2,225,781
The above consolidated statement of financial position should be read in conjunction with the accompanying
notes.
18
Consolidated Statement of Changes in Equity
For the year ended 30 June 2017
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Note
Total
$
Balance at 1 July 2015
8,730,026
(129,176)
(5,601,183)
2,999,667
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with Shareholders
Payment related to ESOP shares
Transfer relating to Foreign Reserve
Employee equity benefits reserve
-
-
-
-
1,712,616
1,712,616
(2,540,217)
-
(2,540,217)
(2,540,217)
1,712,616
(827,601)
27,000
-
-
-
125,576
26,715
-
(125,576)
-
27,000
-
26,715
Balance at 30 June 2016
8,757,026
1,735,731
(8,266,976)
2,225,781
Balance at 1 July 2016
8,757,026
1,735,731
(8,266,976)
2,225,781
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with Shareholders
Payment related to ESOP shares
Payment related to share placement
Dividend paid
-
-
-
-
(3,510,712)
(3,510,712)
810,165
-
810,165
810,165
(3,510,712)
(2,700,547)
20
20
36,360
1,031,642
-
-
-
-
-
-
(337,068)
36,360
1,031,642
(337,068)
Balance at 30 June 2017
9,825,028
(1,774,981)
(7,793,879)
256,168
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
19
Consolidated Statement of Cash Flows
For the year ended 30 June 2017
Note
2017
$
2016
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other financial costs paid
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
74,044,685
(73,425,990)
56,512
(70,242)
604,965
50,251,056
(53,536,459)
79,618
(47,804)
(3,253,589)
8(b)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant & equipment
Investment in other entity
Repayment from/(loan to) related parties
Net proceeds from disposal of subsidiary
(Payment to)/drawdown of bank deposits
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from partially paid share capital
Proceeds from share placement
Proceeds from borrowings
Repayment of borrowings
Dividends paid
NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES
Net decrease in cash held
Cash held at the beginning of the financial year
(82,727)
(260,000)
60,636
200
(479,039)
(760,930)
(49,258)
(70,000)
(60,636)
-
165,198
(14,696)
36,360
1,031,642
43,258,000
(44,445,662)
(337,068)
(456,728)
27,000
-
25,300,000
(23,552,844)
-
1,774,156
(612,693)
1,198,069
(1,494,129)
2,692,198
CASH AT THE END OF FINANCIAL YEAR
8(a)
585,376
1,198,069
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
20
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies
This financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting
the Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of
Standards Board (AASB) and the Corporations Act 2001 as applicable to for-profit entities.
The consolidated financial report of the Group also complies with International Financial Reporting Standards (IFRSs) and
interpretations adopted by the International Accounting Standards Board (IASB).
The following is a summary of the material accounting policies adopted in the preparation of the financial report. The
accounting policies have been consistently applied, unless otherwise stated, with all balances being presented in
Australian dollars.
This financial report includes the consolidated financial statements and notes of TPC Consolidated Limited and the
controlled entities (consolidated group or group).
TPC Consolidated Limited is a company limited by shares, incorporated and domiciled in Australia, whose shares are
publicly traded on the Australian Securities Exchange, under the ticker TPC.
Basis of Preparation
The financial report has been prepared on an accruals basis and is based on historical costs except where applicable as
modified by the revaluation of financial assets and financial liabilities for which the fair value basis of accounting has been
applied.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance
with Australian Accounting Standards ensures that the consolidated financial statements and notes also comply with
International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report
are presented below. They have been consistently applied unless otherwise stated.
The financial report of TPC Consolidated Limited and its controlled entities for the year ended 30 June 2017 was
authorised for issue in accordance with a resolution of the TPC Board of Directors on 29 August 2017.
Going Concern
The Group has reported a profit for the year of $0.81 million (2016: loss $2.54 million) and net current liabilities at 30 June
2017 of $0.19 million (2016: net current assets $1.91 million). In preparing the financial report management has adopted
the going concern basis of preparation which envisages the realisation of assets and the settlement of liabilities in the
ordinary course of business. In reaching their conclusion on the basis of management prepared forecasts covering the next
15 months which demonstrate that TPC Consolidated Limited is expected to be profitable in the financial year end 30 June
2018. The Directors closely monitor cash flows as the Group grows and if revenues do not increase as expected, the
directors will look to contain costs. The directors believe that these actions, if required, will be sufficient to ensure that the
Company will be able to meet its obligations as they fall due.
The Group has an invoice finance facility agreement with Westpac Banking Corporation. The agreement provides a
funding facility for working capital that the Group can borrow against qualifying debtor balances up to $6 million (2016: $4
million). The facility is secured over all existing and future assets and undertakings of CovaU Pty Limited, a wholly owned
subsidiary of TPC Consolidated Limited. This facility provides the Group with additional liquidity if required. As at the 30
June 2017, the amount drawn down is $559,494 (2016: $1,747,156).
Parent Entity Information
In accordance with Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in Note 30.
21 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies
New, Revised or Amended Accounting Standards and Interpretations Adopted
The Company has applied the required amendments to the Standards that are relevant to its operations and effective for
the current reporting period.
The application of the amendments to Standards do not have a material impact on disclosure or amounts recognised in
these financial statements.
(a) Principles of Consolidation
The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2017.
The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary
and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30
June.
All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and
losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on
the underlying asset is also tested for impairment from a group perspective. Amounts reported in the
consolidation,
financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting
policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from
the effective date of acquisition, or up to the effective date of disposal, as applicable.
(b) Business Combination
Business combinations occur where control over another business is obtained and results in the consolidation of its assets
and liabilities. All business combinations, including those involving entities under common control, are accounted for by
applying the acquisition method.
Consideration transferred for the acquisition comprises the fair value of the assets transferred, liabilities incurred and the
equity interests issued by the acquirer. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. Any
deferred consideration payable is discounted to present value using the entity's incremental borrowing rate. Acquisition
related costs are expensed as incurred.
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 acquirer's share of net identifiable
assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets acquired
and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain
purchase.
(c) Investments in Associate
Associates are those entities over which the Group is able to exert significant influence but which are not subsidiaries.
Investments in associates are accounted for using the equity method. Any goodwill or fair value adjustment attributable to
the Group's share in the associate is not recognised separately and is included in the amount recognised as investment.
The carrying amount of the investment in associates is increased or decreased to recognise the Group's share of the profit
or loss and other comprehensive income of the associate, adjusted where necessary to ensure consistency with the
accounting policies of the Group.
22 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies (continued)
(d) Income Tax
The income tax expense or benefit represents the sum of current tax and deferred tax. Current tax is calculated on
accounting profit after adjustment for any non-taxable and non-deductible items. Deferred tax is calculated at the tax rates
that are expected to apply to the period when the asset is realised or the liability is settled.
It is calculated using the tax
rates that have been enacted or are substantially enacted at reporting date.
The current tax and deferred tax is recognised as an expense in the consolidated statement of profit or loss and other
comprehensive income, except when it relates to items directly charged or credited to equity, in which case the current and
deferred tax is also recognised directly in equity.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between
the tax base of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred tax liabilities are recognised for all taxable temporary differences, except to the extent that the deferred tax
liabilities arises from:
- the initial recognition of goodwill; or
- the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither
the accounting profit or taxable income at the time of the transaction.
Deferred tax assets are recognised for all deductible temporary differences and for carrying forward of unused tax losses
and tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carrying forward of unused tax losses and tax credits can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will be occurring in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets
and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
Effective 1 July 2003, for the purposes of income taxation, TPC Consolidated Limited and its 100% owned Australian
subsidiaries formed a tax consolidated group. As part of the election to enter tax consolidation, the tax consolidated group
is treated as a single entity for income tax purposes. Gotalk Pty Limited and its wholly owned subsidiaries joined the tax
consolidated group upon acquisition on 23 December 2011.
TPC Consolidated Limited, as the head entity in the tax consolidated group, recognises, in addition to its own, the current
tax liabilities and the deferred tax assets arising from unused tax losses and tax credits of all entities in the group.
(e) Inventories
Inventories are initially measured and recorded at cost and are valued at the lower of cost and net realisable value.
23 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies (continued)
(f) Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost less any accumulated depreciation and any provision for
impairment loss.
Plant and Equipment
Plant and Equipment are measured on the cost basis less depreciation and impairment losses.
in excess of the
The carrying amount of plant and equipment
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows
which will be received from the assets employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts.
is reviewed annually by directors to ensure it is not
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 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 consolidated statement of profit or loss and other
comprehensive income during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is
depreciated on a straight line basis over their useful lives to the consolidated entity commencing from the time the asset is
held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or
the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Office Fittings & Furniture
Office Equipment
Network Equipment
13%
20% - 33%
20% - 33%
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains or losses between the carrying amount and the disposal proceeds are taken to profit or loss.
(g) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the
legal ownership, are transferred to entities in the consolidated group are classified as finance leases.
Finance leases are capitalised, recording an asset and a liability equal
to the present value of the minimum lease
payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease
liability and the lease interest expense for the period.
Leased assets are depreciated on a straight line basis over the shorter of their useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as
expenses in the period in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight line basis over the life of
the lease term.
24 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies (continued)
(h) Financial Instruments
Recognition and Initial Measurement
liabilities, are recognised when the entity becomes a
Financial
party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are
delivered within timeframes established by marketplace convention.
instruments, incorporating financial assets and financial
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at
fair value through profit or loss. Transactions costs related to instruments classified as at fair value through profit or loss
are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.
Loans and Receivables
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted on an
active market and are stated at amortised cost using the effective interest rate method.
Financial Liabilities
Non derivative financial liabilities are subsequently measured at amortised cost.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated
liabilities are derecognised where the related obligations are either discharged, cancelled or
with the asset. Financial
expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and
the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit
or loss.
Impairment
instrument has been
At each reporting date, the group assesses whether there is objective evidence that a financial
impaired. For the case of available for sale financial
is
considered to determine whether an impairment has arisen. Impairment loses are recognised in the consolidated statement
of profit or loss and other comprehensive income.
instruments, a prolonged decline in value of the instrument
Derivative Financial Instruments
The group enters into derivative financial instruments to manage its exposure to electricity price risk. Derivatives are initially
recognised at fair value when the entity becomes a party to contractual provisions to the instrument and subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedge instrument. The group designates its electricity derivatives as
hedges of a risk associated with the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges). Derivatives are carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
The group documents at inception of the hedge transactions the relationship between hedging instruments and hedge
items and its risk management objective and strategy for undertaking various hedge transactions. The group documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivative used to hedge transactions is
highly effective in offsetting changes in the cash flows of the hedge item. The fair value of the hedge derivative is classified
as a non-current asset or liability where the remaining maturity of the hedge is more than 12 months. Otherwise it is
classified as a current asset or liability.
25 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies (continued)
(h) Financial Instruments (continued)
Cashflow Hedge
The group uses forward commodity contracts for its exposure to volatility in commodity prices. The effective portion of
changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other
comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is
recognised immediately in profit and loss. Amounts accumulated in equity are reclassified to profit and loss in the period
where the hedge item affects profit and loss. In the case of the group, this is when the forecast purchase of electricity takes
place.
When a hedging instrument expires or is sold or terminated, or when the hedge no longer meets criteria for hedge
accounting, any accumulated gain or loss existing in equity at the time remains in equity for as long as the forecast
transaction is expected to occur and is recognised when the forecast transaction is ultimately recognised in profit and loss.
When the forecast transaction is no longer expected to occur the gain or loss that was reported in equity is recognised in
the profit and loss.
Electricity hedging contract have been formally designated for Hedge Accounting, and as such movements in their fair
value are recorded through Other Comprehensive Income. As the contracts are utilised or lapse, the value is realised
through the profit and loss.
(i) Impairment of Assets
At each reporting date, the group reviews the carrying values of assets to determine whether there is any indication that
those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the
asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's
carrying value over its recoverable amount
is charged to the consolidated statement of profit or loss and other
comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable
amount of the cash generating unit to which the asset belongs.
(j) Foreign Currency Transactions and Balances
Functional and Presentational Currency
The functional currency of each group entity is measured using the currency of the primary economic environment in which
the entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's
functional and presentational currency.
Transactions and Balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year end exchange rate. Non monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured
at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the consolidated statement of profit or
loss and other comprehensive income.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that
the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the consolidated
statement of profit or loss and other comprehensive income.
26 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies (continued)
(j) Foreign Currency Transactions and Balances (continued)
results and position of
Group Companies
The financial
presentational currency are translated as follows:
- Assets and liabilities are translated at year end exchange rates prevailing at the reporting date;
- Income and expenses are translated at average exchange rates for the period; and
- Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
foreign operations whose functional currency is different
from the group's
Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency
translation reserve in the consolidated statement of financial position. These differences are recognised in the consolidated
statement of profit or loss and other comprehensive income in the period in which the operation is disposed.
(k) Employee Benefits
Annual Leave/Long Service Leave
Provision is made for the consolidated entity's liability for employee benefits arising from services rendered by employees
to reporting date. Employee benefits that are expected to be settled within one year have been measured at the amounts
expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have
been measured at the present value of the future cash outflows to be made for those benefits.
Superannuation
Contributions are made by the consolidated entity to employee superannuation funds and are charged as expenses when
incurred.
Share-based Payments
The group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity
to which employees become entitled is measured at grant date and is recognised as an expense over the vesting period,
with a corresponding increase in equity. The fair value of shares is ascertained as the market bid price. The fair value of
options (and ESOP awards accounted for as options)
is ascertained using a Black-Scholes pricing model which
incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at
each reporting date such that the amount recognised for services received as consideration for the equity instruments
granted shall be based on the number of equity instruments that eventually vest.
(l) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short
investments with original maturities of three months or less, and bank overdrafts.
term highly liquid
(m) Trade Receivables
Trade and other receivables are stated at amortised cost less any provision for impairment loss.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off by reducing the carrying amount directly. Provision for impairment of trade receivables is used when there is objective
evidence that the group will not be able to collect all amounts due according to the original terms of the receivable.
The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade receivable for which
loss had been recognised becomes uncollectible in a subsequent period, it is written off against the
an impairment
provision account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or
loss.
(n) Trade and Other Payables
Trade and other payables are stated at amortised cost.
27 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies (continued)
(o) Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured.
(p) Unearned Revenue
Unearned revenue represents the unused component of prepaid mobile products as at the reporting date and relates to
cards that have been activated.
Unearned revenue also represents receipts in advance from customers of the energy business as at the reporting date.
(q) Revenue Recognition
Revenue from the rendering of a service is recognised upon the delivery of the service to customers. A sales incentive
provided to a customer in the form of non-cash consideration, for example bonus time, is considered to be a separate
deliverable in a multiple deliverable arrangement. Sales revenue is allocated proportionally to the aggregate of the service
paid for and the incentive, and is recognised when the customer utilises the incentive i.e. when TPC provides the service.
Revenue from the sale of goods is recognised upon delivery of the goods sold. If the entity is acting as an agent under a
sales arrangement, the revenue will be recorded on a net basis, being the gross amount billed less the amount paid to the
supplier.
Revenue from electricity and gas services supplied is recognised once the electricity and/or gas has been delivered to the
customer and is measured through a regular review of usage meters. Customers are billed on a periodic and regular basis.
At the end of each reporting period, electricity and gas revenue includes an accrual for energy delivered to customers but
not yet billed (unbilled revenue).
Interest revenue is recognised using the effective interest method.
(r) Goods and Services Tax
Revenues and expenses are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of expense.
Receivables and payables in the statement of financial position are shown inclusive of GST. The net amount of GST due,
but not paid, to the Australian Taxation Office is included under payables.
Cash flows are presented in the cash flow statements on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
28 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies (continued)
(s) Commission Costs
Commission costs are recognised as a cost of sale in the statement of profit or loss and other comprehensive income in
proportion to revenue recognised. The effective commission charge recognised is based on an analysis of actual
commissions incurred. The key assumption used in the calculation of commission costs is the effective rate which
represents the average rate of actual commission paid over a period of time. Starting as of 1 July 2010, the effective rate
has changed from the average rate of actual commission paid over a period of three years to the rolling average rate of
actual commission paid over a period of three months. In managements view a three month period ensures that the
commission cost recognised is an accurate reflection of the costs incurred in relation to revenue recognised. Were this
assumption to change the absolute value of commission costs recognised in cost of sales would change.
(t) Earnings per Share
Basic earnings per share is calculated as net profit or loss attributable to ordinary equity holders of TPC Consolidated
Limited divided by the weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated as adjusted net profit or loss attributable to ordinary equity holders of TPC
Consolidated Limited divided by the weighted average number of shares outstanding adjusted for the effects of all dilutive
potential ordinary shares during the period.
(u) 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 Board of Directors.
(v) Comparatives
Where required by accounting standards, comparative figures have been adjusted to conform to changes in the current
year.
(w) Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current
trends and consolidated data, obtained both externally and within the group.
Provision for Impairment of Receivables
The provision for impairment of receivables 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 receivables, historical collection
rates and specific knowledge of the individual debtors financial position.
Estimation of Commission Costs
The key assumption used in the calculation of commission costs in cost of sales in the consolidated statement of profit or
loss and other comprehensive income is the effective rate which represents the average rate of actual commission paid
over a period of time. Starting as of 1 July 2010, the effective rate has changed from the average rate of actual
commission paid over a period of three years to the rolling average rate of actual commission paid over a period of three
months.
29 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies (continued)
(w) Critical Accounting Estimates and Judgments (continued)
Unbilled Revenue
The Company recognises revenue from electricity and gas services once the electricity and/or gas has been consumed by
the customer. Customers are billed on a periodic and regular basis. Management estimates customer consumption
between the last invoice date and the end of the reporting period when determining electricity and gas revenue for the
financial period. Various assumptions and financial models are used to determine the estimated unbilled consumption.
Share-based Payment Transactions
The group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined internally by management using a Black-
Scholes valuation model. The accounting estimates and assumptions relating to equity-settled share-based payments
would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may
impact expenses and equity.
Fair Value of Financial Instruments
When the fair value of financial assets and financial
liabilities recorded in the statement of financial position cannot be
derived from active markets, the fair value is determined using valuation techniques including the discounted cash flow
model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a
degree of judgement is required in establishing fair values. The judgements include considerations of inputs such as
liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of
financial instruments. See Note 25 for further discussion.
(x) Recently Issued Accounting Standards to be Applied in Future Reporting Periods
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2017. The
consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most
relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments and its consequential amendments
AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities. These
requirements improve and simplify the approach for classification and measurement of financial assets compared with the
requirements of AASB 139. The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based
on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and
balances recognised in the financial statements when it is first adopted for the year ending 30 June 2019.
30 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (continued)
Accounting Policies (continued)
(x) Recently Issued Accounting Standards to be Applied in Future Reporting Periods (continued)
IFRS 15
AASB 15:
• replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations:
- establishes a new revenue recognition model
- changes the basis for deciding whether revenue is to be recognised over time or at a point in time
- provides new and more detailed guidance on specific topics (e.g., multiple element arrangements, variable pricing, rights
of return, warranties and licensing)
- expands and improves disclosures about revenue
The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity’s preliminary
assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the
financial statements when it is first adopted for the year ending 30 June 2019.
AASB 16 Leases:
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. For lessee accounting, the
standard eliminates the 'operating lease' and 'finance lease' classification required by AASB 117 'Leases'. Subject to
exceptions, a 'right-of -use' asset will be capitalised in the statement of financial position, measured as the present value of
the unavoidable future lease payments to be made over the lease term. The exceptions related to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and office furniture) where an accounting
policy choice exists whereby either a ' right-of-use' asset is recognised or lease payments are expensed to profit or loss as
incurred. A liability corresponding to the capitalised lease will be recognised, adjusted for lease prepayments, lease
incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs.
Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included
in operating costs) and an interest expense on the recognised lease liability (included in finance costs). For classification
within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and
interest (either operating or financing activities) components. For lessor accounting, the standard does not substantially
change how to a lessor accounts for leases. The Group will adopt this standard from 1 July 2019 but the impact of its
adoption is yet to be assessed by the Group.
31 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 2: Revenue
Operating Activities
- Sales of Energy
- Rendering of Telecommunication Services
Other Income
- Foreign Exchange Gain
- Sundry Income
Note 3: Loss Before Income Tax
Occupancy Expense
Advertising and Promotion Expense
Communication Expense
Professional Fees
Bank and Merchant Fees
Travel Expense
Bad and Doubtful Debts Expense
Call Centre Expenses
Other Expenses
Employee Benefits Expenses
Superannuation
Total Employee Benefits Expenses
Depreciation of Non-current Assets
Total Depreciation and Amortisation
Finance Costs
2017
$
2016
$
64,472,914
4,412,955
68,885,869
41,703,540
5,939,003
47,642,543
13,017
383,198
396,215
8,214
112,841
121,055
2017
$
396,576
478,379
73,801
927,877
298,059
285,522
1,591,770
1,455,719
542,235
6,049,938
5,230,092
504,652
5,734,744
2016
$
342,574
412,964
38,402
1,027,871
273,822
216,453
1,119,210
1,374,852
613,172
5,419,320
4,967,418
451,295
5,418,713
195,739
195,739
238,394
238,394
70,242
47,804
32
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 4: Income Tax Benefit/(Expense)
(a) Income Tax Expense
The major components of income tax expense are:
Deferred tax assets brought to account related to in fair value of cash flow
hedges
Current tax expense
(b) The prima facie income tax expense/(benefit) on profit/(loss)
from ordinary
activities differs from the income tax expense/(benefit) provided in the financial
statements and is reconciled as follows:
Profit/(Loss profit) before income tax expense
Prima facie tax expense on profit from ordinary activities at
30% (2016: 30%)
Non-deductible/(non-assessable) items
Tax losses not previously brought to account
Deferred tax assets brought to account related to in fair value of cash flow
hedges
Income tax benefit attributable to profit from ordinary activities
2017
$
2016
$
-
-
-
(732,435)
-
(732,435)
2017
$
2016
$
810,165
(3,272,652)
243,050
(981,796)
562,449
(805,499)
(52,438)
1,034,234
-
-
(732,435)
(732,435)
(1) The consolidated entity has not recognised unused tax losses to the extent that it is not probable that future taxable profit
will be available against which the unused tax losses can be utilised. The unused tax loss carried forward is $5,682,840
(2016: $11,377,143)
(c) Tax Consolidation
Effective 1 July 2003, for the purposes of income taxation, TPC Consolidated Limited and its 100% owned Australian
subsidiaries formed a tax consolidated group. As part of the election to enter tax consolidation, the tax consolidated group
is treated as a single entity for income tax purposes. Gotalk Pty Limited and its wholly owned subsidiaries joined the tax
consolidated group upon acquisition on 23 December 2011.
TPC Consolidated Limited, as the head entity in the tax consolidated group, recognises, in addition to its own transactions,
the current tax liabilities and the deferred tax assets arising from unused tax losses and tax credits of all entities in the
group.
33
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 5: Earnings Per Share
Basic earnings per share
Diluted earnings per share
2017
Cents
2016
Cents
7.41
7.41
(25.05)
(25.05)
Net earnings used in the calculation of basic and diluted EPS
810,165
(2,540,217)
Weighted average number of ordinary shares outstanding during the year
in the calculation of basic EPS
in the calculation of diluted EPS
Number
10,940,606
10,940,606
Number
10,140,970
10,140,970
Note 6: Dividends Paid and Proposed
(a) Recognised Amounts
2017
Cents per Share
Total
$
2016
Cents per Share
Total
$
(i) Dividends declared paid during the year:
Interim dividend - fully franked
Total
3.0
337,068
-
-
3.0
337,068
-
-
A fully franked interim dividend $337,068 equivalent to 3 cents per share (11,235,613 shares) was declared on 24 February
2017 with a record date of 8 March 2017 and was paid on 23 March 2017.
Franking Credit Balance
The amount of franking credits available for the subsequent financial year
- Franking account balance as at the end of the financial year at 30%
(2016: 30%)
The amount of franking credits available for future reporting periods:
- Impact on franking account of dividends proposed or declared before the
financial report was authorised for issue but not recognised as a distribution
to equity holders during period
2017
$
2016
$
1,500,093
1,500,093
1,644,551
1,644,551
-
1,500,093
-
1,644,551
34
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 7: Auditor's Remuneration
During the financial year the following fees were paid or payable for services provided
by Grant Thornton, the auditor of the Company:
Auditors of Parent Entity
Audit and Review of Financial Reports
Non-assurance Services
Taxation Services
Other Advisory Services
Total Auditors Remuneration
Note 8: Cash and Cash Equivalents
(a) Cash Balance
Cash at bank and in hand
(b) Reconciliation of Net Cash Flow from
Operations with Profit after Income Tax
Profit/(Loss) after income tax
Non-cash flows in profit
Income tax benefit recognised in profit or loss
Depreciation and amortisation
Share-based payment
Changes in assets and liabilities
Increase in prepayments
Increase in trade & other receivables
Increase in trade & other payables
Increase/(decrease) in other provisions
2017
$
2016
$
97,500
12,000
64,700
174,200
86,700
11,850
-
98,550
2017
$
2016
$
585,376
585,376
1,198,069
1,198,069
2017
$
2016
$
810,165
(2,540,217)
-
195,739
-
(732,435)
238,394
26,715
(268,929)
(1,760,611)
1,441,985
186,616
604,965
(106,580)
(2,485,163)
2,599,354
(253,657)
(3,253,589)
35
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 9: Trade and Other Receivables
Current
Trade Receivables
Provision for Impairment of Receivables
Accrued Income (a)
Other Receivables
(a) Accrued income comprises of:
- Unbilled Revenue
- Other Accrued Income
2017
$
2016
$
8,367,752
(1,282,121)
3,066,368
11,715
10,163,714
5,697,735
(1,025,223)
3,973,495
13,994
8,660,001
3,064,230
2,138
3,066,368
3,967,602
5,894
3,973,496
The movement in the provision for impairment in respect of trade receivables and other receivables are detailed below:
Opening balance
- Provision for impairment recognised during the year
- Provision for impairment reversed during the year
- Receivables written off during the year as uncollectible
Closing balance
Credit Policy
(1,025,223)
(1,560,254)
45,943
1,257,413
(1,282,121)
(565,803)
(1,111,754)
12,227
640,107
(1,025,223)
The group requires customers to pay in accordance with agreed terms. Trade receivables are non-interest bearing and are
generally on 20-90 days terms. A provision for impairment is recognised when there is objective evidence that an individual
trade receivable is impaired. All credit and recovery risk associated with trade receivables has been provided for in the
consolidated statement of financial position.
Ageing of trade receivables at the reporting date was:
Not past due
Past due 0 - 30 days
Past due 31 - 60 days
Past due 61 - 90 days
Past due 90 days over
Total
Impairment losses
Trade receivables net of provision for impairment
Ageing of trade receivables that are past due but not impaired at the reporting date was:
Past due 0 - 30 days
Past due 31 - 60 days
Past due 61 - 90 days
Past due 90 days over
4,799,360
1,171,379
587,549
308,721
1,500,743
8,367,752
2,713,121
1,157,370
517,244
267,590
1,042,410
5,697,735
(1,282,121)
7,085,631
(1,025,223)
4,672,512
1,171,379
587,549
79,156
448,187
2,286,271
1,154,610
514,304
62,184
228,294
1,959,392
The consolidated entity did not consider there to be a credit risk on the aggregate balance after reviewing credit terms of
customers based on recent collection practices.
36
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 10: Inventories
Current
Inventories
Inventories are held at the lower of cost and net realisable value.
Note 11: Bank Deposits
Current
Bank Deposits
2017
$
2016
$
110,103
119,425
2017
$
2016
$
2,996,932
2,517,893
Bank deposits include term deposits which are held as security for bank guarantee amounting to $2,996,932 (2016:
$2,517,893).
Note 12: Other Assets
Current
Deferred Commission Costs
Prepayments
Other balances due from related parties
Loan to related party
Security Deposit
2017
$
2016
$
57,813
450,670
-
-
4,800
513,283
117,521
181,741
52,935
60,636
4,800
417,633
37
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 13: Controlled Entities
Country
of
Incorporation
Effective Interest
2017
2016
%
%
Company's recorded
amount of Investment
2017
$
2016
$
Parent Entity
TPC Consolidated Limited
Controlled Entities Interest at Cost
CovaU Pty Limited
iGENO Pty Limited (1)
Realtime Mobile Pty Limited (2)
gotalk Pty Limited (3) (4)
ACN 074 079 897 Pty Ltd (3) (5) (6)
Global Card Services Pty Limited (3) (5) (7)
Gotalk Communications Pty Limited (3) (5) (8)
Green Communications Australia Pty Limited (3) (5) (9)
Tel.Pacific ESOP Pty Limited
Tel.Pacific New Zealand Limited (10)
Investment in controlled entities
Impairment losses
Total investment in controlled entities
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
100%
100%
0%
0%
0%
0%
0%
0%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
12
100
-
-
-
-
-
-
1
-
113
-
113
12
100
100
9,008,187
-
-
-
-
1
8,546
9,016,946
(4,771,861)
4,245,085
(1) Hello Card Pty Limited changed its name to iGENO Pty Limited on 2 March 2017.
(2) Realtime Mobile Pty Limited has been dormant since its incorporation and was sold to a related party on 18 August 2016
(see Note 24).
(3) These entities had been dormant since all retail business and assets were transferred to TPC Consolidated Limited as
part of corporate restructuring to consolidate the group's telephony products and services on 1 April 2013.
(4) gotalk Pty was deregistered on 9 November 2016.
(5) These entities are held indirectly by TPC Consolidated Limited through their parent entity - gotalk Pty Limited, which was
acquired by Tel.Pacific Limited on 23 December 2011.
(6) ACN 074 079 897 Pty Ltd was deregistered on 26 October 2016.
(7) Global Card Services Pty Limited was deregistered on 17 July 2016.
(8) Gotalk Communications Pty Limited was deregistered on 19 October 2016.
(9) Green Communications Australia Pty Limited was deregistered on 29 September 2016.
(10) Tel.Pacific New Zealand Limited had ceased trading and was wound down after the calling card business was sold to
Aggregato Guilliver Pty Limited on 1 April 2014, and was deregistered on 12 October 2016.
38
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 14: Property, Plant and Equipment
Motor Vehicles
Less: Accumulated Depreciation
Network Equipment & Software
Less: Accumulated Depreciation
Office Equipment & Software
Less: Accumulated Depreciation
Office Fittings & Furniture
Less: Accumulated Depreciation
Movement in Carrying Amount
2017
Balance at the beginning of the year
Additions
Disposal
Depreciation expense
Balance at the end of the year
2016
Balance at the beginning of the year
Additions
Disposal
Depreciation expense
2017
$
2016
$
15,364
(15,364)
-
701,939
(621,216)
80,723
48,388
(48,388)
-
656,124
(578,040)
78,084
1,094,885
(1,032,875)
62,010
1,063,025
(1,002,061)
60,964
918,413
(810,814)
107,599
913,361
(689,064)
224,297
250,332
363,345
Motor
Vehicles
$
Network
Equipment
& Software
$
Office
Equipment
& Software
$
Office
Fittings &
Furniture
$
Total
$
-
-
-
-
-
78,084
60,963
224,298
363,345
45,815
-
(43,176)
31,861
-
(30,814)
5,051
-
(121,749)
82,727
-
(195,739)
80,723
62,010
107,600
250,333
Motor
Vehicles
$
Network
Equipment
& Software
$
Office
Equipment
& Software
$
Office
Fittings &
Furniture
$
Total
$
2,064
118,749
78,476
353,192
552,481
-
-
(2,064)
11,450
-
(52,115)
16,253
-
(33,766)
21,555
-
(150,449)
49,258
-
(238,394)
Balance at the end of the year
-
78,084
60,963
224,298
363,345
39
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 15: Equity-accounted Investments
The Group has a 33% equity interest in Long Tail Property Ltd. The associate is not material to the Group.
Summarised aggregated financial information of the Group's share in the associate:
Loss from continuing operations
Total comprehensive loss
2017
$
(39,423)
(39,423)
2017
$
-
-
2016
$
2016
$
Aggregate carrying amount of the Group's interests in associates
290,577
70,000
The movement for the period in the Group's investments accounted for using the equity method is as follows:
Balances at 1 July 2016
Additional investments at cost
Share of results for the period
Balances at 30 June 2017
Note 16: Trade and Other Payables
Current
Trade Payables
Accrued Expenses
Sundry Payables
Goods and Services Tax Payable
Note 17: Borrowings
Current
Bank borrowings - Invoice finance facility
$
70,000
260,000
(39,423)
290,577
2017
$
2016
$
939,938
8,443,527
342,349
161,814
9,887,628
1,669,505
6,406,842
308,095
27,332
8,411,774
2017
$
2016
$
559,494
559,494
1,747,156
1,747,156
The bank borrowings is classified as a current liability consistent with the current assets classification of the receivable
against which it is secured. Facility is $6m (2016: $4m) but limited to 70% of energy customer invoices outstanding.
CovaU Pty Limitd, a wholly owned subsidiary of the Company, is in breach of one of its financial covenants (need to
maintain capital ratio not less than 30%) with Westpac Banking Corporation and is currently working to resolve this breach.
The carrying value of the facility subject to this breach is the full value of the short term borrowings disclosed in the attached
financial statements. Identification of this breach did not result in reclassification of the short term loans, which were already
classified as current borrowings under the terms of the facility agreement.
At the date of this report, Westpac has not taken any action with respect to the breach that CovaU has reported to them.
40
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 18 Provisions
Short Term Provisions
Leave Entitlement (1)
Future Rent (2)
Make Good
Long Term Provisions
Leave Entitlement (1)
Future Rent
2017
$
2016
$
969,620
20,853
73,200
1,063,673
96,909
-
96,909
780,229
44,386
27,454
852,069
101,044
20,853
121,897
Movements in Provisions
Movement of each class of provision (current and non-current), other than employee benefits, are set out below:
(a) Future Rent
Opening balance
- additional provisions
- amount used
Closing balance
(b) Make Good
Opening balance
- additional provisions
Closing balance
2017
$
2016
$
65,239
-
(44,386)
20,853
27,454
45,746
73,200
102,886
1,375
(39,022)
65,239
27,454
-
27,454
(1) Leave Entitlement Provision represents provision for employee entitlements relating to annual
leave and long service
leave. In calculating the present value of future cash flows in respect of long service leave, the probability of long service
leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits have
been included in Note 1.
(2) Future Rent Provision relates to the difference between the cash payments on the leasehold property and the accounting
charge spread over the life of the lease on a straight line basis.
41
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 19: Unearned Revenue
Unearned revenue relating to telecommunication services
Unearned revenue relating to energy services
2017
$
702,736
1,274,449
1,977,185
2016
$
1,052,919
1,376,221
2,429,140
Note 20: Issued Capital
(a) Ordinary Shares
Issued and Fully Paid
Issued and Partially Paid (1)
2017
2016
Number
$
Number
$
9,715,613
1,520,000
11,235,613
9,797,668
27,360
9,825,028
9,050,837
1,540,000
10,590,837
8,757,026
-
8,757,026
(b) Movements in Ordinary Shares on Issue
Balance at the beginning of the year
10,590,837
8,757,026
9,991,815
8,730,026
Cancellation of forfeited shares (2)
Issue of 1,600,000 ordinary ESOP shares at
$0.45 per share on 15 January 2016 (3)
Payments related to ESOP shares
Issue of 644,776 ordinary shares at $1.60 on
15 December 2016
-
-
-
-
(1,000,978)
-
36,360
1,600,000
-
644,776
1,031,642
-
-
-
27,000
-
Balance at the end of the year
11,235,613
9,825,028
10,590,837
8,757,026
(1) The issue of shares under the 2009 Employee Shares Ownership Plan (2009 ESOP) has been treated as issue of share
options in accordance with the pronouncement of the International Financial Reporting Interpretations Committee. Where
the company funds the acquisition of its own shares via a loan to employees with recourse only to the shares, it is treated as
an option grant and accounted for under AASB 2 Share-based Payment. No loan or equity is booked initially. The
Company has effectively given the employee an option exercisable sometime in the future to buy a share at a set price. For
information relating to shares issued under the 2009 ESOP during the financial year, refer to Note 27(a).
(2) Effective 30 November 2015, a total of 1,000,978 forfeited shares in TPC Consolidated Limited were cancelled as
approved by the shareholders at the 2015 Annual General Meeting. These forfeited shares were previously issued to the
eligible employees and directors of the Company under the 2007 Employee Share Ownership Plan and 2009 Employee
Share Ownership Plan.
(3) On 15 January 2016, a total of 1,600,000 shares were granted to the employees and directors of the company under the
2009 ESOP.
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par value
shares. Accordingly, the company does not have authorised capital nor par value in respect of its issued shares.
Ordinary shares carry one vote per share and carry the right to dividends.
42
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 20: Issued Capital (continued)
(c) Capital Management
Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with
adequate returns and ensure that the group can fund its operations and continue as a going concern.
The group's capital includes ordinary shares supported by financial assets, and structured debt facilities.
Management effectively manages the group's capital by assessing the group's financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of debt
levels, distributions to shareholders, buy-back shares and share issues.
Apart from the above, there have been no changes in the strategy adopted by management to control the capital of the
group since the prior year.
Note 21: Reserves
Foreign Currency Translation Reserve
2017
$
2016
$
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled entities.
Balance at the beginning of the year
Gain on translation of overseas controlled entities
Transferred to retained earnings
Balance at the end of the year
Employee Equity Benefits Reserve
-
-
-
-
(129,176)
1,712,616
(1,583,440)
-
The employee equity benefits reserve records the value of equity benefits provided to employees and directors as part of
their remuneration.
Balance at the beginning of the year
Share-based payment
Balance at the end of the year
Cashflow Hedge Reserve
Balance at the beginning of the year
Cash flow hedge (loss)/gain recognised in equity (net of tax)
Balance at the end of the year
Total Reserves
26,715
-
26,715
-
26,715
26,715
1,709,016
(3,510,712)
(1,801,696)
-
1,709,016
1,709,016
(1,774,981)
1,735,731
43
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 22: Capital and Leasing Commitments
Operating Lease Commitments
Non-cancellable operating leases contracted for but not capitalised in the financial statements.
- not later than 1 year
- later than 1 year but not later than 5 years
Total lease commitments
Operating lease for the following types of assets:
2017
$
2016
$
133,004
7,809
140,813
286,354
140,812
427,166
1. Property lease with a five or six year term and rent payable monthly in advance. Contingent rental provisions within the
lease agreement require that the minimum lease payments shall increase by between 3 - 4.25% per annum.
2. Rental of office equipment with average lease terms 3 - 5 years
Note 23: Contingent Liabilities
As at 30 June 2017 the consolidated entity has issued bank guarantees totalling $2,996,932 (2016: $2,517,893) for which
term deposits are held to secure this amount.
Apart from the bank guarantees, there are no contingent liabilities as at the date of signing of this report.
Note 24: Related Party Transactions
Information relating to controlled entities is set out in Note 13. Transactions occurred between certain of these entities
during the period, all of which are eliminated from the consolidated accounts.
During the year, CovaU Pty Ltd (CovaU), a wholly owned subsidiary of the Company, has lent totalling $Nil (2016:
$60,636) to Long Tail Property Pty Ltd (Long Tail). Under the Shareholders Agreement of Long Tail, CovaU which has
holding of 33% in Long Tail, provides required funding to Long Tail and the outstanding amount was converted to shares
in Long Tail, upon meeting certain milestones. Both Greg McCann and Steven Goodarzi are directors of Long Tail. There
is also an investment in the equity of this entity of $290,577 (see note 15 for details).
During the year,
the Company has received commission totalling $26,239 GST inclusive (2016: $Nil) on normal
commercial terms and conditions no more favourable than those available to other parties, from Nextgen Capital Pty
Limited whom Chiao-Heng (Charles) Huang is director.
On 18 August 2016, Realtime Mobile Pty Limited which has been dormant since its incorporation, was sold for a
consideration of $200 on normal commercial terms and conditions no more favourable than those available to other
parties, to CTC Capital Pty Ltd , whom Chiao-Heng (Charles) Huang is a sole director.
44
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 25: Fair Value of Financial Instruments
At balance date, the Company has a number of derivative financial
Statement of Financial Position.
instruments which are recorded at fair value in the
Current Assets
Derivative financial instruments
Opening Balance
- Designated
- Non designated
Acquired
Recognised in the income statement
Closing Balance
- Designated
- Non designated
Current Liabilities
Derivative financial instruments
Opening Balance
- Designated
- Non designated
Acquired
Recognised in the income statement
Closing Balance
- Designated
- Non designated
Fair Value
$
Carrying
Amount
$
2,491,126
-
2,491,126
2,491,126
-
2,491,126
-
(2,491,126)
-
(2,491,126)
-
-
-
-
-
49,675
-
49,675
49,675
-
49,675
1,069,261
(49,675)
1,069,261
(49,675)
1,069,261
-
1,069,261
1,069,261
-
1,069,261
(1,069,261)
(1,069,261)
These financial instruments are classified as "Level 2" instruments per the fair value hierarchy in AASB 13. Level 2 refers to
instruments where the fair value is determined using inputs other than quoted prices other than those traded on an active
market.
Financial assets
Derivative financial instrument
- Energy derivatives - cash flow hedges
Financial liabilities
Derivative financial instrument
- Energy derivatives - cash flow hedges
Carrying
Amount
$
Level 2
$
Total
$
-
-
-
-
-
-
(1,069,261)
(1,069,261)
(1,069,261)
(1,069,261)
(1,069,261)
(1,069,261)
The fair value of the instruments has been determined by reference to comparable similar instrument prices as at the
balance sheet date.
The instruments include Cap and Swap agreements mitigating exposure to significant increases in energy prices over the
next twelve months.
45
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 26: Directors and Executives Disclosures
(a) Remuneration of Key Management Personnel
Short-term Employee Benefits
Long-term Employee Benefits
Post-employment Benefits
Equity Based Benefits
2017
$
1,350,206
21,887
140,694
-
1,512,787
2016
$
1,340,338
22,763
139,997
22,875
1,525,973
The remuneration paid to the key management personnel is detailed in the Directors' Report.
Note 27: Employee Benefits
(a) Employee Share Ownership Plan
The 2009 Employee Share Ownership Plan, which was implemented on 30 November 2009, was amended and approved
by shareholders at the Annual General Meeting on 30 November 2015 (2009 ESOP).
The 2009 ESOP aims to motivate, retain and attract quality employees and directors of
the company to create
commonality of purpose between the employees and directors and the company. The ESOP is operated by way of the
company issuing new shares to participants, with an amount equal to the subscription price for those shares being loaned
to the participant by the company. That loan secured by the company taking security over the shares which are subject to
a holding lock period of five years, is interest free with recourse only to the shares. The loan is to be repaid over time by
the participant (whether through dividends, specific payments to reduce the loan, or on sale of the underlying shares).
Shares issued under the 2009 ESOP will rank from the date of issue equally with the other shares in the company then on
issue.
All shares issued pursuant to the 2009 ESOP are held by a trustee appointed by the company in trust for the participant
until such time as the loan is repaid. The loan becomes immediately repayable in the event of dismissal, resignation, death
or retirement of the participant. 60% of all dividends and distributions made in respect of the shares must be applied
towards repayment of the loan. Voting rights attached to the shares may only be exercised by the trustee holder in the best
interest of the participant.
On 15 January 2016, a total of 1,600,000 shares were granted to the employees and directors of the company under the
2009 ESOP.
For accounting purposes, the share issue under the 2009 ESOP has been treated as option grant and the value of the
options vested has been accounted for and included in the result of the period. Any repayment of the loan will be treated
as partial payment to be applied towards the payment of shares issued under the 2009 ESOP.
The fair value of the option grant relating to the 2009 ESOP is estimated at the date of grant using a Black-Scholes
Options Pricing Model applying the following inputs:
Number of Options on Issue
Exercise Price
Time to Maturity
Underlying Share Price
Expected Share Price Volatility
Risk-free Interest Rate
Dividend Yield
1,600,000
$0.450
5 years
$0.540
18.61%
2.73%
12.96%
46
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 27: Employee Benefits (continued)
(a) Employee Share Ownership Plan (continued)
ESOP shares in issue
- At started of year
- Exercised
- At year ended
Number of
shares
Exercise Price
$
1,540,000
(20,000)
1,520,000
0.450
0.450
0.450
The number of ESOP shares on issue represents the number of shares issued under the 2009 ESOP on 15 January 2016.
The expected life of the options is based on historical data, which may not eventuate in the future. The expected share
price volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily
be the actual outcome.
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and
conditions of the options, can be found in the Remuneration Report on pages 9-13.
(b) Expenses Arising from Share-based Payment Transactions
Total expenses arising from share-based payment transactions recognised during the year as part of employee benefits
expenses were as follows:
Payments related to 2009 ESOP Shares
(c) Superannuation Plan
2017
$
2016
$
-
26,715
The company contributes to employee superannuation plans in accordance with contractual and statutory requirements.
2017
$
2016
$
Defined contribution superannuation expense
504,652
451,295
47
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 28: Financial Instruments and Financial Risk Management Objectives and Policies
The group undertakes transactions in a range of financial instruments including:
- Cash assets;
- Trade and other receivables;
- Trade and other payables;
- Investments; and
- Derivative financial instruments.
The main risks arising from the group's financial instruments are energy price risk, interest rate risk, foreign currency risk
and credit risk. The Board reviews and agrees policies for managing each of these risks.
(a) Energy Price Risk
The group is exposed to energy price risk associated with the purchase and/or sale of electricity, gas and environmental
products. The group manages energy risk through an established risk management framework consisting of policies to
place appropriate risk limits on overall energy market exposures and transaction limits for approved energy commodities,
requirements for delegations of authority on trading, regular reporting of exposures and segregation of duties.
It is the group's policy to actively manage the energy price exposure arising from both forecast energy supply and retail
customer energy load. The Group’s risk management policy for energy price risk is to hedge forecast future positions for
up to 12 months into the future.
Exposures to fluctuations in the wholesale market energy prices are managed through the use of various types of hedge
contracts including derivative financial instruments, such as energy swaps and caps.
As at 30 June 2017 instruments entered into include 72,408 MWh (2016: 186,657 MWh) swaps and 26,496 MWh (2016:
4,416 MWh) caps to cover an estimate 40% (2016: 76%) forecast yearly electricity demands, and no hedging
arrangements are in place with respect to exposure to wholesale gas prices.
48 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 28: Financial Instruments and Financial Risk Management Objectives and Policies
(continued)
(b) Interest Rate Risk
The group’s exposure to interest rate risk is the risk that the financial
changes in market interest rates. The effective weighted average interest rates on those financial assets is as follows:
instrument's value will fluctuate as a result of
2017
Financial Assets
Cash
Trade and other receivables (1)
Bank deposit (1)
Financial Liabilities
Trade and other payables (2)
Borrowing (2)
2016
Financial Assets
Cash
Trade and other receivables (1)
Bank deposit (1)
Financial Liabilities
Trade and other payables (2)
Borrowing (2)
(1) Loans and receivables category
(2) Financial liabilities at amortised cost category
Average
Effective
Interest Rate
Total
Note
$
8
9
11
16
17
8
9
11
15
16
585,376
10,163,714
2,996,932
13,746,022
9,725,815
559,494
10,285,309
1,198,069
8,660,001
2,517,893
12,375,963
8,384,442
1,747,156
10,131,598
0.24%
0.00%
2.36%
0.00%
5.23%
0.26%
0.00%
2.42%
0.00%
5.49%
49 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 28: Financial Instruments and Financial Risk Management Objectives and Policies
(continued)
(c) Foreign Currency Risk
The group operates internationally and is exposed to foreign currency risk arising from various currency exposures,
primarily with respect to the US dollar, NZ dollar and UK pound.
Foreign exchange risk arises from future commercial transactions and net investments in foreign operations.
The transactional currency exposure will be minimised by seeking economically favourable local suppliers. When it is
required, the group will enter into forward exchange contracts to reduce and minimise its currency exposures.
Foreign currency risk also arises on translation of the net assets of our non Australian controlled entities which have
different functional currency. The foreign currency gains or losses arising from this risk are recorded through the foreign
currency translation reserve. The group does not seek to hedge this exposure taking consideration of current net
investment position.
The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at
the reporting date was as follows:
Consolidated
US dollars
New Zealand dollars
British pounds
(d) Credit Risk
Assets
2017
108,181
18,313
-
126,494
2016
102,123
25,955
-
128,078
Liabilities
2017
211,780
-
7,928
219,708
2016
113,168
-
8,448
121,616
The group's maximum exposure to credit risk at reporting date in relation to each class of recognised financial assets is
the carrying amount of those assets as indicated in the consolidated statement of financial position.
Trade receivables consist of residential and business customers. Prior to contracting, customers must agree to and
successfully pass a credit check and all results are individually assessed for approval by our credit team under the credit
risk management policy.
In the event that a credit check result is declined by our credit team all offers of supply and sale
are withdrawn from the customers.
The group does not have any significant credit risk exposure to any single counter-party or any group of counter-parties
having similar characteristics. In addition, receivable balances are monitored on an ongoing basis.
There are no significant concentrations of credit risk within the group.
50
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 28: Financial Instruments and Financial Risk Management Objectives and Policies
(continued)
(e) Liquidity Risk
The group's objective is to be self-funding by the generation of positive cash flow. The group manages liquidity risk by
monitoring cash flow requirements on a continuing basis.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial
instrument liabilities.
Both interest and principal cash flows are disclosed as remaining contractual maturities and therefore these totals may
differ from their carrying amount in the statement of financial position.
2017
Non-derivatives financial assets
Non-interest bearing
Trade and other receivables
Interest-bearing
Cash and cash equivalents
Bank Deposits
Non-derivatives financial liabilities
Non-interest bearing
Trade and other payables
Interest-bearing
Borrowing
Total non-derivatives
Derivatives financial assets
Non-interest bearing
Derivatives held at fair value
Derivatives financial liabilities
Non-interest bearing
Derivatives held at fair value
Total derivatives
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Total
$
5.23%
10,163,714
585,376
2,996,932
(9,887,629)
(559,494)
3,298,899
-
(1,069,261)
(1,069,261)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,163,714
585,376
2,996,932
(9,887,629)
(559,494)
3,298,899
-
(1,069,261)
(1,069,261)
51
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 28: Financial Instruments and Financial Risk Management Objectives and Policies
(continued)
(e) Liquidity Risk (continued)
2016
Non-derivatives financial assets
Non-interest bearing
Trade and other receivables
Interest-bearing
Cash and cash equivalents
Bank Deposits
Non-derivatives financial liabilities
Non-interest bearing
Trade and other payables
Interest-bearing
Borrowing
Total non-derivatives
Derivatives financial assets
Non-interest bearing
Derivatives held at fair value
Derivatives financial liabilities
Non-interest bearing
Derivatives held at fair value
Total derivatives
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Total
$
5.49%
8,660,001
1,198,069
2,517,893
(8,411,774)
(1,747,156)
2,217,033
2,491,126
(49,675)
2,441,451
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,660,001
1,198,069
2,517,893
(8,411,774)
(1,747,156)
2,217,033
2,491,126
(49,675)
2,441,451
As at 30 June 2017, the group maintained a total $3,582,308 in cash balance and bank deposits.
52
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 28: Financial Instruments and Financial Risk Management Objectives and Policies
(continued)
(f) Summarised Sensitivity Analysis
Energy Price Risk
The sensitivity analysis is based on energy price risk exposures arising from the electricity and gas prices from 10 per cent
movement in the wholesale market with all other variables remaining constant.
A sensitivity of 10 per cent has been selected as this is considered reasonable given the current level of market contract
price and the volatility observed both on an historical basis and market expectations for future movements.
Year Ended 30 June 2017
Year Ended 30 June 2016
Profit/Loss
+10%
$
-10%
$
Equity
+10%
$
-10%
$
Profit/Loss
+10%
$
-10%
$
Equity
+10%
$
-10%
$
(110,678)
(628,885)
(739,563)
1,077,119
628,885
1,706,004
(110,678)
(628,885)
(739,563)
1,077,119
628,885
1,706,004
169,382
(185,248)
(15,866)
(163,157)
185,248
22,091
169,382
(185,248)
(15,866)
(163,157)
185,248
22,091
Increase/(decrease)
- Electricity
- Gas
Interest Rate Risk
The following sensitivity analysis is based on interest rate exposures arising from the effect on interest income on net
average balance of cash and cash equivalents and term deposits from 50 basis point (0.5%) movement in interest rates
during the year.
A sensitivity of plus or minus 50 basis point (0.5%) has been selected as this is considered reasonable given the current
level of both short term and long term Australian interest rates.
Year Ended 30 June 2017
Year Ended 30 June 2016
Profit/Loss
+0.5%
$
-0.5%
$
Equity
+0.5%
$
-0.5%
$
Profit/Loss
+0.5%
$
-0.5%
$
Equity
+0.5%
$
-0.5%
$
3,121
9,651
(4,037)
8,735
(3,121)
(9,651)
4,037
(8,735)
3,121
9,651
(4,037)
8,735
(3,121)
(9,651)
4,037
(8,735)
6,808
9,102
(6,808)
(9,102)
6,808
9,102
(6,808)
(9,102)
(3,058)
12,852
3,058
(12,852)
(3,058)
12,852
3,058
(12,852)
Financial Assets
Cash and cash equivalents
Other assets - term deposit
Financial Liabilities
Borrowings
Increase/(decrease)
Foreign Exchange Risk
The sensitivity analysis is based on foreign currency risk exposures on financial instruments and net foreign investment
balances as at reporting date. Foreign currency risk arising from financial instruments represents a financial risk.
A sensitivity of 10 per cent has been selected as this is considered reasonable given the current level of exchange rates
and the volatility observed both on an historical basis and market expectations for future movements.
Year Ended 30 June 2017
Year Ended 30 June 2016
Profit/Loss
+10%
$
-10%
$
Equity
+10%
$
-10%
$
Profit/Loss
+10%
$
-10%
$
Equity
+10%
$
-10%
$
Increase/(decrease)
5,932
5,932
(7,250)
(7,250)
5,932
5,932
(7,250)
(7,250)
(411)
(411)
503
503
(411)
(411)
503
503
53
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 29: Segment Reporting
The consolidated entity has identified its operating segments based on the internal reports and that are reviewed and used
by the chief operating decision makers in assessing performance and in determining the allocation of resources.
The operating segments are identified by management based on revenue stream. Discrete financial information about each
of those operating business is reported on a monthly basis.
(a) Types of Products and Services
The consolidated entity operates in the provision of pre-paid mobile telephony products and services and the associated
operations of the Mobile Real Time Monitoring platform, and the provision of retail electricity and gas services to residential
and businesses in Australia.
(b) Accounting Policies and Inter-Segment Transactions
Unless stated otherwise, all amounts reported to the Board of Directors as the chief operating decision maker with respect to
operating segments are determined in accordance with accounting policies that are consistent with the consolidated entity's
policies described in Note 1.
(c) Major Customers
The consolidated entity is not reliant on any single customer and no one customer represents more that 10% of the Group’s
revenue.
2017
Revenue
Revenue from external customers
Other income
Inter-segment revenue
Total segment revenue
Result
Earnings before interest expense and taxation
(EBIT)
Finance revenue
Finance costs
Share of loss of equity-accounted investees, net of tax
Loss before income tax for the year
Other Segment Information
Depreciation
Goodwill impairment
Energy
Services
$
Telecom-
munication
Services
$
Total
$
64,472,914
254,505
-
64,727,419
4,412,955
141,710
-
4,554,665
68,885,869
396,215
-
69,282,084
118,104
748,970
867,074
52,756
(70,242)
(39,423)
810,165
173,528
-
22,211
-
195,739
-
54 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 29: Segment Reporting (continued)
2016
Revenue
Revenue from external customers
Other income
Inter-segment revenue
Total segment revenue
Result
Earnings before interest expense and taxation
(EBIT)
Finance revenue
Finance costs
Loss before income tax for the year
Other Segment Information
Depreciation
Goodwill impairment
Energy
Services
$
Telecom-
munication
Services
$
Total
$
41,703,540
80,949
-
41,784,489
5,939,003
120,234
-
6,059,237
47,642,543
201,183
-
47,843,726
(3,990,157)
685,181
(3,304,976)
80,128
(47,804)
(3,272,652)
200,669
-
37,725
-
238,394
-
No segment assets and liabilities are disclosed because there is no measure of segment liabilities regularly reported to chief
operating decision makers.
55 Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Note 30: Parent Entity Disclosures
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Employee equity benefits reserve
Retained earnings
Shareholders' equity
Loss for the year
Total comprehensive income
Parent entity contingencies
Company
2017
$
3,036,043
3,244,393
3,261,709
3,346,182
9,825,028
26,715
(9,953,532)
(101,789)
2016
$
4,554,321
9,212,710
8,576,824
8,693,720
8,757,026
26,715
(8,264,752)
518,989
(1,351,711)
(2,703,437)
(1,351,711)
(2,703,437)
The details of all contingent liabilities in respect to TPC Consolidated Limited are disclosed in Note 23.
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1.
Note 31: Events Subsequent to the End of the Financial Year
No matter or circumstance, other than those referred to in the financial statements or notes thereto, has arisen since the
end of the financial year, that has significantly affected, or may significantly affect, the operations of the consolidated entity,
the results of those operations, or the state of affairs of the consolidated entity in future financial years.
Note 32: Company Details
The Company is incorporated and domiciled in Australia.
The registered office and principal place of business of the Company is:
Suite 802, Level 8, 1 York Street, Sydney NSW 2000, Australia
56
Directors' Declaration
The directors of the Company declare that:
1.
The financial statements, comprising the consolidated statement of profit or loss and other comprehensive
income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated
statement of cash flows, accompanying notes, are in accordance with the Corporations Act 2001 and:
(a)
(b)
comply with Accounting Standards and the Corporations Regulations 2001; and
give a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of its
performance for the year ended on that date.
2.
3.
4.
The Company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable.
The directors have been given the declarations by the chief executive officer and chief financial officer required
by section 295A.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of
the directors by:
Greg McCann
Chairman
Chiao-Heng (Charles) Huang
Managing Director
Sydney, 29 August 2017
57 Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
to the Members of TPC Consolidated Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of TPC Consolidated Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
June 2017, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, and notes to the consolidated 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 2017 and of its
performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We 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 of the current period. 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.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
58
Key audit matter
Going concern
Note 1
The group has net current liabilities of $187,833 and
cash on hand as at 30 June 2017 of $585,376
The Directors have determined that the use of the
going concern basis of accounting is appropriate in
preparing the financial report. Their assessment of
going concern was based on cash flow projections.
The preparation of these projections incorporated a
number of assumptions and judgments.
Due to the level of estimation involved in forecasting
cash flows, this is a key audit matter.
Unbilled revenue
Note 1(q) and Note 9
Unbilled revenue of $3,064,230 represents the value
of electricity and gas supplied to customers between
the date of the last meter reading and the reporting
date where no invoice has been issued by TPC
Consolidated Limited’s subsidiary CovaU to the
customer at the reporting date. Detailed calculations
utilising estimates of the electricity and gas
consumption of CovaU’s customers and applicable
pricing plans are used to determine the estimate of
unbilled revenue.
This area is a key audit matter due to the estimation
uncertainty involved in determining the estimated
customer consumption between the last invoice date
and the end of the reporting period to determine the
gas and electricity unbilled revenue at the reporting
date and the application of pricing assumptions to the
calculation.
Derivative financial instruments
Note 1(g) and Note 23
The Group enters into derivative financial
instruments, such as energy price caps and swaps,
to hedge its exposure to variability in wholesale
energy prices. These financial instruments are
classified by the Group as cash-flow hedges.
Accounting for derivative financial instruments
involves judgement in the application of specific
hedge accounting requirements of AASB 139
Financial Instruments: recognition and measurement.
There is also a requirement to record the derivative
financial instruments at fair value which involves the
application of further judgement.
This area is a key audit matter due to the
complexities associated with the valuation and
accounting for these financial instruments.
How our audit addressed the key audit matter
Our procedures included, amongst others:
•
obtaining and reviewing management's
assessment of going concern;
testing mathematical accuracy of the forecasts
challenging management’s assumptions in the
cash flow forecast;
reviewing management’s ability to accurately
forecast by reference to the actual results for the
year in comparison to the prior year forecast;
assessing the appropriateness of the related
disclosures included in the financial statements.
•
•
•
•
Our procedures included, amongst others:
obtaining an understanding of the key controls
management has in place to determine and review
the estimate of unbilled revenue;
comparing the Group’s previous estimates against
subsequent billings to evaluate the historical
accuracy of the Group’s calculations and
estimates;
agreeing managements reconciliation of purchase
volumes to revenue volumes recognised;
challenging management’s calculations and
assumptions and comparing:
•
•
average pricing rates used in the accrual
calculation to historical and current rates;
internally generated estimates of physical
energy loss levels through the distribution
process to industry averages published
by the Australian Energy Market Operator
(‘AEMO’); and
assessing the adequacy of the Group’s disclosures
in respect of unbilled revenue.
Our procedures included, amongst others:
obtaining an understanding of the internal risk
management procedures and systems and
controls associated with the origination and
maintenance of complete and accurate information
relating to derivative contracts;
obtaining details of all swap and cap contracts to
which the Group is a counterparty at 30 June 2017
and confirming directly with the counterparty the
key terms and conditions of the agreement and
pricing of an equivalent contract as at 30 June
2017;
comparing the year-end pricing provided by the
counterparty to the contracted pricing,
recalculating the fair value of the financial
instrument and comparing the fair values to those
recorded by management;
obtaining and evaluating management’s hedge
documentation of significant hedge relationships
for compliance with AASB 139 Financial
Instruments: recognition and measurement; and
assessing the appropriateness of the disclosures
in the financial report.
59
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters 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.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 13 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of TPC Consolidated Limited, for the year ended 30 June
2017, complies with section 300A of the Corporations Act 2001.
60
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.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M R Leivesley
Partner - Audit & Assurance
Sydney, 29 August 2017
61
Shareholder Information
Shareholder information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is
as follows.
(a) Shares and Options as at 24 August 2017
Equity Security
Shares on issue
(b) Distribution of Equity Securities as at 31 July 2017
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
There were 15 holders of less than a marketable parcel of 1,946 ordinary shares.
(c) Substantial Shareholders as at 24 August 2017
Rank Shareholder
Tel.Pacific ESOP Pty Limited
Focus Capital Finance Limited
1 Mr Chiao Heng Huang
2
3
4 Megaway Group Limited
5 Mr Barry Christopher Chan
Number
11,235,613
Class of Equity Securities
Ordinary Shares
Holders
Ordinary Shares
Units
222
74
24
31
15
366
205,978
185,005
178,351
848,335
9,817,944
11,235,613
Number of
Shares
% of Issued
Capital
4,063,393
1,520,000
544,500
544,500
500,000
36.17
13.53
4.85
4.85
4.45
62
Shareholder Information
(d) Twenty Largest Shareholders as at 24 August 2017
Rank Shareholder
Number of
Shares
% of Issued
Capital
Fortune Giant International Limited
Tel.Pacific ESOP Pty Limited
Focus Capital Finance Limited
1 Mr Chiao Heng Huang
2
3
4 Megaway Group Limited
5 Mr Barry Christopher Chan
6
7 Ms Wei Chun Wu
8 Mr Bob Cheng
9 Mr Guonan Guan
10 Mrs Maobin Guan
11 Mrs Xiaohong Xue
12
13 CX & J Pty Ltd (CXJ Superannuation Fund A/C)
14 Mr Trevor Neil Hay
15
16 Mr Jeffrey Wu Kin Ma
17 Mr Chiao Ting Huang
18 Mr Junwu Lian
19 Invia Custodian Pty Limited (Andrew William Blackman A/C)
20 Mrs Samantha Vieira
Global Property Services Pty Limited (Super Account)
Walker Group of Companies Retirement Fund
Total
4,063,393
1,520,000
544,500
544,500
500,000
424,924
415,000
379,488
364,048
228,888
228,888
177,500
147,272
142,431
137,112
82,003
77,476
70,000
53,000
42,744
10,143,167
36.17
13.53
4.85
4.85
4.45
3.78
3.69
3.38
3.24
2.04
2.04
1.58
1.31
1.27
1.22
0.73
0.69
0.62
0.47
0.38
90.29
63 Corporate Directory
Directors
Greg McCann
Chiao-Heng (Charles) Huang
Jeffrey Ma
Steven Goodarzi
Company Secretary
Jeffrey Ma
Registered Office
Suite 802, Level 8, 1 York Street
Sydney NSW 2000
Australia
Telephone
Facsimile
Web Site
(02) 8448 0633
1300 369 222
www.tpc.com.au
Share Registry
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street
Sydney NSW 2000
Stock Exchange Listing
Australian Securities Exchange Limited
ASX Code: TPC
Auditor
Grant Thornton Audit Pty Ltd
Level 17, 383 Kent Street
Sydney NSW 2000
Solicitor
Lander & Rogers lawyers
Level 19, 123 Pitt Street
Sydney NSW 2000
Banker
Westpac Banking Corporation
425 Victoria Avenue
Chatswood NSW 2067
Commonwealth Bank
48 Martin Place
Sydney NSW 2000
64