TPC CONSOLIDATED LIMITED A.B.N. 99 073 079 268 Annual Report For the year ended 30 June 2020 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 2 3 4 6 16 17 18 19 20 21 22 64 65 69 71 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 ended 30 June 2020. The challenging industry environment resulted in modest revenue growth. Despite this, our focus on improving business efficiencies in the past year proved effective in enabling higher operating performance. Moving forward, our aim is to be more reliant on new generation opportunities. While this is taking longer than expected, it remains a high priority for CovaU. Our business strategy has enabled us to deliver a financial result that was above our expectations. CovaU has had a very difficult second half year with the COVID-19 pandemic affecting customers, supply chains, sales, employees and collections. We will continue to operate with our pandemic measures until we have better news towards a vaccine. Everyone is committed to coming out of this situation and continuing to take our company to the next level. There were consistent upturns of performance for the year. Revenue of the consolidated entity increased to $86.3 million, up by 3.6% from the previous year. Gross profit increased to $18.7 million, up by 11.9%. EBITDA increased to $5.0 million, up by 87.3% from the last year of $2.7 million. NPAT was $3.4 million, up by 51.8% compared with last year of $2.2 million. I am very pleased that, due to management efforts despite being under challenging conditions, the Board is able to declare a dividend of 8 cents per share for this financial year. Should there be no major changes in the overall energy market, the Group expects to maintain its profitability and cash flow in the next financial year. CovaU's energy business will remain the largest contributor to revenues and profits. Dependable performance will be achieved by diligent management and stringent cost control alongside activities that grow the energy business. On behalf of the Board, I would like to thank management for their hard work and shareholders for their patience and continued support. I sincerely hope that we will be able to report correspondingly improved financial results for the Group in the coming years as a reward to that continuing support. Yours sincerely, Greg McCann Chairman 2 CEO and Managing Director’s Review I am pleased to report our results from CovaU has improved from last year. Despite this unprecedented business environment with COVID-19, we managed to minimize the revenue loss and effectively preserve our margin. I would like to thank everyone for their contribution. In the prior year's annual report, I highlighted some of the challenges encountered by our business with particular focus on energy policy direction. This has taken a back seat with the COVID-19 pandemic as every effort is now channelled on how to best manage the business during this period. CovaU had felt the impact as early as January and we have been dedicated to working with the federal government, regulatory bodies and distribution networks on addressing customer impact, as well as the whole supply chain. It has been an unprecedented event that has brought the industry closer together. Relief packages have been provided yet we believe there is more that can be done and we will continue to strive further. Our customers are supported during this pandemic with generous payment plans and continuation of services even under financial distress. In regards to the renewable generation segment, the Chief Strategy Officer and I continue to invest our efforts heavily with a view to strategically position CovaU into a strong renewable future. Energy prices have soften significantly during the pandemic. the economy returns to normal operating conditions. It remains to be seen if these lower prices will continue once Our business has now expanded into Queensland and we plan to grow that to be a sizable business within the next few years. Corporate sales efforts have brought on large customers to our business. We continue to invest into the development of this important market segment for CovaU to support future growth. Beyond Australia, the effects of COVID-19 have impact to our organisation in the Philippines. We are providing extended support to all our employees there as they continue to support us. The mobile business remains largely unchanged; profitable although with a decline in revenue. We are undertaking a review and taking actions to see how best this business fits into our future strategy. The executive team will maintain prudent management of business profitability in these uncertain times. 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. He has not held any other directorships in the last 3 years. 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 TPC Consolidated Limited (formerly Tel.Pacific Limited) 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 years. 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 years. 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 Property 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 years. 5 Directors' Report Your directors present Company) and the entities it controlled during the year ended 30 June 2020. the Group's report on the consolidated entity consisting of TPC Consolidated Limited (the 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 $86,346,155, up by 3.6% from the previous year of $83,336,529. Earnings before interest expense, taxation, depreciation, amortisation and impairment (EBITDA) from operations was $5,022,954, up by 87.3% from the previous year of $2,681,095. Net profit from operations after tax was $3,361,593, up by 51.8% compared to the profit in previous year of $2,214,993. COVID-19 Impact on Results In March 2020, the World Health Organisation declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout Australia. The spread of COVID-19 has caused significant volatility in Australian and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the Australian and international economies. To date, the Group has experienced minimal financial impacts of COVID-19 specially on the CovaU business in the year ended 30 June 2020, given the customer base includes large number in the residential and commercial sector users. Whilst the Group faced a decrease in revenue from commercial businesses due to lock-downs and businesses operating on lower capacity, this was hugely offset by residential customers due to the tendency of people choosing to work from home in the last quarter of FY 2020. The impact was further shielded with the support provided by the Australian Government the Group's clientele is comprised of residential customers as well as small to medium sized Australian-based businesses from a broad cross-section of industries. limited to the Jobkeeper allowance. Note that including but not Going forward, the Group is unable to determine if COVID-19 will have a material impact to its operations. The Group is managing the downside risk presented by COVID-19 via tight management of costs, a focus on working capital management and targeted deployment of capital and resources. Review of Operations $000’s Revenue EBITDA (1) NPAT Year ended 30 June 2020 Year ended 30 June 2019 % Change on PCP 86,346 5,023 3,362 83,337 2,681 2,215 3.6% 87.4% 51.8% (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. 6 Directors' Report Revenue of the consolidated entity for the year increased by $3.0 million, from $83.3 million to $86.3 million, up by 3.6% compared to the previous corresponding period (PCP), which was attributable to the continuing growth of its core energy business. The energy revenue increased by $3.6 million to $84.6 million, representing an increase of $1.8 million (up 3.1%) in electricity service and of $1.8 million (up 8.2%) in gas service. The telecommunication revenue however decreased by $0.6 million (down 25.6%) from $2.3 million to $1.7 million during the same period due to the further decline in the prepaid mobile revenue. Gross profit of the consolidated entity increased by $2.0 million, from $16.7 million to $18.7 million, up by 11.9% over the PCP, and the gross margin increased by 1.7%, from 20.0% to 21.7%. Despite the challenging circumstances for the energy industry continued from FY 2019 to FY 2020, the electricity gross margin decreased slightly by 1.1% over the PCP, from 19.3% to 18.2%, which was largely due to the higher electricity cost resulting from the maximum price events in the third quarter of FY 2020. The decrease in electricity gross margin was however offset by the significant increase in the gas gross margin by 10.1% over the PCP, from 19.2% to 29.3%, attributable to the lower gas cost in the second half year. Total operating expenses and employee benefit expense of the consolidated entity increased to $14.7 million, up 3.6% over the PCP of $14.2 million. The efficiency ratio of expenses over revenue remained at the same level of 17.0% as the last year. Earnings before interest expense, taxation, depreciation and amortisation (EBITDA) of the consolidated entity for the year ended 30 June 2020 increased by $2.3 million to $5.0 million, up by 87.3%, from the last year of $2.7 million. Profit before tax of the consolidated entity for the year increased by $1.8 million to $4.0 million, up by 81.1% from the last year of $2.2 million. Net profit after tax (NPAT) of the consolidated entity for the year was $3.4 million, up by 51.8% compared with the last year of $2.2 million. Over the year, net assets increased by $2.7 million, up 44.7%, to $8.9 million, which was mainly attributable to the current year's profit after tax of $3.4 million, being offset by the negative fair value movement on derivatives of $0.7 million. Current assets decreased by $0.3 million, down 1.5%, to $18.9 million, which was mainly due to the decrease of $0.2 million in cash and bank deposits. Non-current assets increased by $0.5 million, up 17.5%, to $3.4 million, which was mainly attributable to the increase of $0.9 million in lease assets, being offset by the decrease of $0.3 million in deferred tax assets. Current liabilities decreased by $3.0 million, down 19.3%, to $12.7 million, which was due to the decrease of $2.2 million in borrowings and the decrease of $1.9 million in trade payables, being offset by the increase of $0.1 million in derivatives held at fair value and the increase of $0.5 million in lease liabilities as well as the increase of $0.3 million in income tax payable . Non-current liabilities increased by $0.5 million, up 210% to $0.8 million, which was mainly attributable to the increase of $0.7 million in lease liabilities. As at 30 June 2020, cash and bank deposits stood at $3.1 million (including $1.2 million held as security for bank facilities), representing a decrease of $0.2 million (down 7.2%) during the year. Dividends A fully franked final dividend $898,849 equivalent to 8 cents per share (11,235,613 shares) was declared on 28 August 2020 with a record date of 9 September 2020 and payment date of 23 September 2020. 7 Directors' Report 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 2020. 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 To date, the Group has experienced minimal financial impacts of COVID-19 specially on the CovaU business in the year ended 30 June 2020. The Group is unable to determine if COVID-19 will have a material impact to its operations. The Group is managing the downside risk presented by COVID-19 via tight management of costs, a focus on working capital management and targeted deployment of capital and resources. The directors expect continued growth in the energy business going forward and that the Group will maintain its profitability and cash flow in the financial year ending 30 June 2021. 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 8 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) 5/6 6/6 6/6 6/6 Audit and Risk Committee Attend / Held (1) 1/2 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 30 January 2020 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 $61,028. 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. 9 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 2009 ESOP aims to motivate, retain and attract quality employees and directors of the Company to create a 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. 10 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 2019 Annual General Meeting ("AGM") At the 2019 AGM, shareholders voted to approve the adoption of the remuneration report for the year ended 30 June 2019. 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 2020 and 30 June 2019. 2020 Short Term Benefits Post Employment Long Term Benefits Total Chairman (Non-Executive Director) Greg McCann Executive Directors Chiao-Heng (Charles) Huang Jeffrey Ma Steven Goodarzi Executives Bing Zhou Charles Hsieh Gang Gu Huy Nguyen Salary and Fees $ Cash Benefits (1) $ Non-Cash Benefits $ Super- annuation $ Accrued Leave Entitlement $ $ 69,127 - - 6,567 - 75,694 317,226 205,905 210,916 163,390 149,785 138,541 120,059 1,374,949 42,461 - - - 10,769 - - 53,230 - 1,067 4,731 8,107 - 2,510 - 16,415 25,000 25,000 20,162 14,393 14,170 13,514 10,109 128,915 30,017 20,849 - 11,126 2,648 8,176 - 72,816 414,704 252,821 235,809 197,016 177,372 162,741 130,168 1,646,325 11 Directors' Report 2019 Short Term Benefits Post Employment Long Term Benefits Total Chairman (Non-Executive Director) Greg McCann Executive Directors Chiao-Heng (Charles) Huang Jeffrey Ma Steven Goodarzi Executives Bing Zhou Charles Hsieh Gang Gu Huy Nguyen Salary and Fees $ Cash Benefits (1) $ Non-Cash Benefits $ Super- annuation $ Accrued Leave Entitlement $ $ 72,765 305,000 196,008 200,692 135,819 144,667 137,973 127,322 1,320,246 - - - - - - 44,512 8,045 - - - - 44,512 1,181 - 4,181 - 13,407 6,913 - 79,678 25,000 25,000 20,917 11,875 12,508 13,300 10,956 126,469 6,934 4,409 - 2,399 991 2,860 - 17,593 336,934 225,417 274,166 151,274 158,166 158,314 138,278 1,522,227 The proportion of remuneration linked to performance and the fixed proportion are as follows: Chairman (Non-Executive Director) Greg McCann Executive Directors Chiao-Heng (Charles) Huang Jeffrey Ma Steven Goodarzi Executives Bing Zhou Charles Hsieh Gang Gu Huy Nguyen Fixed Remuneration 2020 2019 100% 100% 100% 100% 100% 94% 100% 100% 90% 100% 100% 100% 100% 100% 100% 94% (1) Cash benefits represented the payout of unused annual leave entitlements. Performance 2020 2019 0% 0% 0% 0% 6% 0% 0% 10% 0% 0% 0% 0% 0% 0% 0% 6% 12 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 Bing Zhou Charles Hsieh Gang Gu Huy Nguyen Total Shares Held at Beginning of Year Total Shares Held at End of Year Shares Disposal 85,000 4,463,393 423,003 210,335 61,000 30,000 83,826 67,922 5,424,479 - - - - - - - - - 85,000 4,463,393 423,003 210,335 61,000 30,000 83,826 67,922 5,424,479 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 25 (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. 13 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 2020 $86.35 m 2019 $83.34 m 2018 $80.18 m 2017 $68.89 m 2016 $47.64 m Profit/(loss) after tax Underlying profit/(loss) after tax $3.36 m $3.36 m $2.21 m $2.21 m $3.17 m $3.17 m $0.81 m $0.81 m ($2.54 m) ($2.54 m) Share price at year end $0.95 $0.40 $1.01 $0.85 $0.55 Interim/Special dividend Final dividend 0 cents 8 cents 0 cents 0 cents 0 cents 0 cents 3 cents 0 cents 0 cents 0 cents 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 (2019: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 the proceedings to which the consolidated entity is a party for the purpose of consolidated entity for all or any part of those proceedings. taking responsibility on behalf of 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 immediately after this directors' report. 14 Directors' 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. 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 issued by the Australian Securities and The Company is of a kind referred to in Legislative Instrument 2016/191, 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 Chiao-Heng (Charles) Huang Managing Director Dated this 28 August 2020 15 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. 16 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 2020, I declare that, to the best of my knowledge and belief, there have been: a b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. Grant Thornton Audit Pty Ltd Chartered Accountants S M Thomas Partner – Audit & Assurance Sydney, 28 August 2020 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘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. 17 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2020 Note 2020 $ 2019 $ Revenue Delivery of services Gross profit Other income Operating expenses Employee benefits expense Gain on fair value of derivatives 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 before income tax Income tax (expense)/benefit Profit for the year Other comprehensive loss for the year, net of tax 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 Other comprehensive loss for the year, net of tax Total comprehensive income for the year Profit attributable to Members of TPC Consolidated Limited Total comprehensive income attributable to Members of TPC Consolidated Limited Earnings per share for the year attributable to the members of TPC Consolidated Limited Earnings per share - Basic earnings per share - Diluted earnings per share 2 2 3 3 3 3 3 4 5 5 86,346,155 (67,651,811) 18,694,344 537,868 19,232,212 (7,853,557) (6,871,593) 515,892 83,336,529 (66,635,764) 16,700,765 169,171 16,869,936 (7,670,323) (6,539,582) 21,064 5,022,954 2,681,095 (753,675) - 4,269,279 27,952 (292,220) - 4,005,011 (643,418) 3,361,593 (290,372) (111,380) 2,279,343 103,523 (170,541) (1,368) 2,210,957 4,036 2,214,993 (10,170) (653,769) (663,939) 8,471 (460,965) (452,494) 2,697,654 1,762,499 3,361,593 2,214,993 2,697,654 1,762,499 Cents Cents 29.92 29.92 19.71 19.71 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 18 Consolidated Statement of Financial Position As at 30 June 2020 ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Bank deposits Other assets Total Current Assets Non-Current Assets Property, plant and equipment Right of use assets Deferred tax assets Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Borrowings Derivatives held at fair value Lease liabilities Current tax liabilities Short term provisions Contract liabilities Total Current Liabilities Non-Current Liabilities Long term provisions Lease liabilities Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated Losses TOTAL EQUITY Note 2020 $ 2019 $ 8 9 10 11 13 14 4 15 16 23 14 4 17 18 17 14 19 20 1,855,450 13,778,972 48,037 1,222,101 1,978,600 18,883,160 1,045,304 14,167,401 55,764 2,272,101 1,629,528 19,170,098 896,298 910,375 1,598,975 3,405,648 937,700 - 1,959,587 2,897,287 22,288,808 22,067,385 7,531,554 751,368 429,811 488,682 267,542 1,315,435 1,880,240 12,664,632 9,463,087 2,946,218 291,934 - - 1,145,020 1,850,513 15,696,772 99,194 666,645 765,839 246,914 - 246,914 13,430,471 15,943,686 8,858,337 6,123,699 9,920,068 (939,264) (122,467) 8,858,337 9,833,668 (275,325) (3,434,644) 6,123,699 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 19 Consolidated Statement of Changes in Equity For the year ended 30 June 2020 Balance at 1 July 2018 (Reported) Adjusted from adoption of AASB 9 Balance at 1 July 2018 Transfer relating to cashflow hedge reserve Profit for the year Other comprehensive loss Total comprehensive income for the year Transactions with Shareholders Payment related to ESOP shares Issued Capital $ Reserves $ Accumulated Losses $ Note 9,825,028 (555,266) - 9,825,028 - - - - - (555,266) 732,435 - (452,494) (452,494) (4,625,382) (291,820) (4,917,202) (732,435) 2,214,993 - 2,214,993 Total $ 4,644,380 (291,820) 4,352,560 - 2,214,993 (452,494) 1,762,499 19 8,640 - - 8,640 Balance at 30 June 2019 9,833,668 (275,325) (3,434,644) 6,123,699 Balance at 1 July 2019 (Reported) Adjusted from adoption of AASB 16 Balance at 1 July 2019 Profit for the year Other comprehensive loss Total comprehensive income for the year Transactions with Shareholders Payment related to partially paid shares 9,833,668 (275,325) - - 9,833,668 (275,325) (3,434,644) (49,416) (3,484,060) - - - - (663,939) (663,939) 3,361,593 - 3,361,593 6,123,699 (49,416) 6,074,283 3,361,593 (663,939) 2,697,654 19 86,400 - - 86,400 Balance at 30 June 2020 9,920,068 (939,264) (122,467) 8,858,337 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 20 Consolidated Statement of Cash Flows For the year ended 30 June 2020 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 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant & equipment Net proceeds from disposal of fixed assets Received from/(Payment) to bank deposits NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from partially paid share capital Proceeds from borrowings Repayment of borrowings Repayment of lease liabilities NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES Net increase in cash held Cash held at the beginning of the financial year Note 2020 $ 2019 $ 93,982,401 (91,188,059) 42,993 (292,220) 2,545,115 88,828,003 (90,502,813) 92,094 (170,541) (1,753,257) 8(b) (180,520) - 1,050,000 869,480 (168,211) 286 1,615,000 1,447,075 86,400 80,410,000 (82,604,850) (495,999) (2,604,449) 8,640 88,216,121 (87,461,788) - 762,973 810,146 1,045,304 456,791 588,513 CASH AT THE END OF FINANCIAL YEAR 8(a) 1,855,450 1,045,304 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 21 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 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 transactions, events and conditions to which they apply. report containing relevant and reliable information about 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 2020 was authorised for issue in accordance with a resolution of the TPC Board of Directors on 28 August 2020. 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 28. 22 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 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. AASB 16 Leases became mandatorily effective on 1 January 2019. Accordingly, the standard apply for the first time to this set of annual financial statements. The nature and effect of changes arising from these standards are summarised in the section below. New Standards Adopted as at 1 July 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. When adopting AASB 16, the Group has applied the modified retrospective approach. The cumulative impact of the adoption has been recognised in 1 July 2019 opening retained earnings and comparatives has not been restated. At 1 July 2019, a right of use asset of $1,398,633 was recognised along with increase in deferred tax assets of $15,264, increase in lease liabilities $1,651,718, decrease in provision for future rent of $188,405 and a decrease in retained earnings of $49,416. Measurement of lease liabilities Operating lease commitments as at 30 June 2019 Discounted using leases incremental borrowing rate at 1 July 2019 Less: Unamortised rent incentive as at 1 July 2019 Lease liability recognised as at 1 July 2019 Incremental borrowing rate of at the date of initial application Of which are: Current lease liabilities Non-current lease liabilities $ 1,824,994 (104,370) (68,906) 1,651,718 6.14% 514,514 1,137,204 1,651,718 23 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (a) Principles of Consolidation The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2020. 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 consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the 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. (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. 24 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (d) Income Tax (continued) 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. (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. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the 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. 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. 25 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (f) Property, Plant and Equipment (continued) 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 A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether: • the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group • the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract • the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use. Measurement and recognition of leases as a lessee At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero. The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term. 26 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (g) Leases (continued) 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. (h) Financial Instruments Recognition and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and initial measurement of financial assets Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable) Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories: • amortised cost • fair value through profit or loss (FVTPL) • fair value through other comprehensive income (FVOCI). In the periods presented the corporation does not have any financial assets categorised as FVOCI. The classification is determined by both: • the entity’s business model for managing the financial asset • the contractual cash flow characteristics of the financial asset. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. 27 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (h) Financial Instruments (continued) Subsequent measurement of financial assets Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): • they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows • the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. Financial assets at fair value through profit or loss (FVTPL) Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. Financial assets at fair value through other comprehensive income (FVOCI) The Group accounts for financial assets at FVOCI if the assets meet the following conditions: • they are held under a business model whose objective it is “hold to collect” the associated cash flows and sell and • the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset. Impairment of financial assets AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’. Instruments within the scope of the requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss. Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. In applying this forward-looking approach, a distinction is made between: • financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and • financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’). ‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date. ‘12-month expected credit recognised for the second category. losses’ are recognised for the first category while ‘lifetime expected credit losses’ are Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. 28 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (h) Financial Instruments (continued) Trade and other receivables and contract assets The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due. Classification and measurement of financial liabilities The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. Derivative financial instruments and hedge accounting Derivative financial instruments are accounted for at fair value through profit and loss (FVTPL) except for derivatives designated as hedging instruments in cash flow hedge relationships, which require a specific accounting treatment. To qualify for hedge accounting, the hedging relationship must meet all of the following requirements: • there is an economic relationship between the hedged item and the hedging instrument • the effect of credit risk does not dominate the value changes that result from that economic relationship • the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. For the reporting periods under review, the Group has designated certain forward currency contracts as hedging instruments in cash flow hedge relationships. These arrangements have been entered into to mitigate foreign currency exchange risk arising from certain highly probable sales transactions denominated in foreign currency. All derivative financial subsequently at fair value in the statement of financial position. instruments used for hedge accounting are recognised initially at fair value and reported To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss. 29 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (h) Financial Instruments (continued) At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. However, if a non-financial asset or liability is recognised as a result of the hedged transaction, the gains and losses previously recognised in other comprehensive income are included in the initial measurement of the hedged item. If a forecast transaction is no longer expected to occur, any related gain or loss recognised in other comprehensive income is transferred immediately to profit or loss. If the hedging relationship ceases to meet the effectiveness conditions, hedge accounting is discontinued and the related gain or loss is held in the equity reserve until the forecast transaction occurs. (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 the year end exchange rate. Non monetary items transaction. Foreign currency monetary items are translated at 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. 30 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 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 term highly liquid investments with original maturities of three months or less, and bank overdrafts. (m) Trade Receivables Trade and other receivables are stated at amortised cost less any provision for impairment loss. Expected Credit Loss The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The loss allowance methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Group uses an allowance matrix to measure expected credit losses of trade receivables and contract assets from its customers. Trade receivable amounts are disaggregated into customer segments. Loss rates are estimated in each age category and are based on the probability of a receivable progressing through to write-off. Factors to estimate the loss rate are based on risk assessment performed per customer segment and economic factors such as wholesale electricity forward curves. 31 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (m) Trade Receivables (continued) The amount of the expected credit loss is recognised in profit or loss within other expenses. When a trade receivable for which an expected credit loss had been recognised becomes uncollectible in a subsequent period, it is written off against the provision account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss. Expected credit loss on trade receivables and contract assets The Group uses an allowance matrix to measure expected credit losses of trade receivables and contract assets from its customers. Trade receivable amounts are disaggregated into customer segments. (n) Trade and Other Payables Trade and other payables are stated at amortised cost. (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) Contract Liabilities Contract liabilities represents the unused component of prepaid mobile products as at the reporting date and relates to cards that have been activated. Contract liabilities also represents receipts in advance from customers of the energy business as at the reporting date. (q) Revenue Recognition The Group’s primary revenue streams relate to the retail sale of electricity and gas to residential and business customers in Australia. Revenue from contracts with customers is recognised when control of the goods or services is transferred to a customer at an amount that reflects the consideration to which the Group expects to be entitled to receive in exchange for those goods or services. The majority of contractual energy supply arrangements with customers have no fixed duration, generally require no minimum consumption by the customer and are able to be terminated by either party at any time without incurring significant penalty. Given this, the enforceable contracts are considered short term (less than 12 months) in nature. The Group has generally concluded that it is the principal in its revenue arrangements because it controls the goods or services before transferring them to the customer. The Group’s primary performance obligations are the supply of energy (gas or electricity) over the contractual term. There are either individual contracts representing separate purchasing decisions of customers, or the units of supply of energy represent a series of distinct goods that are substantially the same and have the same pattern of transfer to the customer and hence is considered one performance obligation satisfied over time. For the shorter term contracts, the performance obligations are considered to be satisfied, and revenue is recognised, as and when the units of energy are delivered. Residential electricity and gas sales Residential energy sales relate to the sales of energy (gas and electricity) to retail customers. Residential sales are classified as individual, short term, day-by-day contracts and are recognised as revenue on a day-by-day basis upon delivery of energy to customers. The Group recognises revenue from contracts with its residential customers at the electricity and gas portfolio levels. 32 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (q) Revenue Recognition (continued) Business electricity and gas sales Business sales represent the sale of energy to business customers. The nature and accounting treatment of this revenue stream is consistent with residential sales. Revenue from the rendering of telecommunication service Revenue from the rendering of telecommunication 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. Customer contract liabilities are recognised for cash received in advance and services not used yet. Costs to obtain and fulfil a contract Costs that are incurred regardless of whether an energy contract is obtained are expensed as incurred, unless those costs are explicitly chargeable to the customer. Variable consideration and constraints The Group includes variable consideration in the transaction price as estimated at the inception of a contract. However, if it is considered 'highly probable' that a significant reversal of revenue recognised will occur in the future, the variable consideration is constrained and not included in the transaction price. The Group's contractual arrangements contain a number of variable pricing elements including discounts. Some of these variable elements are resolved during the reporting periods. Where they are not, management estimates the likelihood of the variable pricing element eventuating and recognises the variable pricing element to the extent it is not highly probable that it will reverse. Government Grant Income - Jobkeepers Payment Intended to help keep more Australians in jobs and support businesses affected by the significant economic impact of COVID-19, the Government announced Jobkeeper Payment Scheme that provides eligible employers with wages subsidy for wages paid to eligible employees during the six-month period starting on 30 March 2020. The Jobkeeper payment grant is recognised as income when the Group is reasonably assured that it will comply with the conditions attaching to it, and the grant will be received. 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. 33 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (s) 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. (t) 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. (u) Comparatives Where required by accounting standards, comparative figures have been adjusted to conform to changes in the current year. (v) 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. Expected Credit Loss of Receivables The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Group uses an allowance matrix to measure expected credit losses of trade receivables from its customers. Trade receivable amounts are disaggregated into customer segments. Loss rates are estimated in each age category and are based on the probability of a receivable progressing through to write-off. Factors to estimate the loss rate are based on risk assessment performed per customer segment and economic factors such as wholesale electricity forward curves. 34 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 1: Statement of Significant Accounting Policies (continued) Accounting Policies (continued) (v) Critical Accounting Estimates and Judgments (continued) Contract Assets The Group recognises revenue from gas and electricity sales once the gas and/or electricity has been consumed by the customer. Management estimates customer consumption between the last invoice date and the end of the reporting period when determining gas and electricity revenue for the financial period. Various assumptions and financial models are used to determine the estimated unbilled consumption. Some of the assumptions and estimates include: • Volume and timing of energy consumed by the customers • Various pricing plans and allocation of the estimated volume to such pricing plans • Loss factors • Behavioural discounts The Group makes uses of simplified approach in accounting for contract assets and records the loss allowance as life expected credit losses. Deferred tax assets relating to tax losses Deferred tax assets are recognised for deductible temporary differences and accumulated tax losses only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses (see Note 4). 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 26 for further discussion. Significant estimates– uncertain tax position and tax-related contingency AASB Interpretation 23 Uncertainty over Income Tax Treatment The interpretation address the accounting for income taxes when tax treatments involve uncertainty that affects the application of AASB 112 Income Taxes. It doesn’t apply to taxes or levies outside the scope of AASB 112, nor does it specially include requirement relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses the following: • Whether an entity considers uncertain tax treatments separately • The assumptions an entity makes about the examination of tax treatments by taxation authorities • How an entity determines taxable profit (tax loss), unused tax losses, unused tax credits and tax rates • How an entity considers changes in facts and circumstances The Group determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments and uses the approach that better predicts the resolution of the uncertainty. The Group determined on adoption and at 30 June 2020 that no uncertain tax positions exist and therefore the interpretation did not have an impact on the financial statement of the Group. 35 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 2: Revenue Disaggregated Revenue Services transferred over time - Electricity Service - Gas Service - Telecommunication Services Other Income - Foreign Exchange Gain - Government Grant Income - Jobkeeper Payment - Sundry Income 2020 $ 2019 $ 61,451,549 23,167,974 1,726,632 86,346,155 59,615,654 21,407,626 2,313,249 83,336,529 - 453,000 84,868 537,868 6,025 - 163,146 169,171 AASB 15 requires entities to disaggregate revenue from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Group has determined that a disaggregation of revenue using existing segments and the nature of revenue best depicts the Group's revenue. For 2020, revenue includes $1,692,605 (2019: $1,595,370) included in contract liability balance at the beginning of the period. Note 3: Profit Before Income Tax Occupancy Expense Advertising and Promotion Expense Communication Expense Professional Fees Bank and Merchant Fees Travel Expense Expected Credit Losses Foreign Exchange Losses Other Expenses Total Operating Expenses Employee Benefits Expenses Superannuation Total Employee Benefits Expenses Depreciation of Non-current Assets Total Depreciation and Amortisation Finance Costs 2020 $ 2019 $ 274,459 401,753 82,233 827,662 424,798 260,057 3,212,104 35,367 2,335,124 7,853,557 6,398,509 473,085 6,871,594 805,721 383,379 81,178 833,650 414,187 311,568 2,733,880 - 2,106,760 7,670,323 6,053,403 486,179 6,539,582 753,675 753,675 290,372 290,372 292,220 170,541 36 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 4: Income Tax Benefit (a) Income Tax Expense The major components of income tax expense are: Current tax expense Overprovision in respect of prior years Deferred tax movement arising from origination and reversal of temporary differences Deferred tax relating from the recognition of prior years tax loss (b) The prima facie income tax expense/(benefit) on profit from ordinary activities differs from the income tax expense/(benefit) provided in the financial statements and is reconciled as follows: Profit before income tax expense Prima facie tax expense on profit from ordinary activities at 30% (2019: 30%) Non-assessable items Overprovision in respect of prior years Income tax benefit attributable to profit from ordinary activities (c) Current Tax Balances Current tax liabilities Income tax payable 2020 $ 2019 $ 800,979 (295,909) 138,348 - 643,418 324,994 (92,440) (236,590) - (4,036) 2020 $ 2019 $ 4,005,011 2,210,957 1,201,503 663,287 (262,176) (295,909) 643,418 (574,883) (92,440) (4,036) 2020 $ 2019 $ 267,542 - 37 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 4: Income Tax (Expense)/Benefit (continued) (d) Deferred Tax Balances Deferred tax liabilities Accrued Income Others Balance as at 30 June 2019 Property, plant and equipment Accrued Income Others Balance as at 30 June 2020 Deferred tax assets Property, plant and equipment Provisions Carry forward tax losses Others Opening Balance $ Charged to Income $ Charged directly to Equity $ Closing Balance $ 893,106 1,116 568,112 155,284 894,222 723,396 - 1,461,218 156,400 7,696 (178,730) 331,512 1,617,618 160,478 - - - - - - - 1,461,218 156,400 1,617,618 7,696 1,282,488 487,912 1,778,096 Opening Balance $ Charged to Income $ Charged directly to Equity $ Closing Balance $ 2,225 397,381 1,049,942 1,275,159 (2,225) (104,867) (232,553) 1,067,077 - 125,066 - - - 417,580 817,389 2,342,236 Balance as at 30 June 2019 2,724,707 727,432 125,066 3,577,205 Provisions Carry forward tax losses Others Balance as at 30 June 2020 Deferred tax assets Deferred tax liability Net deferred tax assets (e) Tax Consolidation 417,580 817,389 2,342,236 6,809 (237,528) 30,585 3,577,205 (200,134) - - - - 424,389 579,861 2,372,821 3,377,071 2020 $ 2019 $ 3,377,071 (1,778,096) 1,598,975 3,577,205 (1,617,618) 1,959,587 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. in addition to its own TPC Consolidated Limited, as the head entity in the tax consolidated group, recognises, transactions, the current tax liabilities and the deferred tax assets arising from unused tax losses and tax credits of all entities in the group. 38 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 5: Earnings Per Share Basic earnings per share Diluted earnings per share 2020 Cents 2019 Cents 29.92 29.92 19.71 19.71 Net earnings used in the calculation of basic and diluted EPS 3,361,593 2,214,993 Weighted average number of ordinary shares outstanding during the year in the calculation of basic EPS in the calculation of diluted EPS Number 11,235,613 11,235,613 Number 11,235,613 11,235,613 Note 6: Dividends Paid and Proposed (a) Recognised Amounts (i) Dividends paid during the year: Final dividend (prior year) - fully franked Interim dividend - fully franked Total (ii) Dividends declared and not recognised as a liability: Final dividends - fully franked (1) 2020 Cents per Share Total $ 2019 Cents per Share Total $ - - - - - - - - - - - - 8.0 898,849 - - (1) The final dividend was proposed on 28 August 2020. This amount has not been recognised as a liability in the 2020 financial year but will be brought into account in the 2021 financial year. 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% (2019: 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 2020 $ 2019 $ 1,500,093 1,500,093 1,500,093 1,500,093 - 1,500,093 - 1,500,093 39 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 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 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 after income tax Non-cash flows in profit Depreciation and amortisation Gain on fair value of derivatives Impairment Share of loss of equity-accounted investees Changes in assets and liabilities Decrease in prepayments Increase in trade & other receivables Increase/(decrease) in trade & other payables Increase in other provisions Decrease/(increase) in deferred tax assets 2020 $ 2019 $ 115,355 105,465 15,000 130,355 12,000 117,465 2020 $ 2019 $ 1,855,450 1,855,450 1,045,304 1,045,304 2020 $ 2019 $ 3,361,593 2,214,993 753,675 (515,892) - - (269,873) (1,357,758) 190,063 22,695 360,612 2,545,115 290,372 (21,064) 111,380 1,368 (1,140,665) (2,868,097) (279,774) 67,332 (129,102) (1,753,257) 40 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 9: Trade and Other Receivables Current Trade Receivables Expected Credit Losses of Receivables Contract Assets (a) Other Receivables (a) Contract Assets comprises of: - Contract Assets - Other Accrued Income 2020 $ 2019 $ 9,426,839 (4,344,517) 8,665,203 31,447 13,778,972 9,852,541 (2,598,330) 6,891,671 21,519 14,167,401 8,515,093 150,110 8,665,203 6,876,520 15,151 6,891,671 The movement in the expected credit losses in respect of trade receivables and other receivables are detailed below: Opening balance (Reported) Adjusted from adoption of AASB 9 Opening balance - Expected credit losses recognised during the year - Expected credit losses reversed during the year - Receivables written off during the year as uncollectible Closing balance Credit Policy (2,598,330) - (2,598,330) (3,212,104) - 1,465,917 (4,344,517) (1,804,162) (416,886) (2,221,048) (2,766,368) 32,560 2,356,526 (2,598,330) 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 based on expected credit loss model. 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 Expected credit losses Trade receivables net of expected credit losses 3,313,342 1,112,341 673,959 905,920 3,421,277 9,426,839 4,796,718 1,436,480 595,885 625,639 2,397,819 9,852,541 (4,344,517) 5,082,322 (2,598,330) 7,254,211 41 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 9: Trade and Other Receivables (continued) The expected credit loss for trade receivables as at 30 June 2020 and 30 June 2019 was determined as follows: At 30 June 2020 Not past due Past due 0 - 30 days Past due 31 - 60 days Past due 61 - 90 days Past due 90 days over Total At 30 June 2019 Not past due Past due 0 - 30 days Past due 31 - 60 days Past due 61 - 90 days Past due 90 days over Total Note 10: Bank Deposits Current Bank Deposits Expected Credit Loss Rate % 6.13% 23.19% 41.66% 70.12% 86.74% Expected Credit Loss Rate % 3.22% 13.88% 30.48% 45.37% 74.19% Gross Carrying Amount $ Expected Credit Loss $ 3,313,342 1,112,341 673,959 905,920 3,421,277 9,426,839 203,106 257,963 280,742 635,217 2,967,488 4,344,517 Gross Carrying Amount $ Expected Credit Loss $ 4,796,718 1,436,480 595,885 625,639 2,397,819 9,852,541 154,409 199,443 181,642 283,879 1,778,957 2,598,330 2020 $ 2019 $ 1,222,101 2,272,101 Bank deposits include term deposits which are held as security for bank guarantee amounting to $1,222,101 (2019: $2,272,101). Note 11: Other Assets Current Deferred Commission Costs Prepayments Security Deposit 2020 $ 2019 $ 11,365 1,824,969 142,266 1,978,600 32,915 1,555,096 41,516 1,629,527 42 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 12: Controlled Entities Parent Entity TPC Consolidated Limited Controlled Entities Interest at Cost CovaU Pty Limited iGENO Pty Limited Tel.Pacific ESOP Pty Limited Kinect Inc. (1) Gen Earth Pty Limited (2) Investment in controlled entities Impairment losses Total investment in controlled entities Country of Incorporation Effective Interest 2020 2019 % % Company's recorded amount of Investment 2020 $ 2019 $ Australia Australia Australia Australia Philippines Australia 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 12 100 1 115,693 200 116,006 - 116,006 12 100 1 38,864 - 38,977 - 38,977 (1) Kinect Inc. was incorporated in the Philippines on 6 October 2017. (2) Gen Earth Pty Limited was acquired on 10 January 2020 and it has been dormant since its incorporation. Note 13: Property, Plant and Equipment Network Equipment & Software Less: Accumulated Depreciation Office Equipment & Software Less: Accumulated Depreciation Office Fittings & Furniture Less: Accumulated Depreciation 2020 $ 2019 $ 796,327 (705,553) 90,774 736,345 (680,366) 55,979 1,436,211 (1,218,076) 218,135 1,345,011 (1,141,998) 203,013 1,949,247 (1,361,858) 587,389 1,875,339 (1,196,631) 678,708 896,298 937,700 43 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 13: Property, Plant and Equipment (continued) Movement in Carrying Amount 2020 Balance at the beginning of the year Reclassification Additions Depreciation expense Foreign currency exchange difference Network Equipment & Software $ Office Equipment & Software $ Office Fittings & Furniture $ Total $ 55,979 203,013 678,708 937,700 - 59,983 (25,188) - (46,928) 117,052 (73,122) 18,120 46,928 3,485 (156,039) 14,307 - 180,520 (254,349) 32,427 Balance at the end of the year 90,774 218,135 587,389 896,298 2019 Balance at the beginning of the year Reclassification Additions Disposal Depreciation expense Foreign currency exchange difference Network Equipment & Software $ Office Equipment & Software $ Office Fittings & Furniture $ Total $ 57,216 190,363 807,437 1,055,016 - 25,433 - (26,670) - 6,177 75,877 (10,560) (64,419) 5,575 (6,177) 66,901 - (199,283) 9,830 - 168,211 (10,560) (290,372) 15,405 Balance at the end of the year 55,979 203,013 678,708 937,700 44 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 14: Leases (a) Amounts recognised in the balance sheet The balance sheet shows the following amounts relating to leases: Right-of-use asset - Properties At cost Less: Accumulated depreciation Balance at 1 July 2018 Balance at 30 June 2019 Adoption of AASB 16 on 1 July 2019 Depreciation Foreign currency exchange difference Balance at 30 June 2020 Lease liabilities Current Non-current 2020 $ 2019 $ 2,175,777 (1,265,402) 910,375 - - - - - 1,398,633 (499,326) 11,068 910,375 488,682 666,645 1,155,327 The lease liabilities are secured by the related underlying assets. Future minimum lease payments at 30 June 2020 were as follows: At 30 June 2020 Lease payments Finance charges Net present value At 30 June 2019 Lease payments Finance charges Net present value Within 1 year $ 1-2 year $ 2-3 year $ 3-4 year $ Total $ 544,370 (55,688) 488,682 601,819 (87,305) 514,514 463,091 (29,011) 434,080 526,081 (55,522) 470,559 236,748 (4,183) 232,565 463,091 (29,011) 434,080 - - - 1,244,209 (88,882) 1,155,327 236,748 (4,183) 232,565 1,827,739 (176,021) 1,651,718 (b) Amounts recognised in the statement of profit or loss The statement of profit or loss shows the following amounts relating to leases: Depreciation charge of right-of-use asset Right-of-use asset Interest expense (included in finance cost) Expense relating to short-term leases 2020 $ 499,326 65,368 274,459 45 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 15: Trade and Other Payables Current Trade Payables Accrued Expenses Sundry Payables Goods and Services Tax Payable Note 16: Borrowings Current Bank borrowings - Invoice finance facility 2020 $ 2019 $ 1,888,072 5,366,829 155,971 120,681 7,531,553 1,111,061 8,189,586 153,256 9,184 9,463,087 2020 $ 2019 $ 751,368 751,368 2,946,218 2,946,218 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 (2019: $6m). Note 17: Provisions Short Term Provisions Leave Entitlement (1) Future Rent Long Term Provisions Leave Entitlement (1) Future Rent 2020 $ 2019 $ 1,315,435 - 1,315,435 1,115,230 29,790 1,145,020 99,194 - 99,194 88,299 158,615 246,914 (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. 46 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 18: Contract Liabilities Unearned revenue relating to energy services Unearned revenue relating to telecommunication services 2020 $ 1,487,789 392,451 1,880,240 2019 $ 1,306,274 544,239 1,850,513 The amounts recognised as a contract liability will generally be utilised within the next reporting period. Note 19: Issued Capital (a) Ordinary Shares Issued and Fully Paid Issued and Partially Paid (1) 2020 2019 Number $ Number $ 9,715,613 1,520,000 11,235,613 9,896,668 23,400 9,920,068 9,715,613 1,520,000 11,235,613 9,797,668 27,360 9,825,028 (b) Movements in Ordinary Shares on Issue Balance at the beginning of the year 11,235,613 9,833,668 11,235,613 9,825,028 Payments related to ESOP shares - 86,400 - 8,640 Balance at the end of the year 11,235,613 9,920,068 11,235,613 9,833,668 (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 25(a). 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. 47 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 19: 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 20: Reserves Foreign Currency Translation Reserve 2020 $ 2019 $ 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 Balance at the end of the year Employee Equity Benefits Reserve 10,958 (10,170) 788 2,487 8,471 10,958 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 Balance at the end of the year Cashflow Hedge Reserve Balance at the beginning of the year Transferred to retained earnings Cashflow hedge loss recognised in equity Balance at the end of the year Total Reserves 26,715 26,715 26,715 26,715 (312,998) - (653,769) (966,767) (584,468) 732,435 (460,965) (312,998) (939,264) (275,325) 48 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 21: Contingent Liabilities As at 30 June 2020 the consolidated entity has issued bank guarantees totalling $1,222,101 (2019: 2,272,101) 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 22: 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, the Company has received commission totalling $3,353 GST inclusive (2019: $14,092) 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 10 January 2020, the Company purchased Gen Earth Pty Limited which has been dormant since its incorporation, from CTC Capital Pty Ltd, whom Chiao-Heng (Charles) Huang is a sole director with a consideration of $200 on normal commercial terms and conditions no more favourable than those available to other parties. 49 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 23: Fair Value of Financial Instruments At balance date, the Company has a number of derivative financial instruments which are recorded at fair value in the Statement of Financial Position. Current Liabilities Derivative financial instruments Opening Balance - Designated - Non designated Acquired Recognised in the statement of profit or loss and other comprehensive income Closing Balance - Designated - Non designated Fair Value $ Carrying Amount $ 291,934 - 291,934 137,877 - 377,149 52,662 429,811 291,934 - 291,934 137,877 - 377,149 52,662 429,811 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 liabilities Derivative financial instrument - Energy derivatives - cash flow hedges - Foreign currency derivatives - cash flow hedges Carrying Amount $ Level 2 $ Total $ 377,149 52,662 429,811 377,149 52,662 429,811 377,149 52,662 429,811 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. 50 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 24: Directors and Executives Disclosures (a) Remuneration of Key Management Personnel Short-term Employee Benefits Long-term Employee Benefits Post-employment Benefits 2020 $ 1,444,594 72,816 128,915 1,646,325 2019 $ 1,378,165 17,593 126,469 1,522,227 The remuneration paid to the key management personnel is detailed in the Directors' Report. Note 25: 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% 51 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 25: 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 $ 1,500,000 (200,000) 1,300,000 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 shares 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 10-14. (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 2020 $ 2019 $ - - The company contributes to employee superannuation plans in accordance with contractual and statutory requirements. Defined contribution superannuation expense 473,085 486,179 2020 $ 2019 $ 52 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 26: 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, caps and options. The Group uses the following types of derivative instruments to mitigate energy price risk. - Forwards: A contract documenting the underlying reference rate (such as benchmark price or exchange rate) to be paid or received on a notional principal obligation at a future date. - Futures: An exchange-traded contract to buy or sell an asset for an agreed price at a future date. Futures are net- settled in cash without physical delivery of the underlying asset. - Swaps: A contract in which two parties exchange a series of cash flows for another. - Options: A contract in which the buyer has the right, but not the obligation, to buy (a call option) or sell (a put option) an instrument at a fixed price in the future. The seller has the corresponding obligation to fulfil the transaction if the buyer exercises the option. Derivatives are carried on the balance sheet at fair value. Movements in the price of the underlying variables, which cause the value of the contract to fluctuate, are reflected in the fair value of the derivative. The Group currently uses Cashflow hedge accounting relationships as detailed below: Objective of hedging arrangement To hedge our exposure to variability in the cash flows of a recognised asset or liability, or a highly probable forecast transaction caused by commodity price movements. Effective hedge portion The effective portion of changes in the fair value of derivatives designated as cash flow hedges are recognised in the hedge reserve. Hedge ineffectiveness Certain determinants of fair value, such as credit charges included in derivatives, or mismatches between the timing of the instrument and the underlying item in the hedge relationship, can cause hedge ineffectiveness. Any ineffectiveness is recognised immediately in profit or loss as a change in the fair value of derivatives. Hedged item sold or repaid Amounts accumulated in the hedge reserve are transferred immediately to profit or loss. 53 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 26: Financial Instruments and Financial Risk Management Objectives and Policies (continued) (a) Energy Price Risk (continued) Hedging instrument expires, is sold, is terminated or no longer qualifies for hedge accounting The amount previously deferred in the hedge reserve is only transferred to profit or loss when the hedged item is also recognised in profit or loss. Set out below are the fair values of derivatives designated in hedge accounting relationships at reporting date. Cashflow Hedge Accounting Hedge Current Liabilities $ 429,811 429,811 A number of derivative contracts have been designated as cash flow hedges of the Group's exposure to foreign exchange, interest rate and commodity price fluctuations. Designated derivatives include swaps, options, futures and forwards. Electricity Gas RECs FX Nominal hedge volume 204,090 MWh 55,200 GJ 275,000 units PHP 23.4M Hedge rates $43.80 - $89.25 $4.60 - $4.90 $14.75 - $38.55 31.72 - 33.10 Carry amounts Hedging instrument - assets/(liabilities) Hedge reserve Fair value increase/(decrease) Hedging instrument Hedged item Hedge inffectiveness Reconciliation of hedge reserve Effective portion of hedge gains/(losses) Transfer of deferred losses/(gains) to: - Cost of sales Change in hedge reserve Electricity $ (2,345,946) (2,345,946) Gas $ 2,760 2,760 RECs $ 1,966,037 1,376,418 FX $ (52,662) - Total $ (429,811) (966,768) (2,296,225) 2,296,225 - 15,180 (15,180) - 2,195,830 (1,594,723) (601,107) (52,662) - (52,662) (137,877) 686,322 548,445 (2,296,225) 15,180 1,594,723 (49,721) (2,345,946) (12,420) 2,760 94693 1,689,416 - - - (686,322) 32,552 (653,770) 54 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 26: 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 2020 Financial Assets Cash Trade and other receivables (1) Bank deposit (1) Financial Liabilities Trade and other payables (2) Borrowing (2) 2019 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, excluding GST payable Average Effective Interest Rate Total Note $ 8 9 11 15 16 8 9 11 15 16 1,855,450 13,778,972 1,222,101 16,856,523 7,410,873 751,368 8,162,241 1,045,304 14,167,401 2,272,101 17,484,806 9,453,903 2,946,218 12,400,121 0.02% 0.00% 1.17% 0.00% 6.25% 0.03% 0.00% 2.27% 0.00% 6.43% 55 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 26: 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 Philippine Peso. 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 Philippine Peso (d) Credit Risk Assets 2020 227,056 18,089 112,347 357,492 2019 178,411 18,468 72,557 269,436 Liabilities 2020 14,803 - 36,039 50,842 2019 14,823 - 4,821 19,644 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. 56 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 26: 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. 2020 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 $ 6.25% 13,778,972 1,855,450 1,222,101 (7,531,554) (751,368) 8,573,601 - (429,811) (429,811) - - - - - - - - - - - - - - - - - - 13,778,972 1,855,450 1,222,101 (7,531,554) (751,368) 8,573,601 - (429,811) (429,811) 57 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 26: Financial Instruments and Financial Risk Management Objectives and Policies (continued) (e) Liquidity Risk (continued) 2019 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 $ 6.43% 14,167,401 1,045,304 2,272,101 (9,463,087) (2,946,218) 5,075,501 - (291,934) (291,934) - - - - - - - - - - - - - - - - - - 14,167,401 1,045,304 2,272,101 (9,463,087) (2,946,218) 5,075,501 - (291,934) (291,934) As at 30 June 2020, the group maintained a total $3,077,551 in cash balance and bank deposits. 58 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 26: 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 2020 Year Ended 30 June 2019 Profit/Loss +10% $ -10% $ Equity Profit/Loss Equity +10% $ -10% $ +10% $ -10% $ +10% $ -10% $ 222,687 (469,164) (246,477) (179,700) 330,003 150,303 222,687 (469,164) (246,477) (179,700) 330,003 150,303 (701,806) (650,223) (1,352,029) 686,804 650,223 1,337,027 (701,806) (650,223) (1,352,029) 686,804 650,223 1,337,027 (Decrease)/increase - 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 2020 Year Ended 30 June 2019 Profit/Loss +0.5% $ -0.5% $ Equity +0.5% $ -0.5% $ Profit/Loss +0.5% $ -0.5% $ Equity +0.5% $ -0.5% $ Financial Assets Cash and cash equivalents Other assets - term deposit Financial Liabilities Borrowings Increase/(decrease) 5,076 (5,076) 5,076 (5,076) 2,859 (2,859) 2,859 (2,859) 6,115 (6,115) 6,115 (6,115) 10,779 (10,779) 10,779 (10,779) (6,471) 4,720 6,471 (4,720) (6,471) 4,720 6,471 (4,720) (8,992) 4,646 8,992 (4,646) (8,992) 4,646 8,992 (4,646) 59 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 26: Financial Instruments and Financial Risk Management Objectives and Policies (continued) (f) Summarised Sensitivity Analysis (Continued) 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 2020 Year Ended 30 June 2019 Profit/Loss +10% $ -10% $ Equity Profit/Loss Equity +10% $ -10% $ +10% $ -10% $ +10% $ -10% $ (Decrease)/increase (19,341) (19,341) 23,639 23,639 (19,341) (19,341) 23,639 23,639 (15,896) (15,896) 19,428 19,428 (15,896) (15,896) 19,428 19,428 60 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 27: 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. 2020 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 Profit before income tax for the year Other Segment Information Depreciation Energy Services $ Telecom- munication Services $ Total $ 84,619,523 452,829 - 85,072,352 1,720,445 85,039 - 1,805,484 86,339,968 537,868 - 86,877,836 4,039,107 230,172 4,269,279 27,952 (292,220) - 4,005,011 753,675 - 753,675 61 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 27: Segment Reporting (continued) 2019 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 Profit before income tax for the year Other Segment Information Depreciation Impairment Energy Services $ Telecom- munication Services $ Total $ 81,023,280 7,719 - 81,030,999 2,313,249 161,452 - 2,474,701 83,336,529 169,171 - 83,505,700 1,791,732 487,611 2,279,343 103,523 (170,541) (1,368) 2,210,957 279,370 111,380 11,002 - 290,372 111,380 No segment assets and liabilities are disclosed because there is no measure of segment liabilities regularly reported to chief operating decision makers. 62 Notes to the Consolidated Financial Statements For the year ended 30 June 2020 Note 28: Parent Entity Disclosures Current assets Total assets Current liabilities Total liabilities Issued capital Employee equity benefits reserve Retained earnings Shareholders' equity Profit/(Loss) for the year Total comprehensive income Parent entity contingencies Company 2020 $ 2019 $ 2,706,613 5,533,646 2,557,507 4,557,835 10,634,275 11,606,459 11,710,409 11,932,029 9,920,068 26,715 (16,019,596) (6,072,813) 9,833,668 26,715 (17,234,577) (7,374,194) 1,250,596 (4,644,518) 1,250,596 (4,644,518) The details of all contingent liabilities in respect to TPC Consolidated Limited are disclosed in Note 21. The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1. Note 29: Events Subsequent to the End of the Financial Year To date, the Group has experienced minimal financial impacts of COVID-19 specially on the CovaU business in the year ended 30 June 2020. The Group is unable to determine if COVID-19 will have a material impact to its operations. The Group is managing the downside risk presented by COVID-19 via tight management of costs, a focus on working capital management and targeted deployment of capital and resources. The directors expect continued growth in the energy business going forward and that the Group will maintain its profitability and cash flow in the financial year ending 30 June 2021. Management are exploring strategies to grow the energy business through strategic partnerships, acquisitions and organic means. 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 30: Company Details The Company is incorporated and domiciled in Australia. The registered office and principal place of business of the Company is: Suite 1103, Level 11, 201 Kent Street, Sydney NSW 2000, Australia 63 Directors' Declaration The directors of the Company declare that: 1. 2. 3. 4. The financial statements, comprising the consolidated statement of profit or loss and other comprehensive financial position, consolidated statement of changes in equity, income, consolidated statement of 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 2020 and of its performance for the year ended on that date. 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, 28 August 2020 64 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 2020, 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 2020 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 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. Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘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. 65 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. Key audit matter Estimation of unbilled revenue – Note 9 Unbilled revenue of $8,515,093 represents the value of gas and electricity supplied to customers for the period between the date of the last meter reading and the reporting date of 30 June 2020, of which the invoices had not been issued to the customers. Detailed calculations utilising estimates of the electricity and gas consumption of the Group’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 customer consumption between the last invoice date and the end of the reporting period and the application of pricing assumptions to the calculation of unbilled revenue. Unbilled network expenses – Note 15 Management estimates energy consumption between the date of the last invoice date from the energy distributor to the Group, and the end of the reporting period when estimating network expenses. Detailed financial models utilising estimates of the electricity and gas consumption of the Group’s customers are used to determine the unbilled distribution costs of. Detailed calculations utilising estimates of the electricity and gas consumption of the Group’s customers are used to determine the unbilled network expenses of $5,366,829, as disclosed in Trade and Other Payables in Note 17 to the financial statements. This area is a key audit matter due to the estimation uncertainty involved in estimating the volume of energy purchased to satisfy the Groups customer demand since the last invoice. Derivative financial instruments – Note 23 The Group enters into derivative arrangements, such as energy price caps and swaps, in order to hedge its exposure to the variable and volatile 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 under AASB 9: Financial Instruments. There is also a requirement to record the derivatives at fair value, which involves the application of further judgement. This area is a key audit matter due to the heightened complexities associated with the valuation and accounting for these derivative financial instruments and this is the first year of the adoption of AASB 9. Upon adoption, the Group was required to assess whether their derivative arrangements still met the recognition and measurement requirements under the new standards. How our audit addressed the key audit matter Our procedures included, amongst others: • • Obtaining an understanding of the key controls 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 management’s reconciliation of purchase volumes to revenue volumes recognised; Challenging management’s calculations and assumptions and comparing: o • • o 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’) for electricity, Short Term Trading Market (STTM) for gas in New South Wales and Declared Wholesale Gas Market (DWGM) for gas in Victoria; and • Assessing the adequacy of the Group’s disclosures in respect of unbilled revenue. Our procedures included, amongst others: • • Obtaining an understanding of the process flows and key controls in place to determine the estimate of the accrued expenses; Testing the volume of wholesale energy purchased by the Group to the invoices received from Australian Energy Market Operator (‘AEMO’) for electricity, Short Term Trading Market (STTM) for gas in New South Wales and Declared Wholesale Gas Market (DWGM) for gas in Victoria on a sample basis; Reconciling purchase volumes to revenue volumes recognised; Comparing post period-end invoices to management’s estimate of accrued expenses; and Assessing the appropriateness and adequacy of the disclosures in the financial report. • • • 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 and evaluating management’s hedge documentation of significant hedge relationships for compliance with AASB 9; Identifying a complete list of swap and cap contracts by inquiring with management, reviewing counterparty statements and considering results of confirmations; Confirming directly with the counterparty the key terms and conditions of the agreement and pricing of an equivalent contract as of the year end date; Comparing the year end pricing provided by the counterparty to the contracted pricing, recalculating the fair value of the financial instrument and comparing to the fair values as recorded by management; and Assessing the appropriateness of the disclosures in the financial report. • • 66 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 2020, 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 accordingly 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. The Directors’ responsibility also includes 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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 10-14 of the Directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of TPC Consolidated Limited, for the year ended 30 June 2020 complies with section 300A of the Corporations Act 2001. 67 Responsibilities The Directors of the Group 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 S M Thomas Partner – Audit & Assurance Sydney, 28 August 2020 68 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 10 August 2020 Equity Security Shares on issue (b) Distribution of Equity Securities as at 31 July 2020 Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Total There were 17 holders of less than a marketable parcel of 2,048 ordinary shares. (c) Substantial Shareholders as at 10 August 2020 Rank Shareholder Tel.Pacific ESOP Pty Limited 1 Mr Chiao Heng Huang 2 3 Mr Barry Christopher Chan 4 5 Megaway Group Limited Focus Capital Finance Limited Number 11,235,613 Class of Equity Securities Ordinary Shares Holders Ordinary Shares Units 217 80 17 33 14 361 197,825 219,179 128,651 914,497 9,775,461 11,235,613 Number of Shares % of Issued Capital 4,063,393 1,300,000 700,000 544,500 544,500 36.17 11.57 6.23 4.85 4.85 69 Shareholder Information (d) Twenty Largest Shareholders as at 10 August 2020 Rank Shareholder Number of Shares % of Issued Capital Tel.Pacific ESOP Pty Limited Focus Capital Finance Limited Fortune Giant International Limited 1 Mr Chiao Heng Huang 2 3 Mr Barry Christopher Chan 4 5 Megaway Group Limited 6 Mr Guonan Guan 7 8 Ms Wei Chun Wu 9 Mr Bob Cheng 10 Mr Maobin Guan 11 Mrs Xiaohong Xue 12 13 14 Middleton Capital Investment Pty Ltd (Chen and Xuan Family A/C) 15 Mr Jeffrey Wu Kin Ma 16 Mr Chiao Ting Huang 17 Mr Junwu Lian 18 Snowtop Wealth Management Pty Ltd 19 Mr Muhammad Patel 20 Mrs Samantha Vieira CX & J Pty Ltd (CXJ Superannuation Fund A/C) Global Property Services Pty Limited (Super Account) Total 4,063,393 1,300,000 700,000 544,500 544,500 440,809 424,924 415,000 379,488 228,888 228,888 202,959 137,112 105,000 82,003 77,476 70,000 67,315 50,313 42,744 10,105,312 36.17 11.57 6.23 4.85 4.85 3.92 3.78 3.69 3.38 2.04 2.04 1.81 1.22 0.93 0.73 0.69 0.62 0.60 0.45 0.38 89.94 70 Corporate Directory Directors Greg McCann Chiao-Heng (Charles) Huang Jeffrey Ma Steven Goodarzi Company Secretary Jeffrey Ma Registered Office Suite 1103, Level 11, 201 Kent 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 Baker & McKenzie Level 46, 100 Barangaroo Avenue Sydney NSW 2000 Banker Commonwealth Bank 48 Martin Place Sydney NSW 2000 Westpac Banking Corporation 425 Victoria Avenue Chatswood NSW 2067 71
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