PPK GROUP LIMITED — Annual Report 2009

Aug 30, 2009

PPK GROUP LIMITED

ABN 65 003 964 181

PRELIMINARY FINAL REPORT

APPENDIX 4E

FINANCIAL YEAR ENDED 30 JUNE 2009

Previous Corresponding Year 30 June 2008

This information is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.3A.

HIGHLIGHTS OF RESULTS FOR ANNOUNCEMENT TO THE MARKET

(figures are in A$000s)

	$000s	$000s	$000s	%
SALES REVENUE	4,867	4,251	616	14.5%
RENTAL INCOME FROM INVESTMENT PROPERTIES	4,776	4,396	380	9%
NET PROFIT BEFORE INCOME TAX AND(LOSSES)/GAINS FROM INVESTING	3,084	1,577	1,507	96%
UNREALISED (LOSSES)/GAINS FROM INVESTING	(2,755)	(2,184)	(571)	26%
REALISED GAINS FROM INVESTING	132	1,309	(1,177)	-90%
PROFIT BEFORE INCOME TAX	461	702	(241)	-34%
PROFIT AFTER TAX ATTRIBUTABLE TO MEMBERS	540	607	(67)	-11%

	June2009$000s	June2008$000s	Change$000s	Change%
SALES REVENUE	4,867	4,251	616	14.5%
RENTAL INCOME FROM INVESTMENT PROPERTIES	4,776	4,396	380	9%
NET PROFIT BEFORE INCOME TAX AND(LOSSES)/GAINS FROM INVESTING	3,084	1,577	1,507	96%
UNREALISED (LOSSES)/GAINS FROM INVESTING	(2,755)	(2,184)	(571)	26%
REALISED GAINS FROM INVESTING	132	1,309	(1,177)	-90%
PROFIT BEFORE INCOME TAX	461	702	(241)	-34%
PROFIT AFTER TAX ATTRIBUTABLE TO MEMBERS	540	607	(67)	-11%
EARNINGS PER SHARE	0.9	1.0	(0.1)	-10%

	CurrentYear	PreviousYear
Interim Dividend	1.50 cents	3.25 cents
Final Dividend	1.00 cent	3.25 cents
	2.50 cents	6.50 cents

RECORD DATE FOR DETERMINING ENTITLEMENT TO FINAL DIVIDEND TOTALLING 1.00 CENT PER SHARE 13 November 2009

COMMENTARY ON RESULTS

The significant volatility in the Australian share market continued to impact on PPK's result for the 2009 year.

Profit after tax for the year ended 30 June, 2009 was $540,000, equating to earnings per share (EPS) of 0.9 cents.

After recording a loss of $524,000 for the first half, PPK generated an after tax profit of $1,064 million in the second half.

The full year's results include:

(a) a non cash writedown of $2.755 million in the value of listed shares and derivatives held by PPK as at 30 June, 2009;

(b) profit before tax of $3.084 million from trading operations, being rental income and earnings by Rambor Pty Ltd; and

(c) net operating cash flows of $2.966 million (5.1 cps).

The Australian share market has remained volatile, though to a lesser degree in the second half of the reporting period. Whilst there are some signs of the world economy beginning to improve, volatility in the Australian share market could continue to impact on the value of PPK's investments in subsequent reporting periods.

PPK's manufacturing business, Rambor Pty Ltd, has delivered an improved performance in the 2009 year. Sales increased from $4.251 million to $4.867 million and profit before tax increased from $650,000 to $1.062 million. This business has improved significantly in the last two years, growing sales from $2.8 million to $4.6 million and profit before tax from $189,000 to over $1 million.

Rambor Pty Ltd continues to introduce new products to the market and is expected to continue to deliver a strong contribution to the PPK's future earnings.

PPK paid an interim dividend of 1.5 cents in March 2009 and the directors have resolved to pay a final fully franked dividend of 1.0 cent per share on 20 November, 2009, bringing the total fully franked dividend for the year ended 30 June, 2009 to 2.5 cents per share.

The directors will continue to monitor the effect of current economic conditions on PPK's earnings and dividends will be assessed on PPK's future performance.

CONSOLIDATED INCOME STATEMENT

	CURRENT YEAR$000s	PRIOR YEAR$000s
Sales Revenue	4,867	4,251
Cost of sales	(2,583)	(2,527)
GROSS PROFIT	2,284	1,724
Interest Received	428	898
Gain on sale of investment property	13	-
Gain on sale of available-for-sale financial assets	132	1,309
Foreign exchange gains/(losses)	70	(84)
Rental Income from investment properties	4,776	4,396
Fair value adjustment on derivatives	(1,059)	186
Other income	52	89
Warehouse & Distribution expenses	(54)	(47)
Selling Expenses	(64)	(74)
Administrative expenses	(3,262)	(3,816)
Impaiment of available-for-sale financial assets	(1,696)	(2,370)
Finance costs	(1,159)	(1,509)
PROFIT BEFORE INCOME TAX EXPENSE	461	702
Income tax (expense) / credit	79	(95)
PROFIT AFTER INCOME TAX FROM	540	607
Earnings per share
Continuing operations	0.9 cents	1.0 cents
Diluted Earnings per share	0.9 cents	1.0 cents
INDIVIDUALLY SIGNIFICANT ITEMS - Gains or ( losses )
Sale of rental property	13	-
Fair value adjustment on derivatives	(1,059)	186
Gain on sale of available-for-sale financial assets	132	1,309
Impaiment of available-for-sale financial assets	(1,696)	(2,122)
Impaiment in investment in unlisted companies	-	(248)
	(2 610)(2,610)	(875)
DEPRECIATION AND AMORTISATION COSTS
Depreciation & amortisation of property, plant & equipment	888	858
Amortisation of intangibles	113	101
	1,001	959

CONSOLIDATED BALANCE SHEET

		30-Jun-09	30-Jun-08
		$000s	$000s
Current Assets
	Cash	884	1,349
	Trade and other Receivables	2,261	3,263
	Inventories	1,423	1,051
	Other	355	362
		4,923	6,025
	Assets classified as held for sale	703	703
	Total Current Assets	5,626	6,728
	Non Current Assets
	Trade and other Receivables	2,331	7,216
	Available-for-sale financial assets	2,411	3,276
	Investment Property	35,137	40,466
	Other Property Plant & Equipment	2,027	2,149
	Intangibles	857	892
	Deferred Tax Assets	2,200	2,070
	Derivatives	288	1,347
	Total non current assets	45,251	57,416
TOTAL ASSETS		50,877	64,144
Current Liabilities
	Payables	692	1,027
	Borrowings	871	2,856
	Current Tax Liabilities	730	866
	Provisions	688	310
	Other	-	-
	Total Current Liabilities	2,981	5,059
	Non Current liabilities
	Borrowings	12,100	19,562
	Deferred Tax Liabilities	318	876
	Provisions	29	338
	Total Non Current liabilities	12,447	20,776
	TOTAL LIABILITIES	15,428	25,835
NET ASSETSNET ASSETS		35 44935,449	38 30938,309
Equity
	Contributed equity	31,249	32,033
	Reserves	(9)	(152)
	Retained profits	4,209	6,428
TOTAL EQUITY		35,449	38,309

CONSOLIDATED CASH FLOW STATEMENT

	Year Ended30-Jun-09$000s	Year Ended30-Jun-08$000s
Cash flows related to operating activities
Receipts from customers	9,920	8,556
Payments to suppliers and employees	(6,363)	(6,434)
Other Revenue	5	66
Interest Revenue	397	898
Dividends received	47	23
Income taxes paid	(806)	(3,210)
Other	(234)	(199)
Net Operating Cash Flows	2,966	(300)
Cash flows related to investing activities
Payment for purchases of property, plant and equipment	(396)	(733)
Proceeds from sale of investment property	4,920	-
Payment for purchases of equity investments net of cash acquired	-	-
Payment for convertible notes	(303)	(1,928)
Proceeds from sale of available-for-sale financial assets	401	3,772
Purchase of available for sale-financial-assets	(896)	(2,439)
Purchase of derivativesPayment for intangibles	-(78)	(340)(99)
Net Investing cash flows	3,648	(1,767)
Cash flows related to financing activitiesLoans Advanced	(149)	-
Payment for buyback of shares	(784)	(1,540)
(Repayment)/Proceeds from Bank loans	(7,393)	11,498
Repayment of borrowings	(392)	(397)
Loans repaid	7,219	229
Dividends paid	(2,759)	(6,998)
Interest and costs of borrowings	(1,159)	(1,509)
Net financing cash flows	(5,417)	1,283
Net increase (decrease) in cash held	1,197	(784)
Cash at beginning of period	(1,161)	(377)
Cash at end of period	36	(1,161)
Reconciliation of cash
Reconciliation of cash at the end of the period (as shown inthe consolidated statement of cash flows) to the related itemsin the accounts is as follows.
Continuing operationsCash on hand and at bank	884	1,349
Bank Overdraft	(848)	(2,510)
Total cash at end of period	36	(1,161)
Non Cash Financing and Investing Activities during the year	$000s

Fair value adjustments in Derivatives - (decrease)/increase in value (1,059) 186

Earnings per security (EPS)

Details of basic and diluted EPS reported separately in accordance with paragraph 9 and 18 of AASB 1027 : Earnings per share are as follows:

		2009	2008
Earnings used in the calculation of basic EPS		540,000	607,000
Earnings used in the calculation of diluted EPS		540,000	607,000
Weighted average number of ordinary shares outstandingDuring the year used in the calculation of:
Basic EPS		58,271,808	60,490,849
Diluted EPS		58,271,808	60,490,849
Basic EPS - Cents		0.9	1.0
Diluted EPS - Cents		0.9	1.0
NTA Backing	Current period	Previous corresponding
		period

Net tangible asset backing per share 59.6 cents 61.9 cents

DIVIDENDS

Final dividend resolved to be paid 1.00 cent per share fully franked Date dividend is payable 20 November 2009 Record date 13 November 2009 Ex dividend date 6 November 2009 Current Previous Year Year Interim Dividend 1.50 cents 3.25 cents Final Dividend 1.00 cents 3.25 cents 2.50 cents 6.5 cents

The amount of retained profits and reserves that could be distributed as fully franked dividends from franking credits tha could franked franking credits exist or will arise after payment of income tax in the next year in respect to the 2009 year is $4,209,000. We anticipate that dividends will be fully franked for the foreseeable future.

	CurrentYear$000s	PriorYear$000s
Amount of final dividend payable - fully franked	580	-1,926

Both current and prior year dividends were fully franked.

CONSOLIDATED RETAINED PROFITS	CurrentYear$000s		PriorYear$000s
Retained profits at the beginning of the financial year	6,428		12,819
Net profit attributable to members	540		607
Dividends paid	(2,759)		(6,998)
Retained profits at the end of the financial year	4,209		6,428
ORDINARY SHARES ON ISSUE		NUMBER
Number of securities on issue at beginning of year		59,252,613
Shares repurchased through approved buyback scheme		(1,245,963)
		58,006,650

OPTIONS

There were no options outstanding as at balance date.

POST BALANCE DATE EVENTS

Options to re-lease two properties have not been exercised by the tenant and the current leases will expire on 31 August 2009. These properties are being marketed for re-lease and the Board expects these properties will be re-leased in the 2010 financial year.

PPK Properties Pty Ltd is in litigation with the tenant of the Arndell Park, Sydney property over the validity of the lease on this property. It is anticipated that the dispute will be determined by the Court in October 2009.

On 13 July 2009, PPK Investment Holdings Pty Ltd (PPK Investments) and Frigrite Limited (FRR) entered into a Placement Agreement for the issue of convertible notes and an Underwriting Agreement in relation to a share rights issue by FRR.

Pursuant to the terms of the Placement Agreement, PPK Investments was issued 2,000,000 FRR convertible notes at $1.00 each. Each note converts to 5 ordinary shares and pays an interest rate of 12.5% per annum. Each note has 5 attaching options exercisable at 20 cents each at any time within 3 years from the date of issue.

Pursuant to the terms of the Underwriting Agreement and as a result of PPK Investment's entitlements under the rights issue, PPK Investments subscribed for and was issued 13,862,864 FRR shares at 12 cents per share and at a total cost of $1,663,000.

The issue of these shares on 26 August 2009 has increased PPK Investment's shareholding in FRR to approximately 32%. In accordance with the relevant Accounting Standards, FRR has become an associate of PPK Group Limited (PPK) and PPK will be required to recognise and record in its accounts its relevant share of FRR profits and losses as from 26 August 2009.

No other matters or circumstances have arisen since the end of the financial year which significantly affected the operations of the economic entity, the results of those operations or the state of affairs of the economic entity in subsequent periods.

AUDIT STATUS

The accounts are currently in the process of being audited.