PPK GROUP LIMITED — Annual Report 2012

Aug 27, 2012

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APPENDIX 4E

PRELIMINARY FINAL REPORT GIVEN TO THE ASX UNDER LISTING RULE 4.3A

PPK GROUP LIMITED ABN 65 003 964 181

FINANCIAL YEAR ENDED 30 JUNE 2012

ABN: 65 003 964 181 SUITE 3, LEVEL 2, 668 PRINCES HWY, SUTHERLAND NSW 2232 PO Box 3006, KIRRAWEE DELIVERY CENTRE NSW 2232 Tel: 61 (2) 9521 8444 ◙ Fax: 61 (2) 9521 4561

HIGHLIGHTS OF RESULTS FOR ANNOUNCEMENT TO THE MARKET

(figures are in A$000s)

SALES REVENUE RENTAL INCOME FROM INVESTMENT PROPERTIES REALISED GAINS FROM INVESTING REALISED GAIN ON SALE OF INVESTMENT PROPERTY PROFIT / (LOSS) BEFORE INCOME TAX PROFIT / (LOSS) AFTER TAX ATTRIBUTABLE TO MEMBERS EARNINGS PER SHARE	June 2012 $000s	June 2011 $000s	Change $000s	Change %
SALES REVENUE	7,711	6,102	1,609	26.4%
RENTAL INCOME FROM INVESTMENT PROPERTIES	2,211	2,146	65	3%
REALISED GAINS FROM INVESTING	157	10	147	1470%
REALISED GAIN ON SALE OF INVESTMENT PROPERTY	-	1,514	(1,514)	-100%
PROFIT / (LOSS) BEFORE INCOME TAX	1,968	(1,691)	3,659	Loss to toprofit
PROFIT / (LOSS) AFTER TAX ATTRIBUTABLE TO MEMBERS	1,543	(2,515)	4,058	Loss to toprofit
EARNINGS PER SHARE	2.9	-4.5	7.4	Loss to toprofit

Interim Dividend Final Dividend	Current Year 1.00 cent nil 1.00 cent	Previous Year 1.00 cent 1.50 cents
		2.50 cents

The Directors have resolved that no Final Dividend will be paid this year.

The Annual General Meeting of the Company will be held at 3.00 pm on Tuesday 20 November 2012 at the Grace Hotel, 77 York Street, Sydney NSW Australia.

COMMENTARY ON RESULTS

PPK Group Limited ( PPK ) is pleased to report a profit after tax for the 2012 year of $1,543,000. This compares to a loss after tax for the 2011 year of $2,515,000, an improvement of $4,058,000.

Property

Property rental income has remained steady compared to the 2011 year.

The Dandenong, Victoria property has a lease in place until August 2015.

The Seven Hills, New South Wales property will be vacated by the existing tenant on expiry of the current lease at the end of October 2012. The property is currently being marketed for lease or sale.

The Arndell Park, New South Wales property is leased on a number of short term tenancies with significantly progressed negotiations for either a sale of the property or a long term lease.

Rambor

Rambor performed well in the 2012 year achieving its budgeted sales and earnings.

Rambor continues to expand its product range and to extend its distribution coverage into new geographic markets. However continued growth and expansion may possibly to be impacted by the current slow down in the resources sector.

PPK Willoughby Pty Ltd

The Kiah Willoughby Project in which PPK holds an 18.85% interest, although delayed by the extended wet weather experienced in Sydney, remains on track to deliver the expected returns.

The 14 Stage 1 homes are scheduled for completion and settlement of sales in October 2012 at which time profits will commence to flow through to PPK.

PPK Southport Pty Ltd

PPK has a lead role and a 25% interest in the Nerang Street Southport Project Trust.

The amalgamation of an adjoining site is progressing and this amalgamation will add to the potential of the project.

PPK Easy Living Pty Ltd

PPK holds a 50% interest in each of the:

• Easy Living Unit Trust ( ELUT ); and

• Easy Living (Bundaberg) Trust ( ELBT ).

ELUT has completed the acquisition of a profitable 60 unit retirement village in Elizabeth Vale, South Australia will be strata titled and re-sold.

ELBT is in the process of acquiring a profitable 54 unit retirement village in Bundaberg, Queensland which will also be strata titled and re-sold.

PPK Finance Pty Ltd

PPK has the lead role, and a 51.4% interest, in a syndicate established to provide secured finance to Supported Living on Tweed Pty Ltd, a non-associated party operating retirement villages in northern New South Wales and Queensland.

The secured finance facilities were settled in August, with the first year's interest prepaid, and accordingly the syndicate will deliver an immediate earnings contribution to PPK.

Dividend

Whilst PPK has a strong cash position, because of the write-downs and impairments which impacted on retained earnings in the 2010 and 2011 years, on the basis of the ATO's analysis of the law in ATO Ruling 2012/5 the payment of a dividend by PPK in its current circumstances will constitute a return of capital by PPK.

A return of capital requires shareholder approval and has differing, and potentially complex, tax implications for individual shareholders.

In the circumstances, the directors have resolved not to pay a final dividend for the 2012 year.

As soon as the Company's profits and retained earnings position is restored, which is anticipated to occur in the first half of 2013, it is the Board's intention to resume dividend payments.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

REVENUES Mining equipment manufacture Investment properties Investment activities Interest receivable TOTAL REVENUE OTHER INCOME EXPENDITURE Mining equipment manufacture Investment properties Investment activities Administrative expenses Finance costs TOTAL EXPENDITURE Share of profit / (loss) from associated entities PROFIT / (LOSS) BEFORE INCOME TAX EXPENSE Income tax (expense) PROFIT / (LOSS) AFTER INCOME TAX PROFIT / (LOSS) IS ATTRIBUTABLE TO: Owners of PPK Group Limited Non-controlling interest OTHER COMPREHENSIVE INCOME Changes in value on available-for-sale financial assets Provision for income tax thereon Unrealised impairment losses on available-for-sale financial assets transferred to the income statement from the asset revaluation reserve Provision for income tax thereon Realised gain on sale of available-for-sale financial assets transferred to the income statement from the asset revaluation reserve Provision for income tax thereon OTHER COMPREHENSIVE INCOME NET OF INCOME TAX TOTAL COMPREHENSIVE INCOME FOR THE YEAR TOTAL COMPREHESIVE INCOME IS ATTRIBUTABLE TO: Owners of PPK Group Limited Non-controlling interest	30 June 2012 $000s 7,711 2,211 65 1,337 11,324 820 (6,265) (653) (98) (1,759) (1,410) (10,185) 9 1,968 (417) 1,551 1,543 8 1,551 84 (25) - - (163) 49 (55) 1,496 1,488 8 1,496	30 June 2011 $000s
		6,102 2,146 23 1,589
		9,860 3,253 (4,665) (1,071) (5,671) (1,567) (1,418)
		(14,392) (412)
		(1,691) (824)
		(2,515)
		(2,515) -
		(2,515)
		163 (49) (13) 4 (10) 3
		98
		(2,417)
		(2,417) -
		(2,417)

Earnings per share Continuing operations 2.9 cents (4.5) cents Diluted Earnings per share 2.9 cents (4.5) cents

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Current Assets Cash Trade and other receivables Inventories Other current assets Financial assets at fair value through profit or loss Total Current Assets Non Current Assets Trade and other receivables Financial assets Investments in associated entities Investment properties Other property plant & equipment Intangibles Deferred tax assets Total non current assets Total Assets Current Liabilities Trade and other payables Interest bearing liabilities Current tax liabilities Provisions Total Current Liabilities Non Current liabilities Interest bearing liabilities Deferred tax liabilities Provisions Total Non Current liabilities Total Liabilities Net Assets Equity Contributed equity Reserves Retained earnings / (accumulated losses) Capital and reserves attributable to owners of PPK Group Ltd Non-controlling interests Total Equity	30 June 2012 $000s 9,079 2,696 1,162 323 327 13,587 6,276 756 9 27,276 1,273 1,413 1,589 38,592 52,179 695 925 422 311 2,353 20,500 29 89 20,618 22,971 29,208 29,016 67 123 29,206 2 29,208	30 June 2011 $000s
		9,681 4,367 1,813 395 -
		16,256
		5,166 745 - 24,486 1,412 742 1,646
		34,197
		50,453
		625 1,074 122 247
		2,068 18,500 35 68
		18,603
		20,671
		29,782
		29,782 122 (122)
		29,782 -
		29,782

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED ENTITY At 1 July 2010 Total comprehensive income for the year (Loss) for the year Other comprehensive income Fair value adjustment on available-for-sale financial assets expensed on impairment less deferred tax impact Realised gain on available-for-sale financial assets less deferred tax impact Fair value adjustment on available-for-sale financial assets less deferred tax impact Total comprehensive income for the year Transactions with owners in their capacity as owners Dividends paid Shares repurchased At 30 June 2011 Total comprehensive income for the year Profit for the year Other comprehensive income Fair value adjustment on available-for-sale financial assets expensed on impairment less deferred tax impact Realised gain on available-for-sale financial assets less deferred tax impact Fair value adjustment on available-for-sale financial assets less deferred tax impact Total comprehensive income for the year Transactions with owners in their capacity as owners Dividends paid Trust distributions Shares repurchased Change in holding of non-controlling interest in subsidiaries At 30 June 2012	Total Attributable to Non- Issued Retained Other Owners of controlling Total Capital Earnings Reserves PPK Group Ltd Interests Equity $000s $000s $000s $000s $000s $000s 31,249 3,521 24 34,794 - 34,794 - (2,515) - (2,515) - (2,515) - - (13) (13) - (13) - - 4 4 - 4 - - (10) (10) - (10) - - 3 3 - 3 - - 163 163 - 163 - - (49) (49) - (49)
	- (2,515) 98 (2,417) - (2,417)
	- (1,128) - (1,128) - (1,128) (1,467) - - (1,467) - (1,467)
	(1,467) (1,128) - (2,595) - (2,595)
	29,782 (122) 122 29,782 - 29,782
	1,543 1,543 8 1,551 - - - - - - - - - - - - - - (163) (163) - (163) - - 49 49 - 49 - - 84 84 - 84 - - (25) (25) - (25)
	- 1,543 (55) 1,488 8 1,496
	- (1,298) - (1,298) - (1,298) - (8) (8) (766) - - (766) - (766) - 2 2
	(766) (1,298) - (2,064) (6) (2,070)
	29,016 123 67 29,206 2 29,208

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows related to operating activities Receipts from customers Payments to suppliers and employees Other Revenue Payments for financial assets at fair value through profit or loss Proceeds from sale of financial assets at fair value through profit or loss Interest received Dividends received Income taxes paid Interest and costs of borrowings Net Operating Cash Flows Cash flows related to investing activities Payment for purchases of property, plant and equipment Proceeds from sale of investment property Payment for purchase of investment property Proceeds from sale of plant and equipment Payment for investments in associated companies Proceeds from sale of investments in associated companies Proceeds from redemption of convertible notes Proceeds from sale of available-for-sale financial assets Payments for available for sale-financial-assets Payment for intangibles Net Investing cash flows Cash flows related to financing activities Loans Advanced Payment for buyback of shares (Repayment) / Proceeds from Bank loans Proceeds from other loans Loans repaid Dividends paid Transactions with non-controlling interest Net financing cash flows Net increase (decrease) in cash held Cash at beginning of period Cash at end of period Reconciliation of cash Reconciliation of cash at the end of the period (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Continuing operations Cash on hand and at bank Bank Overdraft Total cash at end of period Non Cash Financing and Investing Activities during the year Fair value adjustments in Derivatives - (decrease) / increase in value	Year Ended 30 June 2012 $000s 11,476 (8,400) 219 (2,562) 2,301 65 537 (42) (1,410) 2,184 (384) - (3,100) 9 - - 2,169 - (618) (59) - (1,983) (1,184) (766) 1,850 642 600 (1,298) 2 (154) 47 8,607 8,654 9,079 (425) 8,654 $000s -	Year Ended 30 June 2011 $000s 7,624 (6,517) 1,627 - - 1,141 23 (831) (1,418)
		1,649 (533) 8,085 - 8 (19) 15 - 516 (87) (11)
		7,974 - (1,467) - - 4,500 (1,128)
		1,905 11,528 (2,921)
		8,607 9,681 (1,074)
		8,607
		$000s (76)

NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

30 June 2012 $000s REVENUE, OTHER INCOME & EXPENSES FROM OPERATIONS REVENUE Sale of goods 7,711 Rental income from investment properties 2,211 Dividends received - other parties 65 Interest receivable 1,337 11,324 OTHER INCOME Net gain on disposal of investment properties - Net gain on sale of available-for-sale financial assets 157 Net gain on sale of financial assets at fair value through profit or loss 66 Net gain on disposal of plant and equipment 9 Proceeds from rental property dispute resolution 192 Reversal of doubtful debts - other receivables 64 Received on redemption of convertible note impaired prior year 169 Value of available-for-sale financial asset received on redemption of convertible notes 101 Fair value adjustment on available-for-sale non longer classified as an associate 35 Fair value adjustment on conversion of convertible notes - Foreign currency translation gains - Sundry income 27 820 INTEREST INCOME Other persons 404 Associated entities 933 1,337 SHARE OF PROFIT (LOSS) FROM ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD Share profit (loss) from associates accounted for under the equity method 9 9 EXPENSES Profit / (loss) before income tax has been determined after: Amortisation of intangibles 26 Cost of sales - mining equipment manufacture 4,612 Depreciation - investment properties 310 - plant and equipment 523 833 Fair value adjustment on derivatives - Foreign currency translation losses 8 Impairment - investment properties - Impairment of available-for-sale financial assets - Listed investments 60 Impairment of carrying value of investment in associates - Impairment other receivables -convertible notes - Interest paid - other 1,410 Doubtful debts - trade receivables 20 - other receivables - Defined contribution superannuation expense 270 Employee benefit expenses 2,629 Rental expense on operating leases 233	30 June 2011 $000s 6,102 2,146 23 1,589
	9,860
	1,514 10 - 5 1,585 - - - - 95 2 42
	3,253
	398 1,191
	1,589
	(412)
	(412)
	48 3,275 339 528
	867
	76 - 169 22 4,140 1,322 1,418 - 237 208 1,921 160

NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

COMPARISON OF HALF-YEAR PROFITS Consolidated profit / (loss) after tax attributable to members reported for the 1st half-yearly report Consolidated profit / (loss) after tax attributable to members for the 2nd half-yearly report Profit / (loss) after income attributable to members reported for the year	30 June 2012 $000s 957 586 1,543	30 June 2011 $000s (1,381) (1,134)
		(2,515)

BUSINESS COMBINATIONS

During the year PPK Group Limited participated in the establishment of four syndicates operating through Unit Trusts. At the time of establishment the only assets of each unit trust were the issued units. As PPK Group Limited holds 50% or more of the units in three of the Unit Trusts, these three Unit Trusts are controlled entities of PPK Group Limited and the relevant details are set out in the "Details of Investments in Controlled Entities" below.

PPK Group Limited holds 25% of the units in the fourth of the Unit Trusts and details of this investment are set out in the "Investments In Associate Unit Trusts" below.

The PPK Group Limited share of the trust income in the fourth of the Unit Trusts is included the "Aggregate Share of Associates Profit (or Loss)" below.

DETAILS OF INVESTMENTS IN CONTROLLED ENTITIES

DETAILS OF INVESTMENTS IN CONTROLLED ENTITIES Ownership Interest The Easy Living Unit Trust 50.00% The Easy Living (Bundaberg) Trust 50.00% The Slot Loan Trust 51.43% DETAILS OF INVESTMENTS IN ASSOCIATES Fair value of investments in associates Ownership Interest Companies no longer considered associates FRR Limited 7.63% ISL Limited 7.28%	30 June 2012 Units Held Ownership $1 each Interest 500 500 1,800 2,800 30 June 2012 $000s Ownership Interest - 27.92% - 26.39%	30 June 2011 Units Held $1 each - - -
		-
		30 June 2011 $000s - -

FRR Limited (formerly Frigrite Limited) and ISL Limited (formerly Intelligent Solar Limited) were both placed in administration in the 2011 year. During the 2012 year both companies effectuated a Deed of Company Arrangement. FRR Limited relisted on the Australian Stock Exchange on 6th June 2012. ISL Limited is in the process of complying with ASX requirements for relisting.

As a result of the Deeds of Company Arrangement, PPK Group Limited's shareholding in each of FRR Limited and ISL Limited has reduced as detailed above and neither FRR Limited or ISL Limited are now associates of PPK Group Limited.

PPK Group Limited's investment in FRR Limited and ISL Limited as at 30 June 2012 is included in available-for-sale financial assets. PPK Group Limited has made a fair value adjustment to the carrying value of the shares in FRR Limited as the company is no longer an associate and has relisted.

The fair value adjustment is taken to the profit and loss only at the time that the entity has relisted as the value of PPK Group Limited's shareholding can only be ascertained at the time of relisting. Details of the fair value adjustment for the FRR Limited shares held by PPK Group Limited is disclosed in "Other Income".

Investments in associated unit trust Nerang Street Southport Project Trust 25.00% PPK Willoughby Funding Unit Trust 22.86% Carrying value in the Financial Statements Nerang Street Southport Project Trust PPK Willoughby Funding Unit Trust Aggregate share of associates' profit or (loss) Profit (loss) before income tax Income tax expense or (credit) Net profit (loss) after income tax	30 June 2012 Units Held $1 each 275 40 22.86% 315 $000s 9 - 9 9 (3) 6	30 June 2011 Units Held $1 each - 40
		40
		$000s - -
		-
		(412) -
		(412)

Earnings per security (EPS)

Details of basic and diluted EPS reported separately in accordance with paragraph 9 and 18 of_AASB 133_	Details of basic and diluted EPS reported separately in accordance with paragraph 9 and 18 of_AASB 133_
_Earnings per share_are as follows:	30 June 2012	30 June 2011
	$000s	$000s
Earnings used in the calculation of basic EPS	1,543	(2,515)
Earnings used in the calculation of diluted EPS	1,543	(2,515)
Weighted average number of ordinary shares outstanding
During the year used in the calculation of:	Number	Number
Basic EPS	52,322,800	56,398,923
Diluted EPS	52,322,800	56,398,923
	Cents	Cents
Basic EPS - Cents	2.9	(4.5)
Diluted EPS - Cents	2.9	(4.5)
Net Tangible Asset Backing
Net tangible asset backing per share	53.8	54.0

NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

DIVIDENDS

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30 June 2012 30 June 2011
Interim Dividend 1.00 cent 1.00 cent
Final Dividend nil 1.50 cent
1.00 cent 2.50 cents
The amount of retained profits and reserves that could be distributed as fully
franked dividends from franking credits that exist or will arise after payment of
income tax in the next year in respect to the 2012 year is $190,000.
$000s $000s
Amount of final dividend payable - fully franked - 807
Both current and prior year dividends were fully franked.
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CONSOLIDATED RETAINED PROFITS

Retained profits / (accumulated losses) at the beginning of the financial year Net (loss) / profit attributable to members Dividends paid (Accumulated losses) Retained profits at the end of the financial year ORDINARY SHARES ON ISSUE Number of securities on issue at beginning of year Shares repurchased through approved buyback scheme Number of securities on issue at end of year	(122) 1,543 (1,298) 123 NUMBER 53,812,779 (2,187,349) 51,625,430	3,521 (2,515) (1,128)
		(122)
		NUMBER 58,006,650 (4,193,871)
		53,812,779

OPTIONS

There were no options outstanding at balance date

POST BALANCE DATE EVENTS

No matter or circumstances have arisen since the end of the financial year which will 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