PPK GROUP LIMITED — Annual Report 2013

Aug 28, 2013

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

PPK GROUP LIMITED

ABN 65 003 964 181

FINANCIAL YEAR ENDED 30 JUNE 2013

HIGHLIGHTS OF RESULTS FOR ANNOUNCEMENT TO THE MARKET

June June

(figures are in A$000s)

	2013$000s	2012$000s	Change$000s	Change%
SALES REVENUE	5,002	7,711	(2,709)	-35%
RENTAL INCOME FROM INVESTMENT PROPERTIES	3,060	2,211	849	38%
REALISED GAINS FROM INVESTING	264	157	107	68%
PROFIT BEFORE INCOME TAX	3,455	1,968	1,487	76%
PROFIT BEFORE INCOME TAXATTRIBUTABLE TO OWNERS OF PPK GROUP LTD	3,034	1,960	1,074	55%
PROFIT AFTER INCOME TAXATTRIBUTABLE TO OWNERS OF PPK GROUP LTD	2,383	1,543	840	54%
EARNINGS PER SHARE	4.7	2.9	1.8	59%

	CurrentYear	PreviousYear
Interim DividendFinal Dividend	1.50 cents2.00 cents	1.00 centnil
	3.50 cents	1.00 cent

The Directors have resolved that a fully franked final dividend of 2.00 cents per share will be paid this year.

Record Date for determining entitlement to Dividend	11 October 2013
Payment date of Dividend	18 October 2013

The company's Annual General Meeting will be held on Tuesday 26th November 2013 at 3.00pm Venue: The Grace Hotel, 77 York Street Sydney NSW, Australia.

COMMENTARY ON RESULTS

PPK Group Limited (PPK) has recorded a profit after tax attributable to members of $2.383 million for FY 2013 compared to $1.543 million in FY 2012 (up 54%).

Industrial Properties

All three PPK owned industrial properties, Arndell Park, Dandenong South and Seven Hills are now fully leased to strong established tenants and provide a full rental return and a steady cash flow.

Property Development

PPK Southport Pty Ltd atf the Nerang Street Southport Project Trust (Trust) in which PPK currently has a 25% interest will this week complete the acquisition of an adjoining property for a part cash and part equity consideration. This will reduce PPK's interest in the Trust entity to 18.74% but provide the Trust with a larger development site in a key location with improved development potential.

The Kiah Willoughby Project continues to progress very well. All 16 Stage 2 homes are scheduled for completion by the builder and settlement of their sales prior to 31 December 2013 with a consequent flow through of profit to PPK.

The Bundaberg and Elizabeth Vale retirement villages continue to provide strong and regular rental income and are currently the subject of approaches by prospective purchasers of both villages on an in-line basis at prices which are receiving serious consideration by the PPK directors.

Financing

The secured mortgage loans provided by PPK Finance Pty Ltd to a retirement village operator and a mining services industry operator are both scheduled for repayment, and will be repaid, in the first half of FY 2014. Until repaid these loans provide an ongoing interest income stream at premium rates.

Rambor

The Rambor mining services business had an improved second half in FY 2013 and contributed $707,000 in pre-tax profit for the full year. This is well down on FY 2012 but remains a positive contribution in a difficult environment for all mining services industry businesses.

Generally

Present indications are for a continuing steady improvement in earnings in FY 2014. This combined with a strong and regular cash flow means that the directors have resolved to pay a final fully franked dividend of 2 cents per share payable on 18 October 2013. This represents a total dividend of 3.5 cents per share fully franked for FY 2013.

	30 June 2013$000s	30 June 2012$000s
REVENUES
Mining equipment manufacture	5,002	7,711
Investment properties	3,060	2,211
Investment activities	38	65
Interest receivable	2,173	1,337
TOTAL REVENUE	10,273	11,324
OTHER INCOME	667	820
EXPENDITURE
Mining equipment manufacture	(4,301)	(6,265)
Investment properties	(812)	(653)
Investment activities	(53)	(98)
Administrative expenses	(1,514)	(1,759)
Finance costs	(1,298)	(1,410)
TOTAL EXPENDITURE	(7,978)	(10,185)
Share of profit / (loss) from associated entities	493	9
PROFIT / (LOSS) BEFORE INCOME TAX EXPENSE	3,455	1,968
Income tax (expense)	(707)	(417)
PROFIT / (LOSS) AFTER INCOME TAX	2,748	1,551
PROFIT / (LOSS) IS ATTRIBUTABLE TO:
Owners of PPK Group Limited	2,383	1,543
Non-controlling interest	365	8
	2,748	1,551
OTHER COMPREHENSIVE INCOME
Changes in value on available-for-sale financial assets	(180)	84
Provision for income tax thereon	54	(25)
Realised gain on sale of available-for-sale financial assets
transferred to the income statement from the asset revaluation reserve	(36)	(163)
Provision for income tax thereon	10	49
OTHER COMPREHENSIVE INCOME NET OF INCOME TAX	(152)	(55)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	2,596	1,496
TOTAL COMPREHESIVE INCOME IS ATTRIBUTABLE TO:
Owners of PPK Group Limited	2,231	1,488
Non-controlling interest	365	8
	2,596	1,496
EARNINGS PER SHARE
Continuing operations	4.7 cents	2.9 cents

Diluted Earnings per share	4.7 cents	2.9 cents

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	30 June 2013$000s	30 June 2012$000s
Current Assets
Cash	1,345	9,079
Trade and other receivables	8,850	2,696
Inventories	1,017	1,162
Other current assets	312	323
Financial assets at fair value through profit or loss	-	327
Total Current Assets	11,524	13,587
Non Current Assets
Trade and other receivables	10,700	6,276
Financial assets	2,259	756
Investments in associated entities	265	9
Investment properties	30,430	27,276
Other property plant & equipment	993	1,273
Intangibles	1,985	1,413
Deferred tax assets	1,310	1,589
Total non current assets	47,942	38,592
Total Assets	59,466	52,179
Current Liabilities
Trade and other payables	493	695
Interest bearing liabilities	6,720	925
Current tax liabilities	58	422
Provisions	520	311
Total Current Liabilities	7,791	2,353
Non Current liabilities
Interest bearing liabilities	18,080	20,500
Trade and other payables	2,881	-
Deferred tax liabilities	170	29
Provisions	89	89
Total Non Current liabilities	21,220	20,618
Total Liabilities	29,011	22,971
Net Assets	30,455	29,208
Equity
Contributed equity	28,673	29,016
Reserves	(85)	67
Retained earnings / (accumulated losses)	1,741	123
Capital and reserves attributable to ownersof PPK Group Ltd	30,329	29,206
Non-controlling interests	126	2
Total Equity	30,455	29,208

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	IssuedCapital$000s	RetainedEarnings$000s	OtherReserves$000s	TotalAttributable toOwners ofPPK Group Ltd$000s	NoncontrollingInterests$000s	TotalEquity$000s
CONSOLIDATED ENTITYAt 1 July 2011	29,782	(122)	122	29,782	-	29,782
Total comprehensive income for the year
(Loss) for the year	-	1,543	-	1,543	8	1,551
Other comprehensive income
Realised gain on available-for-sale financial assets	-	-	(163)	(163)	-	(163)
less deferred tax impactFair value adjustment on available-for-sale	-	-	49	49	-	49
financial assets	-	-	84	84	-	84
less deferred tax impact	-	-	(25)	(25)	-	(25)
Total comprehensive income for the year	-	1,543	(55)	1,488	8	1,496
Transactions with owners in their
capacity as owners
Dividends paid	-	(1,298)	-	(1,298)	-	(1,298)
Trust distributions					(8)
Shares repurchased	(766)	-	-	(766)	-	(766)
Change in holding of non-controllinginterest in subsidiaries					2
	(766)	(1,298)	-	(2,064)	(6)	(2,064)
At 30 June 2012	29,016	123	67	29,206	2	29,208
Total comprehensive income for the year
Profit for the year		2,383		2,383	365	2,748
Other comprehensive income
Realised gain on available-for-sale financial assets	-	-	(36)	(36)	-	(36)
less deferred tax impact	-	-	10	10	-	10
Fair value adjustment on available-for-sale
financial assetsless deferred tax impact	--	--	(180)54	(180)54	--	(180)54
Total comprehensive income for the year	-	2,383	(152)	2,231	365	2,596
Transactions with owners in theircapacity as owners
Dividends paid	-	(765)	-	(765)	-	(765)
Trust distributions				-	(241)	(241)
Shares repurchased	(343)	-	-	(343)	-	(343)
Change in holding of non-controllinginterest in subsidiaries				-	-	-
	(343)	(765)	-	(1,108)	(241)	(1,349)
At 30 June 2013	28,673	1,741	(85)	30,329	126	30,455

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year Ended30 June 2013$000s	Year Ended30 June 2012$000s
Cash flows related to operating activities
Receipts from customers	8,320	11,476
Payments to suppliers and employees	(6,368)	(7,762)
Other Revenue	57	219
Payments for financial assets at fair value through profit or loss	-	(2,562)
Proceeds from sale of financial assets at fair value through profit or loss	360	2,301
Interest received	987	537
Dividends received	38	65
Income taxes paid	(586)	(42)
Interest and costs of borrowings	(1,298)	(1,410)
Net Operating Cash Flows	1,510	2,822
Cash flows related to investing activities
Payment for purchases of property, plant and equipment	(194)	(384)
Payment for purchase of investment property	(3,438)	(3,100)
Proceeds from sale of plant and equipment	-	9
Distribution received from associated entitiesProceeds from redemption of convertible notes	228-	-2,169
Proceeds from sale of available-for-sale financial assets	2,530	-
Payments for available for sale-financial-assets	(2,912)	(618)
Payment for intangibles	(584)	(697)
Net Investing cash flows	(4,370)	(2,621)
Cash flows related to financing activities
Loans Advanced	(9,781)	(1,184)
Payment for buyback of shares	(343)	(766)
Proceeds from Bank loans	3,150	1,850
Proceeds from other loans	3,625	642
Loans repaid	(335)	600
Dividends paidTransactions with non-controlling interest	(765)-	(1,298)2
Net financing cash flows	(4,449)	(154)
Net increase (decrease) in cash held	(7,309)	47
Cash at beginning of period	8,654	8,607
Cash at end of period	1,345	8,654
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 operations
Cash on hand and at bank	1,345	9,079
Bank Overdraft	-	(425)
Total cash at end of period	1,345	8,654
Non Cash Financing and Investing Activities during the year	$000s	$000s
Fair value adjustments in Derivatives - (decrease) / increase in value	-	-

	30 June 2013$000s	30 June 2012$000s
REVENUE, OTHER INCOME & EXPENSES FROM OPERATIONS
REVENUESale of goodsRental income from investment propertiesDividends received - other partiesInterest receivable	5,0023,060382,173	7,7112,211651,337
OTHER INCOME	10,273	11,324
Net gain on disposal of investment propertiesNet gain on sale of available-for-sale financial assetsNet gain on sale of financial assets at fair value through profit or lossNet gain on disposal of plant and equipmentProceeds from rental property dispute resolution	-264---	-157669192
Reversal of doubtful debts - other receivablesReceived on redemption of convertible note impaired prior year	--	64169
Value of available-for-sale financial asset received on redemption ofconvertible notes	47	101
Fair value adjustment on available-for-sale non longer classifiedas an associateSundry income	32234	3527
	667	820
INTEREST INCOME
Other personsAssociated entities	1,230943	404933
	2,173	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	493	9
	493	9
EXPENSESProfit / (loss) before incometax has been determined after:
Amortisation of intangibles	12	26
Cost of sales - mining equipment manufacture	(2,815)	4,612
Depreciation - investment properties- plant and equipment	309391	310523
	700	833
Foreign currency translation losses	1	8
Impairment of available-for-sale financial assets- Listed investments	22	60
Interest paid - other	1,298	1,410

Doubtful debts - trade receivables 4 20 Defined contribution superannuation expense 223 270 Employee benefit expenses 2,377 2,629 Rental expense on operating leases 174 233

COMPARISON OF HALF-YEAR PROFITS	30 June 2013$000s	30 June 2012$000s
Consolidated profit / (loss) after tax attributable to membersreported for the 1st half-yearly report	862	957
Consolidated profit / (loss) after tax attributable to membersfor the 2nd half-yearly report	1,521	586
Profit / (loss) after income attributable tomembers reported for the year	2,383	1,543

BUSINESS COMBINATIONS

PPK Group Limited holds 50% or more of the units in three 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.

DETAILS OF INVESTMENTS IN CONTROLLED ENTITIES		30 June 2013		30 June 2012
	OwnershipInterest	Units Held$1 each	OwnershipInterest	Units Held$1 each
The Easy Living Unit TrustThe Easy Living (Bundaberg) TrustThe Slot Loan Trust	50.00%50.00%51.43%	5005001,800	50.00%50.00%51.43%	5005001,800
		2,800		2,800
		30 June 2013$000s		30 June 2012$000s
DETAILS OF INVESTMENTS IN ASSOCIATES
Fair value of investments in associates	OwnershipInterest		OwnershipInterest
Investments in associated unit trust		30 June 2013Units Held$1 each		30 June 2012Units Held$1 each
Nerang Street Southport Project TrustPPK Willoughby Funding Unit Trust	25.00%22.86%	27540	25.00%22.86%	27540
		315		315
Carrying value in the Financial Statements		$000s		$000s
Nerang Street Southport Project TrustPPK Willoughby Funding Unit Trust		1264		9-
		265		9
Aggregate share of associates' profit or (loss)Profit (loss) before income taxIncome tax expense or (credit)		493(148)		9(3)
Net profit (loss) after income tax		345		6

Earnings per security (EPS)

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 2013$000s	30 June 2012$000s
Earnings used in the calculation of basic EPS	2,383	1,543
Earnings used in the calculation of diluted EPS	2,383	1,543
Weighted average number of ordinary shares outstandingDuring the year used in the calculation of:	Number	Number
Basic EPS	51,084,022	52,322,800
Diluted EPS	51,084,022	52,322,800
	Cents	Cents
Basic EPS - CentsDiluted EPS - Cents	4.74.7	2.92.9
Net Tangible Asset Backing
Net tangible asset backing per share	55.7	53.8
DIVIDENDS	30 June 2013	30 June 2012
Interim Dividend	1.50 cents	1.00 cent
Final Dividend	2.00 cents	nil
	3.50 cents	1.00 cent
The amount of retained profits and reserves that could be distributed as fullyfranked dividends from franking credits that exist or will arise after payment ofincome tax in the next year in respect to the 2013 year is $1,656,000.
	$000s	$000s
Amount of final dividend payable - fully franked	1,015	-
Both current and prior year dividends were fully franked.

CONSOLIDATED RETAINED PROFITS

Retained profits / (accumulated losses) atthe beginning of the financial year	123	(122)
Net profit attributable to members	2,383	1,543
Dividends paid	(765)	(1,298)
Retained profitsat the end of the financial year	1,741	123
ORDINARY SHARES ON ISSUE	NUMBER	NUMBER
Number of securities on issue at beginning of year	51,625,430	53,812,779
Shares repurchased through approved buyback scheme	(860,654)	(2,187,349)

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