PPK GROUP LIMITED — Interim / Quarterly Report 2013

Feb 21, 2013

ABN 65 003 964 181

Appendix 4D Half-year report & half-year accounts Period ended 31 December 2012

Previous Corresponding Period 31 December 2011

Contents

• 1. Highlights of Results for Announcement to the Market
• 1. Commentary on Results
• 1. Directors' Report
• 1. Auditor's Independence Declaration
• 1. Half-year Report 31 December 2012
• 1. Directors' Declaration
• 1. Independent Auditor's Review Report

This information is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.2A and should be read in conjunction with the most recent annual financial report.

HIGHLIGHTS OF RESULTS FOR ANNOUNCEMENT TO THE MARKET

	31 December2012$000s	31 December2011$000s	Change$000s	Change%
SALES REVENUE	2,190	4,079	(1,889)	-46%
RENTAL INCOME	1,423	1,031	392	38%
REALISED GAINS FROM INVESTING	157	35	122	349%
PROFIT BEFORE INCOME TAX EXPENSE	1,306	1,247	59	5%
PROFIT BEFORE TAX ATTRIBUTABLE TO OWNERS OF PPK GROUP LTD	1,158	1,247	(89)	-7%
PROFIT AFTER TAX ATTRIBUTABLE TO OWNERS OF PPK GROUP LTD	862	957	(95)	-10%
EARNINGS PER SHARE	cents1.7	cents1.8	cents(0.1)	-6%

DIVIDENDS

2013 FULLY FRANKED INTERIM DIVIDEND PER SHARE	1.50 cents
2012 FULLY FRANKED INTERIM DIVIDEND PER SHARE	1.00 cent
RECORD DATE FOR DETERMINING ENTITLEMENT TO DIVIDEND	14 March 2013
DATE DIVIDEND PAYABLE	22 March 2013

COMMENTARY ON RESULTS

PPK Group Limited (PPK) has recorded a profit attributable to the members of $862,000 after tax for the 2013 first half as compared to $957,000 for the 2012 first half.

Having recouped prior year losses and now with sufficient retained earnings, the directors have resolved to pay a 1.5 cents per share fully franked dividend which will be payable on 22 March 2013.

PPK's industrial properties, property development and financing divisions performed well.

Industrial Properties

A Lease was signed on the Arndell Park property during the reporting period and both the Arndell Park and Dandenong properties are now leased by strong established tenants and provide a full rental return.

The Seven Hills property is being refurbished and Heads of Agreement have been signed for a new Lease to commence on 1 April 2013 subject to the Lessee confirming acceptable development approval conditions which is not expected to be an issue.

Property Development

Negotiations are continuing in relation to either a redevelopment or an on-sale of the Nerang Street Southport Project site.

The Bundaberg (Queensland) and Elizabeth Vale (South Australia) retirement villages are performing to expectations and showing a strong return on investment. They are providing a regular income stream whilst arrangements are made for strata titling and re-sale.

The Kiah Willoughby Project continues to progress well. PPK's share of profit for the reporting period from the sale of the first 13 homes of the 14 homes in Stage 1 was $493,000. Construction work is progressing on the 16 Stage 2 homes, the sales of which will settle in the first half of the 2014 financial year.

Development approvals have issued for the 46 Stage 3 and 4 homes and construction work is scheduled to commence in the latter part of the 2013 calendar year with completion and settlement in the 2015 financial year.

This project will continue to provide a strong profit stream in the 2014 and 2015 financial years.

Financing

Regular interest payments at premium rates continue to be received on the secured mortgage funding provided by PPK Finance Pty Ltd to the retirement village operator and mining services industry operator borrowers.

Rambor

In line with other businesses in the mining services sector, Rambor had a difficult first half with a minimal pre-tax profit contribution of $77,000 to PPK's first half profit (as compared to a pre-tax profit contribution of $983,000 in the first half in FY 2012).

However there are now strong signs of a recovery in sales and profitability for Rambor for the second half of FY 2013.

Generally

Present indications are for a continuing and steady improvement in earnings, dividend payment capacity and return to shareholders.

PPK GROUP LIMITED AND CONTROLLED ENTITIES ABN 65 003 964 181

HALF YEAR CONSOLIDATED FINANCIAL STATEMENTS

DIRECTORS' REPORT

Your directors present their report on the consolidated entity consisting of PPK Group Limited and its controlled entities for the half year ended 31 December, 2012.

DIRECTORS

The names of directors in office at any time during or since the financial period are:

Jury Ivan Wowk Glenn Robert Molloy Raymond Michael Beath Graeme Douglas Webb David Alfred Hoff (as alternate for Raymond Michael Beath)

REVIEW OF OPERATIONS

A detailed review of results and operations is included in the Commentary on Results on page 3 of this report.

DIVIDENDS

The Board of Directors has resolved to pay a fully franked interim dividend of 1.5 cent per share.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no significant changes in the state of affairs of the consolidated entity during the period.

AUDITORS INDEPENDECE DECLARATION

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.

ROUNDING OF AMOUNTS

The parent entity has applied the relief available to it in ASIC Class Order 98/100 and, accordingly, amounts in the financial statements and Directors' Report have been rounded to the nearest thousand dollars.

JURY IVAN WOWK Director

Grant Thornton Audit Pty Ltd ACN 130 913 594

Level 17, 383 Kent Street Sydney NSW 2000 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 PPK Group Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of PPK Group Limited for the half-year ended 31 December 2012, I declare that, to the best of my knowledge and belief, there have been:

• a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• b no contraventions of any applicable code of professional conduct in relation to the review.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

IS Kemp Partner - Audit & Assurance

Sydney, 22 February 2013

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Consolidated Statement of Comprehensive Income for the Half-Year Ended 31 December 2012

		CONSOLIDATED ENTITY
		31 December	31 December
	Note	2012	2011
REVENUES		$000s	$000s
Mining equipment manufacture		2,190	4,079
Investment Properties		1,423	1,031
Investment Activities		31	50
Interest receivable		1,121	681
Total Revenue	2a	4,765	5,841
OTHER INCOME	2b	193	451
EXPENDITURE
Mining equipment manufacture		(2,116)	(3,106)
Investment Properties		(457)	(313)
Investment Activities		(184)	(49)
Administrative expenses		(723)	(866)
Finance costs		(673)	(711)
Total Expenditure	2d	(4,153)	(5,045)
Share of profit of associates accounted for using the equity method	2c	501	-
Profit before income tax expense		1,306	1,247
Income tax (expense) attributable to profit		(296)	(290)
Profit after income tax		1,010	957
Profit after tax is attributable to:
Owners of PPK Group Limited		862	957
Non-controlling interests		148	-
		1,010	957
OTHER COMPREHENSIVE (LOSS) INCOME
Changes in fair value on available-for-sale financial assets		(151)	(181)
Provision for income tax on changes in fair value		45	54
Realised gain (loss) on sale of available-for-sale financial assets
transferred to profit or loss from the asset revaluation reserve		(36)	-
Provision for income tax thereon		10	-
Other comprehensive (loss) income net of income tax		(132)	(127)
Total Comprehensive Income for the half year		878	830
Total Comprehensive Income for the half year is attributable to:
Owners of PPK Group Limited		730	957
Non-controlling interests		148	-
		878	957
Earnings per share from continuing operations	4	Cents	Cents
Total basic earnings per shares		1.7	1.8
Diluted earnings per share		1.7	1.8

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes

Consolidated Statement of Financial Position for the Half-Year Ended 31 December 2012

	CONSOLIDATED ENTITY
	31 December	30 June
	2012	2012
	$000s	$000s
CURRENT ASSETS
Cash and cash equivalents	2,224	9,079
Trade and other receivables	1,543	2,696
Inventories	1,122	1,162
Other current assets	629	323
Financial assets at fair value through profit or loss	-	327
TOTAL CURRENT ASSETS	5,518	13,587
NON-CURRENT ASSETS
Trade and other receivables	14,720	6,276
Investments in associated entities - equity accounted	501	9
Financial assets	792	756
Investment Properties	30,353	27,276
Other Property, plant and equipment	1,073	1,273
Deferred tax assets	1,429	1,589
Intangible assets	1,622	1,413
TOTAL NON-CURRENT ASSETS	50,490	38,592
TOTAL ASSETS	56,008	52,179
CURRENT LIABILITIES
Trade and other payables	746	695
Interest Bearing Liabilities	500	925
Current tax liabilities	-	422
Provisions	296	311
TOTAL CURRENT LIABILITIES	1,542	2,353
NON-CURRENT LIABILITIES
Interest Bearing Liabilities	24,535	20,500
Deferred tax liabilities	101	29
Provisions	97	89
TOTAL NON-CURRENT LIABILITIES	24,733	20,618
TOTAL LIABILITIES	26,275	22,971
NET ASSETS	29,733	29,208
SHAREHOLDERS' EQUITY
Contributed equity	28,811	29,016
Reserves	(65)	67
Retained earnings	985	123
Capital and reserves attributable to owners of PPK Group Ltd	29,731	29,206
Non-controlling interests	2	2
TOTAL EQUITY	29,733	29,208

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes

Consolidated Statement of Cash Flows for the Half-Year Ended 31 December 2012

	CONSOLIDATED ENTITY
	31 December	31 December
	2012	2011
	$000s	$000s
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers	4,098	5,696
Cash payments to suppliers and employees	(3,448)	(4,176)
Proceeds from sale of financial assets at fair value through profit or loss	360	-
Interest received	677	217
Dividends received	31	50
Income tax paid	(473)	(93)
Interest and costs of borrowings	(673)	(711)
Net cash provided by operating activities	572	983
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment property	(3,116)	-
Purchase of property, plant and equipment	(126)	(167)
Payments for purchase of available-for-sale financial assets	(1,257)	(2,061)
Payments for investments in associate entities	-	-
Redemption of convertible notes	-	1,963
Proceeds from sale of available-for-sale financial assets	1,919	1,385
Purchase of intangible assets	(225)	-
Net cash provided by (used in) investing activities	(2,805)	1,120
CASH FLOWS FROM FINANCING ACTIVITIES
Loans advanced	(8,071)	(837)
Loans repaid	44	-
Shares repurchased	(205)	(645)
Proceeds from borrowings	1,850	-
Proceeds from other loans	2,185	-
Dividends paid	-	(781)
Net cash provided by (used in) financing activities	(4,197)	(2,263)
Net increase (decrease) in cash held	(6,430)	(160)
Cash at the beginning of the financial period	8,654	8,607
Cash at the end of the financial period	2,224	8,447

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes

Consolidated Statement of Changes in Equity

	for the Half-Year Ended 31 December 2012
	Issued capital$'000s	Retainedearnings$'000s	Otherreserves$'000s	Total Attributableto Owners of PPKGroup Ltd$'000s	Non-controllingInterests$'000s	Total Equity$'000s
At 1 July 2011	29,782	(122)	122	29,782	-	29,782
Total comprehensive income for the half year		957		957	-	957
Profit (loss) for the period
Other comprehensive income
Fair value adjustment on available-for-sale financial assets			(181)	(181)	-	(181)
less deferred tax impact			54	54	-	54
Total comprehensive income for the half year		957	(127)	830	-	830
Transactions with owners in their capacity as owners
Dividends paid		(781)		(781)	-	(781)
Share buyback	(645)			(645)	-	(645)
	(645)	(781)		(1,426)	-	(1,426)
At 31 December 2011	29,137	54	(5)	29,186	-	29,186
Total comprehensive income for the half year
Profit (loss) for the period		586	-	586	8	594
Other comprehensive income
Fair value adjustment on available-for-sale
financial assets expensed on impairment			(163)	(163)	-	(163)
less deferred tax impact			49	49	-	49
Fair value adjustment on available-for-sale financial assets			265	265	-	265
less deferred tax impact			(79)	(79)	-	(79)
Total comprehensive income for the half-year		586	72	658	8	666
Transactions with owners in their capacity as owners
Dividends paid		(517)		(517)	-	(517)
Trust distributions to non-controlling interests				-	(8)	(8)
Share buyback	(121)			(121)		(121)
Changes in holding of non-controlling interests				-	2	2
	(121)	(517)	-	(638)	(6)	(644)
At 30 June 2012	29,016	123	67	29,206	2	29,208
Total comprehensive income for the half year
Profit/(loss) for the period		862		862	148	1,010
Other comprehensive income
Fair value adjustment on available-for-sale financial assets			(151)	(151)	-	(151)
less deferred tax impact			45	45	-	45
Realised gain on sale of available-for-sale financial assets			(36)	(36)	-	(36)
Less deferred tax impact			10	10		10
Total comprehensive income for the half-year	-	862	(132)	730	148	878
Transactions with owners in their capacity as owners
Dividends paid		-		-	-	-
Trust distributions due to non-controlling interests				-	(148)	(148)
Share buyback	(205)			(205)	-	(205)
At 31 December 2012	28,811	985	(65)	29,731	2	29,733

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes

Notes to and Forming Part of the Accounts For the Half year Ended 31 December 2012

Note 1. Basis of Preparation of Half-Year Financial Statements

These general purpose financial statements for the half-year reporting period ended 31 December 2012 has been prepared in accordance with Australian Accounting Standard 134 "Interim Financial Reporting" and the Corporations Act 2001.

The half year statements have been prepared on an accrual basis and is based on historical cost basis, except for derivatives and financial assets for which the fair value basis of accounting has been applied.

These half year financial statements do not include all the notes of the type normally included in annual financial statements and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial statements. Accordingly, these interim financial statements are to be read in conjunction with the annual report for the year ended 30 June 2012 and any public announcements made by PPK Group Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The same accounting policies and methods of computation have generally been followed in these interim financial statements as compared with the most recent annual financial report. AASB 134: Interim Financial Reporting generally only requires disclosure of accounting policies that have changed from those used in the prior annual reporting period.

The half-year statements do not include full disclosures of the type normally included in the annual financial report.

Significant Accounting Policies

The accounting policies adopted in the preparation of these interim financial statements are the same as those applied by PPK Group Limited in its annual financial report as at and for the year ended 30 June 2012.

The parent entity has applied the relief available under ASIC Class Order 98/100 and accordingly, amounts in the financial statements and directors' report have been rounded to the nearest thousand dollars, or in certain cases, to the nearest dollar.

The interim financial report was authorised for issue in accordance with a resolution of the directors on 19th February 2013

		31 December2012	31 December2011
Note 2.	Revenue, Other Income & Expenses from Operations	$000s	$000s
(a) REVENUE
Sale of goods		2,190	4,079
	Rental income from investment properties	1,423	1,031
Interest receivable		1,121	681
	Dividends received - other parties	31	50
		4,765	5,841
(b) OTHER INCOME
	Net gain on disposal of property, plant & equipment	3	-
	Net gain on sale of available-for-sale financial assets	157	35
	Foreign currency translation gain (loss)	(1)	1
	Reversal of doubtful debts provision - other receivables	-	64
	Reversal of impairment other receivables - convertible notes	-	150
Sundry Income		34	201
		193	451

(c) SHARE OF PROFIT FROM ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD

Share of profit from associates accounted for under the equity method 501 -

Notes to and Forming Part of the Accounts For the Half year Ended 31 December 2012

		31 December2012$000s	31 December2011$000s
Note 2. (cont.)	Revenue, Other Income & Expenses from Operations
(d) EXPENSES
Amortisation - intangibles		16	16
	Cost of sales - mining equipment manufacture	1,402	2,351
Depreciation - investment properties		156	156
	- plant and equipment	212	263
		368	419
Interest paid		673	711
	Impairment of available-for-sale financial assets	-	35
Doubtful debts - trade receivables		(1)	6
	Defined contribution superannuation expense	116	124
Employment benefit expense		1,139	1,225
Rental expense on operating lease		85	120
Note 3.	Dividends
Dividends paid
	No Final ordinary dividend was paid for 2012 year	-	781
	(2011 1.50c per share - 100% franked)
	Dividends declared after half year ended 31 December 2012
	Interim ordinary dividend of 1.50c per share - 100% franked	766	519
	(2011 1.00c per share - 100% franked)

The group has sufficient franking credits to allow up to $9,102,000 in dividends to be distributed as fully franked from franking credits that exist at 31 December 2012.

Note 4.	Earnings Per Share
		Cents	Cents
	Basic earnings per share (cents per share)	1.7	1.8
Diluted earnings per share		1.7	1.8
		$000s	$000s
	(a) Reconciliation of Earnings to Net Profit attributable to owners of PPK Group Ltd
	Earnings used in calculating Basic EPS	862	957
	Earnings used in calculating Diluted EPS	862	957
		Number	Number
	(b) Weighted average number of ordinary shares outstanding during the periodused in calculation of basic EPS	51,414,675	53,344,187
(c) Classification of Securities

The only securities that have been classified as potential ordinary shares and included in calculation of diluted EPS are options outstanding.

Notes to and Forming Part of the Accounts For the Half year Ended 31 December 2012

		31 December2012	31 December2011
		Number	Number
Note 5.	Ordinary Shares on Issue
Movement in number of ordinary shares
	Number of securities on issue at beginning of period	51,625,430	53,812,779
	Shares repurchased through approved on market share buy back	(537,932)	(1,864,171)
		51,087,498	51,948,608
		$000s	$000s
Movement in share capital
Balance at the beginning of the financial period		29,016	29,782
	Shares repurchased through approved on market share buy back	(205)	(645)
		28,811	29,137

During the half-year reporting period the company repurchased shares on market under an approved buy back scheme.

Options

There were no options outstanding at balance date

Note 6. Events Subsequent To Reporting Date

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

Note 7. Contingent Liabilities / Assets

There has been no change in contingent liabilities since the last annual reporting date

Note 8. Net Tangible Asset Backing

	Cents	Cents
Net tangible asset backing per share	55.0	54.8

The above NTA backing per share excludes the effect of the three industrial properties being revalued to their most recent independent valuation of $29.7m and allowing for capital gains tax of $1.1m. An independent valuation was last undertaken in May 2010. This would have the effect of increasing effective NTA backing per share by 8.6 cents to 63.6 cents (2011 by 8.5 cents to 63.3 cents).

Retirement villages purchased in May 2012 by the Easy Living Unit Trust and in October 2012 by the Easy Living Bundaberg Trust are considered by the Directors to have a fair value, equal to their costs of $3.2m and $3.0m respectively and are not included in the valuation of $29.7m or in the above calculation.

Notes to and Forming Part of the Accounts For the Half year Ended 31 December 2012

Note 9. Segment Information

• The Investment property segment owns three industrial properties and two retirement villages.
• The Investment segment owns primarily listed and some unlisted investments, it has also made loans from which earns interests. Investments in associate companies are included in this segment.
• The Mining equipment segment manufactures portable underground mining equipment.

Half Year ended 31 December 2012 Mining

Business Segments	InvestmentProperties	Investing	EquipmentManufacturing	Total
	$000s	$000s	$000s	$000s
Primary Segment
Sales Revenue	-	-	2,190	2,190
Rental income	1,423	-	-	1,423
Gain on sale of available-for-sale financial assets	-	157	-	157
Sundry Income	33	-	3	36
Reversal of provisions	-	-	-	-
Interest Received	-	1,121	-	1,121
Dividends Received	-	31	-	31
Total revenue and other income	1,456	1,309	2,193	4,958
Segment result	999	1,125	77	2,201
Reconciliation of earnings to net profit attributable owners of
PPK Group Ltd
Amounts not included in segment result but reviewed by the Board
Share of profit from associates accounted for using the equity method				501
Unallocated corporate income & expenses				(723)
Unallocated interest income & expense				(673)
Consolidated operating profit before income tax				1,306
Non-controlling interests share of after tax profit				(148)
Income tax (expense)				(296)
Consolidated operating after income tax

attributable to owners of PPK Group Ltd 862

Half Year ended 31 December 2011 Mining

Business Segments	InvestmentProperties$000s	Investing$000s	EquipmentManufacturing$000s	Total$000s
Primary Segment
Sales Revenue	-	-	4,079	4,079
Rental income	1,031	-	-	1,031
Gain on sale of available-for-sale financial assets	-	35	-	35
Reversal of provisions	-	214	-	214
Sundry Income	-	192	10	202
Interest Received	-	678	3	681
Dividends Received	-	50	-	50
Total revenue and other income	1,031	1,169	4,092	6,292
Segment result	910	928	983	2,821

Reconciliation of earnings to net profit attributable owners of PPK Group Ltd Amounts not included in segment result but reviewed by the Board Share of profit from associates accounted for using the equity method -

Unallocated corporate income & expenses (866) Unallocated interest income & expense (708)

Consolidated operating profit before income tax 1,247

Income tax (expense) (290) Consolidated operating after income tax attributable to owners of PPK Group Ltd 957

PPK GROUP LIMITED AND CONTROLLED ENTITIES ABN 65 003 964 181

DECLARATION BY DIRECTORS

The directors of the company declare that:

• a. The accompanying financial statements and accompanying notes, are in accordance with the Corporations Act 2001 and:
  • (i) comply with Accounting Standard AASB134 "Interim Financial Reporting" and the Corporations Regulations 2001; and
  • (ii) give a true and fair view of the consolidated entity's financial position as at 31 December 2012 and of performance for the half-year ended on that date.
• b. In the director's 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.

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:

JURY IVAN WOWK Director

Dated this 22nd day of February 2013

Grant Thornton Audit Pty Ltd ACN 130 913 594

Level 17, 383 Kent Street Sydney NSW 2000 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 Review Report To the Members of PPK Group Limited

We have reviewed the accompanying half-year financial report of PPK Group Limited ("Company"), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2012, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a statement or description of accounting policies, other explanatory information and the directors' declaration of the consolidated entity, comprising both the Company and the entities it controlled at the half-year's end or from time to time during the half-year.

Directors' responsibility for the half-year financial report

The directors of PPK Group Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the PPK Group Limited consolidated entity's financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of PPK Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of PPK Group Limited is not in accordance with the Corporations Act 2001, including:

• a giving a true and fair view of the consolidated entity's financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and
• b complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

IS Kemp Partner - Audit & Assurance

Sydney, 22 February 2013