TESORO GOLD LTD — Annual Report 2016

Aug 30, 2016

Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Plukka Limited ABN 91 106 854 175

Appendix 4E Preliminary Final Report

For the year ended 30 June 2016

Lodged with the ASX under Listing Rule 4.3A

Contents

Results for Announcement to the Market	1
Appendix 4E item 2 & 9
Preliminary statement of profit of loss and other comprehensive income	6
Appendix 4E item 3
Preliminary statement of financial position	7
Appendix 4E item 4
Preliminary statement of cash flows	8
Appendix 4E item 5
Preliminary statement of changes in equity	9
Appendix 4E item 6
Supplementary Appendix 4E Information	10
Appendix 4E item 10-12 & 14

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Results for announcement to the market

Results for announcement to the market
Notes	2016 $ 2015 $ Inc/(Dec) %
Revenue from continuing operations(Appendix 4E item 2.1) 1 Profit/(Loss) from ordinary activities after tax attributable to members (Appendix 4E item 2.2) 2 Comprehensive Profit/(Loss) for the year attributable to members (Appendix 4E item 2.3) 3 Basic Earnings per share (Appendix 4E Item 14.1) Diluted Earnings per share (Appendix 4E Item 4.1) Net Tangible Assets per share (Appendix E Item 9)	1,879,951 1,355,571 39%
	(9,321,106) (1,561,462) 497%
	(9,468,973) (1,700,604) 457%
	(0.10) (0.10) (3%) (0.10) (0.10) (3%) 0.06 (0.05) 208%

Dividends (Appendix 4E item 2.4 & 2.5)

No dividends have been paid during the year and the Company does not propose to pay any final dividends.

Audit Status (Appendix 4E item 15)

This report is based on accounts which are in the process of being audited. The Audited Annual Report is expected to be released by 30 September 2016.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Commentary on Results (Appendix 4E Item 14) & Significant Features of Operating Performance (Appendix 4E Item 14.3)

On 4 December 2015, Plukka Limited (“ Plukka ”) (formerly Continuation Investments Limited), the legal parent and legal acquirer, completed the acquisition of Treasure Castle Holdings Limited and its subsidiaries (“ TCH ”). The acquisition did not meet the definition of a business combination in accordance with AASB 3 Business Combinations. Instead the acquisition has been treated as a group recapitalisation, using the principles of reverse acquisition accounting in AASB 3 Business Combinations given the substance of the transaction is that TCH has effectively been recapitalised. Accordingly, the consolidated financial statements have been prepared as if TCH had acquired Plukka, and not versa as represented by the legal position. The recapitalisation is measured at the fair value of the equity instruments that would have been given by TCH to have exactly the same percentage holding in the new structure at the date of the transaction. Accordingly, the statement of comprehensive income reflects the twelve months of trading of TCH and the trading of Plukka (the parent company and legal acquirer of TCH from 4[th] December 2015.

As the activities of Plukka would not constitute a business based on the requirements of AASB 3, the transaction has been accounted for as a share based payment under AASB 2. The excess of the deemed consideration over the fair value of Plukka, as calculated in accordance with the reverse acquisition accounting principles and with AASB 2, is considered to be a payment for a group restructure and has been expensed.

Concurrent with the acquisition of TCH, Plukka successfully raised $10M through a prospectus offering of 50M new ordinary shares issued at $0.20 per share and re-complied with the ASX listing rules. Plukka’s results for the financial year ended 30 June 2016 have been heavily influenced by one off accounting entries and transactions associated with the acquisition of TCH and re-compliance with the ASX listing rules. Moreover, the successful capital raising provided the Company with the funding to substantially increase its staffing and marketing expenses from the December quarter 2015 to enact the business growth strategy outlined in the prospectus.

1. Revenue from continuing operations (Appendix 4E item 2.6 & 14)

Plukka operates a multi-brand, omni channel fine jewellery retail business through both its international e-commerce site www.plukka.com, its Hong Kong and London boutiques and pop up and trunk shows around the world. Revenue increased by 39% year on year driven by:

• Expanded geographic footprint with the opening of boutiques in Chater House, Hong Kong and in Burlington Arcade in London. These boutique openings, and associated PR and marketing efforts, have improved brand awareness and customer engagement in the key markets of Hong Kong and the UK. Plukka also opened a temporary boutique in NYC on Madison Avenue for March/April 2016 which reinforced its US sales and ensured continued engagement with US customers.

• Relaunched e-commerce platform which better represented the brand and improved the overall customer experience, leading to improved online metrics and strong US based sales.

• Increased marketing spending focused on a driving online traffic, attracting new customers and increasing awareness.

• A successful series of international pop-ups and trunks shows in Hong Kong, Taiwan, London, Miami and New York City.

• Strong online and offline sales in USD also contributed to revenue growth reported in AUD.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

2. Profit/(Loss) from ordinary activities after tax attributable to members (Appendix 4E item 2.6 & 14)

The loss from ordinary activities attributable to members of $9,321,106 is made up of:

• Gross margin on sales revenue of $756,267 (2015: $538,711) increased in line with revenue growth.

• Other income of $1,509,052 (2015: $29,852) includes a one off debt forgiveness of $1,473,663 owed by TCH to Value Train Investments Limited that was forgiven on completion of the acquisition of TCH by Plukka.

• Marketing and administration fees of $5,254,240 (2015: 2,122,260) includes a significant ramp up of staff and marketing activity in the second half of the financial year, post successful capital raising and re-compliance with ASX listing rules intended to prepare the business for accelerated growth. In response to slower than expected top-line growth, Plukka underwent a significant restructuring in June 2016 which has substantially reduced the marketing and administration fees expected for future financial years.

• Restructuring expenses of $464,931 for the opening of the Chater House boutique in Hong Kong, termination of the planned Peninsula Hotel boutique in Kowloon and employee and consultant termination cost associated with downsizing of the operating cost structure in Hong Kong.

• Relisting expenses totalling $2,771,474 (2015: $nil) represent the excess of consideration paid by TCH (as the accounting acquirer) over the fair value of the net assets acquired from Plukka (previously Continuation Investments Limited).

• Share based payments expense of $2,441,637 (2015: $nil) includes $2,215,800 incurred as part of the issue of Plukka securities on the acquisition of TCH and further share based payments expenses to new employees subsequent to the acquisition.

• Other expenses of $631,963 (2015: $nil) includes foreign exchange losses of $429,635 incurred as a result of the exposure to Great Britain Pounds, US dollars and Hong Kong dollars on sales and costs incurred. Foreign currency transactions are translated using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses result from the settlement of such transactions.

While spending has increased with the scale up of the Plukka business globally, a rigorous cost cutting initiative launched in the June quarter of 2016 is expected to be a positive impact on the comprehensive statement of income in future years.

3. Net Profit/(Loss) for the period attributable to members (Appendix 4E item 2.6 & 14)

The Company incurred $147,867 in foreign currency losses relating to the financial position of the entities established in the USA, UK and Hong Kong. This represents the unrealised gains and losses of the monetary assets and liabilities at the reporting date.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Supplementary Information

Trends in Performance (Appendix 4E Item 14.5)

The Company’s online and offline revenue growth trends are in line with the growth of the market in the relevant territory where the Company has the strongest retail boutique presence, supporting the Company’s investment in the “bricks and clicks” strategy.

Other Factors that affected results in the period or which are likely to affect results in the future (Appendix 4E item 14.6)

No other factors to report.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Other Significant Information (Appendix 4E Item 12)

Acquisition of TCH

Plukka acquired 100% of the issued capital of TCH on 4[th] December 2016. To effect the acquisition, the Company issued 129,774,997 shares as follows:

• 72,734,997 shares were issued to shareholders of TCH to acquire 100% of TCH.

• 7,040,000 were issued as facilitation shares to management of TCH and advisors in relation to the acquisition of TCH of which 1,270,000 were issued to Ms Joanne Ooi, Managing Director of TCH at the date of acquisition.

• 50,000,000 shares were issued at an issue price of $0.20 per share to raise $10,000,000 before costs.

In addition, 19,535,000 Performance Rights, comprising 7,000,000 Tranche 1 Performance Rights, 6,267,500 Tranche 2 Performance Rights and 6,267,500 Tranche 3 Performance Rights were issued to executives and advisers of TCH as a long term incentive in connection with their appointment and services provided in connection with the Plukka business. Each Performance Right is convertible into one ordinary share in Plukka upon the following terms and conditions:

• Achievement of sales revenue during any three-month reporting period that ends on or prior to the date two years after completion of the Transaction that equals or exceeds AU$2.5 million (Milestone 1);

• 20-day volume weighted average price of PKA shares on the ASX equals or exceeds AU$0.50 at any time within two years from the date of completion of the transaction (Milestone 2); and

• Achievement of consolidated EBIT by the company during any three-month reporting period that ends on or prior to the date three years after completion of the Transaction that equals or exceeds A$1.25 million (Milestone 3).

The fair value of these performance rights has been included as part of the consideration for the transaction.

As Plukka is deemed to be the acquiree for accounting purposes, the carrying values of its assets and liabilities are required to be recorded at fair value for the purposes of the acquisition. No adjustments were required to the historical values to effect this change.

Consideration: 72,734,997 fully paid ordinary vendor shares 19,535,000 Performance Rights Total value of consideration Fair value of Plukka Limited at acquisition: Cash Trade and other receivables Trade and other payables Fair value of net assets Excess of consideration provided over the fair value of net assets at the date of acquisition expensed, being group restructuring and relisting costs*	$
	4,104,807 -
	4,104,807 412,328 984,772 (63,767)
	1,333,333
	2,771,474

*Performance rights were issued as additional consideration, valued at nil, as the probability of performance hurdles being met was assessed as less than probable on the date of acquisition.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2016

Note	2016 $ 2015 $
Revenue from continuing operations 4 Cost of Goods Sold Gross Margin Other income 5 Expenses Marketing and Administration fees 6 Restructuring expenses 6 Relisting expenses 6 Share based payments expense Other expenses 6 Finance costs Loss before income tax from continuing operations Income tax benefit/(expense) 7 Loss after income tax from continuing operations Other comprehensive income for the year, net of tax Exchange differences Total comprehensive loss for the year Earnings per share from continuing operations attributable to owners of Plukka Limited Basic earnings per share (cents) 18 Diluted earnings per share (cents) 18	1,879,951 1,355,571 (1,123,684) (816,860)
	756,267 538,711 1,509,052 29,852 (5,254,240) (2,122,260) (464,931) - (2,771,474) - (2,441,637) - (631,963) - (21,768) (4,650)
	(11,586,013) (2,126,910) (9,320,694) (1,558,347) (412) (3,115)
	(9,321,106) (1,561,462) (147,867) (139,142)
	(9,468,973) (1,700,604)
	(0.10) (0.10) (0.10) (0.10)

The above preliminary statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Statement of Financial Position As at 30 June 2016

Statement of Financial Position As at 30 June 2016
Note	2016 $ 2015 $
Assets Current assets Cash and cash equivalents 8 Trade and other receivables 9 Inventories 10 Other Assets 11 Total current assets Non-current assets Property, plant and equipment 12 Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 13 Loan payable 14 Borrowings 15 Total current liabilities Total liabilities Net assets/(liabilities) Equity Issued capital 16 Reserves Foreign currency translation reserve Accumulated losses 17 Total equity	4,952,570 494,701 - 91 346,232 54,734 619,521 300,897
	5,918,323 850,423
	453,754 76,588
	453,754 76,588
	6,372,077 927,011
	694,772 268,069 - 513,798 - 1,604,329
	694,772 2,386,196
	694,772 2,386,196
	5,677,305 (1,459,185)
	20,501,646 5,391,420 1,495,237 - (297,042) (149,175) (16,022,536) (6,701,430)
	5,677,305 (1,459,185)

The above preliminary statement of financial position is to be read in conjunction with the accompanying notes.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Statement of Cash Flows For the year ended 30 June 2016

Note	2016 $ 2015 $
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Other – deposits paid Tax refund/(paid) Net cash used in operating activities 19 Cash flows from investing activities Payment for property, plant and equipment Proceeds from sale of property, plant and equipment Acquisition of subsidiary, net cash acquired Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from borrowings Share issue transaction costs Net cash provided by / (used in) financing activities Net increase/(decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of financial year Exchange rate adjustments Cash and cash equivalents at end of financial year	1,879,951 1,223,138 (5,776,145) (2,129,131) 868 - (21,768) (4,649) (256,668) - (412) (3,115)
	(4,174,174) (913,757)
	(475,434) - 13,000 20,223 412,328 -
	(50,106) 20,223
	10,000,000 181,186 - 452,783 (740,350) -
	9,259,650 633,969
	5,035,371 (259,565) 494,701 893,408 (577,502) (139,142)
	4,952,570 494,701

The above preliminary statement of cash flows is to be read in conjunction with the accompanying notes.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Statement of Changes in Equity For the year ended 30 June 2016

	Issued Capital $ Options & Rights Valuation Reserve $ Foreign Currency Translation $ Accumulated Losses $ Total $
Balance at 1 July 2014 Loss after tax Foreign currency translation Total comprehensive Loss for the year Transactions with owners in their capacity as owners: Issue of Preference Shares Balance at 30 June 2015 Balance at 1 July 2015 Loss after tax Foreign currency translation Total comprehensive Loss for the year Transactions with owners in their capacity as owners: Issue of shares Share issue costs Share based payments Balance at 30 June 2016	5,184,330 - (10,033) (5,139,968) 34,329 - - - (1,561,462) (1,561,462) - - (139,142) - (139,142)
	- - (139,142) (1,561,462) (1,700,604) 207,090 - - - 207,090
	207,090 - - - 207,090
	5,391,420 - (149,175) (6,701,430) (1,459,185)
	5,391,420 - (149,175) (6,701,430) (1,459,185) - - - (9,321,106) (9,321,106) - - (147,867) - (147,867)
	- - (147,867) (9,321,106) (9,468,973) 16,312,176 - - - 16,312,176 (740,350) - - - (740,350) (461,600) 1,495,237 - - 1,033,637
	15,110,226 1,495,237 - - 16,605,463
	20,501,646 1,495,237 (297,042) (16,022,536) 5,677,305

The preliminary statement of changes in equity is to be read in conjunction with the accompanying notes.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements

1. Statement of Significant Accounting Policies

This preliminary final report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E. This report is to be read in conjunction with any public announcements made by Plukka during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and Australian Securities Exchange Listing Rules.

The Preliminary Financial Statements and notes of Plukka Limited and its controlled entities, complies with International Financial Reporting Standards as issued by the International Accounting Standards Board.

2. Material factors affecting the consolidated entity for the current period

During the year Plukka acquired 100% of TCH, the owner of fine jewellery retailer PLUKKA. PLUKKA is a Hong Kong based award-winning global omni-channel fine jewellery retailer founded by Joanne Ooi and Jai Waney in 2011. It is the only global ‘bricks & clicks’ platform specialising in designer branded fine jewellery and aims to disrupt the highly localised, fragmented and disorganized global jewellery industry.

On 4[th] December 2015, the Company acquired 100% of TCH for the issue of 72.735 million (post consolidation) ordinary fully paid shares in Plukka. In conjunction with the Transaction, Plukka Limited undertook a share consolidation on a 3-for-4 basis and a capital raising of up to A$10,000,000 at A$0.20 per share (post Consolidation).

The acquisition is recognised as a reverse takeover and as a result the comparatives reflect the balances of TCH for the year ended 30 June 2015.

The impact of the group restructure on each of the primary statements is as follows:

Statement of Profit or Loss and Other Comprehensive Income

• The 30 June 2016 statement of profit or loss and other comprehensive income comprises twelve months of TCH and the period since 4 December 2015 of Plukka Limited.

• The 30 June 2015 comparative statement of profit or loss and other comprehensive income comprises twelve months of TCH.

Statement of Financial Position

• The statement of financial position as at 30 June 2016 represents both Plukka and TCH.

• The comparative statement of financial position at 30 June 2015 represents TCH.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

2. Material factors affecting the consolidated entity for the current period (continued)

Statement of Changes in Equity

• The 30 June 2016 statement of changes in equity comprises TCH’s equity balance at 1 July 2015, its loss for the period and transactions with equity holders for the twelve months. It also comprises Plukka Limited’s transactions with equity holders since the 4[th] December 2015 acquisition date and the equity balances of Plukka and TCH as at 30 June 2016.

• The 30 June 2015 comparative statement of changes in equity comprises twelve months of TCH.

Statement of Cashflows

• The 30 June 2016 statement of cashflows comprise twelve months of TCH and the period from the acquisition date 4 December 2015 of Plukka Limited.

• The 30 June 2015 comparative statement of cashflows comprises twelve months of TCH.

Other than the above, there has not been in the interval between the end of the financial period and the date of this report any other item, transaction or event of a material and unusual nature likely, in the opinion of the Company, to significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years.

The functional and presentation currency of the Company is Australian Dollars. The functional currency of TCH is Hong Kong dollars and the financial statements have been converted into the functional currency of Plukka.

3. Segment Information (Appendix 4E Item 14.4)

The directors have considered the requirements of AASB 8 – Operating Segments and the internal reports that are reviewed by the Chief Operating Decision Maker (the Board) in allocating resources and have concluded that at this time there are no separately identifiable segments.

Following the adoption of AASB 8, the identification of the Company’s reportable segments has not changed. During the period, the Company’s considers that it has only operated in one segment, being operating a multi-brand, omni-channel fine jewellery retail business.

The Company is domiciled in Australia. Revenue from external customers is generated globally. Assets are located in United Kingdom, USA and Hong Kong.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

4. Revenue

Sale of goods Total Revenue 5. Other Revenue Other revenue Interest revenue Debt forgiveness1 Gain on foreign exchange	2016 $ 2015 $
	1,879,951 1,355,571
	1,879,951 1,355,571
	2016 $ 2015 $
	34,521 29,748 868 - 1,473,663 - - 104
	1,509,052 29,852

1A debt of $1,473,663 due from TCH to Value Train Investments Limited was forgiven upon the acquisition of TCH by Plukka on 4[th] December 2015 and re-compliance with ASX Listing Rules.

6. Expenses

Expenses
Marketing and Administration expenses: Marketing expenses Employee related costs Professional fees Rental & services expenses Information Technology expenses Depreciation Other Administration expenses Restructure expenses1 Relisting expenses2 Other expenses: Write off of Receivable3 Foreign exchange losses Loss on sale of assets		2016 $ 2015 $
		1,669,568 633,935 1,178,402 489,947 870,487 372,576 499,643 214,495 343,185 199,514 65,607 40,297 627,348 171,496
		5,254,240 2,122,260
		464,931 - 2,771,474 - 182,744 - 429,635 - 19,584 - 631,963 -

1Restructuring expenses of $464,931 for the opening of the Chater House boutique in Hong Kong, termination of the planned Peninsula Hotel boutique in Kowloon and employee and consultant termination cost associated with downsizing of the operating cost structure in Hong Kong.

2The costs of the acquisition relative to the fair value of the issued shares of Plukka immediately prior to the acquisition is recognised as Relisting expenses of $2,771,474.

3 Write off of The Biofusionary Corporation Promissory Note balance.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

7. Income Tax Expense

The prima facie tax on profit loss before income tax is reconciled to the income tax expense as follows:

Prima facie tax benefit on profit from ordinary activities before income tax at 30% (2015: 30%) Less: Tax effect of: - temporary differences - non-deductible expenses - impact of different tax rates Tax losses not brought to account Income tax benefit/(expense) The applicable weighted average effective tax rates are as follows: Unrecognised carried forward tax losses Tax losses	2016 $ 2015 $
	2,796,208 467,504
	- - (787,314) - (1,077,730) (218,168) (931,576) (252,451)
	(412) (3,115)
	0% 0% 2016 2015 $ $
	11,386,485 6,471,174

Carried forward tax losses have not been recognised because it is presently not considered probable that future taxable profit will be available against which the company can utilise the benefits therein.

The carried forward losses in Plukka prior to the acquisition date have not been carried forward due to the change in the ownership and business activity of the Company.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

8. Cash and Cash Equivalents

Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows:

Cash at bank Cash on deposit Balance as per statement of cash flows 9. Trade and Other Receivables Trade Debtors Less Provision for Doubtful Debts Other receivable 10. Inventories Finished Goods Less provision for impairment 11. Other assets Deposits Prepayments		2016 $ 2015 $
		4,952,570 494,701 - -
		4,952,570 494,701
		2016 $ 2015 $
		- 91 - - - -
		- 91
		2016 $ 2015 $
		528,883 249,298 (182,651) (194,564)
		346,232 54,734
		2016 $ 2015 $
		342,655 128,216 276,866 172,681
		619,521 300,897

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

12. Property, Plant and Equipment 2016 $ 2015 $ Plant and equipment 683,894 255,865 Less: Accumulated Depreciation (230,140) (179,277) 453,754 76,588 13. Trade and Other Payables 2016 $ 2015 $ Trade creditors 42,298 62,254 Other payables 652,474 205,815 694,772 268,069 14. Loan Payable 2016 $ 2015 $ Loan payable1 - 513,798 - 513,798 1In May 2015, TCH entered into a bridge loan agreement with Plukka with a face value of $500,000. The loan is unsecured, bearing interest at 12% per annum and was due in May 2016. Following Plukka’s acquisition of TCH on 4thDecember 2015, the loan became an intercompany receivable and eliminates on consolidation. At 30 June 2016, the loan remained unsettled. The board of Plukka has resolved not to call the loan for before February 2018. 15. Borrowings 2016 $ 2015 $ Borrowing – Value Train1 - 1,402,549 Borrowings - other - 1,100 Borrowing – related parties - 200,680 - 1,604,329		2016 $ 2015 $
		683,894 255,865 (230,140) (179,277)
		453,754 76,588
		2016 $ 2015 $ 42,298 62,254 652,474 205,815
		694,772 268,069
		2016 $ 2015 $
		- 513,798
		- 513,798
		- 1,402,549 - 1,100 - 200,680
		- 1,604,329

1The amount represented the amount due from TCH to Value Train Investments Limited, which was forgiven during the year following the acquisition of TCH by Plukka.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

16. Issued Capital (Appendix 4E Item 14.6)

Ordinary shares fully paid		2016 $ 2015 $ 20,501,646 5,391,420
		20,501,646 5,391,420

Share buy-back

There is no current on-market share buy-back scheme in place.

Movement in ordinary shares Opening balance at beginning of year Allotment of shares- conversion of convertible notes Conversion of preference shares Conversion of preference shares Elimination of existing TCH shares Existing Plukka shares on acquisition1 Capital raising at $0.20 per share Shares issued to acquire TCH Issue of facilitation shares Capital raising costs – options issued Capital raising costs Closing balance at end of year	2016 Number of shares 2016 $ 2015 Number of shares 2015 $
	14,193,334 5,391,420 14,193,334 5,391,420 2,100,105 799,369 - - (4,193,334) - - - 4,193,334 - - - (16,293,439) - - - 20,524,132 - - - 50,000,000 10,000,000 - - 72,734,997 4,104,807 - - 7,040,000 1,408,000 - - - (461,600) - - - (740,350) - -
	150,299,129 20,501,646 14,193,334 5,391,420

1 Securities shown on a post 3 for 4 basis on consolidation.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

17. Retained Earnings (Appendix 4E Item 14.6)

Opening balance at beginning of the year Loss for the year Closing balance at end of the year	2016 $ 2015 $
	(6,701,430) (5,139,968) (9,321,106) (1,561,462)
	(16,022,536) (6,701,430)

18. Earnings per Share (Appendix 4E Item 14.1)

Basic and diluted loss per share (a) Loss used in the calculation of EPS	2016 $ 2015 $
	(0.10) (0.10)
	(9,468,973) (1,700,604)

• (b) Weighted average number of ordinary shares outstanding during the year used in calculating basic earnings per share.

	2016	2015
	No.	No.
Weighted average number of ordinary shares
outstanding during the year used in calculating
basic earnings per share	98,523,762	17,200,985

Diluted earnings per share is equivalent to basic earnings per share. Options on issue are not dilutive as the company has made a loss for the year.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

19. Reconciliation of Net Profit after Tax to Cash Flows from Operating Activities

Net loss after tax Non-cash items: Depreciation Write off of Receivables Share Based payment expense Relisting expenses Gain from forgiveness of debt Impairment of Inventory Movement in assets and liabilities: Trade and other receivables Inventories Other Debtors Trade and Other Payables Cash inflow/(outflow) from operations		2016 $ 2015 $
		(9,321,106) (1,561,462) 65,607 3,575 182,744 - 2,441,637 - 2,771,474 - (1,473,737) - 182,651 - 91 - (474,149) 107,181 1,087,678 (173,384) 362,863 710,333
		(4,174,174) (913,757)

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

20. Controlled Entities Acquired (Appendix 4E Item 10)

During the year the controlled entities acquired by the Company were:

Parent entity Plukka Limited (formerly known as Continuation Investments Limited) Name of Controlled Entity Treasure Castle Holdings Limited Plukka (HK)Inc Plukka (UK) Limited Plukka (USA) Inc	Country of Incorporation Principal Activities Ownership %
	Australia Parent HK Holding company 100% HK Trading of fine jewellery 100% UK Trading of fine jewellery 100% USA Provision of marketing representation 100%

On 4[th] December 2015, Plukka (formerly Continuation Investments Limited), the legal parent and legal acquirer, completed the acquisition of TCG. The acquisition did not meet the definition of a business combination in accordance with AASB 3 Business Combinations. Instead the acquisition has been treated as a group recapitalisation, using the principles of reverse acquisition accounting in AASB 3 Business Combinations given the substance of the transaction is that TCH has effectively been recapitalised.

Accordingly, the consolidated financial statements have been prepared as if TCH had acquired Plukka, and not vice versa as represented by the legal position. The recapitalisation is measured at the fair value of the equity instruments that would have been given by TCH to have exactly the same percentage holding in the new structure at the date of the transaction. Accordingly, the statement of comprehensive income reflects the twelve months of trading of TCH and the trading of Plukka (the parent company and legal acquirer of TCH from 4th December 2015.

As the activities of Plukka would not constitute a business based on the requirements of AASB 3, the transaction has been accounted for as a share based payment under AASB 2. The excess of the deemed consideration over the fair value of Plukka, as calculated in accordance with the reverse acquisition accounting principles and with AASB 2, is considered to be a payment for a group restructure and has been expensed.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

Notes to the Financial Statements (continued)

20. Controlled Entities Acquired (Appendix 4E Item 10) (continued)

Plukka acquired 100% of the issued capital of TCH on 4[th] December 2016. To effect the acquisition, the Company issued 129,774,997 shares as follows:

• 72,734,997 shares were issued to shareholders of TCH to acquire 100% of TCH.

• 7,040,000 were issued as facilitation shares to management of TCH and advisors in relation to the acquisition of TCH of which 1,270,000 were issued to Ms Joanne Ooi, Managing Director of TCH at the date of acquisition.

• 50,000,000 shares were issued at an issue price of $0.20 per share to raise $10,000,000 before costs.

In addition, 19,535,000 Performance Rights, comprising 7,000,000 Tranche 1 Performance Rights, 6,267,500 Tranche 2 Performance Rights and 6,267,500 Tranche 3 Performance Rights were issued to executives and advisers of TCH as a long term incentive in connection with their appointment and services provided in connection with the Plukka business. Each Performance Right is convertible into one ordinary share in Plukka upon the following terms and conditions:

• Achievement of sales revenue during any three-month reporting period that ends on or prior to the date two years after completion of the Transaction that equals or exceeds AU$2.5 million (Milestone 1);

• 20-day volume weighted average price of PKA shares on the ASX equals or exceeds AU$0.50 at any time within two years from the date of completion of the transaction (Milestone 2); and

• Achievement of consolidated EBIT by the company during any three-month reporting period that ends on or prior to the date three years after completion of the Transaction that equals or exceeds A$1.25 million (Milestone 3).

The fair value of these performance rights has been included as part of the consideration for the acquisition of TCH. As Plukka is deemed to be the acquiree for accounting purposes, the carrying values of its assets and liabilities are required to be recorded at fair value for the purposes of the acquisition. No adjustments were required to the historical values to effect this change.

Consideration	$
72,734,997 fully paid ordinary vendor shares 19,535,000 performance rights * Total value of consideration Fair value of Plukka Limited at acquisition: Cash Trade and other receivables Trade and other payables Fair value of net assets Excess of consideration provided over the fair value of net assets at the date of acquisition expensed, being group restructuring and relisting costs	4,104,807 -
	4,104,807
	412,328 984,772 (63,767)
	1,333,333
	2,771,474

*Performance rights were issued as additional consideration, valued at nil, as the probability of performance hurdles being met was assessed as less than probable on the date of acquisition.

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Plukka Limited Preliminary Final Report for the Year Ended 30 June 2016

On behalf of the Board:

==> picture [113 x 47] intentionally omitted <==

Andrew Worland Director

Date: 31 August 2016

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