Business
PPK : Half Yearly Report and Accounts - 31 December 2016
PPK : Half Yearly Report and Accounts - 31 December
About this update from Ppk Group Limited
APPENDIX 4D HALF YEARLY INFORMATION GIVEN TO THE ASX UNDER LISTING RULE 4.2A PPK GROUP LIMITED ABN 65 003 964 181 HALF YEAR ENDED 31 DECEMBER 2016 Page Contents Highlights of Results for Announcement to the Market Executive Chairman's Report Directors' Report Auditor's Independence Declaration Half-year Report 31 December 2016 Directors' Declaration 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 December 2016 $000s 31 December 2015 $000s Change $000s Change % REVENUES 13,675 13,958 (283) -2% PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE (3,220) (5,104) 1,884 37% PROFIT/(LOSS) BEFORE TAX ATTRIBUTABLE TO OWNERS OF PPK GROUP LTD (3,220) (5,127) 1,907 37% PROFIT/(LOSS) AFTER TAX ATTRIBUTABLE TO OWNERS OF PPK GROUP LTD (3,220) (4,994) 1,774 36% EARNINGS PER SHARE cents (5.6) cents (8.6) cents 3.0 35% NET TANGIBLE ASSETS PER SHARE cents 18.1 cents 28.1 cents (10.0) -36% DIVIDENDS FY2016 FULLY FRANKED INTERIM DIVIDEND PER SHARE Nil cents FY2017 FULLY FRANKED INTERIM DIVIDEND PER SHARE Nil cents EXECUTIVE CHAIRMAN'S REPORT The 6-month period from 1 July 2016 to 31 December 2016 showed some welcome relief in sentiment for mining and particularly coal mining as our customers benefited from a lift in underlying commodity prices, lower overall cost structures and a lower Australian dollar. Emerging from the previously difficult trading conditions each of PPK Groups mining equipment divisions have experienced an uptick in enquiry and increases in month-on-month revenue from underlying service and support activity. Secondly, PPK Mining equipment is experiencing the first capital expenditure enquiries to be received over the last 24 months. These "capex" enquiries relate directly to the PPK Mining Equipment's premium Coal Tram "Load, Haul, Dump" machine which was the core rational behind the original mining equipment investment made by PPK Group. There appears to be emerging customer demand for several new machines over the next 12 months which will have a dramatic and positive impact on PPK Mining Equipment's profitability and free cash flow position. In the interim, the realisation of Property & Investment assets continues to support the Group. The sale of PPK's Seven Hills Industrial property was completed in January 2017 for $7.875M. As outlined in more detail in the FY2016 Annual Report, in September 2015 the PPK Board determined that there was a need to seek extended support for the ongoing viability of the group with reference to a prospective merger, sale or equity injection alternative in relation to its mining services businesses and/or PPK itself. Accordingly, at that time the Company applied for the Voluntary Suspension of its shares from quotation on the ASX, whilst negotiations with interested parties were undertaken. Since then, pursuant to a non-binding and conditional Letter of Intent (LOI), PPK has engaged in negotiations with a major State Owned Chinese mining equipment manufacturer (the Counter Party) contemplating the acquisition of a controlling interest in PPK through the placement of new shares. Pursuant to the terms of the LOI, PPK is not permitted to disclose the identity of the Counter Party. Subsequently, financial and legal due diligence was completed and a non-binding offer negotiated pending the Counter Party's rigorous internal and external approval process. However, at the date of this report a binding agreement (conditional or otherwise) is yet to be concluded. FINANCIAL RESULTS PPK Group Limited (PPK) reported a net loss after tax attributable to owners of PPK of $3.220M for the 6 months to 31 December 2016 (HY2016: $4.994M loss). Group revenue for the 6 months from mining equipment sales and mining services was $12.943M (HY2016: $13.324M), revenue from investment properties was $0.294M (HY2016: $0.291M), interest received was $0.055M (HY2016: $0.343M) and recovery of a debt previously written off was $0.383M (HY2016: Nil). Underpinning the disappointing PPK Group result, was a net loss of $2.420M from the Mining Equipment division (HY2016: $3.936M). VOLUNTARY SUSPENSION Given the coal mining sector improvements outlined above and the fact PPK Group Ltd has now filed all the outstanding Annual and Financial Reports required to comply with ASX listing rules, the company expects to hold its 2015 and 2016 Annual General Meetings as soon as possible and post those meetings will apply for a lifting of the suspension in trading of the Company's shares. This process should once again create a liquidity platform for investors to buy and sell PPK shares when required. DIRECTOR AND SENIOR STAFF CHANGES Subsequent to the reporting period Mr Jury Wowk and Mr Ray Beath tendered their resignation as Directors of PPK Group Limited and all its subsidiaries. I thank Jury and Ray who remain PPK Group Shareholders for their committed service to the company and wish them well for their future endeavours. Group CFO Mr Jason Beddow has also resigned and we welcome Mr Ken Hostland to the role. Ken has a broad financial background, appropriate qualifications and has had the benefit of an extended handover period with Jason. PPK Group is also continuing to see the benefit of Mr Dale McNamara's extensive experience in the global mining arena after his appointment as a Director in April 2015. MAJOR SHAREHOLDER SUPPORT Whilst PPK Group begins to benefit from the mining sector upturn and continues to look for other accretive investment and merger opportunities, the major shareholders of the company who have supported it through the last 3 years have committed their continued financial support to ensure any volatility in trading conditions can be appropriately managed. Robin Levison Executive Chairman