Declaration of Independence, Relevant Relationships and Indemnities
HRL Limited
HRL Developments Pty Ltd
(ACN 061 930 756)
(ACN 093 163 663)
ACN 151 146 422 Pty Ltd
HRL Imports Pty Ltd
(ACN 151 146 422)
(ACN 165 637 276)
HRL Technology Pty Ltd
HRL Treasury Pty Ltd
(ACN 062 076 199)
(ACN 062 076 279)
Energy Brix Australia Corporation Pty Ltd Industrial Energy Pty Ltd
(ACN 074 736 833)
(ACN 080 687 681)
Vemco Pty Limited
Vemco Services Pty Ltd
(ACN 065 985 453)
(ACN 083 377 173)
Vemco Treasury Pty Ltd
Vemtec Pty Ltd
(ACN 081 954 789)
(ACN 070 489 039)
Dual Gas Pty Ltd
HRL Infrastructure Services Pty Ltd
(ACN 117 102 244)
(ACN 166 922 292)
HRL Water Pty Ltd
HRL (Hunter) Pty Ltd
(ACN 604 198 834)
(ACN 097 325 810)
Linepro Pty Ltd
Aerial Devices Australia Pty Ltd
(ACN 100 749 246)
(ACN 115 776 353)
HRLDI (Holdings) Pty Ltd
(ACN 118 989 629)
(All Administrators Appointed) (the Compa nies)
A Practitioner appointed to an insolvent entity is required to make declarations as to:
A. their independence generally
B. relevant relationships, including:
i.
the circumstances of the appointment
ii.
any relationships with the Companies and others within the previous 24 months
iii. any prior professional services for the Companies within the previous 24 months
iv. that there are no other relationships to declare and
C. any indemnities given, or up-front payments made, to the Practitioner.
This declaration is made in respect of us, our partners, PPB Advisory and the related entities of
PPB Advisory.
A list of related entities of PPB Advisory is included in Schedule A at the end of this document.
The Companies represent 19 entities within the wider HRL Limited Group of Companies'
(Group).
A. Independence
We, Ian Carson, Craig Crosbie and Stephen Longley of PPB Advisory, Level 21, 181 William
Street, Melbourne VIC 3000, have undertaken a proper assessment of the risks to our
independence prior to accepting the appointment as joint and several Administrators of the
Companies in accordance with the law and applicable professional standards
This assessment identified no real or potential risks to our independence. We are not aware of
any conflicts at the time our appointment or any reasons that would prevent us from accepting
this appointment.
In the event that any conflict arises, we will seek independent legal advice or court directions if
appropriate.
In the event that this declaration needs to be updated we will issue written notice to all known
creditors as per the Companies' records and provide the update on our creditor webpage.
B. Declaration of Relationships
i. Circumstances of appointment
On 3 August 2015 we were engaged (August Engagement) to review:
1. the financial situation of the Group
2.
the forecasts provided by Management and assess the impact on those forecasts if the
underlying assumptions changed.
We were engaged by Paul Welfare, the Chief Executive Officer of HRL Group and a director of
a number of operating entities within the group (including, but not limited to HRL Technology Pty
Ltd, Industrial Energy Pty Ltd, Energy Brix Australia Corporation Pty Ltd, HRL Developments
Pty Ltd and HRL Infrastructure Services Pty Ltd). PPB Advisory was known to Mr Welfare
through our previous dealings with some of the companies in previous years (refer to part iii.,
below)
As there are various trading operations and entities within the Group the review necessitated
several meetings (19 in total) and numerous phone calls during the review. No advice or
recommendations were provided in respect of the Companies' strategic matters or future
direction of the Companies.
We were contacted by Mr Welfare regarding a potential appointment as administrators, in
October (following the completion of our August Engagement review).
Prior to the August Engagement, PPB Advisory has, in the last 24 months, attended a number
of ad-hoc meetings and phone calls (15 in total) with the Companies and/or various directors of
the Companies for the purpose of:
1.
understanding the financial situation of the Group; and
2.
to discuss PPB Advisory's service offerings and potential to assist in relation to the issues
raised by Management at these meetings. Other than the above engagement, PPB
Advisory was not engaged to provide these services as a result of these meetings and no
advice was provided.
In our opinion, these meetings do not affect our independence, as the discussions were held
with the Companies and not with the directors personally. Further, the discussions were
restricted to the limitations imposed by Principle 2 of the Code of Professional Practice in
relation to pre-appointment advice. Further, the discussions are unlikely to be subject to review
during the administration and would not impact on compliance with our statutory and fiduciary
duties. Indeed the information is the type of information which would otherwise be gathered
during the Administration. It is for these reasons that these discussions do not, in our opinion,
give rise to a conflict of interest or duty.
We received $60,000 for the August Engagement, which was prepaid, and therefore cannot
constitute a preference and will not be the subject of investigation by an Administrator.
This engagement commenced on 3 August 2015 and was completed on 27 August 2015.
The work was invoiced to HRL Limited, with the agreed fee payable in two parts in advance, as
follows:
•
•
a bill of $33,000 (representing fees of $30,000 plus GST) was raised on 4 August 2015
and subsequently paid on 5 August 2015
a second bill of $33,660 (representing fees of $30,000 plus GST and reimbursement of
disbursements of $660) was raised on 19 August 2015 and subsequently paid on 20
August 2015
The invoices were raised to and paid by HRL Limited as the engagement letter addressee. We
understand that these payments were authorised by the CEO, Paul Welfare and made by the
Financial Controller, Grant Mahony.
We further note, addressing one of the requirements of clause 6.8.1(A) of the Code, that we
wrote-off $25,137 of net WIP (net time cost incurred) in relation to this August review
engagement. The fee for this engagement was capped at $60,000 by agreement between both
parties at the outset of the engagement. The write-offs occurred primarily as a result of some
inefficiencies reviewing the Group's forecasts which were being updated at the time of our
review. The write-off was processed on 4 September 2015.
Other than the $60,000 discussed above, we did not receive any payments or bill any fees for
the ad-hoc, pre-appointment meetings or phone calls held with the Companies and/or various
directors of the Companies.
We have not provided other information or advice to the Companies, their directors and advisors
prior to our appointment, beyond that outlined in this Declaration of Independence, Relevant
Relationships and Indemnities (DIRRI).
ii. Relevant relationships (excluding professional services to the insolvent)
We, or a member of our firm, have, or have had within the preceding 24 months, a relationship
with:
Name
Nature of relationship
Reason why not an
Impediment or Conflict
Commonwealth
Bank of Australia
Limited (CBA)
The CBA beneficially holds registered
security interests and cross guarantees
which have been granted to a security
trustee over the Companies' property.
There are no matters of which
we are aware which give rise to
a conflict in this appointment.
We have professional relationships with the
majority of major banks and lenders in
Australia and with a number of staff within
the CBA, particularly in the credit area.
In particular, our previous
relationships with the CBA were
not in relation to the Companies
and/or the directors' affairs or
related parties of the Companies
and/or the directors.
We have previously undertaken formal and
informal assignments on behalf of the CBA
for a number of years.
National Australia Bank
Limited
Bank of Queensland
Limited
Macquarie Leasing Pty
Ltd
The Security Holders benefit from security
interests over certain leased assets of the
Companies.
There are no matters of which
we are aware which give rise to
a conflict in this appointment.
We have professional relationships with the
majority of major banks and lenders in
Australia and with a number of staff within
the Security Holders' organisations,
particularly in the credit area.
In particular, our previous
relationships with the Security
Holders were not in relation to
the Companies and/or the
directors' affairs or related
parties of the Companies and/or
the directors.
(Security Holders)
We have previously undertaken formal and
informal assignments on behalf of the
Security Holders for a number of years.
Maddocks Lawyers
Maddocks is the Companies' external legal
advisors,
We have an ongoing professional
relationship with Maddocks and its principals.
We have previously undertaken informal
assignments on entities referred to us by
Maddocks.
Thompson Geer
Thompson Geer provided legal advice to the
Companies' directors.
We have an ongoing professional
relationship with Thompson Geer and its
principals,
We have previously undertaken informal
assignments on entities referred to us by
Thompson Geer.
We believe that this relationship
does not result in a conflict of
interest or duty because our
previous dealings with
Maddocks were not in relation to
the Companies' and/or the
directors' affairs or related
parties of the Companies' and/or
the directors.
We believe that this relationship
does not result in a conflict of
interest or duty because our
previous dealings with
Thompson Geer were not in
relation to the Companies'
and/or the directors' affairs or
related parties of the
Companies' and/or the directors.
iii. Prior professional services to the insolvent
We, or a member of our firm, have provided the following professional services to the
Companies in the 24 months prior to the acceptance of this appointment:
Nature of professional service
Reasons why not an impediment or conflict
From 3 August 2015 to 27 August
2015, PPB Advisory undertook an
independent review of the Companies'
operating forecast and underlying
assumptions against prior period
comparisons and the Companies'
current and prospective customer
contracts.
We believe that this relationship does not result in a conflict of
interest or duty because:
•
The work undertaken was an engagement with a limited
scope.
•
The nature of the report provided to the Companies is
such that it would not be subject to review and challenge
during the course of the administration. The engagement
will not influence our ability to be able to fully comply with
the statutory and fiduciary obligations associated with the
administration of the Companies in an objective and
impartial manner.
•
The engagement was for a limited period.
•
No advice or recommendations were provided in respect
of the Companies' strategic matters or future direction of
the Companies.
The Arita — Code of Professional Practice for Insolvency Practitioners (section 6.17) specifies
the requirement to disclose all relevant relationships and professional services provided to the
Insolvent (ie the Companies) during the past 24 months. However, to ensure full disclosure to
creditors, detailed below are the services provided to the Companies or individual Group
Companies more than 24 months ago.
Nature of professional service Reasons why not an impediment or conflict
In March 2013, PPB Advisory
provided limited advice to HRL
Limited (an entity within the
Group) in relation to a
prospective business
acquisition, which did not
eventuate.
In February 2012 PPB Advisory
provided Energy Brix Australia
Corporation Pty Ltd (an entity
within the Group) with advice on
obtaining short-term/bridging
refinance. Bridging finance was
ultimately obtained from
Macquarie Bank and repaid
within a 6 month period.
We believe that the advice provided does not result in a conflict of
interest or duty because:
•
The work undertaken was an engagement with a limited scope.
•
The nature of the report provided to HRL Limited is such that it
would not be subject to review and challenge during the course of
the administration. The engagement will not influence our ability
to be able to fully comply with the statutory and fiduciary
obligations associated with the administration of the Companies in
an objective and impartial manner.
•
The engagement was for a limited period.
•
The engagement was a long time ago.
We believe that the advice provided does not result in a conflict of
interest or duty because:
•
The work undertaken was an engagement with a limited scope.
•
The nature of the report provided to Energy Brix Australia
Corporation Pty Ltd is such that it would not be subject to review
and challenge during the course of the administration. The
engagement will not influence our ability to be able to fully comply
with the statutory and fiduciary obligations associated with the
administration of the Companies in an objective and impartial
manner.
•
The engagement was for a limited period.
•
No advice or recommendations were provided in respect of the
Companies' strategic matters or future direction of the
Companies.
•
The engagement was a long time ago.
Nature of professional service Reasons why not an impediment or conflict
In 2005 PPB Advisory reviewed
the Companies' cash flow and
provided recommendations to
improve cash flows.
In 2000 PPB Advisory reviewed
the cash flow for Energy Brix
Australia Corporation Pty Ltd (an
entity within the Group).
We believe that the review does not result in a conflict of interest or
duty because:
•
The work undertaken was an engagement with a limited scope.
•
The nature of the report provided to the Companies is such that it
would not be subject to review and challenge during the course of
the administration. The engagement will not influence our ability
to be able to fully comply with the statutory and fiduciary
obligations associated with the administration of the Companies in
an objective and impartial manner.
•
The engagement was for a limited period.
•
No advice was provided in respect of the Companies' strategic
matters or future direction of the Companies.
•
The engagement was a long time ago.
We believe that the review does not result in a conflict of interest or
duty because:
•
The work undertaken was an engagement with a limited scope.
•
The nature of the report provided to Energy Brix Australia
Corporation Pty Ltd is such that it would not be subject to review
and challenge during the course of the administration. The
engagement will not influence our ability to be able to fully comply
with the statutory and fiduciary obligations associated with the
administration of the Companies in an objective and impartial
manner.
•
The engagement was for a limited period.
•
No advice or recommendations were provided in respect of the
Companies' strategic matters or future direction of the
Corn panies.
•
The engagement was a long time ago.
iv. No other relevant relationships to disclose
There are no other known relevant relationships, including personal, business and professional
relationships, from the previous 24 months with the Companies, an associate of the Companies,
a former insolvency practitioner appointed to the Companies or any person or entity that has
security over the whole or substantially the whole of the Companies' property that should be
disclosed.
C. Indemnities and up-front payments
We have not been indemnified in relation to this administration, other than any indemnities that
we may be entitled to under statute. We have not received any upfront payments in respect of
our remuneration or disbursements.
Dated this 6th ay of May 2016
Ian Carson
Craig Crosbie
Stephen Longley
Administrator
Administrator
Administrator
Schedule A— related entities of PPB Advisory
All Australian incorporated related entities of PPB Advisory
PPB PTY LIMITED, AUSTRALIA
subsidiaries
PPB ADVISORY AGRIBUSINESS MANAGEMENT PTY LTD, AUSTRALIA
PPB ADVISORY FUNDS MANAGEMENT HOLDING PTY LIMITED,
AUSTRALIA
PPB CORPORATE FINANCE PTY LIMITED, AUSTRALIA
PPB CORPORATE SERVICES PTY LTD, AUSTRALIA
PPB NZ HOLDINGS PTY LIMITED, AUSTRALIA
PPB ADVISORY FUNDS MANAGEMENT LIMITED, AUSTRALIA
PPB PROPERTY ADMINISTRATION PTY LTD, AUSTRALIA
PPB PROPERTY PTY LIMITED, AUSTRALIA
PPB REAL ESTATE PTY LTD, AUSTRALIA
PPB NZ LIMITED AS NOMINEE FOR PPB NZ PARTNERSHIP
PPB NZ PROPERTY LIMITED
PPB NZ EQUITY LIMITED
TIAGO ADVISORY PTY LIMITED, AUSTRALIA
A.C.N 142 632 479 PTY LIMITED, AUSTRALIA
PPB FUNDING PTY LTD, AUSTRALIA
As of 1 March 2016 (four months following our appointment) PPB Advisory merged with Litmus
Group and the following entities were transferred into the PPB Advisory Group:
Litmus Group entities which merged with PPB Advisory as of 1 March
2016
LITMUS GROUP PTE LIMITED, SINGAPORE
TRUE NORTH ADVANTAGE PTE LIMITED, SINGAPORE