Why Did PPK Take a $22.4M Hit on Li-S Energy While CIB Revenue Skyrocketed?

Financial Overview and Impairment Impact

PPK Group Limited disclosed a statutory loss after tax of $25.7 million for the financial year ended 30 June 2025, a sharp increase from the prior year’s $15.9 million loss. This outcome was heavily influenced by a substantial non-cash impairment charge of $22.4 million related to its 39.24% investment in Li-S Energy Limited (LIS), following the deconsolidation of LIS as a controlled subsidiary in October 2024 and its reclassification as an associate.

The impairment reflects the decline in LIS’s share price to 10.5 cents at the reporting date, down from the initial 20 cents per share valuation at deconsolidation. Notably, post-reporting, LIS shares have rebounded to 16 cents, suggesting a potential reversal of approximately $14 million before tax in the near term.

Portfolio Highlights, Ballistics and Energy Storage

Amidst the challenges, PPK’s Craig International Ballistics (CIB) segment delivered a standout performance, achieving a record $48.1 million in revenue, representing a remarkable 116% year-on-year growth. CIB’s expansion was underpinned by strategic investments in manufacturing capabilities, including commissioning the largest hydraulic press in the Southern Hemisphere, and a strong order book heading into FY26.

PowerPlus Energy (PPE), PPK’s energy storage subsidiary, recorded $23.1 million in revenue, a 16% decline attributed to competitive pricing pressures and delayed consumer investment pending the Federal Government’s Cheaper Battery Program (CHBP). PPE launched new battery products aligned with CHBP requirements, positioning itself for growth as the program progresses.

Nanomaterials and Strategic Restructuring

PPK’s nanomaterials businesses, including White Graphene Limited (WGL) and BNNT Technology Pty Ltd, faced operational restructuring amid ongoing commercialization challenges. The recent merger of WGL and BNNT aims to streamline operations and enhance commercial efficiency. While promising trials continue, material revenue from nanomaterials is not expected in FY26.

Corporate Actions and Governance

In October 2024, PPK paid a special fully franked in-specie dividend of 5.71 cents per share, distributing LIS shares to shareholders as part of the deconsolidation process. The Board saw notable changes with the appointment of Rick Francis as an independent non-executive director in December 2024 and the resignation of CEO Marc Fenton in June 2025, with a transition plan underway to ensure leadership continuity.

PPK maintains a strong balance sheet with $5.1 million in cash and cash equivalents at year-end, despite reduced liquidity compared to the prior year. The group continues to manage risks related to liquidity, market volatility, and operational execution across its diversified portfolio.

Outlook and Market Implications

Looking ahead, PPK is cautiously optimistic about FY26, with CIB well-positioned to capitalize on strong demand and PPE poised to benefit from government programs. The company remains focused on advancing LIS’s commercial milestones and navigating nanomaterials commercialization. Investors will be watching closely for developments on LIS’s share price and any reversal of impairment, as well as strategic moves around CIB and nanomaterials.