TIDMTLOU
RNS Number : 3083Q
Tlou Energy Ltd
11 September 2017
Tlou Energy Limited / EPIC: TLOU / Sector: Oil & Gas
Tlou Energy Limited ('Tlou' or 'the Company')
Final Results
Tlou Energy Limited, the AIM and ASX listed company focused on
delivering power in Botswana and Southern Africa through the
development of coal bed methane ('CBM') projects, is pleased to
announce its final results for the year ended 30 June 2017. To view
a full version of the Annual Report please go the Company's
website: http://tlouenergy.com/reports
Highlights
-- First independently-certified CBM Gas reserves achieved
-- Environmental Impact Statement approved
-- Request received for supply of up to 100MW of CBM power from Government of Botswana
-- Mining License granted covering 900km(2)
Tlou Managing Director Tony Gilby said, "This has been a
phenomenal year for the Company. We set a number of key targets
which were achieved including being the first Company in Botswana
to book CBM natural gas reserves, receiving environmental approval
for our field development and converting a large part of our
project area from a prospecting or exploration licence to a mining
licence for a term of 25 years. It was a very busy year and the
coming year is set to be another significant one for the Company. I
look forward to updating you further as the year progresses."
For further information regarding this announcement please
contact:
Tlou Energy Limited +61 7 3012 9793
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Tony Gilby, Managing Director
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Solomon Rowland, Company Secretary
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Grant Thornton (Nominated
Adviser) +44 (0)20 7383 5100
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Samantha Harrison, Colin Aaronson,
Harrison Clarke
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+44 (0) 207 408
Shore Capital (Joint Broker) 4090
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Jerry Keen, Mark Percy, Toby
Gibbs
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Optiva Securities Limited
(Joint Broker) +44 (0)20 3137 1904
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Jeremy King, Christian Dennis
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St Brides Partners Limited +44 (0) 20 7236
(Public Relations) 1177
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Lottie Brocklehurst, Megan
Dennison, Susie Geliher
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FlowComms Limited (Investor +44 (0) 7891 677
Relations) 441
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Sasha Sethi
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The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Chairman Statement
Dear Shareholders,
Over the past year we have made excellent progress towards
establishing ourselves as a key power player in Botswana,
culminating in being awarded our Mining Licence in August 2017.
This was a key target as we work towards our goal of reducing the
regional power deficit in Southern Africa through the development
of our gas to power project via Coal Bed Methane ('CBM').
We are privileged to have the support of the forward-thinking
Government of Botswana, which announced last year that CBM, a
relatively clean source of energy and more competitively priced
than solar and diesel, is to be included as part of the country's
forward plan to combat power deficiency. Early in 2017, with our
Environmental Impact Statement for upstream development already
approved, we were delighted to receive a Request for Proposal
('RFP') from the Ministry of Mineral Resources, Green Technology
and Energy Security to provide up to 100MW of CBM power from
Lesedi. A detailed response to this RFP will be submitted in Q3
2017 which will incorporate a phased approach, firstly delivering
up to 10MW, before expanding further. This phased development plan
would allow power to get to the grid sooner, thereby generating
revenue for the Company and would require less capital expenditure
upfront.
As 100% owners of the most advanced CBM project in Botswana we
believe we are in an excellent position to deliver the project
outlined in our response to the RFP. In addition, we have
collaborated with a leading power plant developer, London based
Independent Power Corporation PLC ('IPC') to jointly develop our
CBM power project with Tlou taking responsibility for the gas field
development and IPC leading the power generation aspect of the
project. IPC brings power generation experience and funding
partners to the project which significantly enhances its viability.
Notably, IPC has since entered into a joint venture partnership,
"QG Power Africa", with QG Africa Mezzanine LP, a US$250 million
investment vehicle which is part of the Quantum Global Group, and
Tomé International Limited, a project management consulting firm,
to jointly develop power assets in sub-Saharan Africa.
Tlou's Lesedi project has Botswana's first
independently-certified CBM reserves which were upgraded to 3.9
billion cubic feet ('BCF') 2P and 261 BCF 3P gas reserves. We
believe there is significant further upside to these figures which
will come to fruition through further de-risking of both the Lesedi
and Mamba project areas. With this in mind we have commissioned a
2D seismic survey over areas considered to be highly prospective
for the addition of gas reserves. As well as potentially increasing
the contingent resources and reserves the results of the survey
will provide information which will enhance our knowledge of the
sub-surface structures and resources in advance of further core
well drilling.
Tlou has been producing gas from its operations in Botswana for
over a year and in June 2017 generated its first power from CBM, a
significant milestone for the Company and in effect a proof of
concept of 'first gas monetisation'. This landmark achievement
followed the installation of a gas generator at the Selemo project
area which is now running on gas being produced by our own wells.
Power required to run pumps and metering at the Selemo wells was
previously supplied solely by diesel generators.
During the year, we were delighted to complete a share purchase
plan and placings to raise A$9.7 million which was well supported
by new investors and existing shareholders. This cash has enabled
us to undertake additional field appraisal and to finalise
licencing requirements. Additionally, on a corporate level we have
made two valuable additions to the Tlou Board as Non-Executive
Directors. We welcome Mr. Hugh Swire who brings expert knowledge
and direct investment experience in the low carbon, water, energy
and technology sectors having completed and exited investments into
several leading companies in the low carbon sector; and Ms. Linah
Mohohlo, who as well as being the former Governor of the Bank of
Botswana, has significant experience in the mining industry in
Botswana.
This has been a highly active year for Tlou. With the Lesedi
Mining Licence now in hand which is an important prerequisite to
developing the first commercial gas-to-power project in the
Botswana, we have a range of milestones ahead that are set to be
pivotal in shaping our future and we believe we are very well
placed to achieve our objectives. I would like to take this
opportunity to thank the Tlou Board, Management Team, Advisers and
most importantly our shareholders for their continued support
during this exciting time for Tlou.
Yours faithfully,
Martin McIver
Chairman
Managing Director's Report
Dear Shareholders,
The Lesedi CBM project has been further de-risked during the
year after achieving some major milestones as we aim to deliver
power to Botswana and the Southern African region.
In September 2016, we were granted approval of our Environmental
Impact Statement ('EIS') by Botswana's Department of Environmental
Affairs ('DEA'). This process took over two years to be completed
including preparation of all regulatory documentation, followed by
a review and final approval by the Government. An approved EIS is
essential prior to the application for a Mining Licence in
Botswana. A Mining Licence is required prior to the commencement of
full field development. With our EIS in place, post-year end we
submitted our Mining Licence application to Botswana's Department
of Mines in the Ministry of Mineral Resources, Green Technology and
Energy Security. We received notification in August 2017 that the
application had been successful and the Mining Licence was granted.
This was the first CBM mining licence granted in Botswana, with the
Mining Licence covering a large area of approximately 900km2.
In October 2016, we were delighted to receive an initial
independent reserve certification from SRK Consulting (Australasia)
Pty Ltd ('SRK'), marking Botswana's first independently certified
CBM natural gas reserves. In early 2017, we were able to reinforce
the commerciality of the project with a significant upgrade to
these reserves with an increase in 2P (Proved and Probable) gas
reserves to 3.9 billion cubic feet ('BCF') and 3P (Proved, Probable
and Possible) gas reserves to 261 BCF. These increases comprised
additional certified reserves in the Lesedi Project area (PL 002)
based on a southern extension of the Selemo pilot area; and initial
certified reserves in the Mamba Project area (PL's 238 and 240)
based on a western extension of the Selemo pilot area. Together, we
believe that the Lesedi and Mamba projects will continue to develop
into a valuable resource for our shareholders as we work towards
increasing the certified gas reserves in both areas.
In January 2017, we received a detailed Request for Proposal
('RFP') from the Government of Botswana to develop up to 100MW of
CBM power in Botswana. This indicates the Government's commitment
to facilitate the development of a CBM industry in Botswana. The
proposed Government power purchase agreement will assist in
fast-tracking the development of the gas industry in the country
and creates a new market for our gas. We made the decision to
partner with Independent Power Corporation PLC to jointly develop
our proposed (up to) 100 MW CBM to power project. Together, we have
finalised work on a detailed proposal for the supply of CBM power
in modular stages, which forms a significant part of the planned
submission to the Government of Botswana in response to the
RFP.
In line with further de-risking our project ahead of development
we appointed Velseis Pty Ltd ('Velseis'), an experienced seismic
survey contractor, to undertake a fully funded seismic survey for
both the Lesedi and Mamba permits. The seismic survey will assist
in our plan to drill more wells, by providing us with enhanced
knowledge of sub-surface structures and resources in our project
areas. The seismic survey will expand our geological database
beyond the known gas reserve areas by providing data on potential
gas reservoir compartments that have been identified outside the
currently mapped gas reserve areas. Geological information over
these compartments is relatively sparse other than the existing
aeromagnetic data held by the Company, which was reprocessed by our
reserve certifiers during the year. New seismic information is
anticipated to potentially expand gas reserves and/or contingent
resources should it be demonstrated that continuity of gas-rich
coal exists. We look forward to reporting the results later this
year.
Following the installation of a gas generator at the Selemo
project area during the year, we generated our first power from CBM
at the Lesedi project. Rather than flaring gas produced from the
Selemo pilot wells, it can now be redirected to a gas generator for
use in the field. Use of this indigenous gas provides a saving to
the Company due to the reduced diesel requirement, effectively
'first gas monetisation'. We plan to replace another diesel
generator in the near term which would provide further savings on
diesel costs.
We believe that Tlou is well positioned to succeed in the RFP
tender process and we look forward to providing further updates
over the coming months. This is an exciting time for Tlou and I
would like to thank our ground team for the consistent hard work in
moving this project forward.
Yours faithfully,
Anthony (Tony) Gilby
Managing Director
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2017
Consolidated
Note June 2017 June 2016
$ $
Interest income 2,365 27,857
Expenses
Employee benefits expense 3 (617,581) (613,809)
Depreciation and amortisation expense (240,961) (260,564)
Foreign exchange loss (37,181) (247,007)
Share issue costs (356,732) (779,310)
Performance rights expense 3 (423,499) -
Professional fees (177,121) (185,566)
Corporate expenses (48,437) (57)
Occupancy costs 3 (47,817) (64,601)
Other expenses 3 (1,218,359) (942,526)
------------ ------------
LOSS BEFORE INCOME TAX (3,165,323) (3,065,583)
Income tax 4 - -
------------ ------------
LOSS FOR THE PERIOD (3,165,323) (3,065,583)
------------ ------------
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations 1,210,182 (2,395,125)
Tax effect - -
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) 1,210,182 (2,395,125)
------------ ------------
TOTAL COMPREHENSIVE INCOME/(LOSS) (1,955,141) (5,460,708)
------------ ------------
Earnings per share
Cents Cents
Basic loss per share 5 (1.3) (1.5)
Diluted loss per share 5 (1.3) (1.5)
The above consolidated statement of comprehensive income should
be read in conjunction with the accompanying notes.
Consolidated Statement of Financial Position
as at 30 June 2017
Consolidated
Note June 2017 June 2016
$ $
CURRENT ASSETS
Cash and cash equivalents 6 6,727,424 1,224,404
Trade and other receivables 100,674 290,431
Other current assets 8,650 43,969
TOTAL CURRENT ASSETS 6,836,748 1,558,804
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NON-CURRENT ASSETS
Exploration and evaluation assets 8 49,328,038 46,183,722
Other non-current assets 9 694,402 946,675
Property, plant and equipment 7 320,739 444,358
TOTAL NON-CURRENT ASSETS 50,343,179 47,574,755
------------- -------------
TOTAL ASSETS 57,179,927 49,133,559
------------- -------------
CURRENT LIABILITIES
Trade and other payables 10 431,032 306,956
Provisions 11 166,193 160,874
TOTAL CURRENT LIABILITIES 597,225 467,830
------------- -------------
NON-CURRENT LIABILITIES
Deferred tax liabilities 4 369,353 369,353
Provisions 11 94,000 94,000
TOTAL NON-CURRENT LIABILITIES 463,353 463,353
------------- -------------
TOTAL LIABILITIES 1,060,578 931,183
------------- -------------
NET ASSETS 56,119,349 48,202,376
------------- -------------
EQUITY
Contributed equity 12 83,380,184 73,931,569
Reserves (3,107,432) (4,741,113)
Accumulated losses (24,153,403) (20,988,080)
------------- -------------
TOTAL EQUITY 56,119,349 48,202,376
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The above consolidated statement of financial position should be
read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2017
Contributed Equity Share Based Foreign Currency Accumulated Losses Total
Payments Reserve Translation
Reserve
$ $ $ $ $
Balance at 1 July
2015 71,606,519 2,062,745 (2,442,989) (19,985,242) 51,241,033
------------------- ------------------- ------------------- ------------------- ------------
Loss for the period - - - (3,065,583) (3,065,583)
Other comprehensive
income - - (2,395,125) - (2,395,125)
Total comprehensive
income - - (2,395,125) (3,065,583) (5,460,708)
------------------- ------------------- ------------------- ------------------- ------------
Transactions with owners in their capacity as owners
Share based
payments - 97,001 - - 97,001
Transfers - (2,062,745) - 2,062,745 -
Shares issued, net
of costs 2,325,050 - - - 2,325,050
2,325,050 (1,965,744) - 2,062,745 2,422,051
------------------- ------------------- ------------------- ------------------- ------------
Balance at 30 June
2016 73,931,569 97,001 (4,838,114) (20,988,080) 48,202,376
------------------- ------------------- ------------------- ------------------- ------------
Balance at 1 July
2016 73,931,569 97,001 (4,838,114) (20,988,080) 48,202,376
------------------- ------------------- ------------------- ------------------- ------------
Loss for the period - - - (3,165,323) (3,165,323)
Other comprehensive
income - - 1,210,182 - 1,210,182
Total comprehensive
income - - 1,210,182 (3,165,323) (1,955,141)
------------------- ------------------- ------------------- ------------------- ------------
Transactions with owners in their capacity as owners
Share based
payments - 423,499 - - 423,499
Shares issued, net
of costs 9,448,615 - - - 9,448,615
9,448,615 423,499 - - 9,872,114
------------------- ------------------- ------------------- ------------------- ------------
Balance at 30 June
2017 83,380,184 520,500 (3,627,932) (24,153,403) 56,119,349
------------------- ------------------- ------------------- ------------------- ------------
The above consolidated statement of changes in equity should be
read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
for the year ended 30 June 2017
Consolidated
June 2017 June 2016
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST) (2,446,145) (2,896,862)
Interest received 2,365 27,857
GST and VAT received 98,911 565,759
NET CASH USED IN OPERATING ACTIVITIES 22 (2,344,869) (2,303,246)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets (1,852,642) (5,783,800)
Payment for property, plant and equipment (100,764) (24,102)
NET CASH USED IN INVESTING ACTIVITIES (1,953,406) (5,807,902)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 9,938,787 2,292,540
Share issue costs (162,317) (227,676)
NET CASH PROVIDED BY FINANCING ACTIVITIES 9,776,470 2,064,864
------------ ------------
Net increase/(decrease) in cash held 5,478,195 (6,046,283)
Cash at the beginning of the period 1,224,404 7,197,813
Effects of exchange rate changes on cash 24,825 72,875
------------ ------------
CASH AT THE OF THE PERIOD 6 6,727,424 1,224,404
------------ ------------
The above consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
Notes to the financial statements
Note 1. Significant accounting policies
Introduction
This financial report includes the consolidated financial
statements of Tlou Energy Limited (the "Company") and its
controlled entities (together referred to as the "consolidated
entity" or the "group").
The separate financial statements of the parent entity, Tlou
Energy Limited, have not been presented within this financial
report as permitted by the Corporations Act 2001. Supplementary
information about the parent entity is disclosed in note 25.
Tlou Energy Limited is a public company, incorporated and
domiciled in Australia. Its registered office and principal place
of business is 210 Alice St, Brisbane, QLD 4000, Australia.
The following is a summary of the material and principal
accounting policies adopted by the consolidated entity in the
preparation of the financial report. The accounting policies have
been consistently applied to all the years presented, unless
otherwise stated.
Operations and principal activities
The principal activity of the consolidated entity is the
exploration and evaluation of assets in Southern Africa to identify
and develop CBM resources. No revenue from this activity has been
earned to date, as the consolidated entity is still in the
exploration and evaluation stage.
Currency
The financial report is presented in Australian dollars, rounded
to the nearest dollar, which is the functional currency of the
parent entity.
Authorisation of financial report
The financial report was authorised for issue on 11 September
2017.
Basis of preparation
These general purpose financial statements have been prepared in
accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board and the
Corporations Act 2001. Tlou Energy Limited is a for-profit entity
for the purposes of preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of Tlou Energy Limited
also comply with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board
(IASB).
Historical cost convention
The consolidated financial statements have been prepared on an
accruals basis and are based on historical costs.
Critical accounting estimates
The preparation of the financial statements requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the
consolidated entity's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements are disclosed in note 2.
Foreign currency transactions
Foreign currency transactions are translated into Australian
dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
financial year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in
profit or loss.
Going Concern
The consolidated financial statements have been prepared on a
going concern basis which contemplates that the group will continue
to meet its commitments and can therefore continue normal business
activities and the realisation of assets and settlement of
liabilities in the ordinary course of business.
Because of the nature of the operations, exploration companies,
such as Tlou Energy Limited, find it necessary on a regular basis
to raise additional cash funds for future exploration activity and
meet other necessary corporate expenditure. The company has
recently completed a capital raising which is expected to fund
ongoing operations and working capital requirements for the next 12
months. Subject to the results of these operations the group may
need to raise additional capital to expand and develop the project
further. Accordingly, the group is in the process of investigating
various options for the raising of additional funds which may
include but is not limited to an issue of shares or the sale of
exploration assets where increased value has been created through
previous exploration activity.
At the date of this financial report, none of the above fund
raising options have been concluded and no guarantee can be given
that a successful outcome will eventuate. The directors have
concluded that as a result of the current circumstances there
exists a material uncertainty that may cast significant doubt
regarding the group's and the company's ability to continue as a
going concern and therefore the group and company may be unable to
realise their assets and discharge their liabilities in the normal
course of business. Nevertheless, after taking into account the
current status of the various funding options currently being
investigated and making other enquiries regarding other sources of
funding, the directors have a reasonable expectation that the group
and the company will have adequate resources to fund its future
operational requirements and for these reasons they continue to
adopt the going concern basis in preparing the financial
report.
The financial report does not include adjustments relating to
the recoverability or classification of recorded assets amounts or
to the amounts or classification of liabilities that might be
necessary should the group not be able to continue as a going
concern.
Accounting Polices
(a) Principles of consolidation
Subsidiaries are all entities (including structured entities)
over which the Consolidated Entity has control. The Consolidated
Entity controls an entity when the Consolidated Entity is exposed
to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to
the Consolidated Entity. They are deconsolidated from the date that
control ceases.
The acquisition method of accounting is used to account for
business combinations by the Consolidated Entity.
Intercompany transactions, balances and unrealised gains on
transactions between Consolidated Entity companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Consolidated Entity.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated statement of
comprehensive income, consolidated statement of changes in equity
and consolidated statement of financial position respectively.
(b) Revenue recognition
Revenue is recognised when it is probable that the economic
benefit will flow to the consolidated entity and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received or receivable.
Interest
Interest revenue is recognised as interest accrues using the
effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest
income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the
right to receive payment is established.
(c) Investments and other financial assets
Investments and other financial assets are measured at either
amortised cost or fair value depending on their classification.
Classification is determined based on the purpose of the
acquisition and subsequent reclassification to other categories is
restricted. The fair values of quoted investments are based on
current bid prices. For unlisted investments, the consolidated
entity establishes fair value by using valuation techniques. These
include the use of recent arm's length transactions, reference to
other instruments that are substantially the same, discounted cash
flow analysis, and option pricing models.
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been
transferred and the consolidated entity has transferred
substantially all the risks and rewards of ownership.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are
either: (i) held for trading, where they are acquired for the
purpose of selling in the short- term with an intention of making a
profit; or (ii) designated as such upon initial recognition, where
they are managed on a fair value basis or to eliminate or
significantly reduce an accounting mismatch. Except for effective
hedging instruments, derivatives are also categorised as fair value
through profit or loss. Fair value movements are recognised in
profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial
assets, principally equity securities that are either designated as
available-for-sale or not classified as any other category. After
initial recognition, fair value movements are recognised in the
available-for-sale reserve in equity. Cumulative gain or loss
previously reported in the available-for-sale reserve is recognised
in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The consolidated entity assesses at the end of each reporting
period whether there is any objective evidence that a financial
asset or group of financial assets is impaired. Objective evidence
includes significant financial difficulty of the issuer or obligor;
a breach of contract such as default or delinquency in payments;
the lender granting to a borrower concessions due to economic or
legal reasons that the lender would not otherwise do; it becomes
probable that the borrower will enter bankruptcy or other financial
reorganisation; the disappearance of an active market for the
financial asset; or observable data indicating that there is a
measurable decrease in estimated future cash flows.
The amount of the impairment allowance for financial assets
carried at cost is the difference between the asset's carrying
amount and the present value of estimated future cash flows,
discounted at the current market rate of return for similar
financial assets.
Available-for-sale financial assets are considered impaired when
there has been a significant or prolonged decline in value below
initial cost. Subsequent increments in value are recognised in the
available-for-sale reserve.
(d) Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its recoverable
amount.
Recoverable amount is the higher of an asset's fair value less
costs to sell and value-in-use. The value-in-use is the present
value of the estimated future cash flows relating to the asset
using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped
together to form a cash-generating unit.
(e) Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount
of associated GST, unless the GST incurred is not recoverable from
the tax authority. In this case it is recognised as part of the
cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of
GST receivable or payable. The net amount of GST recoverable from,
or payable to, the tax authority is included in other receivables
or other payables in the consolidated statement of financial
position.
Cash flows are presented on a gross basis. The GST components of
cash flows arising from investing or financing activities which are
recoverable from, or payable to the tax authority, are presented as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of
GST recoverable from, or payable to, the tax authority.
(f) Comparative figures
When required by accounting standards comparative figures have
been adjusted to conform to changes in presentation for the current
financial year.
(g) New Accounting Standards and Interpretations
The Consolidated Entity has adopted all new and amended
Australian Accounting Standards and AASB Interpretations as of 1
July 2016. The Consolidated Entity did not have to change its
accounting policies or make retrospective adjustments as a result
of adopting these standards.
(h) New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 30 June 2017 reporting
periods. The Consolidated Entity has decided against early adoption
of these standards. The Consolidated Entity's assessment of the
impact of these new standards and interpretations is set out
below:
AASB 9 Financial Instruments
This standard and its consequential amendments are currently
applicable to annual reporting periods beginning on or after 1
January 2018. This standard introduces new classification and
measurement models for financial assets, using a single approach to
determine whether a financial asset is measured at amortised cost
or fair value. To be classified and measured at amortised cost,
assets must satisfy the business model test for managing the
financial assets and have certain contractual cash flow
characteristics. All other financial instrument assets are to be
classified and measured at fair value. This standard allows an
irrevocable election on initial recognition to present gains and
losses on equity instruments (that are not held-for-trading) in
other comprehensive income, with dividends as a return on these
investments being recognised in profit or loss. In addition, those
equity instruments measured at fair value through other
comprehensive income would no longer have to apply any impairment
requirements nor would there be any 'recycling' of gains or losses
through profit or loss on disposal. The accounting for financial
liabilities continues to be classified and measured in accordance
with AASB 139, with one exception, being that the portion of a
change of fair value relating to the entity's own credit risk is to
be presented in other comprehensive income unless it would create
an accounting mismatch. The Group has not yet made an assessment of
the impact of this standard.
AASB 16: Leases
This standard is applicable to annual reporting periods
beginning on or after 1 January 2019. When effective, this Standard
will replace the current accounting requirements applicable to
leases in AASB 117: Leases and related Interpretations. AASB 16
introduces a single lessee accounting model that eliminates the
requirement for leases to be classified as operating or finance
leases.
The main changes introduced by the new Standard include:
-- recognition of a right-to-use asset and liability for all
leases (excluding short-term leases with less than 12 months of
tenure and leases relating to low-value assets);
-- depreciation of right-to-use assets in line with AASB 116:
Property, Plant and Equipment in profit or loss and unwinding of
the liability in principal and interest components;
-- variable lease payments that depend on an index or a rate are
included in the initial measurement of the lease liability using
the index or rate at the commencement date;
-- by applying a practical expedient, a lessee is permitted to
elect not to separate non-lease components and instead account for
all components as a lease; and
-- additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either
retrospectively apply the Standard to comparatives in line with
AASB 108 or recognise the cumulative effect of retrospective
application as an adjustment to opening equity on the date of
initial application. The Group has not yet made an assessment of
the impact of this standard.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to
assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on
historical experience and on other various factors, including
expectations of future events, management believes to be reasonable
under the circumstances. The resulting accounting judgements and
estimates will seldom equal the related actual results. The
judgements, estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed
below.
Exploration & evaluation assets
The consolidated entity performs regular reviews on each area of
interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest. These reviews
are based on detailed surveys and analysis of drilling results
performed to reporting date.
Deferred Tax assets
The group is subject to income taxes in Australia and
jurisdictions where it has foreign operations. Significant
judgement is required in determining the worldwide provision for
income taxes. There are certain transactions and calculations
undertaken during the ordinary course of business for which the
ultimate tax determination is uncertain. The group estimates its
tax liabilities based on the group's understanding of the tax law.
Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact
the current and deferred income tax assets and liabilities in the
period in which such determination is made.
In addition, the group has recognised deferred tax assets
relating to carried forward tax losses to the extent there are
sufficient taxable temporary differences (deferred tax liabilities)
relating to the same taxation authority and the same subsidiary
against which the unused tax losses can be utilised. However,
utilisation of the tax losses also depends on the ability of the
entity, which is not part of the tax consolidated group, to satisfy
certain tests at the time the losses are recouped. Due to the
parent entity acquiring the entity that holds the losses it is
expected that the entity will fail to satisfy the continuity of
ownership test and therefore has to rely on the same business test.
As at 30 June 2017 the group has received advice that the losses
are available, however should this change in the future the group
may be required to derecognise these losses.
Note 3. Expenses
Consolidated
June 2017 June 2016
Loss before income tax includes the following specific expenses: $ $
Employee benefits expense
Defined contribution superannuation
-- expense 42,408 46,535
-- Performance rights 423,499 -
-- Other employee benefits expense 575,173 567,274
1,041,080 613,809
---------- ----------
Occupancy costs
Rental expense relating to operating
-- leases -- minimum lease rentals 47,817 64,601
47,817 64,601
---------- ----------
Other expenses include the following specific items:
-- Travel and accommodation costs 225,735 140,462
-- Consultants 277,184 365,460
Stock exchange, advisory, secretarial
-- fees 355,848 198,707
-- Insurance 68,254 70,705
927,021 775,334
---------- ----------
Note 4. Income Tax
The income tax expense or benefit for the period is the tax
payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences and unused tax losses and under and over provision in
prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates that
are enacted or substantively enacted, except for:
-- When the deferred income tax asset or liability arises from
the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the
time of the transaction, affects neither the accounting nor taxable
profits; or
-- When the taxable temporary difference is associated with
investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal can be controlled and it
is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary
differences and losses.
The carrying amount of recognised and unrecognised deferred tax
assets are reviewed each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no longer probable
that future taxable profits will be available for the carrying
amount to be recovered. Previously unrecognised deferred tax assets
are recognised to the extent that it is probable that there are
future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there
is a legally enforceable right to offset current tax assets against
current tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable
entities which intend to settle simultaneously.
Consolidated
June 2017 June 2016
$ $
Loss before income tax (3,165,323) (3,065,583)
------------ ------------
Tax at the domestic tax rates applicable to profits in the country
concerned (949,597) (919,675)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Other non-deductible items 216,360 244,706
Difference in overseas tax rates (218,335) 329,015
Previously unrecognised tax losses used to reduce deferred tax expense - -
Deferred tax asset not recognised 951,572 345,954
Income tax benefit - -
------------ ------------
Recognised deferred tax assets
Unused tax losses 7,551,526 5,937,794
7,551,526 5,937,794
Recognised deferred tax liabilities
Assessable temporary differences 7,920,879 6,307,147
7,920,879 6,307,147
Net deferred tax liability recognised 369,353 369,353
------------ ------------
Unrecognised temporary differences and tax losses
Unused tax losses and temporary differences for which no deferred tax asset
has been recognised 29,026,473 25,426,397
------------ ------------
The deductible temporary differences and tax losses do not
expire under current tax legislation. Deferred tax assets have not
been recognised in respect of these items because it is not
probable that future taxable profit will be available against which
the group can utilise these benefits.
Note 5. Earnings per share
Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of Tlou Energy Limited, excluding any
costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during the
financial year.
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary
shares.
Consolidated
June 2017 June 2016
$ $
Reconciliation of earnings used in calculating basic and diluted loss per share:
Loss for the year attributable to owners of Tlou Energy Limited (3,165,323) (3,065,583)
Loss used in the calculation of the basic and dilutive loss per share (3,165,323) (3,065,583)
------------ ------------
Weighted average number of ordinary shares used as the denominator
Number Number
Number used in calculating basic and diluted loss per share 245,694,059 197,910,139
------------ ------------
Options and performance rights are considered to be "potential
ordinary shares" but were anti-dilutive in nature and therefore the
diluted loss per share is the same as the basic loss per share.
Note 6. Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less
that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value. For the
consolidated statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are shown
within borrowings in current liabilities on the consolidated
statement of financial position.
Consolidated
June 2017 June 2016
$ $
Cash at bank 6,727,424 1,224,404
6,727,424 1,224,404
---------- ----------
Note 7. Property, Plant and Equipment
Plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the
items.
Depreciation is calculated on a straight-line basis to write off
the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Plant and equipment 3-7 years
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon
disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount
and the disposal proceeds are taken to profit or loss.
Consolidated
June 2017 June 2016
$ $
Plant and equipment at cost 1,946,392 1,782,697
Accumulated depreciation (1,625,653) (1,338,339)
320,739 444,358
------------------- ------------------
Movements in Carrying Amounts
Movement in the carrying amount of plant and equipment between the beginning and the end of
the current financial year:
Balance at the beginning of year 444,358 724,334
Additions 100,664 24,140
Disposals (788) (1,069)
Depreciation (240,961) (260,564)
Foreign exchange movements 17,466 (42,483)
Carrying amount at the end of year 320,739 444,358
------------------- ------------------
Note 8. Exploration and Evaluation Assets
Exploration and evaluation expenditure incurred is accumulated
in respect of each identifiable area of interest. Such expenditures
comprise net direct costs and an appropriate portion of related
overhead expenditure but do not include overheads or administration
expenditure not having a specific nexus with a particular area of
interest. These costs are only carried forward to the extent that
they are expected to be recouped through the successful development
of the area or where activities in the area have not yet reached a
stage which permits reasonable assessment of the existence of
economically recoverable reserves and active or significant
operations in relation to the area are continuing.
Accumulated costs in relation to an area no longer considered
viable are written off in full in the year the decision is made.
Regular reviews are undertaken on each area of interest to
determine the appropriateness of continuing to carry forward costs
in relation to that area of interest.
Consolidated
June 2017 June 2016
$ $
Exploration and evaluation assets 49,328,038 46,183,722
49,328,038 46,183,722
----------- ------------
Movements in exploration and evaluation assets
Balance at the beginning of period 46,183,722 43,559,315
Exploration and evaluation expenditure during the year 1,848,143 4,572,815
Foreign currency translation 1,296,173 (1,948,408)
Balance at the end of period 49,328,038 46,183,722
----------- ------------
The recoupment of costs carried forward in relation to areas of
interest in the exploration and evaluation phase is dependent on
successful development and commercial exploitation, or
alternatively, sale of the respective areas of interest.
As at the date of this report, the current terms of the Mamba
Prospecting Licences have expired. However, Tlou has applied to
extend the term of these Exploration Licences, and they continue in
force until a determination is made regarding the application to
extend their terms. Accordingly, while Tlou has applied to renew
the Mamba Prospecting Licences, there is no certainty that the
terms of the licences will be extended.
There is a risk that one of more of the exploration licences
will not be extended, or that the terms of the extension are not
favourable to Tlou. This could have an adverse impact on the
performance of Tlou. The Company is not aware of any reasons why
the licences will not be renewed.
Note 9. Other non-current assets
Inventory and well consumables are valued at lower of cost or
net realisable value. Inventory and well consumables are allocated
to exploration and evaluation expenditure when the assets are used
in operations.
Consolidated
June 2017 June 2016
$ $
Inventory and well consumables 694,402 946,675
694,402 946,675
---------- ----------
Note 10. Trade and Other Payables
These amounts represent liabilities for goods and services
provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term nature
they are measured at amortised cost and not discounted. The amounts
are unsecured and are usually paid within 30 days of
recognition.
Consolidated
June 2017 June 2016
$ $
Current
Trade payables 131,161 151,133
Accruals 278,552 145,793
Other payables 21,319 10,030
431,032 306,956
---------- ----------
The carrying values of trade and other payables approximate fair
values due to short-term nature of the amounts. These are
non-interest bearing.
Note 11. Provisions
Provisions are recognised when the consolidated entity has a
present (legal or constructive) obligation as a result of a past
event, it is probable the consolidated entity will be required to
settle the obligation, and a reliable estimate can be made of the
amount of the obligation. The amount recognised as a provision is
the best estimate of the consideration required to settle the
present obligation at the reporting date, taking into account the
risks and uncertainties surrounding the obligation. If the time
value of money is material, provisions are discounted using a
current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a
finance cost.
Restoration
Both for close down and restoration and for environmental
clean-up costs, a provision is made in the accounting period when
the related disturbance occurs, based on the net present value of
estimated future costs. The amortisation or 'unwinding' of the
discount applied in establishing the net present value of provision
is charged as a finance cost to the consolidated statement of
comprehensive income in each accounting period.
For close down and restoration costs, which include the
dismantling and demolition of infrastructure, removal of residual
materials and remediation of disturbed areas, movements in
provision other than the amortisation of the discount, such as
those resulting from changes in the cost estimates, lives of
operations or discount rates, are capitalised into the carrying
amount of development and amortised against future production.
Rehabilitation
The provision represents the estimated costs to rehabilitate
wells in licences held by the consolidated entity. This provision
has been calculated based on the number of wells which require
rehabilitation and the expected costs to rehabilitate each well,
taking into consideration the type of well and its location.
Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary
benefits, and annual leave expected to be settled within 12 months
of the reporting date are recognised in current liabilities in
respect of employees' services up to the reporting date and are
measured at the amounts expected to be paid when the liabilities
are settled.
Long service leave
The liability for long service leave is recognised in current
and non-current liabilities, depending on the unconditional right
to defer settlement of the liability for at least 12 months after
the reporting date. The liability is measured as the present value
of expected future payments to be made in respect of services
provided by employees up to the reporting date using the projected
unit credit method. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of
service. Expected future payments are discounted using market
yields at the reporting date on national corporate bonds with terms
to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Severance pay
As per the Botswana Labour a provision is calculated for each
Botswana based employee of one day per month of service, which can
be paid out after 60 months or when employment ends. The benefit
rises to two days per month after the first 60 months.
Consolidated
June 2017 June 2016
Current $ $
Employee benefits 42,322 49,136
Employee benefits - Botswana severance 123,871 111,738
166,193 160,874
---------- ----------
Non-current
Rehabilitation 94,000 94,000
94,000 94,000
---------- ----------
Employee benefits - Botswana Severance
A provision has been recognised for employee benefits relating
to severance pay payable in Botswana.
Note 12. Contributed equity
Issued and paid up capital is recognised at the fair value of
the consideration received by the consolidated entity. Incremental
costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the
proceeds.
Consolidated
June 2017 June 2016 June 2017 June 2016
Shares Shares $ $
Opening balance 205,619,292 187,156,319 73,931,569 71,606,519
Issue of ordinary shares during the year* 98,423,556 18,462,973 9,684,461 2,584,816
Share issue costs - - (235,846) (259,766)
Ordinary shares -- fully paid 304,042,848 205,619,292 83,380,184 73,931,569
------------ ------------ ----------- -----------
*Shares issued during the year and the issue price of each issue
is as follows:
Issue No. of Issue
Date Shares Price
AUD
07-Sep-16 31,578,947 $0.095
07-Apr-17 51,788,334 $0.10
27-Apr-17 8,276,275 $0.10
02-May-17 6,780,000 $0.10
Ordinary shares
Ordinary shares entitle the holder to participate in dividends
and the proceeds on the winding up of the company in proportion to
the number of, and amounts paid on, the shares held. The fully paid
ordinary shares have no par value. On a show of hands every member
present at a meeting, in person or by proxy, shall have one vote
and upon a poll, each share shall have one vote. The company does
not have authorised capital or par value in respect of its issued
shares.
Options and performance rights
At 30 June 2017, the following options for ordinary shares in
Tlou Energy Limited and performance rights were on issue:
Options
Number Exercise Expiry
2017 2016 Price Date
1,500,000 1,500,000 $0.14 29/11/2017
500,000 500,000 $0.14 14/01/2018
2,000,000 2,000,000
---------- ----------
Performance rights:
Vesting Exercise 01/07/2016 Issued Exercised Expired 30/06/2017
Date Price
31 January
2017 $0.21 - 2,275,000 - - 2,275,000
31 January
2017 $0.28 - 2,275,000 - - 2,275,000
- 4,550,000 - - 4,550,000
------------- -------------- ------------------ --------------------- ------------------
Capital risk management
The capital structure of the consolidated entity consists of
equity attributable to equity holders of the parent entity,
comprising issued capital and reserves as disclosed in the
Consolidated Statement of Changes in Equity.
When managing capital, management's objective is to ensure the
parent entity continues as a going concern and to maintain a
structure that ensures the lowest cost of capital available and to
ensure adequate capital is available for exploration and evaluation
of tenements. In order to maintain or adjust the capital structure,
the group may seek to issue new shares. Consistent with other
exploration companies, the group and the parent entity monitor
capital on the basis of forecast exploration and development
expenditure required to reach a stage which permits a reasonable
assessment of the existence or otherwise of an economically
recoverable reserve.
There were no changes in the group's approach to capital
management during the year.
The group is not subject to externally imposed capital
requirements.
Note 13. Reserves
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange
differences arising on translation of foreign controlled
entities.
The financial report is presented in Australian dollars rounded
to the nearest dollar, which is Tlou Energy Limited's functional
and presentation currency.
Foreign operations
The assets and liabilities of foreign operations are translated
into functional currency using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are
translated into functional currency using the average exchange
rates, which approximate the rate at the date of the transaction,
for the period. All resulting foreign exchange differences are
recognised in the foreign currency translation reserve in equity.
The foreign currency reserve is recognised in profit or loss when
the foreign operation or net investment is disposed of.
Share Based Payments Reserve
The share based payments reserve is used to record the share
based payment associated with options granted to employees and
others under equity-settled share based payment arrangements.
Note 14. Share-based payments
Equity-settled and cash-settled share-based compensation
benefits are provided to employees.
Equity-settled transactions are awards of shares, or options
over shares that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash
for the exchange of services, where the amount of cash is
determined by reference to the share price.
The cost of equity-settled transactions are measured at fair
value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that
takes into account the exercise price, the term of the option, the
impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option,
together with non-vesting conditions that do not determine whether
the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any other
vesting conditions.
The cost of equity-settled transactions are recognised as an
expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based
on the grant date fair value of the award, the best estimate of the
number of awards that are likely to vest and the expired portion of
the vesting period. The amount recognised in profit or loss for the
period is the cumulative amount calculated at each reporting date
less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining
fair value. Therefore, any awards subject to market conditions are
considered to vest irrespective of whether or not that market
condition has been met provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense
is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting
period, for any modification that increases the total fair value of
the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the
consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not
within the control of the consolidated entity or employee and is
not satisfied during the vesting period, any remaining expense for
the award is recognised over the remaining vesting period, unless
the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it
has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is
substituted for the cancelled award, the cancelled and new award is
treated as if they were a modification.
Employee Share Options and Performance Rights
Share Options and Performance Rights may be granted to certain
personnel of the company on terms determined by the directors or
otherwise approved by the company at a general meeting.
The options are granted for no consideration. Options and
entitlements to the options are vested on a time basis and/or on
specific performance based criteria such as share price increases
or reserves certification. Options granted as described above carry
no dividend or voting rights. When exercisable, each option is
convertible to one ordinary share.
Performance Rights issued during the year are linked to the
share price performance of the Company, ensuring alignment with the
interests of the Company's shareholders. The Performance Rights
have been split into two equal Tranches. For the Performance Rights
to vest and, therefore, become exercisable by a participant,
certain performance conditions will be required to be met as set
out below. On vesting, holders of Performance Rights will be
entitled to acquire Tlou Energy Limited ordinary shares at nil
cost.
Tranche Performance Condition
---------- ----------------------------------------
Tranche 1 The closing price of Shares being
50% or more above the price at the
date of shareholder approval for
a period of 10 consecutive trading
days.
---------- ----------------------------------------
Tranche 2 The closing price of Shares being
100% or more above the price at
the date of shareholder approval
for a period of 10 consecutive trading
days.
---------- ----------------------------------------
Notes:
-- The date of shareholder approval was 10 November 2016
-- The share price on 10 November 2016 was AUD $0.14
-- For Tranche 1 to vest the share price needs to be AUD $0.21
per share or greater for a period of 10 consecutive trading
days
-- For Tranche 2 to vest the share price needs to be AUD $0.28
or greater for a period of 10 consecutive trading days
The expense recognised in the consolidated statement of
comprehensive income in relation to share based payments amounts to
$423,499 (2016: $16,900). The amount assessed as fair value at the
grant date is allocated equally over the period from grant date to
vesting date. The fair value at grant date is determined using
generally accepted valuation techniques that take into account
exercise price, the term of the option or performance rights, the
impact of dilution, the share price at grant date, the expected
price volatility of the underlying share, the expected dividend
yield and the risk free rate for the term of the option/performance
rights and an appropriate probability weighting to factor the
likelihood of the satisfaction of non-vesting conditions.
Inputs used to value the options on issue are as follows:
Grant date 30/11/15 14/01/16
Dividend yield - -
(%)
Expected volatility
(%) 68 68
Risk-free interest
rate (%) 1.94 1.94
Expected life
of options (years) 2 2
Weighted average
share price ($) $0.14 $0.14
Model used Black Black
Scholes Scholes
Inputs used to value the performance rights on issue are as
follows:
Tranche Tranche
1 2
Grant date 10/11/16 10/11/16
Expected volatility
(%) 100 100
Risk-free interest
rate (%) 2.20 2.20
Expected life
of (years) 7 7
Weighted average
share price ($) $0.21 $0.28
Model used Trinomial Trinomial
The following table shows the number, movements and weighted
average exercise price of employee share options outstanding for
the 2017 year
Grant Expiry Exercise Opening Exercised Granted Expired During Closing Vested &
Date date price Balance During the During the the year Balance Exercisable
July 2016 Year Year June 2017
30/11/15 29/11/17 $0.14 1,500,000 - - - 1,500,000 1,500,000
14/01/16 14/01/18 $0.14 500,000 - - - 500,000 500,000
Total 2,000,000 - - - 2,000,000 2,000,000
---------- ------------ ------------- ------------------ ---------- ------------
Weighted average exercise price $0.14 - - - $0.14 $0.14
The weighted average remaining contractual life of share options outstanding at the end of
the year was 0.4 years.
The following table shows the number, movements and weighted
average exercise price of employee share options outstanding for
the 2016 year:
Grant Date Expiry date Exercise Opening Exercised Granted Expired Closing Vested &
price Balance During the During During the Balance Exercisable
July 2015 Year the Year year June 2016
01/07/12 30/04/16 $0.625 10,175,000 - - (10,175,000) - -
01/04/14 30/04/16 $0.625 400,000 - - (400,000) - -
30/11/15 29/11/17 $0.14 - - 1,500,000 - 1,500,000 1,500,000
14/01/16 14/01/18 $0.14 - - 500,000 - 500,000 500,000
Total 10,575,000 - 2,000,000 (10,575,000) 2,000,000 2,000,000
----------- ------------ ---------- ------------- ---------- ------------
Weighted average exercise price $0.63 - $0.14 $0.63 $0.14 $0.14
The weighted average remaining contractual life of share options outstanding at the end of
the year was 1.4 years.
The following table shows the number, movements and exercise
price of performance rights for the 2017 year. There were no
performance rights in the prior year.
Movements
Vesting Exercise 01/07/2016 Issued Exercised Expired 30/06/2017
Date Price
31 January
2017 $0.21 - 2,275,000 - - 2,275,000
31 January
2017 $0.28 - 2,275,000 - - 2,275,000
- 4,550,000 - - 4,550,000
------------- -------------- ------------------ --------------------- ------------------
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transaction
recognised during the year were as follows:
Consolidated
June 2017 June 2016
$ $
Performance rights 423,499 -
Options expensed - 16,900
Options capitalised - 80,101
423,499 97,001
---------- ----------
Note 15. Commitments
Leases
The determination of whether an arrangement is or contains a
lease is based on the substance of the arrangement and requires an
assessment of whether the fulfilment of the arrangement is
dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively
transfer from the lessor to the lessee substantially all the risks
and benefits incidental to ownership of leased assets, and
operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are
established at the present value of minimum lease payments. Lease
payments are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate
of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated
over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty
that the consolidated entity will obtain ownership at the end of
the lease term.
Operating lease payments, net of any incentives received from
the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
Operating lease commitments
Commitments for minimum lease payments for non-cancellable
operating leases for offices and equipment contracted for but not
recognised in the financial statements.
Consolidated
June 2017 June 2016
Payable - minimum lease payments $ $
-- not later than 12 months 5,250 5,250
-- between 12 months and 5 years - -
5,250 5,250
---------- ----------
Exploration expenditure:
In order to maintain an interest in the exploration tenements in
which it is involved, the group is required to meet certain
conditions imposed by the various statutory authorities granting
the exploration tenements or that are imposed by the joint venture
agreements entered into by the group. These conditions can include
proposed expenditure commitments. The timing and amount of
exploration expenditure obligations of the group may vary
significantly from the forecast based on the results of the work
performed, which will determine the prospectivity of the relevant
area of interest. The group's proposed expenditure obligations,
which are not provided for in the financial statements are as
follows:
Consolidated
June 2017 June 2016
Minimum expenditure requirements $ $
-- not later than 12 months 1,637,420 25,668,594
-- between 12 months and 5 years 2,637,363 -
4,274,783 25,668,594
---------- -----------
The minimum expenditure requirements at 30 June 2017 do not
include commitment in relation to Prospecting licence PL002/2004.
In August 2017, post year end, this Prospecting Licence was
converted to a mining licence with no minimum expenditure
requirement outlined in the mining licence, hence the reason for
excluding the figure in the above amounts.
Five of the Group's prospecting licences referred to as the
Mamba permits expired at 30 June 2017. Renewal applications were
submitted in March 2017, however confirmation of whether renewal
was successful or not has not been received at the date of this
report. The issuing authority have confirmed that they will extend
the licences to 30 September 2017, by which time they expect to
have the renewal applications assessed. There was no additional
commitment amount outlined in the extension document so the above
figures do not include any expenditure relating to the Mamba
permits.
Note 16. Financial instruments
Overview
The group's principal financial instruments comprise
receivables, payables, cash and term deposits. The main risks
arising from the group's financial assets are interest rate risk,
foreign currency risk, credit risk and liquidity risk.
This note presents information about the group's exposure to
each of the above risks, its objectives, policies and processes for
measuring and managing risk. Other than as disclosed, there have
been no significant changes since the previous financial year to
the exposure or management of these risks.
The group holds the following financial instruments:
Consolidated
June 2017 June 2016
Financial Assets $ $
Cash and cash equivalents 6,727,424 1,224,404
Trade and other receivables 100,674 290,431
6,828,098 1,514,835
---------- ----------
Financial Liabilities
Trade and other payables 431,032 306,956
431,032 306,956
---------- ----------
Financial risk management objectives
The consolidated entity's activities expose it to a variety of
financial risks: market risk (including foreign currency risk,
price risk and interest rate risk), credit risk and liquidity risk.
The consolidated entity's overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the
consolidated entity. The consolidated entity uses different methods
to measure different types of risk to which it is exposed. These
methods include sensitivity analysis in the case of interest rate,
foreign exchange and other price risks and ageing analysis for
credit risk.
Key risks are monitored and reviewed as circumstances change
(e.g. acquisition of new entity or project) and policies are
created or revised as required. The overall objective of the
group's financial risk management policy is to support the delivery
of the group's financial targets whilst protecting future financial
security.
Given the nature and size of the business and uncertainty as to
the timing and amount of cash inflows and outflows, the group does
not enter into derivative transactions to mitigate the financial
risks. In addition, the group's policy is that no trading in
financial instruments shall be undertaken for the purpose of making
speculative gains. As the group's operations change, the Directors
will review this policy periodically going forward.
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management framework. The
Board reviews and agrees policies for managing the group's
financial risks as summarised below. These policies include
identification and analysis of the risk exposure of the
consolidated entity and appropriate procedures, controls and risk
limits.
Risk management is carried out by senior finance executives
(finance) under policies approved by the Board of Directors.
Finance identifies, evaluates and hedges financial risks within the
consolidated entity's operating units where appropriate.
(a) Interest rate risk
Exposure to interest rate risk arises on financial assets and
financial liabilities recognised at reporting date whereby a future
change in interest rates will affect future cash flows or the fair
value of fixed rate financial instruments. The group is also
exposed to earnings volatility on floating rate instruments.
A forward business cash requirement estimate is made,
identifying cash requirements for the following period (generally
up to one year) and interest rate term deposit information is
obtained from a variety of banks over a variety of periods (usually
one month up to six-month term deposits) accordingly. The funds to
invest are then scheduled in an optimised fashion to maximise
interest returns.
Interest rate sensitivity
A sensitivity of 1% interest rate has been selected as this is
considered reasonable given the current market conditions. A 1%
movement in interest rates at the reporting date would have
increased (decreased) equity and profit or loss by the amounts
shown below. This analysis assumes that all other variables, in
particular foreign currency rates, remain constant.
Profit or loss Equity
1% increase 1% decrease 1% increase 1% decrease
$ $ $ $
Consolidated - 30 June 2017
Cash and cash equivalents 67,274 (67,274) 67,274 (67,274)
Consolidated - 30 June 2016
Cash and cash equivalents 12,244 (12,244) 12,244 (12,244)
Interest rate risk on other financial instruments is
immaterial.
(b) Liquidity risk
Liquidity risk is the risk that the group will not be able to
meet its financial obligations as they fall due. The Board's
approach to managing liquidity is to ensure, as far as possible,
that the group will always have sufficient liquidity to meet its
obligations when due.
Ultimate responsibility for liquidity risk management rests with
the Board of Directors. The group manages liquidity risk by
maintaining adequate reserves and by continuously monitoring
forecast and actual cash flows and matching the maturity profiles
of financial assets and liabilities. This is based on the
undiscounted cash flows of the financial liabilities based on the
earliest date on which they are required to be paid. At the end of
the reporting period the group held cash of $6,727,424 (2016:
$1,224,404).
The following table details the remaining contractual maturity
for non-derivative financial liabilities.
Within Between Total Contractual Carrying
1 Year 1 & 2 years Cash Flows Amount
Consolidated - 30 June 2017 $ $ $ $
Trade and other payables 431,032 - 431,032 431,032
-------- ------------ ------------------ ---------
Consolidated - 30 June 2016
Trade and other payables 306,956 - 306,956 306,956
-------- ------------ ------------------ ---------
(c) Foreign exchange risk
As a result of activities overseas, the group's consolidated
statement of financial position can be affected by movements in
exchange rates. The group also has transactional currency
exposures. Such exposures arise from transactions denominated in
currencies other than the functional currency of the relevant
entity.
The group's exposure to foreign currency risk primarily arises
from the group's operations overseas. Foreign exchange risk arises
from future commercial transactions and recognised financial assets
and financial liabilities denominated in a currency that is not the
entity's functional currency. The risk is measured using
sensitivity analysis and cash flow forecasting.
The group currently does not engage in any hedging or derivative
transactions to manage foreign currency risk. The group's policy is
to generally convert its local currency to Pula, Rand or US dollars
at the time of transaction. The group, has on rare occasions, taken
the opportunity to move Australian dollars into foreign currency
(ahead of a planned requirement for those foreign funds) when
exchange rate movements have moved significantly in favour of the
Australian dollar, and management considers that the currency
movement is extremely likely to move back in subsequent weeks or
months. Therefore, the opportunity has been taken to lock in
currency at a favourable rate to the group. This practice is
expected to be the exception, rather than the normal practice.
The group's exposure to foreign currency risk at the reporting
date, expressed in Australian dollars, was as follows:
2017 2017 2017 2016 2016 2016
USD Pula SA Rand USD Pula SA Rand
$ $ $ $ $ $
Financial Assets
Cash and cash equivalents 20,603 105,567 36,377 21,279 100,871 8,976
Trade and other receivables - 78,337 - - 28,313 -
Financial Liabilities
Trade and other payables - (112,508) - - (154,024) -
Net Financial Instruments 20,603 71,396 36,377 21,279 (24,840) 8,976
------- ---------- -------- ------- ---------- --------
Foreign currency rate sensitivity
Based on financial instruments held at 30 June 2017, had the
Australian dollar strengthened/weakened by 10% the group's profit
or loss and equity would be impacted as follows:
Profit or loss Equity
10% 10% 10% 10%
Increase Decrease Increase Decrease
2017 $ $ $ $
Dollar (US) (2,060) 2,060 (2,060) 2,060
Pula (Botswana) (7,140) 7,140 (7,140) 7,140
Rand (South Africa) (3,638) 3,638 (3,638) 3,638
2016
Dollar (US) (2,182) 2,182 (2,182) 2,182
Pula (Botswana) 2,484 (2,484) 2,484 (2,484)
Rand (South Africa) (898) 898 (898) 898
(d) Credit risk
Credit risk is the risk of financial loss to the group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. This arises principally from cash and
cash equivalents and trade and other receivables. The group
exposure and the credit ratings of its counterparties are
continuously monitored by the Board of Directors.
The maximum exposure to credit risk at the reporting date is the
carrying amount of the financial assets as summarised in the table
above.
Credit Risk Exposures
Trade and other receivables
Trade and other receivables comprise primarily of VAT and GST
refunds due. Where possible the group trades with recognised,
creditworthy third parties. The receivable balances are monitored
on an ongoing basis. The group's exposure to bad debts is not
significant. At 30 June 2017, none (2016: nil) of the group's
receivables were past due.
Cash and cash equivalents
The group has a significant concentration of credit risk with
respect to cash deposits with Westpac Banking Corporation, First
National Bank Botswana and First National Bank South Africa.
However, significant cash deposits are invested across banks to
mitigate credit risk exposure to a particular bank. AAA rated banks
are mostly used and non AAA banks are utilised where commercially
attractive returns are available.
Note 17. Key Management Personnel
Key management personnel comprise directors and other persons
having authority and responsibility for planning, directing and
controlling the activities of the Consolidated Entity.
Detailed remuneration disclosures are provided in the
remuneration report on pages 13 to 19.
Key management personnel compensation
The aggregate compensation made to directors and other members
of key management personnel of the consolidated entity is set out
below:
Consolidated
June 2017 June 2016
$ $
Short-term employee benefits 653,675 885,565
Post-employment benefits 54,796 55,012
Other long-term benefits 23,730 28,063
---------- ----------
732,201 968,640
Share based payments 342,375 -
----------
1,074,576 968,640
---------- ----------
Note 18. Auditors' Remuneration
During the year the following fees were paid or payable for
services provided by the auditor of the group:
Consolidated
June 2017 June 2016
$ $
Audit services
Auditing or reviewing the financial statements - BDO Australia 55,000 48,500
Auditing or reviewing the financial statements - BDO Botswana 25,214 25,088
---------- ----------
80,214 73,588
Non-audit services - BDO Australia
Tax consulting and compliance services 10,172 16,132
AIM listing - 36,983
---------- ----------
10,172 53,115
Total 90,386 126,703
---------- ----------
Note 19. Contingent Liabilities
The Directors are not aware of any contingent liabilities (2016:
nil).
Note 20. Related Party Transactions
Parent entity
The legal parent entity is Tlou Energy Limited.
Subsidiaries
Interests in subsidiaries are set out in note 23.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2017 2016
$ $
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a director-related
entity of
Anthony Gilby. 21,000 46,500
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with
related parties:
Current payables:
Trade payables to The Gilby McKay Alice Street Partnership, a director-related entity
of Anthony
Gilby 1,925 1,925
Loans to/from related parties
There were no loans to or from related parties at the reporting date or during the year.
Terms and conditions
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
Note 21. Segment Reporting
Reportable Segments
Operating segments are identified on the basis of internal
reports that are regularly reviewed by the executive team in order
to allocate resources to the segment and assess its
performance.
The Company currently operates in one segment, being the
exploration, evaluation and development of Coalbed Methane
resources in Southern Africa.
Segment revenue
As at 30 June 2017 no revenue has been derived from its
operations (2016: nil).
Segment assets
Segment non-current assets are allocated to countries based on
where the assets are located as outlined below.
June 2017 June 2016
$ $
Botswana 50,341,366 47,574,122
Australia 1,813 633
50,343,179 47,574,755
----------- -----------
Note 22. Cash Flow Information
Consolidated
June 2017 June 2016
$ $
Reconciliation of cash flow from operations
Loss for the period (3,165,323) (3,065,583)
Depreciation 240,961 260,564
Share-based payments 423,499 97,001
Salaries and fees paid in equity - (97,000)
Loss on disposal 788 -
Net exchange differences 37,181 247,007
Changes in operating assets and liabilities, net of the effects of purchase and disposal of
subsidiaries:
Decrease/(increase) in trade and other receivables 189,757 (68,487)
Decrease/(increase) in other assets - 431,342
Increase/(decrease) in trade payables and accruals (112,369) (165,192)
Decrease/(increase) in employee benefits 35,318 170,322
Increase/(decrease) in provisions 5,319 (113,220)
(2,344,869) (2,303,246)
--------------- --------------
Note 23. Subsidiaries
The consolidated financial statements incorporate the assets,
liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 1.
Name of entity Country of incorporation Class of shares Equity holding %
June 2017 June 2016
Tlou Energy Botswana (Proprietary)
Ltd Botswana Ordinary 100 100
Technoleads International Inc Barbados Ordinary 100 100
Tlou Energy Exploration
(Proprietary) Limited Botswana Ordinary 100 100
Sable Energy Holdings (Barbados)
Inc Barbados Ordinary 100 100
Tlou Energy Resources (Proprietary)
Limited Botswana Ordinary 100 100
Copia Resources Inc Barbados Ordinary 100 100
Tlou Energy Corp Services Botswana
(Proprietary) Limited Botswana Ordinary 100 100
Madra Holdings (Barbados) Inc Barbados Ordinary 100 100
Tlou Energy Solutions (Proprietary)
Limited Botswana Ordinary 100 100
Aguia Energy Limitada Mozambique Ordinary - 100
Mica Investments (Barbados) Inc Barbados Ordinary - 100
SK Holdings (Barbados) Inc Barbados Ordinary - 100
Tlou South Karoo (Proprietary)
Limited Botswana Ordinary - 100
Apex Resources No. 2 Inc Barbados Ordinary - 100
Apex Resources Holdings No. 2 Corp British Virgin Islands Ordinary - 100
Tembo Holdings Inc British Virgin Islands Ordinary - 100
Note 24. Subsequent Events
There has not been any matter or circumstance, other than that
referred to in this report and disclosed in the financial
statements or notes thereto, that has arisen since the end of the
period, that has significantly affected, or may significantly
affect, the operations of the consolidated entity, the results of
these operations, or the state of affairs of the consolidated
entity in future financial years.
Note 25. Parent entity disclosures
Parent
June 2017 June 2016
$ $
Current assets 6,640,713 1,411,310
Non-current assets 30,215,563 30,214,384
Total assets 36,856,276 31,625,694
------------- -------------
Current liabilities 330,900 173,688
Total liabilities 330,900 173,688
------------- -------------
Net assets 36,525,376 31,452,006
------------- -------------
Contributed equity 83,380,184 73,931,569
Share based payment 520,499 2,159,745
Accumulated losses (47,375,307) (44,639,308)
Total equity 36,525,376 31,452,006
------------- -------------
Loss for the period 2,735,999 2,598,498
Total comprehensive income 2,735,999 2,598,498
------------- -------------
Commitments, Contingencies and Guarantees of the Parent
Entity
The Parent Entity has no commitments for the acquisition of
property, plant and equipment, no contingent assets, contingent
liabilities or guarantees at balance date.
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGUUABUPMUCG
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