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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Oilex Ld | LSE:OEX | London | Ordinary Share | AU000000OEX8 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.165 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMOEX
RNS Number : 2963O
Oilex Ltd
01 October 2019
For a printer friendly copy of this announcement, please click on the link below to open a PDF version
http://www.rns-pdf.londonstockexchange.com/rns/2963O_1-2019-10-1.pdf
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2019
`
Hot Features
Premium
Note 2019 2018
$ $
------------ ------------
Revenue 4(a) 188,220 163,562
Cost of sales 4(b) (504,926) (199,266)
------------ ------------
Gross loss (316,706) (35,704)
Other income 4(c) - 13,139
Exploration expenditure 4(d) (491,675) (651,993)
Administration expense 4(e) (1,957,850) (2,101,485)
Share-based payments expense 22 (110,935) (90,211)
Provision for doubtful debts expense 12 (108,206) (1,233,898)
Other expenses 4(f) (40,990) (110,395)
------------ ------------
Results from operating activities (3,026,362) (4,210,547)
------------ ------------
Finance income 4(g) 4,403 6,358
Finance costs 4(h) (97,162) (20)
Foreign exchange (loss)/gain 4(i) 1,000 (26,768)
------------ ------------
Net finance costs (91,759) (20,430)
------------ ------------
Loss before tax (3,118,121) (4,230,977)
Tax expense 5 - -
------------ ------------
Loss (3,118,121) (4,230,977)
------------ ------------
Other comprehensive income/(loss)
Items that may be reclassified to
profit or loss
Foreign operations - foreign currency
translation differences 79,951 (213,981)
------------ ------------
Other comprehensive income, net of
tax 79,951 (213,981)
------------ ------------
Total comprehensive loss (3,038,170) (4,444,958)
------------ ------------
Earnings per share
Basic loss per share (cents per share) 6 (0.13) (0.24)
Diluted loss per share (cents per
share) 6 (0.13) (0.24)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
2019 2018
Note $ $
-------------- --------------
Assets
Cash and cash equivalents 11 357,970 375,507
Trade and other receivables 12 497,974 738,784
Prepayments 156,464 115,271
Inventories 9 1,141,309 1,303,245
-------------- --------------
Total current assets 2,153,717 2,532,807
-------------- --------------
Exploration and evaluation 7 568,888 539,793
Development assets 8 6,495,590 6,165,255
Property, plant and equipment 16 145,927 178,930
Total non-current assets 7,210,405 6,883,978
-------------- --------------
Total assets 9,364,122 9,416,785
-------------- --------------
Liabilities
Trade and other payables 13 697,184 779,249
Employee benefits 10 148,731 274,651
Borrowings 14 563,955 -
10,
Provisions 26 855,554 811,798
Total current liabilities 2,265,424 1,865,698
-------------- --------------
Provisions 10 3,733,837 3,542,877
Total non-current liabilities 3,733,837 3,542,877
-------------- --------------
Total liabilities 5,999,261 5,408,575
-------------- --------------
Net assets 3,364,861 4,008,210
-------------- --------------
Equity
Issued capital 17(a) 176,502,200 174,046,036
Reserves 17(b) 7,501,388 7,628,101
Accumulated losses (180,638,727) (177,665,927)
-------------- --------------
Total equity 3,364,861 4,008,210
-------------- --------------
The above Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2019
Attributable to Owners of the Company
Foreign
Currency
Issued Option Loans Options Translation Accumulated
Capital Reserve Reserve Reserve Losses Total Equity
$ $ $ $ $ $
Note 17(a) 17(b) 17(b) 17(b)
-------------- -------------
Balance at 30 June 2017 172,866,479 583,571 - 7,510,193 (173,686,632) 7,273,611
------------ ---------- ---------------- ------------- -------------- -------------
Total comprehensive
(loss)/income
Loss - - - - (4,230,977) (4,230,977)
------------ ---------- ---------------- ------------- -------------- -------------
Other comprehensive income
Foreign currency
translation
differences - - - (213,981) - (213,981)
------------ ---------- ---------------- ------------- -------------- -------------
Total other comprehensive
loss - - - (213,981) - (213,981)
------------ ---------- ---------------- ------------- -------------- -------------
Total comprehensive
(loss)/income - - - (213,981) (4,230,977) (4,444,958)
------------ ---------- ---------------- ------------- -------------- -------------
Transactions with owners
of the Company
Contributions and
distributions
Shares issued 1,100,000 - - - - 1,100,000
Capital raising costs
(1) (53,800) - - - - (53,800)
Shares issued on exercise
of options 43,146 - - - - 43,146
Transfers on forfeited
options - (251,682) - - 251,682 -
Share-based payment
transactions 90,211 - - - - 90,211
------------ ---------- ---------------- ------------- -------------- -------------
Total transactions with
owners of the Company 1,179,557 (251,682) - - 251,682 1,179,557
------------ ---------- ---------------- ------------- -------------- -------------
Balance at 30 June 2018 174,046,036 331,889 - 7,296,212 (177,665,927) 4,008,210
Additional doubtful debts
provision recognised on
implementation of AASB
9 - - - - (177,874) (177,874)
------------ ---------- ---------------- ------------- -------------- -------------
Balance at 30 June 2018
- adjusted 174,046,036 331,889 - 7,296,212 (177,843,801) 3,830,336
Total comprehensive
(loss)/income
Loss - - - (3,118,121) (3,118,121)
------------ ---------- ---------------- ------------- -------------- -------------
Other comprehensive income
Foreign currency
translation
differences - - - 79,951 - 79,951
Total comprehensive
(loss)/income - 79,951 - 79,951
------------ ---------- ---------------- ------------- -------------- -------------
Total comprehensive loss - - - 79,951 (3,118,121) (3,038,170)
------------ ---------- ---------------- ------------- -------------- -------------
Transactions with owners
of the Company
Contributions and
distributions
Shares issued 2,126,049 - - - - 2,126,049
Capital raising costs (176,187) 27,791 - - - (148,396)
Shares issued on exercise
of options 395,367 (293,217) - - 293,217 395,367
Transfers on forfeited
options - (29,978) - - 29,978 -
Recognition of equity
component of loans (Note
14) - - 98,685 - - 98,685
Derecognition of equity
component of loan upon
repayment (9,945) (9,945)
Share-based payment
transactions 110,935 - - - - 110,935
Total transactions with
owners of the Company 2,456,164 (295,404) 88,740 - 323,195 2,572,695
------------ ---------- ---------------- ------------- -------------- -------------
Balance at 30 June 2019 176,502,200 36,485 88,740 7,376,163 (180,638,727) 3,364,861
------------ ---------- ---------------- ------------- -------------- -------------
(1) Capital raising costs include cash payments and the fair value of options granted to the underwriter.
The above Consolidated Statement of Changes in Equity is to be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2019
2019 2018
Note $ $
------------ ------------
Cash flows from operating activities
Cash receipts from customers 260,501 101,733
Payments to suppliers and employees (2,575,376) (2,642,215)
------------ ------------
Cash outflow from operations (2,314,875) (2,540,482)
(Payments for)/proceeds from exploration and evaluation expenses (629,639) (1,419,516)
Interest received 6,417 6,247
Interest paid (24,466) (20)
Net cash used in operating activities 11 (2,962,563) (3,953,771)
------------ ------------
Cash flows from investing activities
Proceeds from disposals of assets and scrap materials 572 13,139
Acquisition of property, plant and equipment (2,149) -
------------ ------------
Net cash from/(used in) investing activities (1,577) 13,139
------------ ------------
Cash flows from financing activities
Proceeds from issue of share capital 17(a) 2,126,049 1,100,000
Proceeds from exercise of share options 395,367 43,146
Payment for share issue costs (148,396) (47,415)
Proceeds from borrowings 645,000 -
Repayment of borrowings (65,000)
Net cash from financing activities 2,953,020 1,095,731
------------ ------------
Net decrease in cash and cash equivalents (11,120) (2,844,901)
Cash and cash equivalents at 1 July 375,507 3,215,565
Effect of exchange rate fluctuations on cash held (6,417) 4,843
Cash and cash equivalents at 30 June 11 357,970 375,507
------------ ------------
The above Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2019
NOTE 1 - REPORTING ENTITY
Oilex Ltd (the Company) is a for-profit entity domiciled in Australia. These consolidated financial statements comprise the Company and its subsidiaries (collectively the Group and individually Group Entities). Oilex Ltd is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange (ASX) and on the Alternative Investment Market (AIM) of the London Stock Exchange. The Group is primarily involved in the exploration, evaluation, development and production of hydrocarbons.
NOTE 2 - BASIS OF PREPARATION
(a) Statement of Compliance
The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board of Directors on 30 September 2019.
(b) Basis of Measurement
The consolidated financial statements have been prepared on the historical cost basis except for share-based payment arrangements measured at fair value and the foreign currency translation reserve.
A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for some measurement and/or disclosure purposes and where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
(c) Going Concern Basis
The Directors believe it is appropriate to prepare the consolidated financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.
The Group has incurred a loss of $3,118,121 and had cash outflows from operating activities of $2,962,563. As at 30 June 2019, the Group's current liabilities exceeded current assets by $111,707 and the Group has cash and cash equivalents of $357,970.
On 31 July 2019, the Company announced that it had arranged an equity capital raising to secure funding of GBP0.34 million (A$0.6 million) through the placing of 257,329,999 new shares at 0.13 pence (A$0.0023) per share. All shares were subsequently issued on 13 August 2019.
On 26 July and 11 September 2018, the Group entered into loan agreements with existing investors to secure funding of $580,000. As part of the loan funding, options were issued to the subscribers, which if exercised, the proceeds would be applied to the outstanding loan balance which was due on 26 July 2019 of $330,000 and 1 October 2019 of $250,000.
On 23 July 2019, the Group entered into an amendment agreement to vary the terms of its loan funding facility of $330,000 entered into on 26 July 2018. Pursuant to the amendment, the loan repayment date was extended from 26 July 2019 to 1 October 2019. In addition, the Company will issue 124,060,150 new options to the lenders at an exercise price of $0.00266 and expiry date of 31 December 2019, which was approved at a General Meeting held on 19 September 2019. All other loan terms and conditions remain the same; and are extended to 1 October 2019.
The total 91,666,666 share options @ $0.0036 exercisable on or before 26 July 2019, attached to the above-mentioned loans, were not exercised and have lapsed.
On 30 September 2019, the Company entered into an amendment agreement to vary the terms of its loan funding facility of $300,000 entered into on 26 July 2018. Pursuant to the amendment, the loan repayment date has been extended to 15 October 2019.
Furthermore, the Company also entered into an amendment agreement to vary the terms of its loan funding facility of $250,000 entered into on 11 September 2018. Pursuant to the amendment, the loan repayment date has been extended from 1 October 2019 to 1 April 2020.
On 30 September 2019, the Company announced that it has arranged an equity capital raising to secure funding of GBP0.6 million (A$1.1 million) through the placing of 315,789,474 new shares at 0.19 pence (A$0.00348) per share. The shares will be issued to Novum Securities and existing shareholders upon settlement which is expected on or about mid-October 2019 which is necessary for the Group in the short-term to repay the $330,000 loan and cash payments for new business opportunities.
NOTE 2 - BASIS OF PREPARATION (CONTINUED)
(c) Going Concern Basis (Continued)
The Group also requires further funding within the next twelve months in order to repay the $250,000 loan, meet planned expenditures for its projects and ongoing administrative expenses and to progress the Cambay drilling programme, and for the new business opportunities in the Cooper-Eromanga Basins and for any new business opportunities that the Group may pursue (refer to note 27). The Group may also require funds in relation to the matter set out in note 26.
The Directors believe that the Group will be able to secure sufficient funding to meet the requirements to continue as a going concern, due to its history of previous capital raisings, acknowledging that the structure and timing of any capital raising is dependent upon investor support, prevailing capital markets, shareholder participation, oil and gas prices and the outcome of planned exploration and evaluation activities, which creates uncertainty. In addition, the Group is working towards securing a new joint venture partner for the Cambay Production Sharing Contract (PSC).
The Directors consider the going concern basis of preparation to be appropriate based on its forecast cash flows for the next twelve months and that the Group will be in a position to continue to meet its minimum administrative, evaluation and development expenditures and commitments for at least twelve months from the date of this report.
If further funds are not able to be raised or realised, then it may be necessary for the Group to sell or farmout its exploration and development assets and to reduce discretionary administrative expenditure.
The ability of the Group to achieve its forecast cash flows, particularly the raising of additional funds, represents a material uncertainty that may cast significant doubt about whether the Group can continue as a going concern, in which case it may not be able to realise its assets and extinguish its liabilities in the normal course of business and at the stated amounts in the financial statements.
(d) Currency and Foreign Currency Transactions
These consolidated financial statements are presented in Australian dollars, which is the Company's functional currency. The functional currency of the Company's subsidiaries is United States or Australian dollars.
Transactions in foreign currencies are translated into the respective functional currencies of Group entities at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the foreign exchange rate at the reporting date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.
(e) Basis of Consideration
These consolidated financial statements comprise the Company and its subsidiaries (collectively the Group and individually Group Entities).
i) Subsidiaries
Subsidiaries are entities controlled by the Group. The list of controlled entities is contained in note 18. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
ii) Joint Arrangements - Joint Operations
The interests of the Group in unincorporated joint operations and jointly controlled assets are recorded in note 18.
iii) Transactions Eliminated on Consolidation
Intragroup balances and transactions, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.
NOTE 2 - BASIS OF PREPARATION (CONTINUED)
(f) Key Estimates, Judgements and Assumptions
In preparing these consolidated financial statements, management continually evaluate judgements, estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. All judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances. Actual results may differ from these judgements, estimates and assumptions. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
A key assumption underlying the preparation of the financial statements is that the entity will continue as a going concern. An entity is a going concern when it is considered to be able to pay its debts as and when they fall due, and to continue in operation, without any intention or necessity to liquidate or otherwise wind up its operations.
Judgement has been required in assessing whether the entity is a going concern as set out in note 2(c).
In the process of applying the Group's accounting policies, management have made judgements, assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year as follows:
Income Tax - refer note 5
Exploration and Evaluation Assets - refer note 7
Development Assets - refer note 8
Provisions - refer note 10
Trade and other receivables - refer note 12
(g) Rounding of Amounts
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest dollar, unless otherwise stated.
(h) Accounting Policies
Significant accounting policies that are relevant to the understanding of the consolidated financial statements have been provided throughout the notes to the financial statements. Accounting policies that are determined to be non-significant have not been included in the consolidated financial statements.
The accounting policies disclosed have been applied consistently to all periods presented in these consolidated financial statements and have been applied consistently by Group entities, except for the following changes in accounting policies.
Changes in significant accounting policies
The Group has initially applied AASB 15 and AASB 9 from 1 July 2018.
Due to the transition methods chosen by the Group in applying these standards, comparative information throughout these financial statements has not been restated to reflect the requirements of the new standards, except for separately presenting impairment loss on trade and other receivables (refer B. below).
A. AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced AASB 18 Revenue and related interpretations.
Under AASB 18, the Group recognised revenue when the significant risks and rewards of ownership transferred to the customer, which was considered to be at the time of delivery of the product to the customer.
Under AASB 15, revenue is recognised when the Group transfers control of products to a customer at the amount to which the Group expects to be entitled. Revenue from the sale of oil and gas is recognised at a point in time when control of the product is transferred to the customer, which is typically on delivery.
The Group has adopted AASB 15 using the cumulative effect method (without practical expedients), with the effect of initially applying this standard recognised at the date of the initial application (i.e. 1 July 2018). Accordingly, the information presented for 2018 has not been restated - i.e. it is presented, as previously reported, under AASB 18 and related interpretations. Additionally, the disclosure requirements in AASB 15 have not generally been applied to comparative information.
The adoption of the new standard had no impact on the financial position or the consolidated financial statements.
NOTE 2 - BASIS OF PREPARATION (CONTINUED)
(h) Accounting Policies (Continued) A. AASB 9 Financial Instruments
AASB 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces AASB 139 Financial Instruments: Recognition and Measurement.
As a result of the adoption of AASB 9, the Group has adopted consequential amendments to AASB 101 Presentation of Financial Statements, which require impairment of financial assets to be presented in a separate line item in the statement of profit or loss and OCI. Previously, the Group's approach was to include the impairment of trade and other receivables in other expenses. Consequently, the Group reclassified impairment losses amounting to $1,233,898, recognised under AASB 139, from 'other expenses' to 'provision for doubtful debts expense' in the statement of profit or loss and OCI for the year ended 30 June 2018.
(i) Classification and measurement of financial assets and liabilities
AASB 9 contains three principal classification for financial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The classification of financial assets under AASB 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. AASB eliminates the previous AASB 139 categories of held to maturity, loans and receivables and available for sale.
AASB 9 largely retains the existing requirements in AASB 139 for the classification and measurement of financial liabilities.
The adoption of AASB 9 has not had a significant effect on the Group's accounting policies related to financial liabilities.
The following table and the accompanying notes below explain the original measurement categories under AASB 139 and the new measurement categories under AASB 9 for each class of the Group's financial assets and financial liabilities as at 1 July 2018.
The effect of adopting AASB 9 on the carrying amounts of financial assets at 1 July 2018 relates solely to the new impairment requirements.
Original
Original carrying New carrying
classification New classification amount amount
under AASB under AASB under AASB under AASB
Note 39 39 39 39
-------------------- ----- ---------------- ------------------- ------------ -------------
Financial
assets $ $
Cash and cash Loans and Amortised
equivalents receivables cost 375,507 375,507
Trade and Loans and Amortised
other receivables (1) receivables cost 738,784 738,784
-------------------- ----- ---------------- ------------------- ------------ -------------
Total financial
assets 1,114,291 1,114,291
-------------------- ----- ---------------- ------------------- ------------ -------------
Financial
liabilities
Trade and Other financial Other financial
other payables liabilities liabilities (779,249) (779,249)
-------------------- ----- ---------------- ------------------- ------------ -------------
Total financial
liabilities (779,249) (779,249)
-------------------- ----- ---------------- ------------------- ------------ -------------
(1) Trade and other receivables that were classified as loans and receivables under AASB 139 are now classified at amortised cost. An increase of $177,874 in the provision for doubtful debts was recognised in opening retained earnings at 1 July 2018 on transition to AASB 9.
NOTE 2 - BASIS OF PREPARATION (CONTINUED)
(h) Accounting Policies (Continued)
The following table reconciles the carrying amounts of financial assets under AASB 139 to the carrying amounts under AASB 9 on transition to AASB 9 on 1 July 2018.
AASB carrying
amount
at
AASB 9
carrying
amount
30 June at 1 July
2018 Remeasurement 2018
$ $ $
------------------------------ -------------- -------------- -----------
Financial assets
Amortised cost
Trade and other receivables
(from loans and receivables
classification) 738,784 - 738,784
Total amortised cost 738,784 - 738,784
------------------------------ -------------- -------------- -----------
(ii) Impairment of financial assets
AASB 9 replaces the 'incurred loss' model in AASB 139 with an 'expected credit loss' (ECL) model. The new impairment model applies to financial assets measured at amortised cost. Under AASB 9, credit losses are recognised earlier than under AASB 139.
For assets in the scope of the AASB impairment model, impairment losses are generally expected to increase and become more volatile. The Group has determined that the application of AASB 9's impairment requirements at 1 July 2018 results in an additional allowance for impairment as follows:
Loss allowance at 30 June 2018 under AASB 139 5,497,703 Additional impairment recognised at 1 July 2018 on: Trade and other receivables as at 30 June 2018 177,874 ---------------------------------- ---------- Loss allowance at 1 July 2018 under AASB 9 5,675,577 ---------------------------------- ----------
The Group has not elected to early adopt any other new or amended AASB's that are issued but not yet effective (refer note 28).
This section focuses on the results and performance of the Group.
NOTE 3 - OPERATING SEGMENTS
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. The Group has identified its operating segments based upon the internal management reports that are reviewed and used by the executive management team in assessing performance and that are used to allocate the Group's resources. The operating segments identified by management are based on the geographical location of the business. Each segment has responsible officers that are accountable to the Managing Director (the Group's chief operating decision maker). The operating results of all operating segments are regularly reviewed by the Group's Managing Director to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. Segment results that are reported to the Managing Director include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
The Group's executive management team evaluates the financial performance of the Group and its segments principally with reference to revenues, production costs, expenditure on exploration evaluation and development costs.
The Group undertakes the exploration, development and production of hydrocarbons and its revenue is from the sale of oil and gas. Information reported to the Group's chief operating decision maker is on a geographical basis.
Financing requirements, finance income and expenses are managed at a Group level.
Corporate items include administration costs comprising personnel costs, head office occupancy costs and investor and registry costs. It may also include expenses incurred by non-operating segments, such as new ventures and those undergoing relinquishment. Assets and liabilities not allocated to operating segments and disclosed are corporate, and mostly comprise cash, plant and equipment, receivables as well as accruals for head office liabilities.
Major Customer
The Group's most significant customers are Enertech Fuel Solutions Pvt Limited with gas sales representing 39% of the Group's total revenues (2018: 61%) and Indian Oil Corporation Limited, in its capacity as nominee of the Government of India, with oil sales representing 61% of the Group's total revenues (2018: 39%).
Revenue
Revenue is recognised when the Group transfers control of products to a customer at the amount to which the Group expects to be entitled. Revenue from the sale of oil and gas is recognised at a point in time when control of the product is transferred to the customer, which is typically on delivery.
Expenses
Impairment - refer notes 7 and 8
Doubtful debts - refer note 12
Depreciation - refer note 16
Amortisation - refer note 8
Employee benefits - refer note 10
Leases - refer note 25
NOTE 3 - OPERATING SEGMENTS (Continued)
India Australia JPDA (1) Indonesia Corporate (2) Consolidated
--------------- ------------------------ ------------ -------------------- ------------------ -------------------------- --------------------------
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
$ $ $ $ $ $ $ $ $ $ $ $
--------------- ---------- ------------ ----- ----- --------- --------- -------- -------- ------------ ------------ ------------ ------------
Revenue
External
revenue 188,220 163,562 - - - - - - - - 188,220 163,562
--------------- ---------- ------------ ----- ----- --------- --------- -------- -------- ------------ ------------ ------------ ------------
Cost of sales
Production
costs (275,455) (259,799) - - - - - - - - (275,455) (259,799)
Amortisation
of
development
assets (1,931) (3,263) - - - - - - - - (1,931) (3,263)
Movement in
oil stocks
inventory (66,186) 63,796 - - - - - - - - (66,186) 63,796
Write-down of
inventories
to net
realisable
values (161,354) - - - - - - - - - (161,354) -
--------------- ---------- ------------ ----- ----- --------- --------- -------- -------- ------------ ------------ ------------ ------------
Total cost of
sales (504,926) (199,266) - - - - - - - - (504,926) (199,266)
--------------- ---------- ------------ ----- ----- --------- --------- -------- -------- ------------ ------------ ------------ ------------
Gross loss (316,706) (35,704) - - - - - - - - (316,706) (35,704)
--------------- ---------- ------------ ----- ----- --------- --------- -------- -------- ------------ ------------ ------------ ------------
Exploration
expenditure
expensed (456,892) (553,369) - - - - - - (34,783) (98,624) (491,675) (651,993)
Depreciation (21,680) (24,514) - - - - - - (11,084) (18,488) (32,763) (43,002)
Share-based
payments - - - - - - - - (110,935) (90,211) (110,935) (90,211)
Other income - 13,139 - - - - - - - - - 13,139
Provision for
doubtful
debts expense - - - - - - - - (108,206) (1,233,898) (108,206) (1,233,898)
Other expenses (10,459) (1,341,374) - - (85,050) (23,557) 233,653 (6,737) (2,104,219) (792,210) (1,966,075) (2,163,878)
--------------- ---------- ------------ ----- ----- --------- --------- -------- -------- ------------ ------------ ------------ ------------
Reportable
segment
profit/(loss)
before income
tax (805,737) (1,941,822) - - (85,050) (23,557) 233,653 (6,737) (2,369,226) (2,238,431) (3,026,360) (4,210,547)
--------------- ---------- ------------ ----- ----- --------- --------- -------- -------- ------------ ------------ ------------ ------------
Net finance
income (92,759) 6,338
Foreign
exchange
(loss)/gain 998 (26,768)
Income tax
expense - -
------------ ------------
Net loss for
the year (3,118,121) (4,230,977)
------------ ------------
Segment assets 8,721,862 8,653,049 7 7 14,238 16,809 - - 628,015 746,920 9,364,122 9,416,785
--------------- ---------- ------------ ----- ----- --------- --------- -------- -------- ------------ ------------ ------------ ------------
Segment
liabilities 4,104,158 3,917,537 - - 861,776 815,900 78,454 297,022 954,873 378,116 5,999,261 5,408,575
--------------- ---------- ------------ ----- ----- --------- --------- -------- -------- ------------ ------------ ------------ ------------
There were no significant inter-segment transactions during the year.
(1) Joint Petroleum Development Area.
(2) Corporate represents a reconciliation of reportable segment revenues, profit or loss, assets and liabilities to the consolidated figure.
note 4 - revenue and expenses
Loss from ordinary activities before tax has been determined after the following revenues and expenses:
Note 2019 2018
$ $
------------ ------------
(a) Revenue
Oil sales 115,673 63,337
Gas sales 72,547 100,225
------------ ------------
188,220 163,562
------------ ------------
(b) Cost of Sales
Production costs (275,455) (259,799)
Amortisation of development assets (1,931) (3,263)
Movement in oil stocks inventory (66,186) 63,796
Write-down of inventory to net realisable
values (161,354) -
------------ ------------
(504,926) (199,266)
------------ ------------
(c) Other Income
Profit on disposal of other assets - 13,139
------------ ------------
- 13,139
------------ ------------
(d) Exploration Expense 3 (491,675) (651,993)
------------ ------------
(e) Administration Expenses
Employee benefits expense (819,627) (925,660)
Redundancy benefits (31,928) (20,320)
Administration expense (1,106,295) (1,155,505)
(1,957,850) (2,101,485)
------------ ------------
(f) Other Expenses
Depreciation expense 16 (32,763) (43,002)
Oil sales written off - (63,590)
Loss on disposal of plant and equipment (8,227) (3,803)
(40,990) (110,395)
------------ ------------
(g) Finance income
Interest income 4,403 6,358
------------ ------------
(h) Finance costs
Interest expense - borrowings (97,162) -
Interest expense - other - (20)
------------ ------------
(97,162) (20)
------------ ------------
(i) Foreign Exchange (Loss)/Gain
- net
Foreign exchange (loss)/gain- realised 5,580 (19,858)
Foreign exchange (loss)/gain - unrealised (4,582) (6,910)
------------ ------------
998 (26,768)
------------ ------------
Accounting Policy - Revenue
Under AASB 18, the Group recognised revenue when the significant risks and rewards of ownership transferred to the customer, which was considered to be at the time of delivery of the product to the customer.
Under AASB 15, revenue is recognised when the Group transfers control of products to a customer at the amount to which the Group expects to be entitled. Revenue from the sale of oil and gas is recognised at a point in time when control of the product is transferred to the customer, which is typically on delivery.
NOTE 5 - INCOME TAX EXPENSE
Numerical reconciliation between tax expense and pre-tax accounting loss:
2019 2018
$ $
------------ ------------
Loss before tax (3,118,121) (4,230,977)
------------ ------------
Tax using the domestic corporation tax
rate of 27.5% (2018: 27.5%) (857,483) (1,163,519)
Effect of tax rate in foreign jurisdictions (497,254) (401,298)
Non-deductible expenses
Share-based payments 30,507 24,808
Foreign expenditure non-deductible 1,609,412 1,404,174
Other non-deductible expenses 208,577 200,478
493,759 64,643
------------ ------------
Unrecognised deferred tax assets generated
during the year and not
brought to account at reporting date as
realisation is not regarded as probable - -
------------ ------------
Tax expense 493,759 64,643
Tax losses utilised not previously brought
to account (493,759) (64,643)
------------ ------------
Tax expense for the year - -
------------ ------------
Tax Assets and Liabilities
During the year ended 30 June 2019, $360,493 of tax losses were recognised and were offset against the current tax liability resulting in nil tax assets and liabilities.
2019 2018
$ $
----------- -----------
Unrecognised deferred tax assets not brought
to account at reporting date as realisation
is not regarded as probable - temporary
differences
Other 27,482,151 26,397,805
Losses available for offset against future
taxable income 17,018,120 16,204,468
----------- -----------
Deferred tax asset not brought to account 44,500,271 42,602,273
----------- -----------
The deductible temporary differences and tax losses do not expire under current tax legislation.
The deferred tax asset not brought to account for the 2019 financial year will only be realised if:
-- It is probable that future assessable income will be derived of a nature and of an amount sufficient to enable the benefit to be realised;
-- The conditions for deductibility imposed by the tax legislation continue to be complied with; and
-- The companies are able to meet the continuity of ownership and/or continuity of business tests.
The foreign component of the deferred tax asset not brought to account for the 2019 financial year will only be realised if the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit to be realised and the Group continues to comply with the deductibility conditions imposed by the Income Tax Act 1961 (India) and there is no change in income tax legislation adversely affecting the utilisation of the benefits.
NOTE 5 - INCOME TAX EXPENSE (continued)
Tax Consolidation
In accordance with tax consolidation legislation the Company, as the head entity of the Australian tax-consolidated group, has assumed the deferred tax assets initially recognised by wholly owned members of the tax-consolidated group with effect from 1 July 2004. Total tax losses of the Australian tax-consolidated group, available for offset against future taxable income are $5,480,637 (2018: $6,003,749).
Accounting Policy
Income tax expense comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity, or in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Key Estimates and Assumptions
The application of the Group's accounting policy for recognition of tax losses requires management to make certain estimates and assumptions as to future events and circumstances, including the assessment of whether economic quantities of resources have been found, or alternatively, that the sale of the respective areas of interest will be achieved. Any such estimates and assumptions may change as new information becomes available. A deferred tax asset is only recognised for unused losses if it is probable that future taxable profits will be available to utilise those losses.
In determining the amount of current and deferred tax the Group considers the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact tax expense in the period that such a determination is made.
NOTE 6 - LOSS PER SHARE
(a) Basic Loss Per Share
2019 2018
$ $
-------------- --------------
Loss used in calculating earnings per share
Loss for the period attributable to ordinary shareholders 3,380,391 4,230,977
-------------- --------------
2019 2018
Note Number Number
-------------- --------------
Weighted average number of ordinary shares
Issued ordinary shares at 1 July 17 2,001,968,379 1,684,302,899
Effect of shares issued 312,684,194 93,452,655
Effect of share options exercised 61,790,019 9,634,703
-------------- --------------
Weighted average number of ordinary shares at 30 June 2,376,442,592 1,787,390,257
-------------- --------------
(b) Diluted Loss Per Share
The Company's potential ordinary shares, being its options granted, are not considered dilutive as the conversion of these instruments would result in a decrease in the net loss per share.
Accounting Policy
Basic earnings per share is calculated by dividing net profit or loss attributable to ordinary shareholders of the parent entity by the weighted average number of ordinary shares outstanding during the year, adjusted for any bonus element.
Diluted earnings per share is determined by adjusting the profit attributable to ordinary shareholders and weighted average number of shares outstanding for the dilutive effect of potential ordinary shares, which may comprise outstanding options, warrants and their equivalents.
This section provides information on the assets employed to develop value for shareholders and the liabilities incurred as a result.
NOTE 7 - EXPLORATION AND EVALUATION
2019 2018
$ $
-------- --------
Balance at 1 July 539,793 518,670
Effect of movements in foreign exchange
rates 29,095 21,123
-------- --------
Balance at 30 June 568,888 539,793
-------- --------
As at 30 June 2019, the balance of exploration and evaluation assets relates to the Cambay Field, which is currently at evaluation stage, and there was no impairment of this asset (2018: Nil).
The Cambay Field has minimal production that is sold to a third party.
Accounting Policy
Accounting for exploration and evaluation expenditure is assessed separately for each area of interest. Exploration and evaluation expenditure in respect of each area of interest is accounted for under the successful efforts method. An area of interest is an individual geological area which is considered to constitute a favourable environment for the presence of hydrocarbon resources or has been proven to contain such resources.
Expenditure incurred prior to securing legal rights to explore an area is expensed. Exploration licence acquisition costs relating to established oil and gas exploration areas are capitalised.
The costs of drilling exploration wells are initially capitalised pending the results of the well. Costs are expensed where the well does not result in a successful discovery.
All other exploration and evaluation expenditure, including general administration costs, geological and geophysical costs and new venture expenditure is expensed as incurred, except where:
-- The expenditure relates to an exploration discovery for which, at reporting date, an assessment of the existence or otherwise of economically recoverable reserves is not yet complete; or
-- The expenditure relates to an area of interest under which it is expected that the expenditure will be recouped through successful development and exploitation, or by sale.
When an oil or gas field has been approved for commercial development, the accumulated exploration and evaluation costs are first tested for impairment and then reclassified as development assets.
Impairment of Exploration and Evaluation Expenditure
The carrying value of exploration and evaluation assets are assessed at each reporting date if any of the following indicators of impairment exist:
-- The exploration licence term in the specific area of interest has expired during the reporting period or will expire in the near future and it is not anticipated that this will be renewed;
-- Expenditure on further exploration and evaluation of specific areas is not budgeted or planned;
-- Exploration for and evaluation of oil and gas assets in the specific area has not lead to the discovery of potentially commercial reserves; or
-- Sufficient data exists to indicate that the carrying amount of the asset is unlikely to be recovered in full, either by development or sale.
Key Estimates and Assumptions
The application of the Group's accounting policy for exploration and evaluation expenditure necessarily requires management to make certain estimates and assumptions as to future events and circumstances, particularly the assessment of whether economic quantities of resources have been found, or alternatively, that the sale of the respective areas of interest will be achieved. Critical to this assessment are estimates and assumptions as to contingent and prospective resources, the timing of expected cash flows, exchange rates, commodity prices and future capital requirements. These estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under this policy, it is determined that the expenditure is unlikely to be recovered by future exploitation or sale, then the relevant capitalised amount will be written off to the consolidated statement of profit or loss and other comprehensive income.
NOTE 8 - DEVELOPMENT ASSETS
2019 2018
$ $
----------- -----------
Cost
Balance at 1 July 16,235,257 15,631,750
Effect of movements in foreign exchange
rates 831,271 603,507
----------- -----------
Balance at 30 June 17,066,528 16,235,257
----------- -----------
Amortisation and Impairment Losses
Balance at 1 July 10,070,002 9,704,462
Amortisation charge for the year 1,931 3,263
Effect of movements in foreign exchange
rates 499,005 362,277
----------- -----------
Balance at 30 June 10,570,938 10,070,002
----------- -----------
Carrying Amounts
At 1 July 6,165,255 5,927,288
---------- ----------
At 30 June 6,495,590 6,165,255
---------- ----------
Cambay Field Development Assets
Development assets are reviewed at each reporting date to determine whether there is any indication of impairment or reversal of impairment. Indicators of impairment can include changes in: market conditions, future oil and gas prices and future costs, extension of the Cambay Production Sharing Contract and the status of the disputes arising from the issue of the event of default notice to GSPC. No indicators of impairment were identified in the 2019 or 2018 financial years.
There was no impairment on the Cambay Field development assets during the year ended 30 June 2019 (2018: Nil).
Accounting Policy
Development expenditure includes past exploration and evaluation costs, pre-production development costs, development drilling, development studies and other subsurface expenditure pertaining to that area of interest. Costs related to surface plant and equipment and any associated land and buildings are accounted for as property, plant and equipment.
The definition of an area of interest for development expenditure is narrowed from the exploration permit for exploration and evaluation expenditure to the individual geological area where the presence of an oil or natural gas field exists, and in most cases will comprise an individual oil or gas field.
Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. When production commences, carried forward development costs are amortised on a units of production basis over the life of economically recoverable reserves.
Impairment of Development Assets
The carrying value of development assets are assessed on a cash generating unit (CGU) basis at each reporting date to determine whether there is any indication of impairment or reversal of impairment. Indicators of impairment can include changes in market conditions, future oil and gas prices and future costs. Where an indicator of impairment exists, the assets recoverable amount is estimated.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. A CGU is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. The CGU is the Cambay Field, India. Impairment losses are recognised in profit or loss.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell (FVLCS). As a market price is not available, FVLCS is determined by using a discounted cash flow approach. In assessing FVLCS, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Valuation principals that apply when determining FVLCS are that future events that would affect expected cash flows are included in the calculation of FVLCS.
Impairment losses are reversed when there is an indication that the loss has decreased or no longer exists and there has been a change in the estimate used to determine the recoverable amount. Such estimates include beneficial changes in reserves and future costs, or material increases in selling prices. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of amortisation, if no impairment loss had been recognised.
NOTE 8 - development assets (continued)
Key Estimates and Assumptions
Significant judgements and assumptions are required by management in estimating the present value of future cash flows particularly in the assessment of long life development assets. It should be noted that discounted cash flow calculations are subject to variability in key assumptions including, but not limited to, the expected life of the relevant area of interest, long-term oil and gas prices, currency exchange rates, pre-tax discount rates, number of future wells, production profiles and operating costs.
An adverse change in one or more of the assumptions used to estimate FVLCS could result in an adjustment to the development asset's recoverable amount.
Development costs are amortised on a units of production basis over the life of economically recoverable reserves, so as to write off costs in proportion to the depletion of the estimated reserves. The estimation of reserves requires interpretation of geological and geophysical data. The geological and economic factors which form the basis of reserve estimates may change over reporting periods. There are a number of uncertainties in estimating resources and reserves, and these estimates and assumptions may change as new information becomes available.
NOTE 9 - INVENTORIES
2019 2018
$ $
---------- ----------
Oil on hand - net realisable value 31,632 94,096
Drilling inventory - net realisable value 1,109,678 1,209,149
---------- ----------
1,141,310 1,303,245
---------- ----------
Inventories have been reduced by $161,354 (2018: $nil) as a result of write-down to net realisable value.
Accounting Policy
Inventories comprising materials and consumables and petroleum products are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
NOTE 10 - PROVISIONS
2019 2018
$ $
---------- ----------
Site Restoration, Well Abandonment and
Other Provisions
Balance at 1 July 4,354,675 4,184,269
Provision adjustments during the year - -
- Termination (refer note 26)
Effect of movements in exchange rates 234,716 170,406
---------- ----------
Balance at 30 June 4,589,391 4,354,675
---------- ----------
Current - Termination (refer Note 26) 855,554 811,798
Non-current - Restoration 3,733,837 3,542,877
---------- ----------
4,589,391 4,354,675
---------- ----------
Current - Employee benefits 148,731 274,651
---------- ----------
Accounting Policy
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and when a reliable estimate can be made of the amount of the obligation.
Provisions are made for site rehabilitation of an oil and gas field on an incremental basis during the life of the field (which includes the field plant closure phase). Provisions include reclamation, plant closure, waste site closure and monitoring activities. These costs have been determined on the basis of current costs, current legal requirements and current technology. At each reporting date the rehabilitation provision is re-measured to reflect any changes in the timing or amounts of the costs to be incurred. Any such changes are dealt with on a prospective basis.
Short-term employee benefits for wages, salaries and fringe benefits are measured on an undiscounted basis and expensed as the related service is provided. A liability is recognised based on remuneration wage and salary rates that the Group expects to pay as at the reporting date as a result of past service provided by the employee, if the obligation can be measured reliably.
NOTE 10 - PROVISIONS (continued)
The Group's net obligation in respect of long-term service benefits is the amount of future benefit that employees have earned in return for their service up to the reporting date. The obligation is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates; and is discounted using the high quality corporate bond rate at reporting date which have maturity dates approximating to the terms of the Group's obligations.
Key Estimates and Assumptions
In relation to rehabilitation provisions the Group estimates the future removal costs of onshore oil and gas production facilities, wells and pipeline at the time of installation of the assets. In most instances, removal of assets occurs many years into the future. This requires judgemental assumptions regarding removal date, future environmental legislation, the extent of reclamation activities required, the engineering methodology for estimating cost, future removal technologies in determining the removal cost, and discount rates to determine the present value of these cash flows.
NOTE 11 - CASH AND CASH EQUIVALENTS
2019 2018
$ $
-------- --------
Cash at bank and on hand 357,970 375,507
-------- --------
The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 21.
Accounting Policy
Cash and cash equivalents comprise bank balances, call deposits, cash in transit and short-term deposits with an original maturity of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.
Reconciliation of Cash Flows from Operating Activities
2019 2018
$ $
------------ ------------
Net loss (3,118,121) (4,230,977)
Amortisation of development assets 1,931 3,263
Depreciation 32,763 43,002
Interest expense 72,695 -
Provision for doubtful debts expense 108,206 1,297,488
Loss on disposal of assets 8,227 3,803
Profit on disposal of scrap - (13,139)
Equity settled share-based payments 110,935 90,211
Unrealised foreign exchange (gain)/loss (46,688) (39,134)
Operating Loss Before Changes in Working
Capital and Provisions (2,830,052) (2,845,483)
Movement in trade and other payables (82,065) (480,924)
Movement in prepayments (41,193) 13,278
Movement in trade and other receivables (45,269) (570,406)
Movement in provisions - (1,034)
Movement in inventories 161,936 (115,135)
Movement in employee benefits (125,920) 45,933
Net Cash Used in Operating Activities (2,962,563) (3,953,771)
------------ ------------
NOTE 12 - TRADE AND OTHER RECEIVABLES
2019 2018
$ $
------------ ------------
Current
Allocation of receivables
Joint venture receivables 353,492 446,600
Other receivables 144,482 292,184
------------ ------------
497,974 738,784
------------ ------------
Joint venture receivables
Joint venture receivables 6,272,808 5,835,042
Provision for doubtful debts (5,919,316) (5,388,442)
353,492 446,600
------------ ------------
Other receivables
Corporate receivables 288,040 401,445
Provision for doubtful debts (143,558) (109,261)
144,482 292,184
------------ ------------
Joint venture receivables include the Group's share of outstanding cash calls and recharges owing from the joint venture partners, as well as other minor receivables.
The Group considers that there is evidence of impairment if any of the following indicators are present; financial difficulties of the debtor, probability that the debtor will dispute amounts owing and default or delinquency in payment (more than one year old). Whilst the Group has been in ongoing discussions with its joint venture partner Gujarat State Petroleum Corporation (GSPC), for repayment of disputed and other amounts owing, in line with identified impairment indicators, an assessment has been made of the recoverable balance as at 30 June 2019. Each receivable has been assessed individually for recovery, and those deemed to have a low chance of recovery have been fully provided for in the current year. Accordingly, the Indian cash calls receivable have been fully provided for.
The Group is in continuing discussions with GSPC in order to resolve the outstanding issues and recover the outstanding amounts.
The carrying value of trade and other receivables approximates its fair value due to the assessment of recoverability.
Details of the Group's credit risk are disclosed in note 21(b).
2019 2018
$ $
------------ ------------
Movement in provision for doubtful debts
Balance at 1 July (5,497,703) (4,055,327)
Provisions (made)/reversed during the year (108,206) (1,233,898)
Provision adjustment, as at 1 July 2018, (177,874) -
on adoption of AASB 9
Effect of movements in exchange rates (279,091) (208,478)
------------ ------------
Balance at 30 June (6,062,874) (5,497,703)
------------ ------------
Allocation of impairment loss
Joint venture receivables (5,919,316) (5,388,442)
Other receivables (143,558) (109,261)
------------ ------------
(6,062,874) (5,497,703)
------------ ------------
NOTE 12 - TRADE AND OTHER RECEIVABLES (CONTINUED)
Accounting Policy from 1 July 2018
Trade and other receivables, which includes receivables, loans and deposits, are initially recognised when they are originated. All other financial assets are initially recognised when the Group becomes a party to the contractual provisions of the instrument.
All trade and other receivables do not include a significant financing component and are therefore initially measured at the transaction price.
On initial recognition, trade and other receivables are classified as measured as at amortised cost. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- It is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For the purpose of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular amount of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs).
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire , or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Impairment of Receivables
The Group recognises loss allowances for 'expected credit loss' (ECL's) on financial assets measured at amortised cost. Loss allowances for trade and other receivables are always measured at an amount equal to lifetime ECL's.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL's, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.
The Group considers a financial asset to be in default when the financial asset is more than 90 days due past.
Lifetime ECL's are the ECL's that result from all possible default events over the expected life of a financial instrument.
Measurement of ECL's
ECL's are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive. ECL's are discounted at the effective interest rate of the financial asset.
Expected credit loss assessment for corporate customers as at 1 July 2018 and 30 June 2019
The Group uses its allowance schedule to measure the ECLs of trade and other receivables. The allowance schedule is based on actual credit loss experience over the past years. The ECL computed is purely derived from historical data which management is of the view that the historical conditions are representative of the conditions prevailing at the reporting date.
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.
NOTE 12 - TRADE AND OTHER RECEIVABLES (CONTINUED)
Accounting Policy prior to 1 July 2018
The Group initially recognises loans, receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value and subsequently measured at amortised cost, less any impairment losses.
A provision for doubtful debts is recognised in profit or loss when there is objective evidence of non-recovery or an impairment indicator exists. If receivables are subsequently recovered, or an event causes the amount of impairment loss to decrease, the amounts are reversed through profit or loss.
Impairment of Receivables
In assessing collective impairment, the Group uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. The Group considers that there is evidence of impairment if any of the following indicators are present; financial difficulties of the debtor, probability that the debtor will dispute amounts owing and default or delinquency in payment (more than one year old).
Key Estimates and Assumptions
The Group considers evidence of impairment for receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics. This requires judgemental assumptions regarding recoverability. Changes in these assumptions impact the recoverable amount of the asset.
NOTE 13 - TRADE AND OTHER PAYABLES
2019 2018
$ $
-------- --------
Trade creditors 302,338 297,640
Accruals 394,846 481,609
-------- --------
697,184 779,249
-------- --------
The Company's assessment in note 12, of the recoverability of outstanding cash call amounts owing from its joint venture partner (GSPC) has resulted in an additional impairment and consequently the Company is of the opinion that the Cambay Joint Venture will be unable to meet its third party liabilities, without financial support from the Company as Operator, due to non-payment of outstanding cash calls by the Joint Venture partner. As a result, the Group has accrued an additional $76,116 at 30 June 2019 (2018: $107,267) to cover Cambay and Bhandut Joint Venture third party liabilities.
The carrying value of trade and other payables is considered to approximate its fair value due to the short nature of these financial liabilities.
Accounting Policy
Trade and other payables are recorded at the value of the invoices received and subsequently measured at amortised cost and are non-interest bearing. The liabilities are for goods and services provided before year end, that are unpaid and arise when the Group has an obligation to make future payments in respect of these goods and services. The amounts are unsecured. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
NOTE 14 - BORROWINGS
2019 2018
$ $
-------- -----
Unsecured Loans 563,955 -
563,955 -
-------- -----
Terms and repayment schedule
At 30 June 2019, the terms and conditions of outstanding loans are as follows:
2019 2018
$ $
------------------- ------------------
Nominal
interest Year Face Carrying Face Carrying
Currency rate of maturity value amount value amount
---------- ---------- ------------- -------- --------- ------- ---------
Unsecured loans - from
shareholders and financiers AUD 5.0% 2019 580,000 563,955 -- -
-------- --------- ------- ---------
At balance date, options had been issued to the lenders in connection to the above loans, as follows:
a) 91,666,666 share options @ $0.0036 exercisable on or before the applicable loan maturity date of 26 July 2019; and
b) 60,664,887 share options @ $0.004121 exercisable on or before the applicable loan maturity date of 1 October 2019.
In determining the fair value of the liability component of these borrowing arrangements, it has been estimated that the effective interest rate of similar borrowings without a share option component is 18%. The fair value of the share options equity component of these borrowing arrangements has been recognised in the Loans Options Reserve as the loans have been treated as a convertible note. That is, the borrowing arrangement falls within the definition of a compound financial instrument and as such as been classified as both a financial liability and equity.
On 23 July 2019, the Group entered into an amendment agreement to vary the terms of its loan funding facility of $330,000 entered into on 26 July 2018. Pursuant to the amendment, the loan repayment date has been extended from 26 July 2019 to 1 October 2019. In addition, the Company will issue 124,060,150 new options to the lenders at an exercise price of $0.00266 and expiry date of 31 December 2019, which were subject to shareholder approval at a General Meeting to be held on 12 September 2019, which was duly forthcoming. All other loan terms and conditions remain the same; and are extended to 1 October 2019.
The total 91,666,666 share options @ $0.0036 exercisable on or before 26 July 2019, attached to the above-mentioned loans, were not exercised and have lapsed.
The above-mentioned 124,060,150 options were subsequently issued on 27 September 2019.
On 30 September 2019, the Company entered into an amendment agreement to vary the terns of its loan funding facility of $300,000 entered into on 26 July 2018; and the subsequent amendment noted in a) above. Pursuant to the amendment, the loan repayment date has been extended to 15 October 2019.
Furthermore, the Company also entered into an amendment agreement to vary the terms of its loan funding facility of $250,000 entered into on 11 September 2018. Pursuant to the amendment, the loan repayment date has been extended from 1 October 2019 to 1 April 2020. Pursuant to the extension, the Company will issue 60,664,887 options at $0.004121 on or before 1 April 2020.
The loans are subject to the following key undertakings without prior approval by the lenders:
-- Not to dispose of assets having an aggregate value of more than $1 million; -- Not to incur any financial indebtedness more than $50,000; and
-- Not to incur any aggregate payment or outgoing exceeding $1m (except for employee benefit expenses).
NOTE 14 - BORROWINGS (CONTINUED)
Accounting Policy
General
All borrowings are initially recognised when the Group becomes a party to the contractual provisions of the lending instrument. All borrowings are initially recognised at fair value less transaction costs. Borrowings are subsequently carried at amortised cost.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
Series A and Series B Loan
The liability component of loans are initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the loan as a whole and the fair value of the liability component. Subsequent to initial recognition, the liability component of the loan is measured at amortised cost using the effective interest method. The equity component of a loan is not remeasured. Interest related to the financial liability is recognised in profit or loss.
NOTE 15 - EXPITURE COMMITMENTS
Exploration Expenditure Commitments
In order to maintain rights of tenure to exploration permits, the Group is required to perform exploration work to meet the minimum expenditure requirements specified by various state and national governments. These obligations are subject to renegotiation when application for an exploration permit is made and at other times. These obligations are not provided for in the financial report. The expenditure commitments are currently estimated to be $nil (2018: $nil).
There are no minimum exploration work commitments in the Cambay and Bhandut Production Sharing Contracts.
When obligations expire, are re-negotiated or cease to be contractually or practically enforceable, they are no longer considered to be a commitment.
Further expenditure commitments for subsequent permit periods are contingent upon future exploration results. These cannot be estimated and are subject to renegotiation upon expiry of the existing exploration leases.
Capital Expenditure Commitments
The Group had no capital commitments as at 30 June 2019 (2018: Nil).
NOTE 16 - PROPERTY, PLANT AND EQUIPMENT
Motor Plant and Office
Vehicles Equipment Furniture Total
$ $ $ $
---------- ----------- ----------- ----------
Cost
Balance at 1 July
2017 9,398 893,309 145,932 1,048,639
Disposals - (23,339) (4,565) (27,904)
Currency translation
differences 383 18,151 3,009 21,543
---------- ----------- ----------- ----------
Balance at 30 June
2018 9,781 888,121 144,376 1,042,278
---------- ----------- ----------- ----------
Additions - - 2,149 2,149
Disposals - (681) (13,841) (14,522)
Currency translation
differences 527 24,998 4,146 29,671
---------- ----------- ----------- ----------
Balance at 30 June
2019 10,308 912,438 136,830 1,059,576
---------- ----------- ----------- ----------
Depreciation and Impairment
Losses
Balance at 1 July
2017 8,896 712,811 105,978 827,685
Depreciation charge
for the year 132 38,244 4,626 43,002
Disposals - (21,025) (3,076) (24,101)
Currency translation
differences 369 13,749 2,644 16,762
---------- ----------- ----------- ----------
Balance at 30 June
2018 9,397 743,779 110,172 863,348
---------- ----------- ----------- ----------
Depreciation charge
for the year 108 28,682 3,973 32,763
Disposals - (655) (5,068) (5,723)
Currency translation
differences 508 19,095 3,658 23,261
---------- ----------- ----------- ----------
Balance at 30 June
2019 10,013 790,901 112,735 913,649
---------- ----------- ----------- ----------
Carrying amounts
At 1 July 2018 384 144,342 34,204 178,930
---------- ----------- ----------- ----------
At 30 June 2019 295 121,537 24,095 145,927
---------- ----------- ----------- ----------
Accounting Policy
Property, plant and equipment is measured at cost less accumulated depreciation and any accumulated impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located and an appropriate proportion of overheads.
Gains and losses on disposal are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net in the consolidated statement of profit or loss and other comprehensive income.
Depreciation is calculated using the reducing balance or straight line method over the estimated useful life of the assets, with the exception of software which is depreciated at prime cost. The estimated useful lives in the current and comparative periods are as follows:
-- Motor vehicles 4 to 7 years -- Plant and equipment 2 to 7 years -- Office furniture 2 to 10 years
Depreciation methods, useful lives and residual values are reviewed and adjusted if appropriate, at each financial year end.
Impairment of Property, Plant and Equipment
The carrying value of assets are assessed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated.
This section addresses the Group's capital structure, the Group structure and related party transactions, as well as including information on how the Group manages various financial risks.
NOTE 17 - ISSUED CAPITAL AND RESERVES
The reconciliation of the movement in capital and reserves for the consolidated entity can be found in the consolidated statement of changes in equity.
(a) Issued Capital
2019 2019 2018 2018
Number $ Number $
Ordinary Shares of Ordinary Shares Issued Capital of Ordinary Shares Issued Capital
-------------------- ---------------- -------------------- ----------------
On issue at 1 July - fully paid 2,001,968,379 174,046,036 1,684,302,899 172,866,479
Issue of share capital
Shares issued for cash (1) (6) 458,793,303 2,126,049 282,894,737 1,100,000
Shares issued for non-cash (2)
(4) (7) (8) 26,365,320 110,936 23,048,521 90,211
Exercise of unlisted options (3)
(5) 100,190,999 395,367 11,722,222 43,146
Capital raising costs - (176,188) - (53,800)
Balance at 30 June - fully paid 2,587,318,001 176,502,200 2,001,968,379 174,046,036
-------------------- ---------------- -------------------- ----------------
Refer notes following for additional information and note 22 for details of unlisted options.
The shares issued in lieu of non-executive director income were approved by shareholders at the Annual General Meeting (AGM) held on 29 November 2017 for the period from 1 November 2017 to 31 October 2018; and the AGM held on 29 November 2018 for the period from 1 November 2018 to 1 October 2019. The shares were issued at a price based upon the Volume Weighted Average Price (VWAP) for the 10 trading days prior to the date of issue for the period from 1 July 2018 to 31 October 2018; and the 10-Day VWAP up to the applicable quarter end for the period from 1 November to 30 June 2019.
In accordance with the ASX waiver granted on 17 October 2018, the Company advised that the number of remuneration shares that were issued to directors totalled to 11,437,407 for the year ended 30 June 2019, which was equivalent to 0.44% of the Company's issued capital as at 30 June 2019.
Additional information of the issue of ordinary shares and unlisted options:
(1) Pursuant to a debt and equity capital raise announcement dated 11 September 2018 and 17 September 2018, relating to the placement of 278,237,748 new ordinary shares at an issue price of GBP0.0019 (A$0.0034):
- 157,894,737 shares were issued on 17 September 2018; - 91,222,452 shares were issued on 26 September 2018; and - 29,120,559 shares were issued on 14 December 2018.
(2) On 26 September 2018, the Company issued:
- 317,029 and 10,526,315 shares as consideration for consulting services at an issue price of $A0.004 and
GBP0.0019 (A$0.0034) respectively per ordinary share; and
- 3,467,070 shares in lieu of non-executive director remuneration at an issue price of $0.004 per ordinary share.
(3) On 16 November 2018, the Company issued 90,190,999 shares upon the exercise of the following unlisted options:
- 64,944,444 options @ GBP0.00225 per share; - 9,473,684 options @ GBP0.0019 per share; and - 15,772,871 options @ A$0.004121 per share.
(4) On 29 November 2018, the Company issued 1,724,904 shares in lieu of non-executive director remuneration at an issue price of $0.008 per ordinary share.
(5) On 5 December 2018, the Company issued 10,0000 shares upon the exercise of 10,000,000 options @ GBP0.00225 per ordinary share (expiry 22 May 2020).
(6) Pursuant to an equity raise announcement on 18 December 2018 relating to the placement of 180,555,555 new ordinary shares at an issue price of GBP0.0036 (A$0.006314) per ordinary share:
- 55,555,555 shares were issued on 21 December 2018; - 39,583,333 shares were issued on 2 January 2019; - 71,527,778 shares were issued on 4 January 2019; and - 13,888,889 shares were issued on 16 January 2019.
NOTE 17 - ISSUED CAPITAL AND RESERVES (CONTINUED)
(7) On 1 April 2019:
- the Company issued 1,760,000 shares as consideration for consulting services at an issue price of $A0.005 per
ordinary share; and
- the Company issued 2,772,864 shares in lieu of non-executive director income at an issue price of $0.005 per ordinary share.
(8) On 18 June 2019:
- the Company issued 2,324,569 shares as consideration for consulting services at an issue price of $A0.004 per
ordinary share; and
- the Company issued 3,472,569 shares in lieu of non-executive director income at an issue price of $0.004 per ordinary share.
The Company does not have authorised capital or par value in respect of its issued shares. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
Accounting Policy
Ordinary shares are classified as equity. Transaction costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.
(b) Reserves
2019 2018
$ $
---------- ----------
Foreign Currency Translation Reserve 7,376,163 7,296,212
Option Reserve 36,485 331,889
Loans Option Reserve 88,740 -
---------- ----------
7,501,388 7,628,101
---------- ----------
Foreign Currency Translation Reserve (FCTR)
The foreign currency translation reserve is comprised of all foreign currency differences arising from the translation of the financial statements of foreign operations from their functional currency to Australian dollars.
The assets and liabilities of foreign operations are translated to Australian dollars at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Australian dollars at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income and are presented within equity in the FCTR.
Option Reserve
The option reserve recognises the fair value of options issued but not exercised. Upon the exercise, lapsing or expiry of options, the balance of the option reserve relating to those options is transferred to accumulated losses.
NOTE 18 - CONSOLIDATED ENTITIES
Country of Ownership Interest %
Incorporation
----------------
2019 2018
------------------------------------------ ---------------- ----------- ----------
Parent Entity
Oilex Ltd Australia
Subsidiaries
Independence Oil and Gas Limited Australia 100 100
Admiral Oil and Gas Holdings Pty Ltd Australia 100 100
Admiral Oil and Gas (106) Pty Ltd Australia 100 100
Admiral Oil and Gas (107) Pty Ltd Australia 100 100
Admiral Oil Pty Ltd Australia 100 100
Oilex (JPDA 06-103) Ltd Australia 100 100
Merlion Energy Resources Private Limited India 100 100 Oilex N.L. Holdings (India) Limited Cyprus 100 100 Oilex (West Kampar) Limited (1) Cyprus 100 100 ------------------------------------------ ---------------- ----------- ----------
(1) The Group is currently engaging with the Indonesian regulators with a view to returning its interest in West Kampar. It is intended to liquidate the Company as soon as arrangements can be made.
Accounting Policy
The Group controls an entity when it 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 over the entity.
NOTE 19 - JOINT ARRANGEMENTS
The Group's interests in joint arrangements as at 30 June 2019 are detailed below. Principal activities are oil and gas exploration, evaluation, development and production.
(a) Joint Operations Interest
2019 2018
Permit % %
----------------------- ---------------------------------- ----- -----
OFFSHORE
JPDA 06-103 (1) Timor Leste and Australia (JPDA) 10.0 10.0
ONSHORE
Cambay Field India (Cambay Basin) 45.0 45.0
Bhandut Field India (Cambay Basin) 40.0 40.0
Sabarmati Field (2) India (Cambay Basin) 40.0 40.0
West Kampar Block (3) Indonesia (Central Sumatra) 67.5 67.5
(1) The JPDA 06-103 Production Sharing Contract was terminated on 15 July 2015. The Joint Operating Agreement between the Joint Venture participants is still in effect.
(2) The Sabarmati Production Sharing Contract was cancelled on 10 August 2016. The Joint Operating Agreement between the Joint Venture participants is still in effect.
(3) Oilex (West Kampar) Limited is entitled to have assigned an additional 22.5% to its holding of 45% through exercise of its rights under a Power of Attorney granted by PT Sumatera Persada Energi (SPE), following the failure by SPE to repay funds due. The assignment request had been provided to BPMigas (now SKK Migas), the Indonesian Government regulator, and had not been approved or rejected. The West Kampar Contract Area Production Sharing Contract was terminated on 15 August 2018. The Group is currently engaging with the Indonesian regulators with a view to returning its interest in West Kampar. It is intended to liquidate the Company as soon as arrangements can be made.
NOTE 19 - JOINT ARRANGEMENTS (CONTINUED)
(b) Joint Operations
The aggregate of the Group's interests in all joint operations is as follows:
2019 2018
$ $
Current assets
Cash and cash equivalents 81,872 12,510
Trade and other receivables (1) 1,907,808 1,846,349
Inventories 1,054,795 1,209,149
Prepayments 36,286 36,699
----------- ----------
Total current assets 3,080,761 3,104,707
----------- ----------
Non-current assets
Exploration and evaluation 568,887 539,792
Development assets 6,495,591 6,165,255
Property, plant and equipment 111,877 127,145
----------- ----------
Total non-current assets 7,176,355 6,832,192
----------- ----------
Total assets 10,257,116 9,936,899
----------- ----------
Current liabilities
Trade and other payables (137,094) (193,534)
----------- ----------
Total liabilities (137,094) (193,534)
----------- ----------
Net assets 10,120,022 9,743,365
----------- ----------
(1) Trade and other receivables of the joint operations is before any impairment and provisions.
(c) Joint Operations Commitments
In order to maintain the rights of tenure to exploration permits, the Group is required to perform exploration work to meet the minimum expenditure requirements specified by various state and national governments. These obligations are subject to renegotiation when application for an exploration permit is made and at other times. These obligations are not provided for in the financial report.
The Group's has no exploration expenditure commitments attributable to joint operations during the year (2018: $nil).
There are no minimum exploration work commitments in the Cambay and Bhandut Production Sharing Contracts.
Accounting Policy
Joint arrangements are arrangements of which two or more parties have joint control. Joint control is the contractual agreed sharing of control of the arrangements which exists only when decisions about the relevant activities required unanimous consent of the parties sharing control. Joint arrangements are classified as either a joint operation or joint venture, based on the rights and obligations arising from the contractual obligations between the parties to the arrangement.
To the extent the joint arrangement provides the Group with rights to the individual assets and obligations arising from the joint arrangement, the arrangement is classified as a joint operation and as such, the Group recognises its:
-- Assets, including its share of any assets held jointly; -- Liabilities, including its share of any liabilities incurred jointly; -- Revenue from the sale of its share of the output arising from the joint operation; -- Share of revenue from the sale of the output by the joint operation; and -- Expenses, including its share of any expenses incurred jointly.
The Group's interest in unincorporated entities are classified as joint operations.
Joint Ventures provides the Group a right to the net assets of the venture and are accounted for using the equity method. The Group currently has no joint venture arrangements.
NOTE 20 - RELATED PARTIES
Identity of Related Parties
The Group has a related party relationship with its subsidiaries (refer note 18), joint operations (refer note 19) and with its key management personnel.
Key Management Personnel
The following were key management personnel of the Group at any time during the financial year and unless otherwise indicated were key management personnel for the entire period:
Non-Executive Directors Position -------------------------- ---------------------------------------------- Brad Lingo Non-Executive Chairman Paul Haywood Non-Executive Director Executive Director Position -------------------------- ---------------------------------------------- Joe Salomon Managing Director Executives Position -------------------------- ---------------------------------------------- Mark Bolton Chief Financial Officer and Company Secretary Ashish Khare Head - India Assets
Key Management Personnel Compensation
Key management personnel compensation comprised the following:
2019 2018
$ $
-------- --------
Short-term employee benefits 615,475 677,224
Other long-term benefits 40,542 36,805
Non-monetary benefits 21,252 15,192
Post-employment benefits 59,668 63,920
Equity compensation benefits - shares issued
in lieu of salary 55,454 40,228
-------- --------
792,391 833,369
-------- --------
Individual Directors' and Executives' Compensation Disclosures
Information regarding individual Directors' and Executives' compensation is provided in the Remuneration Report section of the Directors' Report. Apart from the details disclosed in this note, or in the Remuneration Report, no Director has entered into a material contract with the Company since the end of the previous financial year and there were no material contracts involving Directors' interests existing at year end.
Key Management Personnel Transactions with the Company or its Controlled Entities
There were no transactions in the current year between the Group and entities controlled by key management personnel.
NOTE 21 - FINANCIAL INSTRUMENTS
The effect of initially applying AASB 9 on the group's financial instruments is described in Note 2(h).
(a) Financial Risk Management
The Group has exposure to the following risks arising from financial instruments.
i) Credit Risk ii) Liquidity Risk iii) Market Risk
This note presents qualitative and quantitative information in relation to the Group's exposure to each of the above risks and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework and the development and monitoring of risk management policies. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.
(b) 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; and arises principally from the Group's receivables from customers and joint ventures.
The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group's customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset. The maximum exposure to credit risk at the reporting date was:
2019 2018
$ $
-------- ----------
Cash and cash equivalents 357,970 375,507
Trade and other receivables - current 497,974 738,784
855,944 1,114,291
-------- ----------
The Group's cash and cash equivalents are held with major banks and financial institutions.
The Group's gross share of outstanding cash calls and recharges owing from joint venture partners and joint operations is $6,129,333 (2018: $5,768,614).
The Group's most significant customers are Enertech Fuel Solutions Pvt Limited (Enertech) with gas sales representing 39% of the Group's total revenues (2018: 61%) and Indian Oil Corporation Limited, in its capacity as nominee of the Government of India, with oil sales representing 61% of the Group's total revenues (2018: 39%). Enertech accounts for $nil of trade receivables as at June 2019 (2018: $5,841), whilst the Indian Oil Corporation Limited accounts for $nil of trade receivables (2018: $66,439).
Impairment Losses
The aging of the trade and other receivables at the reporting date was:
2019 2018
$ $
------------ ------------
Consolidated Gross
Not past due 189,941 294,709
Past due 0-30 days 111,566 73,246
Past due 31-120 days 202,591 278,346
Past due 121 days to one year 524,518 449,771
More than one year 5,532,232 5,140,415
------------ ------------
6,560,848 6,236,487
Provision for doubtful debts (6,062,874) (5,497,703)
------------ ------------
Trade and other receivables net of provision 497,974 738,784
------------ ------------
NOTE 21 - FINANCIAL INSTRUMENTS (CONTINUED)
(b) Credit Risk (continued)
Receivable balances are monitored on an ongoing basis. The Group may at times have a high credit risk exposure to its joint venture partners arising from outstanding cash calls.
The Group considers an allowance for expected credit losses (ECL's) for all debt instruments. The Group applies a simplified approach in calculating ECL's. The Group bases its ECL assessment on its historical credit loss experience, adjusted for factors specific to the debtors and the economic environment including, but not limited to, financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and delinquency in payments.
The Group has been in discussions with its joint venture partner for repayment of disputed and other amounts owing. The Group is continuing discussions in order to resolve the outstanding issues and recover payment of the outstanding amounts, however due to the age of the receivables amounts, is uncertain of the timing or of full recovery.
(c) Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses or risking damage to the Group's reputation.
The Group manages liquidity by monitoring present cash flows and ensuring that adequate cash reserves, financing facilities and equity raisings are undertaken to ensure that the Group can meet its obligations.
The table below analyses the Group's financial liabilities by relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Contractual Cash Flows
------------------------------------------------------------
Carrying Amount Face Value Total 2 months or less 2 - 12 months Greater than
1 year
$ $ $ $
$ $
---------------- ----------- ---------- ----------------- -------------- -------------
2019
Trade and other payables 697,184 697,184 697,184 697,184 - -
Borrowings 563,955 580,000 580,000 - 580,000 -
Total financial
liabilities 1,261,139 1,277,184 1,277,184 697,184 580,000 -
---------------- ----------- ---------- ----------------- -------------- -------------
2018
Trade and other payables 779,249 779,249 779,249 779,249 - -
Total financial
liabilities 779,249 779,249 779,249 779,249 - -
---------------- ----------- ---------- ----------------- -------------- -------------
Subsequent Events
On 23 July 2019, the Group entered into an amendment agreement to vary the terms of its loan funding facility of $330,000 entered into on 26 July 2018. Pursuant to the amendment, the loan repayment date has been extended from 26 July 2019 to 1 October 2019.
On 30 September 2019, the Company entered into an amendment agreement to vary the terms of its loan funding facility of $300,000 entered into on 26 July 2018; and the subsequent amendment noted in a) above. Pursuant to the amendment, the loan repayment date has been extended to 15 October 2019.
Furthermore, the Company also entered into an amendment agreement to vary the terms of its loan funding facility of $250,000 entered into on 11 September 2018. Pursuant to the amendment, the loan repayment date has been extended from 1 October 2019 to 1 April 2020. Pursuant to the extension, the Company will issue 60,664,887 options at $0.004121 on or before 1 April 2020.
NOTE 21 - FINANCIAL INSTRUMENTS (CONTINUED)
(d) Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
An entity is exposed to currency risk on sales and purchases that are denominated in a currency other than the functional currency of the entity. The currencies giving rise to this risk are the United States dollar (USD), Indian rupee (INR) and British pound (GBP).
The amounts in the table below represent the Australian dollar equivalent of balances in the Oilex Group Entities that are held in a currency other than the functional currency in which they are measured in that Group Entity. The exposure to currency risk at balance date was as follows:
2019 2018
---------------------------
USD INR GBP USD INR GBP
In equivalents $ $
of Australian dollar $ $ $ $
--------------------------- -------- ---------- -------- -------- ---------- ---------
Cash and cash equivalents 20,095 139,811 24,467 136,584 30,392 15,928
Trade and other
receivables (1) 229,196 3,219,109 - 110,799 3,053,753 -
Trade and other
payables (3,978) (312,161) (4,665) (3,958) (188,863) (13,176)
-------- ---------- -------- -------- ---------- ---------
Net balance sheet
exposure 245,313 3,046,759 19,802 243,425 2,895,282 2,752
-------- ---------- -------- -------- ---------- ---------
(1) Trade and other receivables of the joint operation is before any impairment and provisions.
The following significant exchange rates applied during the year:
Average Rate Reporting Date Spot Rate
AUD 2019 2018 2019 2018
----- --------- --------- -------------- -----------
USD 0.7156 0.7753 0.7013 0.7391
INR 50.5060 50.4574 48.4100 50.7392
GBP 0.5527 0.5762 0.5535 0.5634
----- --------- --------- -------------- -----------
Foreign Currency Sensitivity
A 10% strengthening/weakening of the Australian dollar against the following currencies at 30 June would have (increased)/ decreased the loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2018.
2019 2018
$ $
---------- ----------
10% Strengthening
United States dollars (USD) 24,351 27,047
Indian rupees (INR) 304,676 321,698
British pounds (GBP) 1,980 306
10% Weakening
United States dollars (USD) (24,351) (22,129)
Indian rupees (INR) (304,676) (263,207)
British pounds (GBP) (1,980) (250)
NOTE 21 - FINANCIAL INSTRUMENTS (CONTINUED)
(d) Market Risk (continued) ii) Interest rate risk
At the reporting date the interest rate profile of the Group's interest-bearing financial instruments was:
Carrying Amount
2019 2018
$ $
---------- --------
Fixed Rate Instruments
Financial assets (short-term deposits
included in trade receivables) 100,000 149,004
Financial liabilities (borrowings) (563,955) -
Variable Rate Instruments
Financial assets (cash and cash equivalents) 357,970 375,507
---------- --------
Cash Flow Sensitivity Analysis for Variable Rate Instruments
An increase of 100 basis points in interest rates at the reporting date would have decreased the loss by the amounts shown below. A decrease of 100 basis points in interest rates at the reporting date would have had the opposite impact by the same amount. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2018.
2019 2018
$ $
------ ------
Impact on profit or loss 3,580 3,755
------ ------
iii) Other market price risks
At 30 June 2019, the Group had no financial instruments with exposure to other price risks (2018: $nil).
Equity Price Sensitivity
At 30 June 2019, the Group had no exposure to equity price sensitivity (2018: $nil).
(e) Capital Risk Management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The capital structure of the Group consists of equity attributable to equity holders of the Company, comprising issued capital, reserves and accumulated losses as disclosed in the consolidated statement of changes in equity.
(f) Fair Values of Financial Assets and Liabilities
The net fair values of financial assets and liabilities of the Group approximate their carrying values. The Group has no off-balance sheet financial instruments and no amounts are offset.
This section provides information on items which are required to be disclosed to comply with Australian Accounting Standards, other regulatory pronouncements and the Corporations Act 2001.
NOTE 22 - SHARE-BASED PAYMENTS
Share-based Payments Expense Shares
The following equity settled share-based payment transactions have been recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income:
2019 2018
$ $
-------- -------
Shares and rights - equity settled
Non-Executive Directors - remuneration shares (1) 55,422 27,653
Technical and administrative contractors 55,513 62,558
Total share-based payments expense 110,935 90,211
-------- -------
(1) At the Annual General Meeting held on 29 November 2017, the shareholders of the Company approved the issue of shares in lieu of cash for part of the remuneration for the Non-Executive Directors. The Directors have also agreed to receive part of their Directors fees in the form of the Company's shares in lieu of cash payments for the period from 1 November 2017 to 31 October 2018, in order to conserve the cash reserves of the Company. Similar shareholder approval was also received at the Annual General Meeting held on 29 November 2018 for the period from 1 November 2018 to 31 October 2019.
In accordance with the ASX waiver granted 17 October 2018, the Company advised that the number of remuneration shares that were issued to directors for the year ended 30 June 2019 totalled 11,437,407 (2018 5,530,644) and the percentage of the Company's issued capital represented by these remuneration shares was 0.44% (2018 0.28%).
As at 30 June 2019, the accrued non-executive director fees, being remuneration shares not yet issued totalled $12,607 (2018: $12,575).
Unlisted Options
At 30 June 2019, the terms and conditions of unlisted options granted by the Company to directors, employees, financiers and advisors are as follows, whereby all options are settled by physical delivery of shares:
Contractual Life
Grant Date Number of Instruments Vesting Conditions of Options
----------------- ---------------------- ------------------- -----------------
Key Management Personnel
Nil
Other Employees
Nil
Financiers and Advisors
22 May 2017 2,222,222 Upon granting 3 years
17 September
2018 91,666,666 Upon granting 45 weeks
29 November
2018 60,664,887 Upon granting 44 weeks
19 December
2018 6,666,667 Upon granting 2 years
Total Options 161,220,442
----------------------
Subsequent to reporting date, no options have been exercised; however the 91,666,666 options have lapsed - for further information refer to Note 27 a).
Accounting Policy
Options allow directors, employees and advisors to acquire shares of the Company. The fair value of options granted to employees is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black-Scholes Model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.
Options may also be provided as part of consideration for services by brokers and underwriters. Any unlisted options issued to the Company's AIM broker are treated as a capital raising cost.
When the Group grants options over its shares to employees of subsidiaries, the fair value at grant date is recognised as an increase in the investments in subsidiaries, with a corresponding increase in equity over the vesting period of the grant.
NOTE 22 - SHARE-BASED PAYMENTS (CONTINUED)
The number and weighted average exercise prices (WAEP) of unlisted share options are as follows:
WAEP Number WAEP Number
2019 2019 2018 2018
------- --------------
Outstanding at 1 July $0.005 77,441,666 $0.009 286,974,273
Lapsed during the year $0.35 (275,000) $0.011 (197,810,385)
Exercised during the year $0.004 (100,190,999) $0.004 (11,722,222)
Granted during the year
* Granted to Brokers and Financial Advisers (1) $0.005 16,140,351 - -
* Series A Loan Options(3) $0.004 91,666,666 - -
* Series B Loan Options(2) (3) $0.004 76,437,758 - -
Outstanding at 30 June $0.004 161,220,442 $0.005 77,441,666
------- -------------- ------- --------------
Exercisable at 30 June $0.004 161,220,442 $0.005 77,441,666
------- -------------- ------- --------------
The unlisted options outstanding at 30 June 2019 have an exercise price in the range of $0.004 to $0.006 (2018: $0.004 to $0.35) and a weighted average remaining contractual life of 0.2 years (2018: 1.90 years).
The fair value of unlisted options is calculated at the date of grant using the Black-Scholes Model. Expected volatility is estimated by considering historical volatility of the Company's share price over the period commensurate with the expected term.
(1) The following factors and assumptions were used to determine the fair value of 16,140,351 options issued to brokers and financial advisors during the year.
Price of Risk Free
2019 Vesting Fair Value Exercise Shares on Expected Interest Dividend
Grant Date Date Expiry Date Per Option Price Grant Date Volatility Rate Yield
19 Sept 19 Sept 17 Sept
2018 2018 2020 $0.003 $0.004 $0.004 104.78% 1.50%
19 Dec 2018 19 Dec 2018 24 Dec 2020 $0.004 $0.006 $0.006 142.57% 1.50% -
(2) 15,772,871 Series B loan options were exercised during the period
(3) The fair value equity component of the 91,666,666 Series A Loan options and 76,437,758 Series B Loan options has been determined using an implied effective interest rate of 18% pa (effective interest rate on a similar borrowing without an equity component); and is $50,490 and $48,195, respectively. At loan drawdown, this amount has been recognised in the Loan Option Reserve as the loans have been treated as convertible notes.
For further information refer to Note 14: Borrowings.
NOTE 23 - PARENT ENTITY DISCLOSURE
As at, and throughout, the financial year ended 30 June 2019 the parent entity of the Group was Oilex Ltd.
2019 2018
$ $
Result of the parent entity
Loss for the year (3,382,300) (4,758,767)
Other comprehensive income/(loss) 143,085 (110,414)
-------------- --------------
Total comprehensive loss for the
year (3,239,215) (4,869,181)
-------------- --------------
Financial position of the parent
entity at year end
Current assets 1,164,081 1,545,758
Total assets 5,995,034 6,162,360
Current liabilities 1,160,603 596,118
Total liabilities 3,361,943 2,684,874
Net assets 2,633,091 3,477,486
-------------- --------------
Total equity of the parent entity
comprising of:
Issued capital 176,502,200 174,046,036
Option reserve 36,485 331,889
Loans Options Reserve 88,740 -
Foreign currency translation reserve 5,052,168 4,909,084
Accumulated losses (179,046,502) (175,809,523)
-------------- --------------
Total equity 2,633,091 3,477,486
-------------- --------------
Parent Entity Contingencies
The Directors are of the opinion that provisions are not required in respect of the following matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Oilex Ltd has issued a guarantee in relation to corporate credit cards. The bank guarantee amounts to $100,000. An equal amount is held in cash and cash equivalents as security by the bank. (2018: $149,004 in relation to the lease of corporate offices and the corporate credit cards).
Parent entity capital commitments for acquisition of property plant and equipment
Oilex Ltd had no capital commitments as at 30 June 2019 (2018: Nil).
Parent entity guarantee (in respect of debts of its subsidiaries)
On 7 November 2006, Oilex Ltd issued a Deed of Parent Company Performance Guarantee in relation to the Production Sharing Contract entered into with the Timor Sea Designated Authority dated 15 November 2006. Refer note 26.
Oilex Ltd has issued no other guarantees in respect of debts of its subsidiaries.
NOTE 24 - AUDITORS' REMUNERATION
2019 2018
$ $
Audit and review services
Auditors of the Company - KPMG
Audit and review of financial reports (KPMG Australia) 81,400 82,000
Audit of Joint Operations operated by Oilex Ltd
Operator proportion only (KPMG Australia) 414 419
Audit and review of financial reports (KPMG related practices) 20,656 16,252
-------- --------
102,470 98,671
Other Auditors
Audit and review of financial reports (India Statutory) 5,972 5,543
-------- --------
108,442 104,214
Other services
Auditors of the Company - KPMG
Taxation compliance services (KPMG Australia) 13,213 11,723
Taxation compliance services (KPMG related practices) 6,987 6,449
-------- --------
20,200 18,172
Other Auditors
Taxation compliance services (India Statutory) 5,255 7,094
-------- --------
25,455 25,266
-------- --------
NOTE 25 - OPERATING LEASES
Leases as Lessee
2019 2018
$ $
------- -------
Within one year 27,211 86,738
One year or later and no later than five
years - 4,711
------- -------
27,211 91,449
------- -------
Non-cancellable operating lease rentals are payable as follows:
The Group leases its head office premises at Level 2, 11 Lucknow Place West Perth, Australia. The lease commenced on 1 June 2019 for a six-month period; with expiry on 30 November 2019. Thereafter, the Group has the option of a month by month lease extension subject to lessor approval.
2019 2018
$ $
-------- --------
Operating lease rentals expensed during the financial year 102,788 130,981
-------- --------
The Group leases office premises in Gandhinagar (India) under an operating lease. The current lease has a three year term, commencing 16 October 2016.
Accounting Policy
Operating leases payments are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense and are allocated over the lease term.
NOTE 26 - PROVISIONS and CONTINGENT LIABILITIES
Contingent Liabilities at Reporting Date
The Directors are of the opinion that provisions (except as noted below) are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Guarantees
Oilex Ltd has issued guarantees in relation to the corporate credit cards. The bank guarantees amount to $100,000.
Termination Penalty
In November 2006 Oilex (JPDA 06-103) Ltd (Operator) and the Joint Venture parties entered into a Production Sharing Contract (PSC) with the Designated Authority for JPDA 06-103 and the PSC was signed in January 2007 (effective date 15 January 2007).
On 12 July 2013, the Operator, on behalf of the Joint Venture participants, submitted to the Autoridade Nacional do Petroleo e Minerais (ANPM), the body responsible for managing and regulating petroleum and mining activities in the Timor-Leste area, a request to terminate the PSC by mutual agreement in accordance with its terms and without penalty or claim. The request was issued as a result of ongoing uncertainty as to the security of PSC tenure which arose as a result of a maritime dispute between the governments of Timor Leste and Australia. This request required the consent of the Timor Sea Designated Authority.
On 15 May 2015, the ANPM issued a Notice of Intention to Terminate the PSC and subsequently, on 15 July 2015, issued a Notice of Termination and Demand for Payment. The demand for payment (100%) of the penalty claim of US$17.0 million (plus interest) reflected the ANPM's estimate of the cost of exploration activities not undertaken in 2013, as well as certain local content obligations set out in the PSC. More recently, ANPM has sought to amend its claim to US$22.26 million.
On 17 October 2018, the Company announced that it had received correspondence from ANPM advising that it had submitted a Request for Arbitration (RFA) to the International Chamber of Commerce (ICC) in Singapore. The RFA relates to matters associated with the termination of the PSC by the ANPM.
In addition to other matters, the Joint Venture considers it has made significant over expenditure in executing the PSC work programme and further, the ANPM failed to properly assess and award credit for such additional expenditure when terminating the PSC. Notwithstanding the Joint Venture considers no penalty payment is applicable, the parties made a number of unsuccessful attempts to settle the matter in dispute prior to the arbitration proceedings issuing. The Group has maintained a USD$600,000 provision for this matter.
On 16 August 2019, the Company announced that it had submitted the Respondents First Memorial to the International Chamber of Commerce (ICC) in Singapore. In this regard, following a substantive legal and independent expert review, the joint venture has lodged a counterclaim against the ANPM for the amount US$23.3 million (plus interest) as damages arising from the wrongful termination of the PSC. Oilex holds a 10% participating interest in the JPDA joint venture.
The arbitration hearing is scheduled to commence on 10 February 2020.
The obligations and liabilities of the Joint Venture participants under the PSC are joint and several and all participants have provided parent company guarantees. The equity interest of the Joint Venture participants are:
Oilex (JPDA 06-103) Ltd (Operator) 10%
Pan Pacific Petroleum (JPDA
06-103) Pty Ltd 15%
Japan Energy E&P JPDA Pty Ltd 15%
GSPC (JPDA) Limited (#) 20%
Videocon JPDA 06-103 Limited
*(#) 20%
Bharat PetroResources JPDA Ltd 20%
Total 100%
-----
* The Company understands that the parent company Videocon Industries Ltd is subject to corporate insolvency proceedings and continues to trade under the supervision of an insolvency professional.
(#) A notice of default has been issued against both Videocon JPDA 06-103 Limited and GSPC (JPDA) Limited for their failure to pay the joint venture cash calls.
NOTE 27 - SUBSEQUENT EVENTS
a) On 23 July 2019, the Group entered into an amendment agreement to vary the terms of its loan funding facility of $330,000 entered into on 26 July 2018. Pursuant to the amendment, the loan repayment date has been extended from 26 July 2019 to 1 October 2019. In addition, the Company will issue 124,060,150 new options to the lenders at an exercise price of $0.00266, and an expiry date of 31 December 2019, which were subject to shareholder approval at a General Meeting to be held on 19 September 2019, which was duly forthcoming. All other loan terms and conditions remain the same; and are extended to 1 October 2019.
The total 91,666,666 share options @ $0.0036 exercisable on or before 26 July 2019, attached to the original loans, were not exercised and have lapsed.
The above-mentioned 124,060,150 options were subsequently issued on 27 September 2019.
b) On 30 September 2019, the Company entered into an amendment agreement to vary the terms of its loan funding facility of $300,000 entered into on 26 July 2018; and the subsequent amendment noted in a) above. Pursuant to the amendment, the loan repayment date has been extended to 15 October 2019.
Furthermore, the Company also entered into an amendment agreement to vary the terms of its loan funding facility of $250,000 entered into on 11 September 2018. Pursuant to the amendment, the loan repayment date has been extended from 1 October 2019 to 1 April 2020. Pursuant to the extension, the Company will issue 60,664,887 options at $0.004121 on or before 1 April 2020.
c) On 31 July 2019, the Company announced that it has arranged an equity capital raising to secure funding of GBP0.34 million (A$0.6 million) through the placing of 257,329,999 new shares at 0.13 pence (A$0.2330) per share. All shares were subsequently issued on 13 August 2019.
d) On 7 August 2019, the Company announced that it has entered into an agreement with Holloman Energy Corporation (HEC) to acquire its 48.5003% interest in the Petroleum Exploration Licence (PEL) 112 and 444 license (the Licenses) in the world class Cooper-Eromanga Basins in South Australia.
Pursuant to the share purchase agreement entered into with HEC, the Company will acquire 100% of its wholly owned subsidiary, Holloman Petroleum Pty Ltd ("HPPL") for gross consideration of 40,416,917 ordinary shares in the Company (Shares) at a deemed price of 0.3 cents and A$24,250 for a total consideration of A$145,500.
e) On 14 August 2019, the Company announced that it has entered into an agreement with Perseville Investing Inc and Terra Nova Energy (Australia) Pty Ltd (TNA) (collectively, TNP) to acquire up to a further 51.4997% interest in the PEL's 112 and 444 licenses.
Pursuant to the share purchase agreement entered into with TNP, the Company will acquire a further participating interest of 30.833% in the Licenses for consideration of 9,166,333 ordinary shares in the Company at a deemed price of 0.3 cents and A$65,000 in cash for a total consideration of A$92,499.
In addition, the Company has been granted an Option by TNP for up to 15 months to acquire a further 20.6667% participating interest in the Licenses (Option). The Option can be exercised for consideration of 20,666,700 ordinary shares in the Company at a deemed price of 0.3 cents for a total consideration of A$62,000 (Option Exercise Shares).
f) In October 2018, the Company announced that the Autoridade Nacional Do Petroleo E Minerais (ANPM) had commenced arbitration proceedings against Oilex and its joint venture partners (Respondents), in regard to the JPDA production sharing contract (PSC).
On 16 August 2019, The Company announced it had submitted the Respondents First Memorial to the International Chamber of Commerce (ICC) in Singapore. In this regard, following a substantive legal and independent expert review, the joint venture has lodged a counterclaim against the ANPM for the amount US$23.3 million (plus interest) as damages arising from the wrongful termination of the PSC.
The arbitration hearing is scheduled to commence on 10 February 2020.
Refer Note 26 for the full background information on this matter.
NOTE 27 - SUBSEQUENT EVENTS (CONTINUED)
g) On 9 September 2019, the Company announced it has reached an agreement with Gujarat State Petroleum Corporation (GSPC) which, upon completion, will resolve the ongoing Cambay PSC dispute (the Agreement). Significantly, the Indian Directorate General of Hydrocarbons is a signatory to the Agreement.
As previously announced in March 2019, the State Government of Gujarat and the GSPC Board of Directors' have approved a sales process for many of GSPC's Indian E&P assets. Oilex and GSPC have now agreed to include GSPC's 55% Participating Interest (PI) in the Cambay PSC in this sale process. GSPC has also undertaken to use its best endeavours to complete the sale process within 90 days from commencement.
Pursuant to the Agreement, the Event of Default (EoD) and Event of Withdrawal (EoW) declared by Oilex pursuant to the Cambay Field Joint Operating Agreement (JOA) has been withdrawn and the arbitration tribunal of the Singapore International Arbitration Centre (SIAC) issued an order on 24 September 2019 terminating the arbitration proceedings instituted by GSPC. GSPC has also undertaken to remove the stay order granted in the High Court of Gujarat.
h) On 16 September 2019, the Company announced it has entered into an exclusivity agreement with Koru Energy (KLW) Ltd ("Koru"), a subsidiary of Koru Energy Limited, for a potential acquisition of up to a 50% relevant interest in the Knox and Lowry, and Whitbeck gas discoveries (the "KLW Gas Discoveries") in the East Irish Sea (EIS), offshore the United Kingdom ("Exclusivity Agreement").
The KLW Gas Discoveries are a series of shallow water gas accumulations that were discovered between 1992 and 2009 by the then operators and successfully drill-stem tested confirming discovered volumes that the Company and Koru would seek to bring into production, should the acquisition complete. The KLW Gas Discoveries are ideally located very close to a subsea tie-back pipeline which delivers gas to the nearby and recently refurbished North Morecambe Gas Production Platform and Terminal.
The EIS is a prolific basin which has produced more than 6TCF of gas to date with considerable existing gas production, gathering, processing and transportation infrastructure. The KLW Gas Discoveries are located in known conventional shallow reservoirs in shallow water near existing EIS gathering and production infrastructure reducing the complexity, risk and cost of development.
i) On 27 September, the Company announced that it has entered into a binding term sheet with Senex Energy Limited and certain of its related entities (together referred to as "Senex") to acquire all of Senex's interest as operator in 27 Petroleum Retention Licenses in the Northern Oil and West Gas Fairway in the world class Cooper-Eromanga Basins in South Australia (the "Northern Fairway PRLs"), subject to satisfaction of conditions (including government approvals).
The Company will acquire 100% of Senex's interest in the Northern Fairway PRLs for nominal consideration and assumption of existing abandonment liabilities, PRL fees and PRL expenditure targets.
The existing abandonment liabilities relate to previous exploration drilling activities (including the cased and suspended Paning-2 tight gas discovery well) and associated with the Cordillo 3D seismic acquisition operating camp. The existing rehabilitation liabilities are estimated at approximately $1.1m. However, the rehabilitation does not require immediate rectification.
The total annual amount of the Northern Fairway PRL renewal fees is approximately $1 million. The Company also assumes the expenditure targets under the PRLs. Failure to achieve the expenditure target will result in pro-rata relinquishment of the permits. The Company notes that the Northern Fairway PRLs are currently suspended by the South Australian Government, suspending the annual license fees and work obligations. Oilex intends to continue this suspension for a period.
The agreement with Senex is subject to various conditions including the approval of Oilex as operator of the Northern Fairway PRLs by the South Australian Government. Hartleys Limited, a leading Australian corporate advisory and stockbroking financial services firm, has been appointed to lead the arrangement of funding for the acquisition. Subject to the receipt of regulatory approvals, Oilex anticipates completion of the acquisition by the end of Calendar Year 2019.
NOTE 27 - SUBSEQUENT EVENTS (CONTINUED)
j) On 30 September 2019, the Company announced that it has arranged an equity capital raising to secure funding of GBP0.6 million (A$1.1 million) through the placing of 315,789,474 new shares at 0.19 pence (A$0.00348) per share. The shares will be issued to Novum Securities and existing shareholders
Other than the above disclosure, there has not arisen in the interval between the end of the financial year and the date of this report an item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.
NOTE 28 - oTHER ACCOUNTING POLICES
New Standards and Interpretations Not Yet Adopted
The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are not yet effective and have not been applied in preparing this financial report.
-- AASB 16 Leases provides a new lessee accounting model requiring the recognition of assets and liabilities for all leases with a term greater than twelve months, unless the underlying asset is of low value. It requires the lessee to recognise a right-of-use asset, representing the rights to use the underlying lease asset and a lease liability representing the obligation of lease payments. AASB 16 is effective for annual periods beginning on or after 1 July 2019. The Group has undertaken a review of all its existing leases. The impact on the Group's financial assets and financial liabilities of the adoption of AASB 16 is being assessed and is dependent upon the adoption approach and application of transitional provisions, as well as assessing new leases anticipated to be entered into. The impact of the adoption of this standard is unlikely to have a material future impact on the Group's balance sheet once the liability for future leases are recognised. Further information is disclosed in Note 25.
-- IFRIC 23 Uncertainty over Tax Treatments clarifies how the recognition and measurement requirements of IAS 12 Income Taxes are applied when there is uncertainty over income tax treatments. IFRIC 23 is effective for annual periods beginning on or after 1 July 2019. The impact of the adoption of this interpretation is not expected to have a significant on the Group's Consolidated financial statements.
(1) In the opinion of the Directors of Oilex Ltd (the Company):
(a) the consolidated financial statements and notes thereto, and the Remuneration Report in the Directors' Report, set out on pages 13 to 29, are in accordance with the Corporations Act 2001, including:
i) giving a true and fair view of the Group's financial position as at 30 June 2019 and of its performance for the financial year ended on that date; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(a) there are reasonable grounds to believe that the Company and Group will be able to pay its debts as and when they become due and payable.
(2) The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing Director and Chief Financial Officer for the financial year ended 30 June 2019.
(3) The Directors draw attention to note 2(a) to the consolidated financial statements, which includes a statement of compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors.
Mr Jonathan Salomon
Mr Brad Lingo Managing Director
Chairman
West Perth
Western Australia
30 September 2019
Shareholder information as at 1 September 2019
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below.
The address of the principal registered office is Level 2, 11 Lucknow Place, West Perth, Western Australia 6005, Australia, Telephone +61 8 9485 3200.
The name of the Company Secretary is Mr Mark Bolton.
Detailed schedules of exploration and production permits held are included in the Business Review.
Directors' interest in share capital options are disclosed in the Directors' Report.
There is currently no on-market buy-back in place.
Shareholding
(a) Distribution of share and option holdings:
Size of holding Number of Number of
shareholders unlisted option
holders
----------------- -------------- -----------------
1 - 1,000 296 -
1,001 - 5,000 474 -
5,001 - 10,000 314 -
10,001 - 100,000 752 -
100,001 and over 495 4
-------------- -----------------
Total 2,331 4
-------------- -----------------
(b) Of the above total 1,900 ordinary shareholders hold less than a marketable parcel.
(c) Voting Rights:
The voting rights attached to the ordinary shares are governed by the Constitution.
On a show of hands every person present who is a Member or representative of a Member shall have one vote and on a poll, every Member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each share held. None of the options give an entitlement to voting rights.
Register of Securities
The register of securities listed on the Australian Securities Exchange is held by Link Market Services Limited, Level 12, 250 St Georges Terrace, Perth, Western Australia 6000, Australia, Telephone +61 8 9211 6670.
The register of securities listed on the Alternative Investment Market of the London Stock Exchange is held by Computershare Investor Services PLC, PO Box 82, The Pavilions, Bridgwater Road, Bristol BS13 8AE, United Kingdom, Telephone +44 870 702 003.
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian Securities Exchange and the Alternative Investment Market of the London Stock Exchange (AIM) and trades under the symbol OEX.
Unquoted Securities - Options
Total unlisted options on issue are 69,553,776.
The Managing Director, Mr Jonathan Salomon holds 14,987,013 shares as at 1 September 2019 which represents 0.52% of shares.
Twenty Largest Shareholders
% of issued
Shareholders Shares Held capital
---------------------------------------- ----------------------- ------------
HSBC Custody Nominees (Australia)
Limited 437,509,516 15.20
Rock (Nominees) Limited <CSHNET> 154,989,568 # 5.39
Roy Nominees Limited <127735> 150,581,264 # 5.23
Hargreaves Lansdown (Nominees) Limited
<15942> 145,235,304 # 5.05
Interactive Investor Services Nominees
Limited <SMKTNOMS> 128,346,155 # 4.46
Barclays Direct Investing Nominees
Limited <CLIENT1> 123,908,406 # 4.31
Interactive Investor Services Nominees
Limited <SMKTISAS> 111,901,410 # 3.89
HSDL Nominees Limited 96,114,523 # 3.34
Hargreaves Lansdown (Nominees) Limited
<HLNOM> 90,399,725 # 3.14
Hargreaves Lansdown (Nominees) Limited
<VRA> 87,471,954 # 3.04
Magna Energy Limited 73,505,090 2.55
Zeta Resources Limited 71,323,567 2.48
Lawshare Nominees Limited <DEALING> 52,121,495 # 1.81
Chase Nominees Limited 50,000,000 # 1.74
HSBC Client Holdings Nominee (UK)
Limited <731504> 49,283,646 # 1.71
HSDL Nominees Limited <MAXI> 43,294,727 # 1.50
Jim Nominees Limited <JARVIS> 39,985,606 # 1.39
Vidacos Nominees Limited <LGUKCLT> 39,275,896 # 1.36
HSDL Nominees Limited <LWMAXI> 37,755,945 # 1.31 UBS Private Banking Nominees Ltd <MAINPOOL> 32,266,549 # 1.12 Total 1,351,606,658 46.96 Total issued shares as at 1 September 2019 2,878,064,483 100.00 ---------------------------------------- ----------------------- ------------
Substantial shareholders as disclosed in the most recent substantial shareholder notices given to the company are as follows:
% of issued
Substantial Shareholders Shares Held capital
------------------------------------ ------------- ------------
Republic Investment Management Pte
Ltd 422,744,768 14.74
Republic Investment Management Pte Ltd has subsequently transferred 1005 of its shares to the AIM register.
(#) Included within the total issued capital are 1,814,417,003 shares held on the AIM register. Included within the top 20 shareholders are certain AIM registered holders as marked.
Associated Natural gas found in contact with or dissolved in crude
Gas oil in the reservoir. It can be further categorised
as Gas-Cap Gas or Solution Gas.
------------ ---------------------------------------------------------------
Bbls Barrels of oil or condensate.
------------ ---------------------------------------------------------------
BCF Billion cubic feet of gas at standard temperature and
pressure conditions.
------------ ---------------------------------------------------------------
BCFE Billion cubic feet equivalent of gas at standard temperature
and pressure conditions.
------------ ---------------------------------------------------------------
BOE Barrels of Oil Equivalent. Converting gas volumes to
the oil equivalent is customarily done on the basis
of the nominal heating content or calorific value of
the fuel. Common industry gas conversion factors usually
range between 1 barrel of oil equivalent (BOE) = 5,600
standard cubic feet (scf) of gas to 1 BOE = 6,000 scf.
(Many operators use 1 BOE = 5,620 scf derived from
the metric unit equivalent 1 m(3) crude oil = 1,000
m(3) natural gas).
------------ ---------------------------------------------------------------
BOPD Barrels of oil per day.
------------ ---------------------------------------------------------------
GOR Gas to oil ratio in an oil field, calculated using
measured natural gas and crude oil volumes at stated
conditions. The gas/oil ratio may be the solution gas/oil,
symbol Rs; produced gas/oil ratio, symbol Rp; or another
suitably defined ratio of gas production to oil production.
Volumes measured in scf/bbl.
------------ ---------------------------------------------------------------
MMscfd Million standard cubic feet of gas per day.
------------ ---------------------------------------------------------------
MMbbls Million barrels of oil or condensate.
------------ ---------------------------------------------------------------
PSC Production Sharing Contract.
------------ ---------------------------------------------------------------
mD Millidarcy - unit of permeability.
------------ ---------------------------------------------------------------
MD Measured Depth.
------------ ---------------------------------------------------------------
Contingent Those quantities of petroleum estimated, as of a given
Resources date, to be potentially recoverable from known accumulations
by application of development projects, but which are
not currently considered to be commercially recoverable
due to one or more contingencies.
Contingent Resources may include, for example, projects
for which there are currently no viable markets, or
where commercial recovery is dependent on technology
under development, or where evaluation of the accumulation
is insufficient to clearly assess commerciality. Contingent
Resources are further categorised in accordance with
the level of certainty associated with the estimates
and may be sub-classified based on project maturity
and/or characterised by their economic status.
------------ ---------------------------------------------------------------
Prospective Those quantities of petroleum which are estimated,
Resources as of a given date, to be potentially recoverable from
undiscovered accumulations.
------------ ---------------------------------------------------------------
Reserves Reserves are those quantities of petroleum anticipated
to be commercially recoverable by application of development
projects to known accumulations from a given date forward
under defined conditions.
Proved Reserves are those quantities of petroleum,
which by analysis of geoscience and engineering data,
can be estimated with reasonable certainty to be commercially
recoverable, from a given date forward, from known
reservoirs and under defined economic conditions, operating
methods and government regulations.
Probable Reserves are those additional Reserves which
analysis of geoscience and engineering data indicate
are less likely to be recovered than Proved Reserves
but more certain to be recovered than Possible Reserves.
Possible Reserves are those additional reserves which
analysis of geoscience and engineering data indicate
are less likely to be recoverable than Probable Reserves.3P
Probabilistic methods
P90 refers to the quantity for which it is estimated
there is at least a 90% probability the actual quantity
recovered will equal or exceed.
P50 refers to the quantity for which it is estimated
there is at least a 50% probability the actual quantity
recovered will equal or exceed.
P10 refers to the quantity for which it is estimated
there is at least a 10% probability the actual quantity
recovered will equal or exceed.
------------ ---------------------------------------------------------------
SCF/BBL Standard cubic feet (of gas) per barrel (of oil).
------------ ---------------------------------------------------------------
TCF Trillion cubic feet.
------------ ---------------------------------------------------------------
Tight Gas The reservoir cannot be produced at economic flow rates
Reservoir or recover economic volumes of natural gas unless the
well is stimulated by a large hydraulic fracture treatment,
a horizontal wellbore, or by using multilateral wellbores.
------------ ---------------------------------------------------------------
Directors Stock Exchange Listings
Brad Lingo Bachelor of Arts Oilex Ltd's shares are listed
with Honours, under the code OEX on the
Juris Doctorate, MAICD Australian Securities Exchange
Non-Executive Chairman and on the Alternative Investment
Market of the London Stock
Joe Salomon B APP SC (Geology), Exchange (AIM)
GAICD
Managing Director AIM Nominated Adviser
Strand Hanson Limited
P Haywood 26 Mount Row
Non-Executive Director London W1K 3SQ
United Kingdom
Company Secretary AIM Broker
Mark Bolton B Business Novum Securities Limited
CFO and Company Secretary 10 Grosvenor Gardens
Belgravia
London SW1W 0DH
United Kingdom
Registered and Principal
Office Share Registries
Level Two Link Market Services Limited
11 Lucknow Place (for ASX)
West Perth Western Australia Level 12
6005 250 St Georges Terrace
Australia Perth Western Australia 6000
Ph. +61 8 9485 3200 Australia
Fax +61 8 9485 3290
Computershare Investor Services
Postal Address PLC (for AIM)
PO Box 254 The Pavilions
West Perth Western Australia Bridgwater Road
6872 Bristol BS13 8AE
Australia United Kingdom
India Operations - Gandhinagar Auditors
Project Office KPMG
3rd Floor Radhe Arcade 'Block 235 St Georges Terrace
C' Perth Western Australia 6000
Nr. Swagat Rainforest 1, Australia
Kudasan
Gandhinagar Koba Road
Gandhinagar 382421
Gujarat, India
Website www.oilex.com.au
Email
oilex@oilex.com.au
Oilex Ltd
ACN 078 652 632
ABN 50 078 652 632
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR GRBDGBGGBGCB
(END) Dow Jones Newswires
October 01, 2019 03:27 ET (07:27 GMT)
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