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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 : 2951O
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/2951O_1-2019-10-1.pdf
2019 FINANCIAL REPORT
CONTENTS
Directors' Report....................................................................................................................................................... 13
Remuneration Report - Audited................................................................................................................................. 22
Lead Auditor's Independence Declaration ................................................................................................................ 30
Consolidated Statement of Profit or Loss and Other Comprehensive Income............................................................. 31
Consolidated Statement of Financial Position.............................................................................................................. 32
Consolidated Statement of Changes in Equity............................................................................................................ 33
Consolidated Statement of Cash Flows...................................................................................................................... 34
Notes to the Consolidated Financial Statements................................................................................................ 35
Directors' Declaration................................................................................................................................................ 73
Independent Audit Report.......................................................................................................................................... 74
Shareholder Information............................................................................................................................................ 79
For the year ended 30 June 2019
The directors of Oilex Ltd present their report (including the Remuneration Report) together with the consolidated financial statements of the Group comprising of Oilex Ltd (the Company) and its subsidiaries for the financial year ended 30 June 2019 and the auditors' report thereon.
DIRECTORS
The directors of Oilex Ltd in office at any time during or since the end of the financial year are:
Mr Bradley Lingo
(Non-Executive Chairman)
Bachelor of Arts with Honours, Juris Doctorate, MAICD
Mr Lingo was appointed as a Non-Executive Director in February 2016 and Non-Executive Chairman in February 2017. Mr Lingo has more than 33 years of experience in a diverse range of oil and gas leadership roles, including business development, new ventures, mergers and acquisitions and corporate finance. Mr Lingo has worked with Tenneco Energy and El Paso Corporation in the US and Australia, Sunshine Gas Limited, AGL Energy, Roc Oil Limited, the Commonwealth Bank of Australia, Drillsearch Energy Limited and Elk Petroleum Limited.
During the last three years Mr Lingo has been a director of the following ASX listed companies:
-- Elk Petroleum Limited (from August 2015 to March 2019)
Mr Paul Haywood
(Non-Executive Director)
Mr Haywood was appointed as a Non-Executive Director in May 2017. Mr Haywood has over 16 years of international experience in delivering value for his investment network through a blended skill set of corporate and operational experience, including more than six years in the Middle East, building early stage and growth projects. More recently, Mr Haywood has held senior management positions with UK and Australian public companies in the natural resource and energy sectors including O&G exploration and development in UK, EU and Central Asia. Mr Haywood's expertise stretches across a broad UK and Australian public market, with a cross-functional skill set with diverse experience and capability encompassing research, strategy, implementation, capital and transactional management. Mr Haywood is currently Executive Director of Block Energy Plc.
During the last three years Mr Haywood has not been a director of any other ASX listed companies.
Mr Jonathan Salomon
(Managing Director)
B App Sc (Geology), GAICD
Mr Salomon was appointed as a Non-Executive Director in November 2015 and Managing Director on 18 March 2016. Mr Salomon has over 33 years of experience working for upstream energy companies. Further details of Mr Salomon's qualifications and experience can be found in the Executive Management section of the Directors' Report.
During the last three years Mr Salomon has not been a director of any other ASX listed companies.
Mr Peter Schwarz (appointed 4 September 2019)
(Non-Executive Director)
B Sc (Geology), M Sc (Petroleum Geology)
Mr Schwarz was appointed as a Non-Executive Director in September 2019. A former director of BG Exploration and Production Limited and CEO of independent exploration company Virgo Energy Ltd, Peter is a certified petroleum geologist and business development professional with over 35 years' experience in the oil and gas industry. Peter has previously held various senior management roles with Amerada Hess, BG, and Marubeni and is currently a director of Finite Energy Limited, an oil and gas consultancy business he founded over 10 years ago, specialising in strategy and business development advice in the UK and Europe.
During the last 3 years Mr Schwarz has not been a director of any other ASX listed companies.
COMPANY SECRETARY
The Chief Financial Officer, Mr Mark Bolton (B Bus) was appointed Company Secretary in June 2016.
CORPORATE GOVERNANCE STATEMENT
The Corporate Governance Statement, which reports on Oilex's key governance principles and practices is available on the Oilex website.
In establishing its corporate governance framework, the Company has referred to the recommendations set out in the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations 3(rd) edition. The Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company's corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the "if not, why not" reporting regime, where, after due consideration, the Company's corporate governance practices do not follow a recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has adopted instead of those in the recommendation.
The Corporate Governance Statement provides detailed information on the Board and committee structure, diversity and risk management.
DIRECTORS' MEETINGS
Directors in office and directors' attendance at meetings during the 2018/19 financial year are as follows:
Hot Features
Premium
Board Meetings (1)
Held (2) Attended
----------------------------- ---------- ---------
Non-Executive Directors (4)
B Lingo (3) 13 13
P Haywood 13 13
Executive Director
J Salomon 13 13
----------------------------- ---------- ---------
(1) Following the changes to the Board at the Annual General Meeting on 25 November 2015, the Board resolved that the full Board would perform the role of the Audit and Risk Committee and the Remuneration and Nomination Committee. The Company is considering the appointment of additional independent non-executive directors in order to achieve best practice corporate governance and may reconstitute the Committees at that time.
(2) Held indicates the number of meetings available for attendance by the director during the tenure of each director.
(3) Current Chairman.
(4) Mr Schwarz was appointed to the board subsequent to 30 June 2019.
EXECUTIVE MANAGEMENT
Mr Jonathan Salomon
(Managing Director)
B App Sc (Geology), GAICD
Mr Salomon was appointed as a Non-Executive Director in November 2015 and Managing Director on 18 March 2016. Mr Salomon has a Bachelor Degree in Applied Science and is a member of the American Association of Petroleum Geologists and the Society of Petroleum Engineers, and has over 33 years of experience working for upstream energy companies. Mr Salomon has worked for a number of oil and gas companies in various senior positions including General Manager Exploration and New Ventures at Murphy Oil Corporation and Global Head of Geoscience at RISC PL, in addition to a number of executive director roles including Strategic Energy Resources, Norwest Energy and Nido Petroleum. At several times in his career, Mr Salomon has acted as an independent consultant for various oil and gas companies, including New Standard Energy and Pacrim Energy. Mr Salomon first worked on Indian projects in 1994 while at Ampolex and since that time has maintained connection with the Indian industry, at various times bidding in India's exploration and field development rounds and working with Indian companies as joint venture partners, both in India and internationally.
Mr Mark Bolton
(Chief Financial Officer and Company Secretary)
B Business
Mr Bolton was appointed Chief Financial Officer and Company Secretary in June 2016. He has significant experience in the resource sector in Australia, having worked as Chief Financial Officer and Company Secretary for a number of resource companies since 2003. Prior to this, Mr Bolton worked with Ernst & Young as an Executive Director in Corporate Finance. Mr Bolton has experience in the areas of commercial management and the financing of resource projects internationally. He also has extensive experience in capital and equity markets in a number of jurisdictions including ASX and AIM.
Mr Ashish Khare
(Head - India Assets - appointed 8 November 2016)
Bachelor of Engineering (BE in Chemical Engineering, including petroleum management)
Mr Khare was appointed Head - India Assets on 8 November 2016 and is based in Gandhinagar India and has over 18 years of experience in the petroleum industry. Mr Khare's area of expertise include upstream oil and gas, as well as midstream and downstream project implementation and operation management. Mr Khare originally worked for Oilex as GM Operations & Business Development, and has experience working for various Indian companies including Cairn India Ltd and Reliance Petroleum.
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the financial year included:
-- exploration for oil and gas; -- appraisal and development of oil and gas prospects; and -- production and sale of oil and gas.
There were no significant changes in the nature of the activities during the year.
OPERATING RESULTS
The loss after income tax of the consolidated entity for the year ended 30 June 2019 amounted to $3,118,121 (2018: loss of $4,230,977).
Revenue for the period decreased due to lower production. Production was cycled from Cambay-77 to Cambay-73 in the September 2018 quarter resulting in minimal oil production thereafter. Gas production from Cambay-73 was voluntarily shut in during the March 2019 quarter with production ceasing from thereon.
The prior year results included a reduction in variable operating expenses as part of Group's effort to reduce costs. In the current year, efforts to contain costs have continued with further reductions in exploration $491,675 (2018: $651,993) and administration employee expenses $819,627 (2018: $925,660).
Total Administration expenses of $1,957,850 (2018: $2,101,485) include the above-mentioned reduction in employee expenses; however, this has been offset by increased legal expenses related to the Cambay PSC.
Other expenses include a reduction in doubtful debts expense of $108,206 (2018: $1,233,898).
Cash and cash equivalents held by the Group as at 30 June 2019 has decreased to $357,970 (30 June 2018: $375,507).
FINANCIAL POSITION
The net assets of the consolidated entity totalled $3,364,861 as at 30 June 2019 (2018: $4,008,210).
DIVIDS
No dividend was paid or declared during the year and the directors do not recommend the payment of a dividend.
REVIEW OF OPERATIONS
A review of the operations of the Group during the financial year and the results of those operations are set out in the Review of Operations on pages 4 to 10 of this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Review of Operations details those changes that have had a significant effect on the Group.
Other than those matters, there have been no other significant changes in the state of affairs of the Group that occurred during the financial year.
LIKELY DEVELOPMENTS
Additional comments on expected results on operations of the Group are included in the Review of Operations on pages 4 to 10.
Further disclosure as to likely developments in the operations of the Group and expected results of those operations have not been included in this report as, in the opinion of the Board, these would be speculative and as such, disclosure would not be in the best interests of the Group.
ENVIRONMENTAL ISSUES
The Group's oil and gas exploration and production activities are subject to environmental regulation under the legislation of the respective states and countries in which they operate. The majority of the Group's activities involve low level disturbance associated with its drilling programmes and production from existing wells. The Board actively monitors compliance with these regulations and as at the date of this report is not aware of any material breaches in respect of these regulations
SIGNIFICANT EVENTS AFTER BALANCE DATE
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, 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 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.
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$0.0023) per share. All shares were subsequently issued on 13 August 2019.
SIGNIFICANT EVENTS AFTER BALANCE DATE (continued)
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 A$0.003 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 A$0.003 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 A$0.003 for a total consideration of A$62,000 (Option Exercise Shares).
f) In October 2018, the Company announced that 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 of 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.
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.
SIGNIFICANT EVENTS AFTER BALANCE DATE (continued)
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.
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.
There were no other significant subsequent events occurring after year end.
FINANCIAL POSITION
Capital Structure and Treasury Policy
As at 30 June 2019 the Group had unsecured loans at face value $580,000 (2018: $nil). Refer note 14 of the Consolidated Financial Statements for details of the carrying amount, terms and conditions, repayment schedule, and options attached to the loans.
Details of transactions involving ordinary shares during the financial year are as follows:
Value Gross Amount
Number of of Shares Raised
Shares Issued $ $
--------------------------------------------------- --------------- ----------- -------------
September 2018
* Share Placements 249,117,189 857,723
September 2018
* Shares Issued for Consulting Services 10,843,344 37,415 -
September 2018
* Non-executive Director Remuneration 3,467,070 13,868 -
November 2018
* Exercise of Unlisted Options 90,190,999 356,187
November 2018
* Non-executive Director Remuneration 1,724,904 13,800 -
December 2018
* Share Placements 84,676,114 458,809
December 2018
* Exercise of Unlisted Options 10,000,000 39,180
January 2019
* Share Placements 125,000,000 809,517
April 2019
* Shares Issued for Consulting Services 1,760,000 8,800 -
April 2019
* Non-executive Director Remuneration 2,772,864 13,864 -
June 2019
* Shares Issued for Consulting Services 2,324,569 9,298 -
June 2019
* Non-executive Director Remuneration 3,472,569 13,890
Total 583,025,053 110,935 2,632,351
--------------------------------------------------- --------------- ----------- -------------
In accordance with the ASX Waiver granted 17 October 2018 the Company advises that the number of remuneration shares that were issued to non-executive directors totalled 11,437,407. This represents 0.44% of the Company's issued capital as at 30 June 2019.
As at the date of this report the Company had a total issued capital of 2,878,064,483 ordinary shares and 69,553,776 unlisted options exercisable at weighted average price of $0.004 per share.
Material Uncertainty Related to Going Concern
The financial report and audit opinion for the year ended 30 June 2019 identifies a material uncertainty regarding continuation as a going concern. The consolidated financial statements have been prepared on a going concern basis, which contemplates the realisation of assets and settlement of liabilities in the normal course of business. The Group will require funding in order to continue its exploration activities and progress the Cambay Project.
The funding requirements of the Group are reviewed on a regular basis by the Group's Chief Financial Officer and Managing Director and are reported to the Board at each board meeting to ensure the Group is able to meet its financial obligations as and when they fall due. Until sufficient operating cash flows are generated from its operations, the Group remains reliant on joint venture contributions, equity raisings or debt funding, as well as asset divestitures or farmouts to fund its expenditure commitments.
The Company continues to actively develop funding options in order that it can meet its expenditure commitments and its planned future discretionary expenditure, as well as any contingent liabilities that may arise.
DIRECTORS' INTERESTS
The relevant interest of each director in shares and unlisted options issued by the Company, as notified by the directors to the ASX in accordance with Section 205G (1) of the Corporations Act 2001, at the date of this report is as follows:
Number of Ordinary Shares
Direct Indirect
---------- --------------- -----------
B Lingo 13,648,950 -
P Haywood 3,319,101 -
J Salomon 14,987,013 -
P Schwarz - -
---------- --------------- -----------
SHARE OPTIONS
Unissued shares under options
All options were granted in the current and previous financial years.
At the date of this report, unissued ordinary shares of the Company under option (with an exercise price) are:
Expiry Date Number of Shares Exercise Price Unlisted Options Issued in 2019: 1 October 2019 (1) 60,664,887 $0.004121 24 December 2020 6,666,667 GBP0.0036 ($0.004) Issued in previous financial years: 22 May 2020 2,222,222 GBP0.0025 ($0.004) Total 69,553,776 -------------------- ----------------- -------------------
(1) Issued in connection to unsecured loans. Refer note 14 of the Consolidated Financial Statements for further detail.
These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
Unissued shares under option that expired during the year
During the financial year, the following unlisted employee and advisor options expired or were cancelled upon cessation of employment:
Date Lapsed Number Exercise Price --------------- -------- --------------- 6 August 2018 275,000 $0.35 Total 275,000 --------------- -------- ---------------
SHARE OPTIONS (continued)
Shares issued on exercise of unlisted options
During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of unlisted options as follows (there were no amounts unpaid on the shares issued):
Number of Shares Amount Paid on Each
Share
---------------------- ----------------- --------------------
During the financial
year 9,473,684 GBP0.002 ($0.003)
74,944,444 GBP0.002 ($0.004)
15,772,871 $0.004
---------------------- ----------------- --------------------
Total 100,190,199
---------------------- ----------------- --------------------
Since the end of the
financial year -
---------------------- ----------------- --------------------
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group paid a premium in respect of insurance cover for the directors and officers of the Group. The Group has not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors' liability and legal expense insurance contracts, as such disclosure is prohibited under the terms of the insurance contract.
PROCEEDINGS ON BEHALF OF THE COMPANY
No proceedings have been brought on behalf of the Company, nor has any application been made in respect of the Company under Section 237 of the Corporations Act 2001.
NON-AUDIT SERVICES
The Company may decide to employ the Auditor on assignments additional to their statutory audit duties where the Auditor's expertise and experience with the Group is important.
The Board has considered the non-audit services provided during the year and is satisfied that the provision of the non-audit services is compatible with, and did not compromise, the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
-- all non-audit services were subject to the corporate governance procedures adopted by the Group and these have been reviewed by the Board to ensure they do not impact the impartiality and objectivity of the auditor; and
-- the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards.
Refer note 24 of the Consolidated Financial Statements for details of the amounts paid to the auditor of the Group, KPMG Australia, and its network firms for audit and non-audit services provided during the year.
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.
LEAD AUDITOR'S INDEPENCE DECLARATION
The Lead Auditor's Independence Declaration for the year ended 30 June 2019 has been received and can be found on page 30.
REMUNERATION REPORT - AUDITED
The Board has performed the function of the Nomination and Remuneration Committee since June 2016 when the Board considered that, given the size and composition of the existing Board, that there are no efficiencies to be gained by having a separate committee. The Board has adopted a Nomination and Remuneration Committee Charter, which describes the role, composition, functions and responsibilities of the committee. The Nomination and Remuneration Committee is responsible for the review and recommendation to the Board, of the Company's Remuneration Policy, senior executives' remuneration and incentives, the remuneration framework for directors, superannuation arrangements, incentive plans and remuneration reporting.
1. PRINCIPLES OF COMPENSATION
Remuneration is referred to as compensation throughout this report. The Remuneration Report explains the remuneration arrangements for directors and senior executives of Oilex Ltd who have authority and responsibility for planning, directing and controlling the activities of the Group (key management personnel).
The compensation structures explained below are designed to attract, retain and motivate suitably qualified candidates, reward the achievement of strategic objectives and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account:
-- the capability and experience of the key management personnel; -- the ability of key management personnel to control the performance of the relevant segments; -- the current downturn of the resources industry; -- the Company's performance including: -- the Group's earnings; and -- the growth in share price and delivering constant returns on shareholder wealth; -- exploration success; and -- development of projects.
Compensation packages include a mix of fixed compensation and long-term performance-based incentives. In specific circumstances the Group may also provide short-term cash incentives based upon the achievement of Company performance hurdles or in recognition of specific achievements.
1.1 Fixed Compensation
Fixed compensation consists of base compensation and employer contributions to superannuation funds. Compensation levels are reviewed annually through a process that considers individual, sector and overall performance of the Group. In addition, reviews of available data on oil and gas industry companies provide comparison figures to ensure the directors' and senior executives' compensation is competitive in the market.
Reductions in remunerations introduced in 2016 and 2017 for Non-Executive Directors, the Managing Director, the Chief Financial Officer, and all staff have remained in place for the full financial year ended 2019.
Compensation for senior executives is separately reviewed at the time of promotion or initial appointment.
1.2 Performance Linked Compensation
Performance linked compensation includes both short-term and long-term incentives designed to reward key management personnel for growth in shareholder wealth. The short-term incentive (STI) is an "at risk" bonus provided in the form of cash or shares, while the long-term incentive plan (LTI) is used to reward performance by granting options over ordinary shares of the Company.
Short-term incentive bonus
The Group does not utilise short-term incentives on an annual or regular basis, as these are not considered part of the standard compensation package for key management personnel.
In certain circumstances the Board may, for reasons of retention, motivation or recognition, consider the use of short-term incentives.
Short-term incentives, if granted, are at the discretion of the Board having regard to the business plans set before the commencement of the financial year as well as the achievement of performance targets as determined by the Board. These targets include a combination of key strategic, financial and personal performance measures which may have a major influence over company performance in the short-term.
1. PRINCIPLES OF COMPENSATION (CONTINUED)
Short-term incentive bonus (continued)
There were no short-term incentives, performance bonuses or shares granted to senior executives or staff during the year ended 30 June 2019.
Long-term incentive bonus
Shareholders approved the 2017 Employee Incentive Plan (the Plan) at the AGM held 29 November 2017, which has yet to be implemented.
The Plan is a long-term incentive plan designed to allow the Group to attract and retain talented employees. The Plan aims to closely align the interests of directors, senior executives, employees and eligible contractors with those of shareholders and create a link between increasing shareholder value and employee reward.
The Plan permits the Board to grant shares and rights to acquire shares in the Company. Rights granted under the Plan may be in the form of options with a market based exercise price, or performance rights, or a combination of these depending upon the Company's objectives in making the grant.
Vesting conditions may include one or more objectives and/or time-based milestones set at the discretion of the Board.
Whilst the Company moved certain assets to development in previous financial years, these have been impaired, and the Company does not generate profits or net operating cash inflows and as such does not pay any dividends, and consequently remuneration packages are not linked to profit performance. It is the performance of the overall exploration and appraisal programme and ultimately the share price that largely determines Oilex's performance. The Board therefore considered that fixed compensation combined with short-term and long-term incentive components is the best remuneration structure for achieving the Company's objectives to the benefit of shareholders. The table below sets out the closing share price at the end of the current and four previous financial years.
2019 2018 2017 2016 2015
Share Price
(cents) 0.2 0.3 0.3 1.0 6.1
The remuneration of directors, may consist of a cash component as well as an equity component, and is designed to retain directors of a high calibre, whilst rewarding them for their ongoing commitment and contribution to the Company on a cost effective basis. The issue of shares, rights or options to directors, subject to shareholder approval, is judged by the Company, to further align the directors' interests with that of shareholders, whilst maintaining the cash position of the Company. The Board does not consider that there are any significant opportunity costs to the Company or benefits foregone by the Company in issuing shares, rights or options to directors.
The Company did not issue any long-term incentives to directors, senior executives or staff during the year ended 30 June 2019.
1. PRINCIPLES OF COMPENSATION (CONTINUED) 1.3 Non-Executive Directors
Total compensation for all Non-Executive Directors is based on comparison with external data with reference to fees paid to Non-Executive Directors of comparable companies. Directors' fees cover all main Board activities and membership of committees, if applicable.
The Board resolved to further reduce the remuneration of Non-Executive Directors by 10% effective from 1 October 2016 and these reductions remained in place during the year ended 30 June 2019.
The Chairman's annual fee including superannuation was set at $70,956 per annum effective from 1 October 2016 and remains unchanged.
The Australian based Non-Executive Directors fees including superannuation was set at $49,275 per annum effective 1 October 2016 and remains unchanged.
The annual fee for Mr Haywood, the Company's United Kingdom based Non-Executive Director was set at GBP30,000 per annum on commencement in May 2017 and remains unchanged.
At the Annual General Meeting held 29 November 2017 shareholders approved the issue of remuneration shares, whereby Non-Executive Directors agreed to receive part of their Directors fees paid through the issue of shares in lieu of cash payments, for the period of 1 November 2017 through to 31 October 2019, 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 1 November 2018 through to 31 October 2019.
The aggregate maximum fixed annual amount of remuneration available for Non-Executive Directors of $500,000 per annum was approved by Shareholders on 9 November 2011.
In addition to the fixed component, the Company can remunerate any director called upon to perform extra services or undertake any work for the Company beyond their general duties. This remuneration may either be in addition to, or in substitution for, the director's share of remuneration approved by Shareholders.
1.4 Clawback Policy
The Board has adopted the following Clawback Policy applicable from August 2015.
In relation to circumstances where an employee acts fraudulently or dishonestly, or wilfully breaches his or her duties to the Company or any of its subsidiaries, the Board has adopted a clawback policy in relation to any cash performance bonuses (including deferred share awards) or LTIs. The Board reserves the right to take action to reduce, recoup or otherwise adjust an employee's performance based remuneration in circumstances where in the opinion of the Board, an employee has acted fraudulently or dishonestly or wilfully breached his or her duties to the Company or any of its subsidiaries. The Board may:
-- deem any bonus payable, but not yet paid, to be forfeited; -- require the repayment by the employee of all or part of any cash bonus received; -- determine that any unvested and/or unexercised LTIs will lapse;
-- require the repayment of all or part of the cash amount received by the employee following vesting and subsequent sale of a LTI;
-- reduce future discretionary remuneration to the extent considered necessary or appropriate to take account of the event that has triggered the clawback;
-- initiate legal action against the employee; and/or -- take any other action the Board considers appropriate. 1.5 Remuneration Consultants
There were no remuneration recommendations made in relation to key management personnel by remuneration consultants in the financial year ended 30 June 2019.
1.6 Adoption of year ended 30 June 2018 Remuneration Report
At the Annual General Meeting held 29 November 2018 shareholders adopted the 30 June 2018 Remuneration Report with a clear majority of 269,627,880 votes in favour, being 96.97% of the votes cast.
2. EMPLOYMENT CONTRACTS
The following table summarises the terms and conditions of contracts between key executives and the Company:
Termination
Notice
Contract Resignation Unvested Required
Contract Termination Notice Options on from the Termination
Executive Position Start Date Date Required Resignation Company (1) Payment
J Salomon Managing 18 March 2016 18 March 2020 3 months Forfeited 3 months For
Director (2) termination
by the
Company,
three months'
salary plus
any accrued
leave
entitlement.
If
a Material
Change Event
occurs,
employee may
give notice
to the
Company
within one
month of
the Material
Change Event,
terminating
the Contract
of Employment
and following
that
effective
date, the
Company will
pay a
Termination
Payment equal
to six
months' fixed
annual
remuneration.
The fixed
annual
remuneration
of $350,000
was reduced
by agreement
to $271,950
effective
from
1 October
2016. Subject
to the
Corporations
Act 2001 and
any necessary
approvals
required
thereunder.
------------- -------------- -------------- ------------- ------------- ------------- --------------
M Bolton Chief 3 June 2016 31 May 2020 3 months Forfeited 3 months For
Financial (3) termination
Officer and by the
Company Company,
Secretary three months'
salary plus
any accrued
leave
entitlement.
------------- -------------- -------------- ------------- ------------- ------------- --------------
A Khare Head of 1 May 2015 n/a 30 days Forfeited 30 days For
India Assets termination
by the
Company, one
months'
salary plus
any accrued
leave
entitlement.
------------- -------------- -------------- ------------- ------------- ------------- --------------
(1) The Company may terminate the contract immediately if serious misconduct has occurred. In this case the termination payment is only the fixed remuneration earned until the date of termination and any unvested options will immediately be forfeited.
(2) The Managing Director's contract has extended by mutual agreement between the Company and Mr Salomon on an ongoing basis as at the date of this report..
(3) The Chief Financial Officer's contract has been extended by mutual agreement between the Company and Mr Bolton on an ongoing basis as at the date of this report.
3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION
Details of the nature and amount of each major element of remuneration of each director of the Company and other key management personnel of the consolidated entity are:
Share-based
Short-Term Payments
Proportion
of
Benefits Other Shares, Remuneration
STI (including Post-Employment Long-Term Options Performance
Salary Cash Non-Monetary) Superannuation Benefits Termination and Rights Related
& Fees Bonus (1) Total Benefits (2) Benefits (3) Total (4)
Year $ $ $ $ $ $ $ $ $ %
-------- ------ -------------- -------- ---------------- ---------- ------------ ------------ -------- -------------
Non-Executive
Directors
B Lingo (5) 2019 20,232 - - 20,232 6,156 - - 44,568 70,956 -
Chairman 2018 31,716 - - 31,716 6,156 - - 33,084 70,956 -
P Haywood (6) 2019 44,069 - - 44,069 - - - 10,886 54,955
Non-Executive
Director 2018 46,052 - - 46,052 - - - 7,144 53,196 -
Executive
Director
J Salomon (7) 2019 209,670 - 9,127 218,797 19,945 21,316 - - 260,058 -
Managing
Director 2018 223,043 - 8,259 231,302 21,189 21,316 - - 273,807 -
Executives
M Bolton (8) 2019 190,000 - 7,141 197,141 18,050 15,489 - - 230,680 -
Chief
Financial
Officer
/ Company
Secretary 2018 201,875 - 6,620 208,495 19,178 15,489 - - 243,162 -
A Khare (9) 2019 151,504 - 4,984 156,488 15,517 3,737 - - 175,742 -
Head of India
Assets 2018 155,788 - 313 156,101 15,616 - - - 171,717 -
Total 2019 615,475 - 21,252 636,727 59,668 40,452 - 55,454 792,391 -
Total 2018 677,224 - 15,192 692,416 63,920 36,805 - 40,228 833,369 -
------ -------- ------ -------------- -------- ---------------- ---------- ------------ ------------ -------- -------------
The Directors of the Company may be Directors of the Company's subsidiaries. No remuneration is received for directorships of subsidiaries. All key management personnel other than A Khare are employed by the parent entity.
Refer to the following explanatory notes for additional information.
3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION (CONTINUED)
Notes in Relation to Directors' and Executive Officers' Remuneration
(1) Benefits, including non-monetary include relocation costs and related expenses, as well as minor benefits, such as payments on behalf of employees considered personal, insurance premiums, car parking and any associated fringe benefits tax.
(2) Includes, where applicable, accrued employee leave entitlement movements.
(3) The 2019 share-based payment disclosures relate to the issue of remuneration shares (refer point 4 below). No unlisted options were issued to key management personnel or executives as remuneration during the year ended 30 June 2018 or 30 June 2019. In accordance with the ASX waiver granted 17 October 2018, the Company advises that the number of remuneration shares that were issued to directors in the year ended 30 June 2019 totalled 11,437,407 and the percentage of the Company's issued capital represented by these remuneration shares was 0.44%.
(4) Fees for Non-Executive Directors are not linked to the performance of the Group. At the Annual General Meeting held 29 November 2017 shareholders approved the issue of remuneration shares, whereby Non-Executive Directors agreed to receive part of their Directors fees paid through the issue of shares in lieu of cash payments, for the period of 1 November 2017 through 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 1 November 2018 to 31 October 2019.
(5) Mr Lingo was appointed a Non-Executive Director on 11 February 2016 and interim Chairman on 23 February 2017 at an annual salary of $70,956 inclusive of statutory superannuation. During 2019 Mr Lingo received 9,192,150 remuneration shares (refer point 3 above) at a value of $44,568. As at 30 June 2019 remuneration shares not yet issued to Mr Lingo had a value of $10,800. These shares will be issued in the next financial year.
(6) Mr Haywood was appointed a Non-Executive Director on 29 May 2017. Mr Haywood is based in the United Kingdom and is paid GBP30,000 per annum. The amount disclosed is converted into Australian dollars at the applicable exchange rate at the date of payment. During 2018 Mr Haywood received 2,245,257 remuneration shares (refer point 3 above) at a value of $10,854. As at 30 June 2019 remuneration shares not yet issued to Mr Haywood had a value of $1,807. These shares will be issued in the next financial year.
(7) Mr Salomon was appointed Managing Director in March 2016 with an initial fixed annual remuneration of $350,000 per annum, inclusive of statutory superannuation, which was reduced to $271,950 inclusive of statutory superannuation effective from 1 October 2016, following the implementation of cost reductions by the Company.
During the current financial year, Mr Salomon, requested and was granted 40.5 days leave without pay, further reducing his salary by $42,361 inclusive of statutory superannuation.
(8) Mr Bolton was appointed CFO on 3 June 2016, with an initial fixed annual remuneration of $273,750 inclusive of statutory superannuation, which was reduced to $260,063 effective 1 October 2016. The amount paid in the year ended 30 June 2019 reflects the reduced working hours implemented 1 October 2017 to facilitate a 20% reduction in salaries.
(9) Mr Khare became key management personnel on 8 November 2016 and is based in India. The amount paid in the year ended 30 June 2019 reflects the reduced working hours implemented 1 October 2017 to facilitate a 20% reduction in salaries. Mr Khare's remuneration has been converted from Indian Rupees at the average exchange rate for the year.
Analysis of bonuses included in remuneration
There were no short-term incentive cash bonuses awarded as remuneration to key management personnel during the financial year.
4. Equity Instruments
All rights and options refer to rights and unlisted options over ordinary shares of the Company, which are exercisable on a one-for-one basis.
4.1 Rights and Options Over Equity Instruments Granted as Compensation
There were no rights or options over ordinary shares granted as compensation to key management personnel during the financial year (2018: nil).
4.2 Rights and Options Over Equity Instruments Granted as Compensation Granted Since Year End
No rights and options over ordinary shares in the Company were granted as compensation to key management personnel and executives since the end of the financial year.
4.3 Modification of Terms of Equity-Settled Share-based Payment Transactions
No terms of equity-settled share-based payment transactions (including options granted as compensation to key management personnel) have been altered or modified by the issuing entity during the financial year.
4.4 Exercise of Options Granted as Compensation
During the financial year no shares were issued on the exercise of options previously granted as compensation.
4.5 Details of Equity Incentives Affecting Current and Future Remuneration
There are no rights or options currently held by key management personnel, (2018: nil).
4.6 Analysis of Movements in Equity Instruments
There were no shares, rights or options over ordinary shares in the Company granted to or exercised by key management personnel in the current year.
4.7 Options or Rights over Equity Instruments Granted as Compensation
There are no rights or options held by key management personnel, or their related parties as at 1 July 2018 through to 30 June 2019.
5. KEY MANANGEMENT PERSONNEL TRANSACTIONS 5.1 Other Transactions with Key Management Personnel
There were no other transactions with entities associated with key management personnel in the year ended 30 June 2019 (2018: nil).
5. KEY MANANGEMENT PERSONNEL TRANSACTIONS (CONTINUED) 5.2 Movements in Shares
The movement during the financial year in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at Received on Exercise of Remuneration Shares Held at
1 July 2018 Options Issued (1) Other Changes (2) 30 June 2019
----------- ------------- -------------------------- -------------------------- ------------------ --------------
J Salomon 14,987,013 - - - 14,987,013
B Lingo 4,456,800 - 9,192,150 - 13,648,950
P Haywood 1,073,844 - 2,245,257 - 3,319,101
M Bolton - - - - -
A Khare - - - - -
(1) At the AGM held 29 November 2017 shareholders approved the issue of remuneration shares,
whereby two Non-Executive Directors agreed to receive part of their Directors fees paid through
the issue of shares in lieu of cash payments, for the period of 1 November 2017 through 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 2019 for the
period 1 November 2018 to 1 October 2019.
(2) Other changes represent shares that were granted, purchased or sold during the year.
----------------------------------------------------------------------------------------------------------------------
END OF REMUNERATION REPORT - AUDITED
Mr Brad Lingo Mr Jonathan Salomon Chairman Managing Director
Signed in accordance with a resolution of the Directors.
West Perth
Western Australia
30 September 2019
Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001
To the directors of Oilex Ltd
I declare that, to the best of my knowledge and belief, in relation to the audit of Oilex Ltd for the financial year ended 30 June 2019 there have been:
i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Derek Meates
Partner
Perth
30 September 2019
KPMG, an Australian partnership
and a member firm of the
KPMG network of independent
member firms affiliated with Liability limited by a
KPMG International Cooperative scheme approved under
("KPMG International"), a Professional Standards
Swiss entity. Legislation.
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
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