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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Tlou Energy Limited | LSE:TLOU | London | Ordinary Share | AU000000TOU2 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.20 | 2.10 | 2.30 | 2.20 | 2.09 | 2.20 | 25,893 | 08:00:12 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Leather Tanning & Finishing | 0 | -4.24M | -0.0039 | -10.26 | 43.06M |
From Apr 2019 to Apr 2024
TIDMTLOU
RNS Number : 3083Q
Tlou Energy Ltd
11 September 2017
Tlou Energy Limited / EPIC: TLOU / Sector: Oil & Gas
Tlou Energy Limited ('Tlou' or 'the Company')
Final Results
Tlou Energy Limited, the AIM and ASX listed company focused on delivering power in Botswana and Southern Africa through the development of coal bed methane ('CBM') projects, is pleased to announce its final results for the year ended 30 June 2017. To view a full version of the Annual Report please go the Company's website: http://tlouenergy.com/reports
Highlights
-- First independently-certified CBM Gas reserves achieved -- Environmental Impact Statement approved -- Request received for supply of up to 100MW of CBM power from Government of Botswana -- Mining License granted covering 900km(2)
Tlou Managing Director Tony Gilby said, "This has been a phenomenal year for the Company. We set a number of key targets which were achieved including being the first Company in Botswana to book CBM natural gas reserves, receiving environmental approval for our field development and converting a large part of our project area from a prospecting or exploration licence to a mining licence for a term of 25 years. It was a very busy year and the coming year is set to be another significant one for the Company. I look forward to updating you further as the year progresses."
For further information regarding this announcement please contact:
Hot Features
Premium
Tlou Energy Limited +61 7 3012 9793
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Tony Gilby, Managing Director
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Solomon Rowland, Company Secretary
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Grant Thornton (Nominated
Adviser) +44 (0)20 7383 5100
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Samantha Harrison, Colin Aaronson,
Harrison Clarke
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+44 (0) 207 408
Shore Capital (Joint Broker) 4090
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Jerry Keen, Mark Percy, Toby
Gibbs
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Optiva Securities Limited
(Joint Broker) +44 (0)20 3137 1904
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Jeremy King, Christian Dennis
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St Brides Partners Limited +44 (0) 20 7236
(Public Relations) 1177
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Lottie Brocklehurst, Megan
Dennison, Susie Geliher
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FlowComms Limited (Investor +44 (0) 7891 677
Relations) 441
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Sasha Sethi
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The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Chairman Statement
Dear Shareholders,
Over the past year we have made excellent progress towards establishing ourselves as a key power player in Botswana, culminating in being awarded our Mining Licence in August 2017. This was a key target as we work towards our goal of reducing the regional power deficit in Southern Africa through the development of our gas to power project via Coal Bed Methane ('CBM').
We are privileged to have the support of the forward-thinking Government of Botswana, which announced last year that CBM, a relatively clean source of energy and more competitively priced than solar and diesel, is to be included as part of the country's forward plan to combat power deficiency. Early in 2017, with our Environmental Impact Statement for upstream development already approved, we were delighted to receive a Request for Proposal ('RFP') from the Ministry of Mineral Resources, Green Technology and Energy Security to provide up to 100MW of CBM power from Lesedi. A detailed response to this RFP will be submitted in Q3 2017 which will incorporate a phased approach, firstly delivering up to 10MW, before expanding further. This phased development plan would allow power to get to the grid sooner, thereby generating revenue for the Company and would require less capital expenditure upfront.
As 100% owners of the most advanced CBM project in Botswana we believe we are in an excellent position to deliver the project outlined in our response to the RFP. In addition, we have collaborated with a leading power plant developer, London based Independent Power Corporation PLC ('IPC') to jointly develop our CBM power project with Tlou taking responsibility for the gas field development and IPC leading the power generation aspect of the project. IPC brings power generation experience and funding partners to the project which significantly enhances its viability. Notably, IPC has since entered into a joint venture partnership, "QG Power Africa", with QG Africa Mezzanine LP, a US$250 million investment vehicle which is part of the Quantum Global Group, and Tomé International Limited, a project management consulting firm, to jointly develop power assets in sub-Saharan Africa.
Tlou's Lesedi project has Botswana's first independently-certified CBM reserves which were upgraded to 3.9 billion cubic feet ('BCF') 2P and 261 BCF 3P gas reserves. We believe there is significant further upside to these figures which will come to fruition through further de-risking of both the Lesedi and Mamba project areas. With this in mind we have commissioned a 2D seismic survey over areas considered to be highly prospective for the addition of gas reserves. As well as potentially increasing the contingent resources and reserves the results of the survey will provide information which will enhance our knowledge of the sub-surface structures and resources in advance of further core well drilling.
Tlou has been producing gas from its operations in Botswana for over a year and in June 2017 generated its first power from CBM, a significant milestone for the Company and in effect a proof of concept of 'first gas monetisation'. This landmark achievement followed the installation of a gas generator at the Selemo project area which is now running on gas being produced by our own wells. Power required to run pumps and metering at the Selemo wells was previously supplied solely by diesel generators.
During the year, we were delighted to complete a share purchase plan and placings to raise A$9.7 million which was well supported by new investors and existing shareholders. This cash has enabled us to undertake additional field appraisal and to finalise licencing requirements. Additionally, on a corporate level we have made two valuable additions to the Tlou Board as Non-Executive Directors. We welcome Mr. Hugh Swire who brings expert knowledge and direct investment experience in the low carbon, water, energy and technology sectors having completed and exited investments into several leading companies in the low carbon sector; and Ms. Linah Mohohlo, who as well as being the former Governor of the Bank of Botswana, has significant experience in the mining industry in Botswana.
This has been a highly active year for Tlou. With the Lesedi Mining Licence now in hand which is an important prerequisite to developing the first commercial gas-to-power project in the Botswana, we have a range of milestones ahead that are set to be pivotal in shaping our future and we believe we are very well placed to achieve our objectives. I would like to take this opportunity to thank the Tlou Board, Management Team, Advisers and most importantly our shareholders for their continued support during this exciting time for Tlou.
Yours faithfully,
Martin McIver
Chairman
Managing Director's Report
Dear Shareholders,
The Lesedi CBM project has been further de-risked during the year after achieving some major milestones as we aim to deliver power to Botswana and the Southern African region.
In September 2016, we were granted approval of our Environmental Impact Statement ('EIS') by Botswana's Department of Environmental Affairs ('DEA'). This process took over two years to be completed including preparation of all regulatory documentation, followed by a review and final approval by the Government. An approved EIS is essential prior to the application for a Mining Licence in Botswana. A Mining Licence is required prior to the commencement of full field development. With our EIS in place, post-year end we submitted our Mining Licence application to Botswana's Department of Mines in the Ministry of Mineral Resources, Green Technology and Energy Security. We received notification in August 2017 that the application had been successful and the Mining Licence was granted. This was the first CBM mining licence granted in Botswana, with the Mining Licence covering a large area of approximately 900km2.
In October 2016, we were delighted to receive an initial independent reserve certification from SRK Consulting (Australasia) Pty Ltd ('SRK'), marking Botswana's first independently certified CBM natural gas reserves. In early 2017, we were able to reinforce the commerciality of the project with a significant upgrade to these reserves with an increase in 2P (Proved and Probable) gas reserves to 3.9 billion cubic feet ('BCF') and 3P (Proved, Probable and Possible) gas reserves to 261 BCF. These increases comprised additional certified reserves in the Lesedi Project area (PL 002) based on a southern extension of the Selemo pilot area; and initial certified reserves in the Mamba Project area (PL's 238 and 240) based on a western extension of the Selemo pilot area. Together, we believe that the Lesedi and Mamba projects will continue to develop into a valuable resource for our shareholders as we work towards increasing the certified gas reserves in both areas.
In January 2017, we received a detailed Request for Proposal ('RFP') from the Government of Botswana to develop up to 100MW of CBM power in Botswana. This indicates the Government's commitment to facilitate the development of a CBM industry in Botswana. The proposed Government power purchase agreement will assist in fast-tracking the development of the gas industry in the country and creates a new market for our gas. We made the decision to partner with Independent Power Corporation PLC to jointly develop our proposed (up to) 100 MW CBM to power project. Together, we have finalised work on a detailed proposal for the supply of CBM power in modular stages, which forms a significant part of the planned submission to the Government of Botswana in response to the RFP.
In line with further de-risking our project ahead of development we appointed Velseis Pty Ltd ('Velseis'), an experienced seismic survey contractor, to undertake a fully funded seismic survey for both the Lesedi and Mamba permits. The seismic survey will assist in our plan to drill more wells, by providing us with enhanced knowledge of sub-surface structures and resources in our project areas. The seismic survey will expand our geological database beyond the known gas reserve areas by providing data on potential gas reservoir compartments that have been identified outside the currently mapped gas reserve areas. Geological information over these compartments is relatively sparse other than the existing aeromagnetic data held by the Company, which was reprocessed by our reserve certifiers during the year. New seismic information is anticipated to potentially expand gas reserves and/or contingent resources should it be demonstrated that continuity of gas-rich coal exists. We look forward to reporting the results later this year.
Following the installation of a gas generator at the Selemo project area during the year, we generated our first power from CBM at the Lesedi project. Rather than flaring gas produced from the Selemo pilot wells, it can now be redirected to a gas generator for use in the field. Use of this indigenous gas provides a saving to the Company due to the reduced diesel requirement, effectively 'first gas monetisation'. We plan to replace another diesel generator in the near term which would provide further savings on diesel costs.
We believe that Tlou is well positioned to succeed in the RFP tender process and we look forward to providing further updates over the coming months. This is an exciting time for Tlou and I would like to thank our ground team for the consistent hard work in moving this project forward.
Yours faithfully,
Anthony (Tony) Gilby
Managing Director
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2017
Consolidated
Note June 2017 June 2016
$ $
Interest income 2,365 27,857
Expenses
Employee benefits expense 3 (617,581) (613,809)
Depreciation and amortisation expense (240,961) (260,564)
Foreign exchange loss (37,181) (247,007)
Share issue costs (356,732) (779,310)
Performance rights expense 3 (423,499) -
Professional fees (177,121) (185,566)
Corporate expenses (48,437) (57)
Occupancy costs 3 (47,817) (64,601)
Other expenses 3 (1,218,359) (942,526)
------------ ------------
LOSS BEFORE INCOME TAX (3,165,323) (3,065,583)
Income tax 4 - -
------------ ------------
LOSS FOR THE PERIOD (3,165,323) (3,065,583)
------------ ------------
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations 1,210,182 (2,395,125)
Tax effect - -
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) 1,210,182 (2,395,125)
------------ ------------
TOTAL COMPREHENSIVE INCOME/(LOSS) (1,955,141) (5,460,708)
------------ ------------
Earnings per share
Cents Cents
Basic loss per share 5 (1.3) (1.5)
Diluted loss per share 5 (1.3) (1.5)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Consolidated Statement of Financial Position
as at 30 June 2017
Consolidated
Note June 2017 June 2016
$ $
CURRENT ASSETS
Cash and cash equivalents 6 6,727,424 1,224,404
Trade and other receivables 100,674 290,431
Other current assets 8,650 43,969
TOTAL CURRENT ASSETS 6,836,748 1,558,804
------------- -------------
NON-CURRENT ASSETS
Exploration and evaluation assets 8 49,328,038 46,183,722
Other non-current assets 9 694,402 946,675
Property, plant and equipment 7 320,739 444,358
TOTAL NON-CURRENT ASSETS 50,343,179 47,574,755
------------- -------------
TOTAL ASSETS 57,179,927 49,133,559
------------- -------------
CURRENT LIABILITIES
Trade and other payables 10 431,032 306,956
Provisions 11 166,193 160,874
TOTAL CURRENT LIABILITIES 597,225 467,830
------------- -------------
NON-CURRENT LIABILITIES
Deferred tax liabilities 4 369,353 369,353
Provisions 11 94,000 94,000
TOTAL NON-CURRENT LIABILITIES 463,353 463,353
------------- -------------
TOTAL LIABILITIES 1,060,578 931,183
------------- -------------
NET ASSETS 56,119,349 48,202,376
------------- -------------
EQUITY
Contributed equity 12 83,380,184 73,931,569
Reserves (3,107,432) (4,741,113)
Accumulated losses (24,153,403) (20,988,080)
------------- -------------
TOTAL EQUITY 56,119,349 48,202,376
------------- -------------
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2017
Contributed Equity Share Based Foreign Currency Accumulated Losses Total
Payments Reserve Translation
Reserve
$ $ $ $ $
Balance at 1 July
2015 71,606,519 2,062,745 (2,442,989) (19,985,242) 51,241,033
------------------- ------------------- ------------------- ------------------- ------------
Loss for the period - - - (3,065,583) (3,065,583)
Other comprehensive
income - - (2,395,125) - (2,395,125)
Total comprehensive
income - - (2,395,125) (3,065,583) (5,460,708)
------------------- ------------------- ------------------- ------------------- ------------
Transactions with owners in their capacity as owners
Share based
payments - 97,001 - - 97,001
Transfers - (2,062,745) - 2,062,745 -
Shares issued, net
of costs 2,325,050 - - - 2,325,050
2,325,050 (1,965,744) - 2,062,745 2,422,051
------------------- ------------------- ------------------- ------------------- ------------
Balance at 30 June
2016 73,931,569 97,001 (4,838,114) (20,988,080) 48,202,376
------------------- ------------------- ------------------- ------------------- ------------
Balance at 1 July
2016 73,931,569 97,001 (4,838,114) (20,988,080) 48,202,376
------------------- ------------------- ------------------- ------------------- ------------
Loss for the period - - - (3,165,323) (3,165,323)
Other comprehensive
income - - 1,210,182 - 1,210,182
Total comprehensive
income - - 1,210,182 (3,165,323) (1,955,141)
------------------- ------------------- ------------------- ------------------- ------------
Transactions with owners in their capacity as owners
Share based
payments - 423,499 - - 423,499
Shares issued, net
of costs 9,448,615 - - - 9,448,615
9,448,615 423,499 - - 9,872,114
------------------- ------------------- ------------------- ------------------- ------------
Balance at 30 June
2017 83,380,184 520,500 (3,627,932) (24,153,403) 56,119,349
------------------- ------------------- ------------------- ------------------- ------------
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
for the year ended 30 June 2017
Consolidated
June 2017 June 2016
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST) (2,446,145) (2,896,862)
Interest received 2,365 27,857
GST and VAT received 98,911 565,759
NET CASH USED IN OPERATING ACTIVITIES 22 (2,344,869) (2,303,246)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets (1,852,642) (5,783,800)
Payment for property, plant and equipment (100,764) (24,102)
NET CASH USED IN INVESTING ACTIVITIES (1,953,406) (5,807,902)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 9,938,787 2,292,540
Share issue costs (162,317) (227,676)
NET CASH PROVIDED BY FINANCING ACTIVITIES 9,776,470 2,064,864
------------ ------------
Net increase/(decrease) in cash held 5,478,195 (6,046,283)
Cash at the beginning of the period 1,224,404 7,197,813
Effects of exchange rate changes on cash 24,825 72,875
------------ ------------
CASH AT THE OF THE PERIOD 6 6,727,424 1,224,404
------------ ------------
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Notes to the financial statements
Note 1. Significant accounting policies
Introduction
This financial report includes the consolidated financial statements of Tlou Energy Limited (the "Company") and its controlled entities (together referred to as the "consolidated entity" or the "group").
The separate financial statements of the parent entity, Tlou Energy Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. Supplementary information about the parent entity is disclosed in note 25.
Tlou Energy Limited is a public company, incorporated and domiciled in Australia. Its registered office and principal place of business is 210 Alice St, Brisbane, QLD 4000, Australia.
The following is a summary of the material and principal accounting policies adopted by the consolidated entity in the preparation of the financial report. The accounting policies have been consistently applied to all the years presented, unless otherwise stated.
Operations and principal activities
The principal activity of the consolidated entity is the exploration and evaluation of assets in Southern Africa to identify and develop CBM resources. No revenue from this activity has been earned to date, as the consolidated entity is still in the exploration and evaluation stage.
Currency
The financial report is presented in Australian dollars, rounded to the nearest dollar, which is the functional currency of the parent entity.
Authorisation of financial report
The financial report was authorised for issue on 11 September 2017.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Tlou Energy Limited is a for-profit entity for the purposes of preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of Tlou Energy Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Historical cost convention
The consolidated financial statements have been prepared on an accruals basis and are based on historical costs.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Going Concern
The consolidated financial statements have been prepared on a going concern basis which contemplates that the group will continue to meet its commitments and can therefore continue normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.
Because of the nature of the operations, exploration companies, such as Tlou Energy Limited, find it necessary on a regular basis to raise additional cash funds for future exploration activity and meet other necessary corporate expenditure. The company has recently completed a capital raising which is expected to fund ongoing operations and working capital requirements for the next 12 months. Subject to the results of these operations the group may need to raise additional capital to expand and develop the project further. Accordingly, the group is in the process of investigating various options for the raising of additional funds which may include but is not limited to an issue of shares or the sale of exploration assets where increased value has been created through previous exploration activity.
At the date of this financial report, none of the above fund raising options have been concluded and no guarantee can be given that a successful outcome will eventuate. The directors have concluded that as a result of the current circumstances there exists a material uncertainty that may cast significant doubt regarding the group's and the company's ability to continue as a going concern and therefore the group and company may be unable to realise their assets and discharge their liabilities in the normal course of business. Nevertheless, after taking into account the current status of the various funding options currently being investigated and making other enquiries regarding other sources of funding, the directors have a reasonable expectation that the group and the company will have adequate resources to fund its future operational requirements and for these reasons they continue to adopt the going concern basis in preparing the financial report.
The financial report does not include adjustments relating to the recoverability or classification of recorded assets amounts or to the amounts or classification of liabilities that might be necessary should the group not be able to continue as a going concern.
Accounting Polices
(a) Principles of consolidation
Subsidiaries are all entities (including structured entities) over which the Consolidated Entity has control. The Consolidated Entity controls an entity when the Consolidated Entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated Entity. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Consolidated Entity.
Intercompany transactions, balances and unrealised gains on transactions between Consolidated Entity companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Consolidated Entity.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of financial position respectively.
(b) Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
(c) Investments and other financial assets
Investments and other financial assets are measured at either amortised cost or fair value depending on their classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories is restricted. The fair values of quoted investments are based on current bid prices. For unlisted investments, the consolidated entity establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are either: (i) held for trading, where they are acquired for the purpose of selling in the short- term with an intention of making a profit; or (ii) designated as such upon initial recognition, where they are managed on a fair value basis or to eliminate or significantly reduce an accounting mismatch. Except for effective hedging instruments, derivatives are also categorised as fair value through profit or loss. Fair value movements are recognised in profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets, principally equity securities that are either designated as available-for-sale or not classified as any other category. After initial recognition, fair value movements are recognised in the available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The consolidated entity assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for financial assets carried at cost is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for similar financial assets.
Available-for-sale financial assets are considered impaired when there has been a significant or prolonged decline in value below initial cost. Subsequent increments in value are recognised in the available-for-sale reserve.
(d) Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs to sell and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
(e) Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the consolidated statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
(f) Comparative figures
When required by accounting standards comparative figures have been adjusted to conform to changes in presentation for the current financial year.
(g) New Accounting Standards and Interpretations
The Consolidated Entity has adopted all new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2016. The Consolidated Entity did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.
(h) New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017 reporting periods. The Consolidated Entity has decided against early adoption of these standards. The Consolidated Entity's assessment of the impact of these new standards and interpretations is set out below:
AASB 9 Financial Instruments
This standard and its consequential amendments are currently applicable to annual reporting periods beginning on or after 1 January 2018. This standard introduces new classification and measurement models for financial assets, using a single approach to determine whether a financial asset is measured at amortised cost or fair value. To be classified and measured at amortised cost, assets must satisfy the business model test for managing the financial assets and have certain contractual cash flow characteristics. All other financial instrument assets are to be classified and measured at fair value. This standard allows an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income, with dividends as a return on these investments being recognised in profit or loss. In addition, those equity instruments measured at fair value through other comprehensive income would no longer have to apply any impairment requirements nor would there be any 'recycling' of gains or losses through profit or loss on disposal. The accounting for financial liabilities continues to be classified and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity's own credit risk is to be presented in other comprehensive income unless it would create an accounting mismatch. The Group has not yet made an assessment of the impact of this standard.
AASB 16: Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard include:
-- recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets);
-- depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components;
-- variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date;
-- by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead account for all components as a lease; and
-- additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. The Group has not yet made an assessment of the impact of this standard.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Exploration & evaluation assets
The consolidated entity performs regular reviews on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. These reviews are based on detailed surveys and analysis of drilling results performed to reporting date.
Deferred Tax assets
The group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. There are certain transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The group estimates its tax liabilities based on the group's understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
In addition, the group has recognised deferred tax assets relating to carried forward tax losses to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same subsidiary against which the unused tax losses can be utilised. However, utilisation of the tax losses also depends on the ability of the entity, which is not part of the tax consolidated group, to satisfy certain tests at the time the losses are recouped. Due to the parent entity acquiring the entity that holds the losses it is expected that the entity will fail to satisfy the continuity of ownership test and therefore has to rely on the same business test. As at 30 June 2017 the group has received advice that the losses are available, however should this change in the future the group may be required to derecognise these losses.
Note 3. Expenses
Consolidated
June 2017 June 2016
Loss before income tax includes the following specific expenses: $ $
Employee benefits expense
Defined contribution superannuation
-- expense 42,408 46,535
-- Performance rights 423,499 -
-- Other employee benefits expense 575,173 567,274
1,041,080 613,809
---------- ----------
Occupancy costs
Rental expense relating to operating
-- leases -- minimum lease rentals 47,817 64,601
47,817 64,601
---------- ----------
Other expenses include the following specific items:
-- Travel and accommodation costs 225,735 140,462
-- Consultants 277,184 365,460
Stock exchange, advisory, secretarial
-- fees 355,848 198,707
-- Insurance 68,254 70,705
927,021 775,334
---------- ----------
Note 4. Income Tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses and under and over provision in prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
-- When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
-- When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Consolidated
June 2017 June 2016
$ $
Loss before income tax (3,165,323) (3,065,583)
------------ ------------
Tax at the domestic tax rates applicable to profits in the country
concerned (949,597) (919,675)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Other non-deductible items 216,360 244,706
Difference in overseas tax rates (218,335) 329,015
Previously unrecognised tax losses used to reduce deferred tax expense - -
Deferred tax asset not recognised 951,572 345,954
Income tax benefit - -
------------ ------------
Recognised deferred tax assets
Unused tax losses 7,551,526 5,937,794
7,551,526 5,937,794
Recognised deferred tax liabilities
Assessable temporary differences 7,920,879 6,307,147
7,920,879 6,307,147
Net deferred tax liability recognised 369,353 369,353
------------ ------------
Unrecognised temporary differences and tax losses
Unused tax losses and temporary differences for which no deferred tax asset
has been recognised 29,026,473 25,426,397
------------ ------------
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the group can utilise these benefits.
Note 5. Earnings per share
Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Tlou Energy Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Consolidated
June 2017 June 2016
$ $
Reconciliation of earnings used in calculating basic and diluted loss per share:
Loss for the year attributable to owners of Tlou Energy Limited (3,165,323) (3,065,583)
Loss used in the calculation of the basic and dilutive loss per share (3,165,323) (3,065,583)
------------ ------------
Weighted average number of ordinary shares used as the denominator
Number Number
Number used in calculating basic and diluted loss per share 245,694,059 197,910,139
------------ ------------
Options and performance rights are considered to be "potential ordinary shares" but were anti-dilutive in nature and therefore the diluted loss per share is the same as the basic loss per share.
Note 6. Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the consolidated statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the consolidated statement of financial position.
Consolidated
June 2017 June 2016
$ $
Cash at bank 6,727,424 1,224,404
6,727,424 1,224,404
---------- ----------
Note 7. Property, Plant and Equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:
Plant and equipment 3-7 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Consolidated
June 2017 June 2016
$ $
Plant and equipment at cost 1,946,392 1,782,697
Accumulated depreciation (1,625,653) (1,338,339)
320,739 444,358
------------------- ------------------
Movements in Carrying Amounts
Movement in the carrying amount of plant and equipment between the beginning and the end of
the current financial year:
Balance at the beginning of year 444,358 724,334
Additions 100,664 24,140
Disposals (788) (1,069)
Depreciation (240,961) (260,564)
Foreign exchange movements 17,466 (42,483)
Carrying amount at the end of year 320,739 444,358
------------------- ------------------
Note 8. Exploration and Evaluation Assets
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include overheads or administration expenditure not having a specific nexus with a particular area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and active or significant operations in relation to the area are continuing.
Accumulated costs in relation to an area no longer considered viable are written off in full in the year the decision is made. Regular reviews are undertaken on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.
Consolidated
June 2017 June 2016
$ $
Exploration and evaluation assets 49,328,038 46,183,722
49,328,038 46,183,722
----------- ------------
Movements in exploration and evaluation assets
Balance at the beginning of period 46,183,722 43,559,315
Exploration and evaluation expenditure during the year 1,848,143 4,572,815
Foreign currency translation 1,296,173 (1,948,408)
Balance at the end of period 49,328,038 46,183,722
----------- ------------
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.
As at the date of this report, the current terms of the Mamba Prospecting Licences have expired. However, Tlou has applied to extend the term of these Exploration Licences, and they continue in force until a determination is made regarding the application to extend their terms. Accordingly, while Tlou has applied to renew the Mamba Prospecting Licences, there is no certainty that the terms of the licences will be extended.
There is a risk that one of more of the exploration licences will not be extended, or that the terms of the extension are not favourable to Tlou. This could have an adverse impact on the performance of Tlou. The Company is not aware of any reasons why the licences will not be renewed.
Note 9. Other non-current assets
Inventory and well consumables are valued at lower of cost or net realisable value. Inventory and well consumables are allocated to exploration and evaluation expenditure when the assets are used in operations.
Consolidated
June 2017 June 2016
$ $
Inventory and well consumables 694,402 946,675
694,402 946,675
---------- ----------
Note 10. Trade and Other Payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Consolidated
June 2017 June 2016
$ $
Current
Trade payables 131,161 151,133
Accruals 278,552 145,793
Other payables 21,319 10,030
431,032 306,956
---------- ----------
The carrying values of trade and other payables approximate fair values due to short-term nature of the amounts. These are non-interest bearing.
Note 11. Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.
Restoration
Both for close down and restoration and for environmental clean-up costs, a provision is made in the accounting period when the related disturbance occurs, based on the net present value of estimated future costs. The amortisation or 'unwinding' of the discount applied in establishing the net present value of provision is charged as a finance cost to the consolidated statement of comprehensive income in each accounting period.
For close down and restoration costs, which include the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas, movements in provision other than the amortisation of the discount, such as those resulting from changes in the cost estimates, lives of operations or discount rates, are capitalised into the carrying amount of development and amortised against future production.
Rehabilitation
The provision represents the estimated costs to rehabilitate wells in licences held by the consolidated entity. This provision has been calculated based on the number of wells which require rehabilitation and the expected costs to rehabilitate each well, taking into consideration the type of well and its location.
Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Severance pay
As per the Botswana Labour a provision is calculated for each Botswana based employee of one day per month of service, which can be paid out after 60 months or when employment ends. The benefit rises to two days per month after the first 60 months.
Consolidated
June 2017 June 2016
Current $ $
Employee benefits 42,322 49,136
Employee benefits - Botswana severance 123,871 111,738
166,193 160,874
---------- ----------
Non-current
Rehabilitation 94,000 94,000
94,000 94,000
---------- ----------
Employee benefits - Botswana Severance
A provision has been recognised for employee benefits relating to severance pay payable in Botswana.
Note 12. Contributed equity
Issued and paid up capital is recognised at the fair value of the consideration received by the consolidated entity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Consolidated
June 2017 June 2016 June 2017 June 2016
Shares Shares $ $
Opening balance 205,619,292 187,156,319 73,931,569 71,606,519
Issue of ordinary shares during the year* 98,423,556 18,462,973 9,684,461 2,584,816
Share issue costs - - (235,846) (259,766)
Ordinary shares -- fully paid 304,042,848 205,619,292 83,380,184 73,931,569
------------ ------------ ----------- -----------
*Shares issued during the year and the issue price of each issue is as follows:
Issue No. of Issue
Date Shares Price
AUD
07-Sep-16 31,578,947 $0.095
07-Apr-17 51,788,334 $0.10
27-Apr-17 8,276,275 $0.10
02-May-17 6,780,000 $0.10
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of, and amounts paid on, the shares held. The fully paid ordinary shares have no par value. On a show of hands every member present at a meeting, in person or by proxy, shall have one vote and upon a poll, each share shall have one vote. The company does not have authorised capital or par value in respect of its issued shares.
Options and performance rights
At 30 June 2017, the following options for ordinary shares in Tlou Energy Limited and performance rights were on issue:
Options
Number Exercise Expiry
2017 2016 Price Date
1,500,000 1,500,000 $0.14 29/11/2017
500,000 500,000 $0.14 14/01/2018
2,000,000 2,000,000
---------- ----------
Performance rights:
Vesting Exercise 01/07/2016 Issued Exercised Expired 30/06/2017
Date Price
31 January
2017 $0.21 - 2,275,000 - - 2,275,000
31 January
2017 $0.28 - 2,275,000 - - 2,275,000
- 4,550,000 - - 4,550,000
------------- -------------- ------------------ --------------------- ------------------
Capital risk management
The capital structure of the consolidated entity consists of equity attributable to equity holders of the parent entity, comprising issued capital and reserves as disclosed in the Consolidated Statement of Changes in Equity.
When managing capital, management's objective is to ensure the parent entity continues as a going concern and to maintain a structure that ensures the lowest cost of capital available and to ensure adequate capital is available for exploration and evaluation of tenements. In order to maintain or adjust the capital structure, the group may seek to issue new shares. Consistent with other exploration companies, the group and the parent entity monitor capital on the basis of forecast exploration and development expenditure required to reach a stage which permits a reasonable assessment of the existence or otherwise of an economically recoverable reserve.
There were no changes in the group's approach to capital management during the year.
The group is not subject to externally imposed capital requirements.
Note 13. Reserves
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled entities.
The financial report is presented in Australian dollars rounded to the nearest dollar, which is Tlou Energy Limited's functional and presentation currency.
Foreign operations
The assets and liabilities of foreign operations are translated into functional currency using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into functional currency using the average exchange rates, which approximate the rate at the date of the transaction, for the period. All resulting foreign exchange differences are recognised in the foreign currency translation reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Share Based Payments Reserve
The share based payments reserve is used to record the share based payment associated with options granted to employees and others under equity-settled share based payment arrangements.
Note 14. Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.
Employee Share Options and Performance Rights
Share Options and Performance Rights may be granted to certain personnel of the company on terms determined by the directors or otherwise approved by the company at a general meeting.
The options are granted for no consideration. Options and entitlements to the options are vested on a time basis and/or on specific performance based criteria such as share price increases or reserves certification. Options granted as described above carry no dividend or voting rights. When exercisable, each option is convertible to one ordinary share.
Performance Rights issued during the year are linked to the share price performance of the Company, ensuring alignment with the interests of the Company's shareholders. The Performance Rights have been split into two equal Tranches. For the Performance Rights to vest and, therefore, become exercisable by a participant, certain performance conditions will be required to be met as set out below. On vesting, holders of Performance Rights will be entitled to acquire Tlou Energy Limited ordinary shares at nil cost.
Tranche Performance Condition
---------- ----------------------------------------
Tranche 1 The closing price of Shares being
50% or more above the price at the
date of shareholder approval for
a period of 10 consecutive trading
days.
---------- ----------------------------------------
Tranche 2 The closing price of Shares being
100% or more above the price at
the date of shareholder approval
for a period of 10 consecutive trading
days.
---------- ----------------------------------------
Notes:
-- The date of shareholder approval was 10 November 2016 -- The share price on 10 November 2016 was AUD $0.14
-- For Tranche 1 to vest the share price needs to be AUD $0.21 per share or greater for a period of 10 consecutive trading days
-- For Tranche 2 to vest the share price needs to be AUD $0.28 or greater for a period of 10 consecutive trading days
The expense recognised in the consolidated statement of comprehensive income in relation to share based payments amounts to $423,499 (2016: $16,900). The amount assessed as fair value at the grant date is allocated equally over the period from grant date to vesting date. The fair value at grant date is determined using generally accepted valuation techniques that take into account exercise price, the term of the option or performance rights, the impact of dilution, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option/performance rights and an appropriate probability weighting to factor the likelihood of the satisfaction of non-vesting conditions.
Inputs used to value the options on issue are as follows:
Grant date 30/11/15 14/01/16
Dividend yield - -
(%)
Expected volatility
(%) 68 68
Risk-free interest
rate (%) 1.94 1.94
Expected life
of options (years) 2 2
Weighted average
share price ($) $0.14 $0.14
Model used Black Black
Scholes Scholes
Inputs used to value the performance rights on issue are as follows:
Tranche Tranche
1 2
Grant date 10/11/16 10/11/16
Expected volatility
(%) 100 100
Risk-free interest
rate (%) 2.20 2.20
Expected life
of (years) 7 7
Weighted average
share price ($) $0.21 $0.28
Model used Trinomial Trinomial
The following table shows the number, movements and weighted average exercise price of employee share options outstanding for the 2017 year
Grant Expiry Exercise Opening Exercised Granted Expired During Closing Vested &
Date date price Balance During the During the the year Balance Exercisable
July 2016 Year Year June 2017
30/11/15 29/11/17 $0.14 1,500,000 - - - 1,500,000 1,500,000
14/01/16 14/01/18 $0.14 500,000 - - - 500,000 500,000
Total 2,000,000 - - - 2,000,000 2,000,000
---------- ------------ ------------- ------------------ ---------- ------------
Weighted average exercise price $0.14 - - - $0.14 $0.14
The weighted average remaining contractual life of share options outstanding at the end of
the year was 0.4 years.
The following table shows the number, movements and weighted average exercise price of employee share options outstanding for the 2016 year:
Grant Date Expiry date Exercise Opening Exercised Granted Expired Closing Vested &
price Balance During the During During the Balance Exercisable
July 2015 Year the Year year June 2016
01/07/12 30/04/16 $0.625 10,175,000 - - (10,175,000) - -
01/04/14 30/04/16 $0.625 400,000 - - (400,000) - -
30/11/15 29/11/17 $0.14 - - 1,500,000 - 1,500,000 1,500,000
14/01/16 14/01/18 $0.14 - - 500,000 - 500,000 500,000
Total 10,575,000 - 2,000,000 (10,575,000) 2,000,000 2,000,000
----------- ------------ ---------- ------------- ---------- ------------
Weighted average exercise price $0.63 - $0.14 $0.63 $0.14 $0.14
The weighted average remaining contractual life of share options outstanding at the end of
the year was 1.4 years.
The following table shows the number, movements and exercise price of performance rights for the 2017 year. There were no performance rights in the prior year.
Movements
Vesting Exercise 01/07/2016 Issued Exercised Expired 30/06/2017
Date Price
31 January
2017 $0.21 - 2,275,000 - - 2,275,000
31 January
2017 $0.28 - 2,275,000 - - 2,275,000
- 4,550,000 - - 4,550,000
------------- -------------- ------------------ --------------------- ------------------
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transaction recognised during the year were as follows:
Consolidated
June 2017 June 2016
$ $
Performance rights 423,499 -
Options expensed - 16,900
Options capitalised - 80,101
423,499 97,001
---------- ----------
Note 15. Commitments
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.
Operating lease commitments
Commitments for minimum lease payments for non-cancellable operating leases for offices and equipment contracted for but not recognised in the financial statements.
Consolidated
June 2017 June 2016
Payable - minimum lease payments $ $
-- not later than 12 months 5,250 5,250
-- between 12 months and 5 years - -
5,250 5,250
---------- ----------
Exploration expenditure:
In order to maintain an interest in the exploration tenements in which it is involved, the group is required to meet certain conditions imposed by the various statutory authorities granting the exploration tenements or that are imposed by the joint venture agreements entered into by the group. These conditions can include proposed expenditure commitments. The timing and amount of exploration expenditure obligations of the group may vary significantly from the forecast based on the results of the work performed, which will determine the prospectivity of the relevant area of interest. The group's proposed expenditure obligations, which are not provided for in the financial statements are as follows:
Consolidated
June 2017 June 2016
Minimum expenditure requirements $ $
-- not later than 12 months 1,637,420 25,668,594
-- between 12 months and 5 years 2,637,363 -
4,274,783 25,668,594
---------- -----------
The minimum expenditure requirements at 30 June 2017 do not include commitment in relation to Prospecting licence PL002/2004. In August 2017, post year end, this Prospecting Licence was converted to a mining licence with no minimum expenditure requirement outlined in the mining licence, hence the reason for excluding the figure in the above amounts.
Five of the Group's prospecting licences referred to as the Mamba permits expired at 30 June 2017. Renewal applications were submitted in March 2017, however confirmation of whether renewal was successful or not has not been received at the date of this report. The issuing authority have confirmed that they will extend the licences to 30 September 2017, by which time they expect to have the renewal applications assessed. There was no additional commitment amount outlined in the extension document so the above figures do not include any expenditure relating to the Mamba permits.
Note 16. Financial instruments
Overview
The group's principal financial instruments comprise receivables, payables, cash and term deposits. The main risks arising from the group's financial assets are interest rate risk, foreign currency risk, credit risk and liquidity risk.
This note presents information about the group's exposure to each of the above risks, its objectives, policies and processes for measuring and managing risk. Other than as disclosed, there have been no significant changes since the previous financial year to the exposure or management of these risks.
The group holds the following financial instruments:
Consolidated
June 2017 June 2016
Financial Assets $ $
Cash and cash equivalents 6,727,424 1,224,404
Trade and other receivables 100,674 290,431
6,828,098 1,514,835
---------- ----------
Financial Liabilities
Trade and other payables 431,032 306,956
431,032 306,956
---------- ----------
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis for credit risk.
Key risks are monitored and reviewed as circumstances change (e.g. acquisition of new entity or project) and policies are created or revised as required. The overall objective of the group's financial risk management policy is to support the delivery of the group's financial targets whilst protecting future financial security.
Given the nature and size of the business and uncertainty as to the timing and amount of cash inflows and outflows, the group does not enter into derivative transactions to mitigate the financial risks. In addition, the group's policy is that no trading in financial instruments shall be undertaken for the purpose of making speculative gains. As the group's operations change, the Directors will review this policy periodically going forward.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board reviews and agrees policies for managing the group's financial risks as summarised below. These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits.
Risk management is carried out by senior finance executives (finance) under policies approved by the Board of Directors. Finance identifies, evaluates and hedges financial risks within the consolidated entity's operating units where appropriate.
(a) Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The group is also exposed to earnings volatility on floating rate instruments.
A forward business cash requirement estimate is made, identifying cash requirements for the following period (generally up to one year) and interest rate term deposit information is obtained from a variety of banks over a variety of periods (usually one month up to six-month term deposits) accordingly. The funds to invest are then scheduled in an optimised fashion to maximise interest returns.
Interest rate sensitivity
A sensitivity of 1% interest rate has been selected as this is considered reasonable given the current market conditions. A 1% movement in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
Profit or loss Equity
1% increase 1% decrease 1% increase 1% decrease
$ $ $ $
Consolidated - 30 June 2017
Cash and cash equivalents 67,274 (67,274) 67,274 (67,274)
Consolidated - 30 June 2016
Cash and cash equivalents 12,244 (12,244) 12,244 (12,244)
Interest rate risk on other financial instruments is immaterial.
(b) Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The Board's approach to managing liquidity is to ensure, as far as possible, that the group will always have sufficient liquidity to meet its obligations when due.
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. This is based on the undiscounted cash flows of the financial liabilities based on the earliest date on which they are required to be paid. At the end of the reporting period the group held cash of $6,727,424 (2016: $1,224,404).
The following table details the remaining contractual maturity for non-derivative financial liabilities.
Within Between Total Contractual Carrying
1 Year 1 & 2 years Cash Flows Amount
Consolidated - 30 June 2017 $ $ $ $
Trade and other payables 431,032 - 431,032 431,032
-------- ------------ ------------------ ---------
Consolidated - 30 June 2016
Trade and other payables 306,956 - 306,956 306,956
-------- ------------ ------------------ ---------
(c) Foreign exchange risk
As a result of activities overseas, the group's consolidated statement of financial position can be affected by movements in exchange rates. The group also has transactional currency exposures. Such exposures arise from transactions denominated in currencies other than the functional currency of the relevant entity.
The group's exposure to foreign currency risk primarily arises from the group's operations overseas. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.
The group currently does not engage in any hedging or derivative transactions to manage foreign currency risk. The group's policy is to generally convert its local currency to Pula, Rand or US dollars at the time of transaction. The group, has on rare occasions, taken the opportunity to move Australian dollars into foreign currency (ahead of a planned requirement for those foreign funds) when exchange rate movements have moved significantly in favour of the Australian dollar, and management considers that the currency movement is extremely likely to move back in subsequent weeks or months. Therefore, the opportunity has been taken to lock in currency at a favourable rate to the group. This practice is expected to be the exception, rather than the normal practice.
The group's exposure to foreign currency risk at the reporting date, expressed in Australian dollars, was as follows:
2017 2017 2017 2016 2016 2016
USD Pula SA Rand USD Pula SA Rand
$ $ $ $ $ $
Financial Assets
Cash and cash equivalents 20,603 105,567 36,377 21,279 100,871 8,976
Trade and other receivables - 78,337 - - 28,313 -
Financial Liabilities
Trade and other payables - (112,508) - - (154,024) -
Net Financial Instruments 20,603 71,396 36,377 21,279 (24,840) 8,976
------- ---------- -------- ------- ---------- --------
Foreign currency rate sensitivity
Based on financial instruments held at 30 June 2017, had the Australian dollar strengthened/weakened by 10% the group's profit or loss and equity would be impacted as follows:
Profit or loss Equity
10% 10% 10% 10%
Increase Decrease Increase Decrease
2017 $ $ $ $
Dollar (US) (2,060) 2,060 (2,060) 2,060
Pula (Botswana) (7,140) 7,140 (7,140) 7,140
Rand (South Africa) (3,638) 3,638 (3,638) 3,638
2016
Dollar (US) (2,182) 2,182 (2,182) 2,182
Pula (Botswana) 2,484 (2,484) 2,484 (2,484)
Rand (South Africa) (898) 898 (898) 898
(d) Credit risk
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. This arises principally from cash and cash equivalents and trade and other receivables. The group exposure and the credit ratings of its counterparties are continuously monitored by the Board of Directors.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised in the table above.
Credit Risk Exposures
Trade and other receivables
Trade and other receivables comprise primarily of VAT and GST refunds due. Where possible the group trades with recognised, creditworthy third parties. The receivable balances are monitored on an ongoing basis. The group's exposure to bad debts is not significant. At 30 June 2017, none (2016: nil) of the group's receivables were past due.
Cash and cash equivalents
The group has a significant concentration of credit risk with respect to cash deposits with Westpac Banking Corporation, First National Bank Botswana and First National Bank South Africa. However, significant cash deposits are invested across banks to mitigate credit risk exposure to a particular bank. AAA rated banks are mostly used and non AAA banks are utilised where commercially attractive returns are available.
Note 17. Key Management Personnel
Key management personnel comprise directors and other persons having authority and responsibility for planning, directing and controlling the activities of the Consolidated Entity.
Detailed remuneration disclosures are provided in the remuneration report on pages 13 to 19.
Key management personnel compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:
Consolidated
June 2017 June 2016
$ $
Short-term employee benefits 653,675 885,565
Post-employment benefits 54,796 55,012
Other long-term benefits 23,730 28,063
---------- ----------
732,201 968,640
Share based payments 342,375 -
----------
1,074,576 968,640
---------- ----------
Note 18. Auditors' Remuneration
During the year the following fees were paid or payable for services provided by the auditor of the group:
Consolidated
June 2017 June 2016
$ $
Audit services
Auditing or reviewing the financial statements - BDO Australia 55,000 48,500
Auditing or reviewing the financial statements - BDO Botswana 25,214 25,088
---------- ----------
80,214 73,588
Non-audit services - BDO Australia
Tax consulting and compliance services 10,172 16,132
AIM listing - 36,983
---------- ----------
10,172 53,115
Total 90,386 126,703
---------- ----------
Note 19. Contingent Liabilities
The Directors are not aware of any contingent liabilities (2016: nil).
Note 20. Related Party Transactions
Parent entity
The legal parent entity is Tlou Energy Limited.
Subsidiaries
Interests in subsidiaries are set out in note 23.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2017 2016
$ $
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a director-related
entity of
Anthony Gilby. 21,000 46,500
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with
related parties:
Current payables:
Trade payables to The Gilby McKay Alice Street Partnership, a director-related entity
of Anthony
Gilby 1,925 1,925
Loans to/from related parties
There were no loans to or from related parties at the reporting date or during the year.
Terms and conditions
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
Note 21. Segment Reporting
Reportable Segments
Operating segments are identified on the basis of internal reports that are regularly reviewed by the executive team in order to allocate resources to the segment and assess its performance.
The Company currently operates in one segment, being the exploration, evaluation and development of Coalbed Methane resources in Southern Africa.
Segment revenue
As at 30 June 2017 no revenue has been derived from its operations (2016: nil).
Segment assets
Segment non-current assets are allocated to countries based on where the assets are located as outlined below.
June 2017 June 2016
$ $
Botswana 50,341,366 47,574,122
Australia 1,813 633
50,343,179 47,574,755
----------- -----------
Note 22. Cash Flow Information
Consolidated
June 2017 June 2016
$ $
Reconciliation of cash flow from operations
Loss for the period (3,165,323) (3,065,583)
Depreciation 240,961 260,564
Share-based payments 423,499 97,001
Salaries and fees paid in equity - (97,000)
Loss on disposal 788 -
Net exchange differences 37,181 247,007
Changes in operating assets and liabilities, net of the effects of purchase and disposal of
subsidiaries:
Decrease/(increase) in trade and other receivables 189,757 (68,487)
Decrease/(increase) in other assets - 431,342
Increase/(decrease) in trade payables and accruals (112,369) (165,192)
Decrease/(increase) in employee benefits 35,318 170,322
Increase/(decrease) in provisions 5,319 (113,220)
(2,344,869) (2,303,246)
--------------- --------------
Note 23. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1.
Name of entity Country of incorporation Class of shares Equity holding %
June 2017 June 2016
Tlou Energy Botswana (Proprietary)
Ltd Botswana Ordinary 100 100
Technoleads International Inc Barbados Ordinary 100 100
Tlou Energy Exploration
(Proprietary) Limited Botswana Ordinary 100 100
Sable Energy Holdings (Barbados)
Inc Barbados Ordinary 100 100
Tlou Energy Resources (Proprietary)
Limited Botswana Ordinary 100 100
Copia Resources Inc Barbados Ordinary 100 100
Tlou Energy Corp Services Botswana
(Proprietary) Limited Botswana Ordinary 100 100
Madra Holdings (Barbados) Inc Barbados Ordinary 100 100
Tlou Energy Solutions (Proprietary)
Limited Botswana Ordinary 100 100 Aguia Energy Limitada Mozambique Ordinary - 100 Mica Investments (Barbados) Inc Barbados Ordinary - 100 SK Holdings (Barbados) Inc Barbados Ordinary - 100 Tlou South Karoo (Proprietary) Limited Botswana Ordinary - 100 Apex Resources No. 2 Inc Barbados Ordinary - 100 Apex Resources Holdings No. 2 Corp British Virgin Islands Ordinary - 100 Tembo Holdings Inc British Virgin Islands Ordinary - 100 Note 24. Subsequent Events
There has not been any matter or circumstance, other than that referred to in this report and disclosed in the financial statements or notes thereto, that has arisen since the end of the period, that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of these operations, or the state of affairs of the consolidated entity in future financial years.
Note 25. Parent entity disclosures
Parent
June 2017 June 2016
$ $
Current assets 6,640,713 1,411,310
Non-current assets 30,215,563 30,214,384
Total assets 36,856,276 31,625,694
------------- -------------
Current liabilities 330,900 173,688
Total liabilities 330,900 173,688
------------- -------------
Net assets 36,525,376 31,452,006
------------- -------------
Contributed equity 83,380,184 73,931,569
Share based payment 520,499 2,159,745
Accumulated losses (47,375,307) (44,639,308)
Total equity 36,525,376 31,452,006
------------- -------------
Loss for the period 2,735,999 2,598,498
Total comprehensive income 2,735,999 2,598,498
------------- -------------
Commitments, Contingencies and Guarantees of the Parent Entity
The Parent Entity has no commitments for the acquisition of property, plant and equipment, no contingent assets, contingent liabilities or guarantees at balance date.
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGUUABUPMUCG
(END) Dow Jones Newswires
September 11, 2017 02:01 ET (06:01 GMT)
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