ANNUAL REPORT 2015
For personal use only
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Corporate Directory
Company Name:
NuEnergy Gas Limited ACN: 009 126 238
Directors: Stock Exchange Listing:
Kong Kok Keong - Chairman Australian Securities Exchange Ltd
Kee Yong Wah Level 8, Exchange Plaza
Goh Tian Chuan 2 The Esplanade
Chen Heng Mun Perth WA 6000
Graeme Robertson ASX Code: NGY
Alan Fraser
Incorporated:
Company Secretary:
Western Australia
Rozanna Lee 26 March 1985
Administration Office: Website:
Suite 2001 www.nuenergygas.com
Level 20 Australia Square 264 George Street SYDNEY NSW 2000 Phone: (02) 9199 5522 Fax: (02) 9247 8966
E-mail: [email protected] Registered Office:
Suite 2001
Level 20 Australia Square 264 George Street SYDNEY NSW 2000
Share Registry Office: INDEX:
Link Market Services Limited Directors’ Report 1
Level 1, 333 Collins Street Corporate Governance 14
MELBOURNE VIC 3000 Declaration by Directors 15
Phone: (03) 9615 9800 Auditor’s Independence Declaration 16
Fax: (03) 9615 9900 Consolidated Statement of Profit or Loss and 17
Other Comprehensive Income
Auditor: Consolidated Statement of Financial Position 18
Consolidated Statement of Changes in Equity 19
Hall Chadwick Consolidated Statement of Cash Flows 20
Level 40 Notes to the Financial Statements 21 - 47
2 Park Street Independent Auditor’s Report 48
SYDNEY NSW 2000 Shareholder and Other Information 50
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Directors' Report
The Directors present the financial report of NuEnergy Gas Limited ("the Company" or "NuEnergy") and its controlled entities (“the consolidated entity”), for the financial year ended 30 June 2015.
DIRECTORS
The Directors of the Company in office at any time during or since the end of the financial year and to the date of this report are as follows:
Kong Kok Keong - Chairman and Non-Executive Director – BBus (Honours) Appointed 21 August 2014
Kong Kok Keong has 20 years of experience in the stockbroking industry from finance to dealing functions. He also has 9 years of experience working for a division involved in the manufacturing of automotive components, parts and systems which is part of Globaltec Formation Berhad (‘Globaltec’), a company listed on Bursa Malaysia Securities Berhad, the Malaysia stock exchange (‘Bursa Malaysia’). Globaltec is an indirect substantial shareholder of NuEnergy through its subsidiaries New Century Energy Resources Limited (‘NCE’) and Globaltec Energy Resources Sdn Bhd (‘GER’). He is currently the Group Deputy Executive Chairman of Globaltec.
He was appointed as the Non-Executive Chairman of the Company on 17 December 2014.
Kee Yong Wah - Executive Director Appointed 21 August 2014.
Kee Yong Wah has more than 30 years’ of experience in the oil and gas exploration, production and servicing industry. In 1984, he joined Halliburton, one of the biggest global servicing companies within the oil and gas industry, particularly in conventional and unconventional oil and gas business where he held various positions which include managerial, business development, operational and manufacturing functions in Asia and the USA. In 2009, he left Halliburton after serving for about 26 years. His last appointment in Halliburton was General Manager of Business Development where he was responsible for leading a group of Business Development and Account Managers in undertaking strategic planning and business development projects (including mergers and acquisitions) for all business units at Halliburton and formulating distributorship and agency agreements with customers. In addition, he was also a director representing the Haliburton group of companies in CNOOC Offshore Services Limited, a joint venture company between China Oilfield Services Limited and the Haliburton group of companies.
From 2010 to 2011, he joined Smith International, Inc, a company listed on the New York Stock Exchange which is principally involved in the supply of products and services to the oil and gas exploration and production industry, petrochemical industry and other industrial markets, as the General Manager for its operations in the China, before the said company was acquired by Schlumberger Limited, a company listed on the New York Stock Exchange which is principally involved in the supply of technology, integrated project management and information solutions to the oil and gas exploration and production industry. From 2011 to 2013, he served as the Vice President of SPT Energy Group Inc, a company listed on the Hong Kong Stock Exchange, which is principally involved in the provision of oilfield services.
He is the founder of NCE, a substantial shareholder of NuEnergy. He was re-designated to Executive Director of the Company on 1 January 2015.
Goh Tian Chuan - Non-Executive Director Appointed 17 December 2014.
Goh Tian Chuan is the Group Executive Chairman of Globaltec, an indirect substantial shareholder of NuEnergy through its subsidiaries NCE and GER. He graduated from the Royal Malaysia Police Contingent in 1982 and was a Senior Police Officer attached to the Royal Malaysia Police Contingent Sabah in Kota Kinabalu, Sabah for 13 years. After leaving the force in 1994, he has run his own businesses, which apart from his investments in several public listed companies, covering a multitude of industries from investment holding to plantation and property development.
In 2014, he was conferred the award Seri Panglima Darjah Kinabalu (‘SPDK’) by the Honourable Head of State of Sabah, the highest state award in Sabah which carries the title “Datuk Seri Panglima” for his significant role in the development of the State of Sabah.
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In 2012, he was conferred Honorary Doctorate of Civil Laws by the European University Switzerland.
Chen Heng Mun - Non-Executive Director – CA, CPA Appointed 1 January 2015.
Chen Heng Mun has 24 years’ corporate and financial management experience across Asia. He is the Executive Director and Group Finance Director of Globaltec, which is an indirect substantial shareholder of NuEnergy through its subsidiaries NCE and GER. He is a Chartered Accountant and member of the Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants and Certified Public Accountants, Australia.
Graeme Robertson – Non-Executive Director - BA, FAICD, MAIE Appointed 29 March 2011.
Graeme Robertson has had significant interests in Indonesia for the last 40 years.
He has been responsible for pioneering and managing world class mining, energy and transport infrastructure operations throughout Africa, Australia and the Asia-Pacific region. He was CEO and developer of the largest open cut coal mine in the Southern Hemisphere, PT Adaro Indonesia, and a former Managing Director (1987-2005) of New Hope Corporation Limited (ASX:NHC). In 2010, he was awarded the Coaltrans Lifetime Achievement Award for his contribution to the coal industry. He is the Chairman of the Board of Directors of Intra Energy Corporation Limited (ASX:IEC).
He was Chairman of the Company until 17 December 2014.
Alan Fraser – Non-Executive Director Appointed 20 January 1992.
Alan Fraser has over 30 years’ experience in Australia and overseas on green fields mineral exploration, mine project management and mine construction. He has managed gold exploration projects through the stages of tenement acquisition, joint venture negotiation, obtaining regulatory approvals and the management of field exploration programs, at times in remote locations.
He was Chief Executive Officer of the Company until 30 November 2007 and is currently a Director of Resource Base Limited (ASX:RBX).
Peter Cockcroft – Non-Executive Director – BA (Geology & Geophysics), FRGS (Life), FAARM, Cert Bus Admin (EBS), GAICD
Appointed 12 April 2011.
Resigned 21 August 2014.
Since graduating as a geologist from the University of Sydney, Peter Cockcroft has worked in the Asian and Indonesian gas industries for over thirty years, with executive positions with both major companies and national oil companies. He has been involved in Indonesian coal bed methane since its inception, and has been invited to address and teach members of the Indonesian Petroleum Association on unconventional gas on many occasions.
He has also held board positions with various oil and gas companies in Kuwait, United Arab Emirates, India, Indonesia and Australia. He is a former Distinguished Lecturer for the Society of Petroleum Engineers, a Life Fellow of the Royal Geographical Society, Life Member of South East Asian Petroleum Exploration Society, a former Research Fellow of the Institute of South East Studies, and a Graduate of the Australian Institute of Company Directors.
Jonathan Warrand – Non-Executive Director – MBA (EXEC), CA, FFINSIA, IPAA, BCOM (Accounting) Appointed 15 June 2011.
Resigned 18 December 2014
Jonathan Warrand is the Managing Director of Intrasia Capital Pty Limited, a corporate advisory and private equity firm based in Singapore and Sydney.He has over 25 years’ corporate advisory experience across various sectors including resources, financial services and real estate and has experience in equity and debt capital markets, strategic planning and capital management.
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He is a Non-Executive Director of Intra Energy Corporation Limited (ASX:IEC). He holds a Masters of Business Administration (Executive) from the Australian Graduate School of Management (University of New South Wales and University of Sydney), Graduate Diploma in Applied Finance and Investment, Insolvency Law Certificate from the University of Southern Queensland and a Bachelor of Commerce (Accounting) from the University of Wollongong.
He is a Chartered Accountant, Fellow of Finsia and is an Associate of the Insolvency Practitioners Association of Australia.
Management
Dr Ian Wang – Chief Executive Officer – PhD (Rock Mechanics & Structural Geology), MSc (Rock Mechanics &
Structural Geology)
Appointed 1 September 2014.
Dr Ian Wang has more than 30 years’ experience in the oil and gas industry and previously held the position of General Manager of Greka Exploration & Production Ltd (‘Greka’). Prior to joining Greka in August 2012, he was employed as General Manager of Clarke Energy China. He has held senior exploration roles at Sino Gas & Energy Limited and Molopo.
He also held roles as Regional Manager with In-Situ Inc in Australia providing consultancy to Lowell Petroleum on Coal Bed Methane (‘CBM’) projects in China and Operations Manager for Huawell CBM Zhenghou.
He holds a Master of Science and PhD from Imperial College, both in Rock Mechanics and Structural Geology and was an Associate Professor at the Chinese Academy of Science, Beijing, where he worked on tectonic and basin analysis.
Jason Chua Joo Huang – Chief Financial Officer – CA, FCCA Appointed 1 May 2015.
Jason Chua Joo Huang has over 15 years’ experience in operational and financial management.
He is a Chartered Accountant, member of the Malaysian Institute of Accountants and Fellow of the Association of Chartered Certified Accountants, United Kingdom.
Simon Harvey – Chief Financial Officer – CA, BCom Appointed 1 January 2013.
Resigned 30 April 2015
Simon Harvey has worked with NuEnergy as Group Financial Controller since September 2011. On 1 January 2013 he was promoted to Chief Financial Officer of the Group. He has over 15 years’ experience working in Australia and Europe including working at KPMG where he completed his CA.
Company Secretary
Rozanna Lee – BCom, LLB, GradDipACG, AGIA, AGIS Appointed 8 August 2011.
Rozanna Lee is a Chartered Company Secretary and has acted as Company Secretary of NuEnergy since August 2011.
Rozanna’s career has spanned numerous industry sectors and includes a period of over eight years working for an international trust company in the Netherlands, which provided company secretarial, tax and administration services to private and corporate clients. Rozanna recently completed the Graduate Diploma of Applied Corporate Governance with the Governance Institute of Australia.
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DIRECTORS’ AND MANAGEMENT INTERESTS
The number of ordinary shares held directly, indirectly or beneficially by each Director and key management personnel, including their related parties, during the financial year is as follows:
Balance 1-Jul-14
Share placements
Purchase / sold on market
Balance 30-Jun-15
Kong Kok Keong * - - - -
Kee Yong Wah * 41,666,667 166,666,666 - 208,333,333
Goh Tian Chuan * - - - -
Chen Heng Mun * - - - -
Graeme Robertson 158,943,486 - - 158,943,486
Alan Fraser 431,665 - - 431,665
Peter Cockcroft ^ - - - -
Jonathan Warrand ^ 1,135,970 - - 1,135,970
Dr Ian Wang * - - - -
Jason Chua Joo Huang * - - - -
Simon Harvey ^ 1,131,270 - (500,000) 631,270
* At time of appointment
^ At time of resignation
The number of options held directly, indirectly or beneficially by each Director and key management personnel, including their related parties, during the financial year is as follows:
Balance 1-Jul-14
Received as Remuneration
Exercised Expired / Lapsed
Balance 30-Jun-15
Kong Kok Keong * - - - - -
Kee Yong Wah * - - - - -
Goh Tian Chuan * - - - - -
Chen Heng Mun * - - - - -
Graeme Robertson 1,200,000 - - (1,200,000) -
Alan Fraser 800,000 - - (800,000) -
Peter Cockcroft ^ 800,000 - - (800,000) -
Jonathan Warrand ^ 800,000 - - (800,000) -
Dr Ian Wang * - - - - -
Jason Chua Joo Huang * - - - - -
Simon Harvey ^ 450,000 - - (450,000) -
* At time of appointment
^ At time of resignation
The NuEnergy Premium Option Plan was terminated on 3 February 2015 and all remaining unexercised options were cancelled.
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- 5 - REMUNERATION REPORT (audited)
This report outlines the remuneration arrangements in place for Directors and Key Management Personnel of the Company.
The Board policy for determining the nature and amount of remuneration of Directors and Key Management Personnel is agreed by the Board of Directors as a whole. The Board obtains professional advice where necessary to ensure that the Company attracts and retains talented and motivated Directors and Key Management Personnel who can enhance Company performance through their contributions and leadership.
Non-Executive Director Remuneration
Non-Executive Directors’ fees are paid within an aggregate limit which is approved by the Company’s shareholders from time to time. The total of Non-Executive Director fees was set at a maximum of $500,000 per annum at a general meeting of shareholders held on 13 November 2007. Presently, the Board has determined the Non-Executive Directors fees will be set at a maximum of $40,000 per annum per Director. Retirement payments, if any, are agreed to be determined in accordance with the rules set out in the Corporations Act 2001 at the time of the Director’s retirement or termination. Non-Executive Directors’ remuneration may include an incentive portion consisting of bonuses and/or options, as considered appropriate by the Board, which may be subject to shareholder approval in accordance with the ASX Listing Rules.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board considers the amount of Director fees being paid by comparable companies with similar responsibilities and the experience of the Non-Executive Directors when undertaking the annual review process.
To date, there is no relationship between the remuneration policy for Non-Executive Directors and the performance of the Company due to the existing size and scale of operations.
The Company determines the maximum amount for remuneration, including thresholds for share-based remuneration, for Directors by resolution of shareholders.
Key Management Personnel Compensation
The compensation of each member of the key management personnel of the consolidated entity is set out below.
Details of Remuneration for Financial Year Ended 30 June 2015
The remuneration for each Director and each of the Key Management Personnel of the consolidated entity receiving the highest remuneration during the year is detailed in the table on the following page.
Options Issued as Part of Remuneration for the Financial Year Ended 30 June 2015 There were no options issued as remuneration during the financial year ended 30 June 2015.
Shares Issued as Part of Remuneration for the Financial Year Ended 30 June 2015 There were no shares issued as remuneration during the financial year ended 30 June 2015.
Options Scheme
No options granted as part of remuneration were exercised or sold during the current financial year.
The NuEnergy Premium Option Plan was terminated on 3 February 2015 and all remaining unexercised options were cancelled.
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- 6 - REMUNERATION REPORT (continued)
2015 Salary, Short term
employment benefits and fees
Post-employment Equity
Salary, Fees and Commission
$
Consulting Fees
$
Superannuation Contribution
$
Options Received as Compensation
$
Shares Received as Comp-
ensation
$
Share based Related Compensation
%
Total
$ Non-Executive
Directors Kong Kok Keong (appointed 21 August 2014)
34,516 - - - 34,516
Goh Tian Chuan (appointed 17 December 2014)
20,000 - - - 20,000
Chen Heng Mun (appointed 1 January 2015)
20,000 - - - 20,000
Graeme Robertson 40,000 - - - 40,000
Alan Fraser 30,000 - - - 30,000
Peter Cockcroft (resigned 21 August 2014)
6,666 7,000 - - - - 13,666
Jonathan Warrand (resigned 18 December 2014)
20,000 45,000 - - - - 65,000
Executive Director Kee Yong Wah (appointed 21 August 2014)
74,516 - - - 74,516
Key Management Dr Ian Wang
(appointed 1 September 2014)
219,000 - - - 219,000
Jason Chua Joo Huang (appointed 1 May 2015)
30,042 - - - 30,042
Simon Harvey (resigned 30 April 2015)
170,962 - 12,652 - - - 183,614
Total 665,702 52,000 12,652 - - - 730,354
Details of Remuneration for the Financial Year Ended 30 June 2014
The remuneration for each Director and each of the Key Management Personnel of the consolidated entity receiving the highest remuneration during the financial year is outlined on the table overleaf.
Options Issued as Part of Remuneration for the Financial Year Ended 30 June 2014 There were no options issued as remuneration during the financial year ended 30 June 2014.
Shares Issued as Part of Remuneration for the Financial Year Ended 30 June 2014 There were no shares issued as remuneration during the financial year ended 30 June 2014.
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2014 Salary, Short –term
employment benefits and fees
Post-employment Equity
Salary, Fees and Commissions
$
Consulting Fees
$
Superannuation Contribution
$
Options Received as Compensation
$
Shares Received as Comp- ensation
$
Share based Related Compensation
%
Total
$ Non-Executive
Directors
Graeme Robertson 40,000 - - - 40,000
Alan Fraser 40,000 - - - 40,000
Peter Cockcroft 40,000 12,026 - - - - 52,026
Jonathan Warrand 40,000 90,000 - - - - 130,000
Key Management Chris Newport (resigned 6 January 2014)
427,974 - - - 427,974
Simon Harvey 160,550 - 14,450 - - - 175,000
Total 748,524 102,026 14,450 - - - 865,000
Employment Contracts of Executive Director and Key Management Personnel
Kee Yong Wah was appointed as Non-Executive Director on 21 August 2014 and re-designated to Executive Director of the Company on 1 January 2015. His employment contract with the Company is for an indefinite period until terminated by either party by giving three months’ notice. His total fixed remuneration is $120,000 per annum (excluding superannuation contributions) subject to annual review. He is eligible to receive annual short term incentive target discretionary bonus if predetermined key performance indicators are achieved and to participate in the Company’s options plan. His place of employment is in Jakarta, Indonesia.
Dr Ian Wang was employed by the Company as Chief Executive Officer on 1 September 2014. His employment contract with the Company is for an indefinite period until terminated by either party by giving three months’ notice. His total fixed remuneration is $262,800 per annum (excluding superannuation contributions) subject to annual review. He is eligible to participate in the Company’s incentive scheme as approved by the Board from time to time. His place of employment is in Jakarta, Indonesia.
Chris Newport was appointed as the Chief Executive Officer of the Company on 20 September 2011. His salary package included a sign on bonus of $50,000, annual remuneration of $375,000 and the issue of 250,000 shares and 500,000 unlisted options over NuEnergy shares upon completion of a probationary period. By a resolution of the Board, these shares and options were issued in July 2012. The options had an exercise price that was 35% above the market price of the Company’s shares as at the vesting date. A three month notice period is required for termination when the length of continuous service is up to two years and a six month notice period is required for more than two years’ continuous service.
He resigned as CEO in January 2014 and completed his full six month notice period with the Company. His employment officially ended on 7 July 2014.
Jason Chua Joo Huang was employed by the Company as Chief Financial Officer on 1 May 2015. His employment contract with the Company is for an indefinite period until terminated by either party by giving three months’ notice. His total fixed remuneration is $94,872 per annum (excluding superannuation contributions) subject to annual review. He is eligible to participate in the Company’s incentive scheme as approved by the Board from time to time. His place of employment is in Jakarta, Indonesia.
Simon Harvey was employed by the Company as Chief Financial Officer on 1 January 2013. His employment contract with the Company was for an indefinite period until terminated by either party by giving three months’ notice. His total fixed remuneration was $189,875 per annum (including superannuation contributions) subject to annual review. He was eligible to participate in the Company’s incentive scheme as approved by the Board from time to time. He resigned as Chief Financial Officer on 30 April 2015.
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- 8 - DIRECTORS’ MEETINGS
The following table sets out the number of Directors’ meetings held during the financial year and the number of meetings attended by each Director.
DIRECTORS
MEETINGS OF DIRECTORS
HELD ATTENDED
Kong Kok Keong (appointed 21 August 2014) 7 5
Kee Yong Wah (appointed 21 August 2014) 7 5
Goh Tian Chuan (appointed 17 December 2014) 7 2
Chen Heng Mun (appointed 1 January 2015) 7 2
Graeme Robertson 7 7
Alan Fraser 7 7
Peter Cockcroft (resigned 21 August 2014) 7 2
Jonathan Warrand (resigned 18 December 2014) 7 3
There were no separate nomination and remuneration or audit and compliance committee meetings for the financial year.
An executive committee of the Board was established during the year and the following table sets out the number of meetings attended by each member.
MEMBERS
EXECUTIVE COMMITTEE MEETINGS
HELD ATTENDED
Kee Yong Wah 3 3
Goh Tian Chuan 3 3
Chen Heng Mun 3 3
Dr Ian Wang 3 3
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the financial year were pursuing opportunities in the oil and gas sector. There were no significant changes in the nature of the consolidated entity’s principal activities during the financial year.
CONSOLIDATED RESULTS
The net consolidated loss of the consolidated entity for the financial year after income tax attributable to members of the parent entity was $26,419,004 (2014 loss: $2,470,780).
DIVIDENDS
The Directors do not recommend and have not provided for payment of a dividend. No dividend was paid during or since the end of the financial year.
LIKELY DEVELOPMENTS
Disclosure of information, in addition to that provided elsewhere in this report, regarding likely developments in the operations of the consolidated entity in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Accordingly, information has not been disclosed in this report.
SHARE OPTIONS
The following options are on issue as at the date of this report:
2015 2014
Terms of options No. of options No. of options
Exercisable at 80 cents on or before 1 December 2014 - 1,250,000
Exercisable at 12.2 cents on or before 20 December 2014 - 500,000
Exercisable at 12.14 cents between 12 December 2015 and 12 December 2017 subject to performance conditions
- 5,050,000
Total - 6,800,000
All remaining unexercised options issued under the NuEnergy Premium Option Plan were cancelled as a result of the termination of the option plan on 3 February 2015.
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- 9 - STATE OF AFFAIRS – SIGNIFICANT CHANGES
During the year, the Company issued 416,666,666 shares raising $12,500,000 in cash proceeds before costs.
EVENTS SINCE BALANCE SHEET DATE
The Directors are not aware of any matters or circumstances that have arisen since 30 June 2015 that have significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entities in subsequent financial years.
REVIEW OF OPERATIONS
Corporate Activities and Capital Raising
During the financial year, the Company’s corporate activities were focused on completing its capital raising through the recapitalisation of NuEnergy. The Company completed two share placements with a strategic Asian investor, NCE and its nominee, GER.
NCE has extensive experience in Coal Bed Methane (‘CBM’) exploration and production industry, including subsurface (geological, geophysical and reservoir), well drilling, completion and production techniques that can significantly enhance the productivity of CBM wells. NCE is 60% owned by Globaltec (MYX:5220), a public company listed on the Bursa Malaysia’s Main Market.
The two successfully completed share placements raised a total of $12.5 million as follows:
a) An initial share placement of 83,333,333 shares at 3 cents per share raising $2.5 million completed on 20 August 2014;
and
b) A second share placement of 333,333,333 shares at 3 cents per share raising $10.0 million completed on 16 December 2014.
Upon completion of the initial share placement, NCE appointed two of its nominees, Kong Kok Keong and Kee Yong Wah, as directors of NuEnergy. Peter Cockcroft resigned as director at the same time to leave NuEnergy with a five member Board.
At and subsequent to the completion of the second share placement, the following changes to the Board occurred:- a) Goh Tian Chuan was appointed a Non-Executive Director of NuEnergy;
b) Chen Heng Mun was appointed a Non-Executive Director of NuEnergy;
c) Jonathan Warrand resigned as Non-Executive Director;
d) Kee Yong Wah transitioned from Non-Executive Director to Executive Director; and
e) Kong Kok Keong replaced Graeme Robertson as Non-Executive Chairman. Graeme Robertson remained a Non- Executive Director of NuEnergy.
In September 2014, the Company appointed Dr Ian Wang as the Chief Executive Officer who has more than 30 years’
experience in the oil and gas industry particularly in CBM and has successfully delivered and commercialised CBM Production Sharing Contracts (‘PSC’) in China and Australia.
With the completion of the capital raising, NuEnergy looks forward to an extensive CBM drilling campaign in the focus area of Sumatra, Indonesia under the new Board and management.
Strategic Acquisition
In May 2015, NuEnergy signed a conditional Share Purchase Agreement (‘SPA’) with Dart Energy International Limited (‘Dart’) to acquire the whole of Dart Energy (Indonesia) Holdings Pte Ltd (‘Dart Indonesia’). Through its group controlled companies, Dart Indonesia has a participating interest in the following PSCs and joint evaluation (“JE”) covering 1,559 and 482 square kilometres.
a) 45% participating interest in Tanjung Enim PSC, South Sumatra;
Tanjung Enim PSC is located in Muara Enim Regency, South Sumatra Province. This PSC was awarded by SKK Migas (formerly known as Badan Pelaksana Usaha Hulu Minyak dan Gas/Implementing Body of the Oil and Gas Upstream Activities) (“BP Migas”) on 4 August 2009 for 30 years. The exploration period under the PSC is for six years up to August 2015.
The contract area comprises a total of 313 square kilometers containing an average of 65 meters to 70 meters net coal thickness, low rank coal seams ranging in depth from 300 meters to 700 meters with an average reported gas content of
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120 standard cubic foot (“scf”)/ton. With these geological and technical parameters, Tanjung Enim PSC is among the CBM PSCs in Indonesia which have high potential for commercial CBM development and is close to existing oil and gas infrastructure and markets.
b) 50% participating interest in Muralim PSC, South Sumatra;
The Muralim PSC was awarded on 3 December 2010 for 30 years. The exploration period under the PSC is for six years up to December 2016.
The Muralim PSC is located in three regencies, namely Musi Rawas, Lahat and Muara Enim. The contract area comprises a total of 835 square kilometers. Wells drilled in mid-2012 have indicated average net coal thickness of around 29 meters to 30 meters, low rank coal seams ranging from depth of 500 meters to 700 meters with an average gas content of 105 scf/ton. Muralim PSC is located adjacent to Tanjung Enim PSC, which is also among the CBM PSCs in Indonesia which have high potential for commercial CBM development.
c) 100% participating interest in Bontang-Bengalon PSC, East Kalimantan; and
The Bontang-Bengalon PSC was awarded on 9 October 2012 for 30 years. The Bontang-Bengalon PSC is located in East Kutai Regency and Bontang City, East Kalimantan Province. The contract covers an area of 411 square kilometers. The exploration period under the PSC is for six years up to October 2018. No significant works have commenced as at the date of this report..
d) Rights to the JE of Bungamas CBM, South Sumatra
In 2014, Bungamas Joint Evaluation was awarded by the Indonesian Government to a consortium comprising of Dart Indonesia, Bungamas International Company, PT Bukit Asam (Persero) Tbk and PT Mantra Energy Services for application of a CBM PSC in the Bungamas area. The Bungamas area is located adjacent to Tanjung Enim PSC and Muralim PSC. The Bungamas Joint Evaluation covers an area of 482 square kilometers. The joint evaluation was completed on 13 February 2015 through a cooperation between the consortium and the University of Trisakti representing the Indonesian Government and is currently pending direct offer for a PSC by the Directorate General of Oil and Gas.
The consideration for the acquisition of Dart Indonesia is USD $1.0 million which will be funded from NuEnergy’s available cash. The completion of the SPA is currently pending the approval of relevant authorities in Indonesia and the extension of the Tanjung Enim PSC and expected to take not more than 12 months from the date of the SPA. After the proposed acquisition, NuEnergy will have six PSCs and the right to one JE reinforcing its position and strategy to acquire, explore, appraise and develop CBM acreage in Indonesia.
Location of Muara Enim PSC, Muara Enim II PSC, Tanjung Enim PSC and Muralim PSC
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Operations Review
During the financial year ended 30 June 2015, NuEnergy continued to focus on its CBM exploration and drilling activities at the Company’s PSC in Sumatra, Indonesia.
Upon the completion of the proposed acquisition of Dart Indonesia, NuEnergy shall have six operating PSCs in Indonesia:
- Muara Enim PSC (40% participating interest) - Muara Enim II PSC (30% participating interest) - Rengat PSC (100% participating interest) - Tanjung Enim PSC (45% participating interest) - Muralim PSC (50% participating interest)
- Bontang-Bengalon PSC (100% participating interest) South Sumatra
The Muara Enim and Muara Enim II PSCs are located in the South Sumatra basin. Together they comprise a combined area of 1,861 square kilometres.
During the financial year, NuEnergy continued with the application for permitting procedures to drill in the western area of both Muara Enim and Muara Enim II, where geological study results revealed coal seams of up to 150 meters thickness.
Extensive surveys were conducted on the potential drilling locations in respect of existing infrastructure such as gas gathering pipelines, major trunklines and compressor stations. These areas remain to be the prime focus on NuEnergy’s CBM core activities in Indonesia.
Following the proposed acquisition of Dart Indonesia, drilling for a core well commenced at the Tanjung Enim PSC in late June 2015 with the mobilisation of the rig in mid-June to well TE-008C which is located approximately 185 km west of Palembang, Indonesia. The truck mounted rig was used to drill TE-008C to prove the potential of shallower coal seams. TE- 008C is the first of three core wells to be drilled in the Tanjung Enim PSC with the view of further development in the PSC and the establishment of a gas reserve prior to early commercialisation.
Rig Site at TE-008C
Rengat PSC
During the year, NuEnergy commenced drilling for the first exploratory well at the Rengat PSC in Central Sumatra, Indonesia. Mobilisation of the rig started in early June 2015 for the planned well located approximately 195km south of Pekanbaru, Indonesia. The fully hydraulic automated truck mounted rig was used to drill to a depth of 495 meters.
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Operations Review (continued)
Rig Site at RE-CBM-01
NuEnergy will core, log and conduct permeability testing on coal formations to identify and map coal continuity across the basin and to understand the reservoir characteristics for further development. The Rengat PSC covers 2,395 square kilometres of Central Sumatra Basin and lies in between prolific oil and gas concessions located in the Central Sumatra Basin in the vicinity of a major gas pipeline from Jakarta to the Chevron Duri Steam Flood project and related infrastructures.
Disposal of Africa interests
Based on the core focus in Indonesia, NuEnergy has entered into agreements for the transfer of its Mozambique interests and assigned all associated rights and obligation to NuAfrica Gas Limited (a wholly owned subsidiary of NuEnergy).
Intrasia Capital Pte Ltd, a Singapore based investment company and related party of the Company’s director, Graeme Robertson acquired the interest in NuAfrica Gas Limited for a consideration of $240,675. The acquisition for the interests in NuAfrica Gas Limited was based on direct and indirect exploration costs incurred in Mozambique and was completed during the financial year.
During the financial year, applications have been made to de-register NuEnergy Gas Zambia Limited and NuEnergy Gas (Tanzania) Limited (wholly owned subsidiaries of NuEnergy) to complete NuEnergy’s exit from Africa CBM exploration.
FINANCIAL POSITION
The consolidated entity reported a net loss after income tax attributable to members of the parent entity for the financial year of $26,419,004 (2014 loss: $2,470,780). The loss predominantly relates to the impairment of the exploration and evaluation assets amounting to $32,218,582 from the valuation made by an independent expert on the exploration and evaluation assets as part of the recapitalization of NuEnergy. The net asset position of the consolidated entity decreased to $36,827,578 (2014: $48,195,720) due mainly to the above impairment of the exploration and evaluation assets.
ENVIRONMENTAL CONSIDERATIONS
The consolidated entity has complied with all terms and conditions of its mining and exploration licences relating to environmental rehabilitation. At the date of this report there are no outstanding environmental matters.
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CORPORATE GOVERNANCE
The Board of Directors of NuEnergy Gas Limited (‘NuEnergy’) is responsible for the corporate governance of the Company. The Board guides and monitors the business and affairs of NuEnergy on behalf of the shareholders by whom it is elected and to whom it is accountable.
The Company is committed to ensuring that its systems, procedures and practices reflect a high standard of corporate governance. The Directors believe that the corporate governance framework is critical in maintaining high standards of corporate governance and fostering a culture that values ethical behaviour, integrity and respect to protect security holders’
and other stakeholders’ interests at all times.
During the financial year ended 30 June 2015, save as disclosed in the Corporate Governance Statement, the Company’s corporate governance framework was consistent with the third edition of the Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council.
The Company will now publish its Corporate Governance Statement on its website rather than in its Annual Report. The Corporate Governance Statement may be viewed or downloaded at: www.nuenergygas.com. Copies of the Group policies referred to in the Corporate Governance Statement are also posted on the website.
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HALL CHADWICK a (NSW)
Chartered Accountants and Business Advisers NUENERGY GAS LIMITED
ACN 009 126 238 AND CONTROLLED ENTITIES
AUDITOR'S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF NUENERGY GAS LIMITED
AND CONTROLLED ENTITIES
SYDNEY Level 40 2 Park Street Sydney NSW 2000 Australia
I declare that, to the best of my knowledge and belief, during the year ended 30 June GPO Box 3555
2015 there have been no contraventions of: Sydney NSW 2001
Ph: (612) 9263 2600
i. the auditor independence requirements as set out in the Corporations Act 2001 Fx : (612) 9263 2800
in relation to the audit; and
H. any applicable code of professional conduct in relation to the audit.
ol
,c,ou..,,tikHall Chadwick
Level 40, 2 Park Street Sydney NSW 2000
Graham Webb Webb Partner
Date: 23 September 2015
A member of AGN international Ltd. a worldwide association of separate and independent accounting and consulting firms
www.hallchadwick.com.au SYDNEY • NEWCASTLE • PARRAMATTA • PENRITH • MELBOURNE • PERTH • BRISBANE • GOLD COAST • DARWIN
Liability limited by a scheme approved under Professional Standards Legislation.
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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated 2015 2014
Note $ $
Revenues 2 149,171 300,744
Expenses:
Directors’ and employees’ remuneration 942,001 949,603
Consultants 184,256 836,335
Administration expenses 3 1,118,707 808,235
Depreciation 89,103 143,323
Asset write-down 12,186 -
Impairment of Tanzanian assets - 233,039
Impairment of exploration and evaluation assets 32,218,582 -
Loss before income tax (34,415,664) (2,669,791)
Income tax benefit 4 7,970,527 178,704
Net loss for the year (26,445,137) (2,491,087)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
Movement in fair value of available for sale
financial assets (14,922) (7,461)
Foreign currency translation reserve 2,666,917 (278,235)
Total comprehensive loss for the year (23,793,142) (2,776,783)
Net Loss attributable to:
Members of the parent entity (26,419,004) (2,470,780)
Non-controlling interest (26,113) (20,307)
(26,445,117) (2,491,087)
Total comprehensive loss attributable to:
Members of the parent entity (23,767,009) (2,756,476)
Non-controlling interest (26,133) (20,307)
(23,793,142) (2,776,783)
Basic earnings (loss) per share
(cents per share) 18 (4.51) (0.80)
Diluted earnings (loss) per share
(cents per share) 18 (4.51) (0.80)
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the notes to the financial statements.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015
Consolidated 2015 2014
Note $ $
CURRENT ASSETS
Cash and cash equivalents 7,499,489 67,032
Trade and other receivables 5 928,257 221,320
TOTAL CURRENT ASSETS 8,427,746 288,352
NON-CURRENT ASSETS
Available for sale financial assets 6 7,461 22,383
Plant and equipment 8 285,471 347,156
Exploration and evaluation 9 30,281,678 57,925,433
Other financial assets 10 1,175,702 1,034,458
TOTAL NON-CURRENT ASSETS 31,750,312 59,329,430
TOTAL ASSETS 40,178,058 59,617,782
CURRENT LIABILITIES
Trade and other payables 11 1,026,921 1,158,367
Provisions 12 117,187 86,796
TOTAL CURRENT LIABILITIES 1,144,108 1,245,163
NON-CURRENT LIABILITIES
Deferred tax liabilities 13 2,196,372 10,166,899
Provisions 12 10,000 10,000
TOTAL NON-CURRENT LIABILITIES 2,206,372 10,176,899
TOTAL LIABILITIES 3,350,480 11,422,062
NET ASSETS 36,827,578 48,195,720
EQUITY
Issued capital 14 85,324,979 72,899,979
Reserves 15 4,667,632 13,182,025
Accumulated losses (53,438,994) (38,186,378)
Parent entity interest 36,553,617 47,895,626
Non-controlling interest 273,961 300,094
TOTAL EQUITY 36,827,578 48,195,720
The consolidated statement of financial position should be read in conjunction with the notes to the financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015
Issued Capital
$
Reserves
$
Accumulated Losses
$
Non- Controlling
Interest
$
Total Equity
$
At 1 July 2013 71,086,872 13,467,721 (35,715,598) 320,401 49,159,396
Shares issued 1,867,628 - - - 1,867,628
Share issue costs (54,521) - - - (54,521)
Options issued - - - - -
Total comprehensive loss for the year - (285,696) (2,470,780) (20,307) (2,776,783)
At 30 June 2014 72,899,979 13,182,025 (38,186,378) 300,094 48,195,720
Issued Capital
$
Reserves
$
Accumulated Losses
$
Non- Controlling
Interest
$
Total Equity
$
At 1 July 2014 72,899,979 13,182,025 (38,186,378) 300,094 48,195,720
Shares issued 12,500,000 - - - 12,500,000
Share issue costs (75,000) - - - (75,000)
Total comprehensive loss for the year Transfer to accumulated losses for options expired and cancelled
- -
2,651,995 (11,166,388)
(26,419,004) 11,166,388
(26,133) -
(23,793,142) -
At 30 June 2015 85,324,979 4,667,632 (53,438,994) 273,961 36,827,578
The consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015
Consolidated 2015 2014
Note $ $
Cash Flows from Operating Activities
Payments to suppliers and employees (2,036,167) (2,221,819)
Interest received 132,453 11,062
Net Cash Flows used in Operating Activities 20 (1,903,714) (2,210,757)
Cash Flows from Investing Activities
Payments for mining exploration expenditure (2,506,576) (4,877,114)
Payments for plant and equipment (76,683) (75,436)
Proceeds from disposal of exploration assets 140,675 100,000 Deposits paid for acquisition of exploration (646,245) - prospects
Net Cash Flows used in Investing Activities (3,088,829) (4,852,550)
Cash Flows from Financing Activities
Proceeds from share issues 12,500,000 1,867,628
Costs associated with capital raising (75,000) (54,521)
Refundable deposits returned - Indonesia - 832,930
Net Cash Flows provided by Financing Activities 12,425,000 2,646,037
Net increase/(decrease) in Cash and Cash Equivalents 7,432,457 (4,417,270) Cash and Cash Equivalents
at the beginning of the financial year 67,032 4,484,302 Cash and Cash Equivalents
at the end of the financial year 7,499,489 67,032
The consolidated statement of cash flows should be read in conjunction with the notes to the financial statements.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report, prepared in accordance with Australian Accounting Standards, Australia Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Group is a for profit entity for financial reporting purposes under Australian Auditing Standards.
The financial report covers the economic entity of NuEnergy Gas Limited and its controlled entities. NuEnergy Gas Limited is a listed public company, incorporated and domiciled in Australia.
The financial report was authorised for issue by the Directors on the date the Declaration by Directors was signed.
The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
Basis of Preparation and Statement of Compliance
The financial report complies with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.
The financial report is presented in Australian Dollars and except for cash flow information, it has been prepared on an accruals basis and is based on historical costs modified, where applicable, by the measurement at fair value of selected non- current assets, financial assets and financial liabilities.
Going Concern Basis
The consolidated entity has incurred a loss of $26,445,137 and had net cash outflows from operations of $1,903,714 for the year ended 30 June 2015. The loss was impacted by a one off impairment of exploration costs of $32,218,582. The consolidated entity has no ongoing source of operating income and is dependent on raising capital to fund its ongoing activities.
The financial report has been prepared on a going concern basis which assumes the realisation of assets and the discharge of liabilities in the normal course of business.
The directors believe the going concern basis is appropriate. Notwithstanding the Group has $7,499,489 in cash and cash equivalents, the directors have prepared cash flow forecasts which include further capital raisings to meet all planned expenditure programs. However, in the event that future capital raisings are delayed, the consolidated entity has the ability to scale back its operations to satisfy its minimum expenditure requirements.
Based on the above, the directors are satisfied that the consolidated entity will be able to fund its operations and continue as a going concern, and it is appropriate that the financial statements have been prepared on that basis.
Significant assumptions and key estimates
The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values that are not apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
(i) Basis of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent, NuEnergy Gas Limited, and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 7.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling interests”. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income.
Business Combinations
Business combinations occur where the acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination one of the combining entities must be identified as the acquirer (ie parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured.
The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree where less than 100% ownership interest is held in the acquiree.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements.
Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.
Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss.
Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair value through the statement of comprehensive income unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive income.
(ii) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Items of plant and equipment are depreciated using a straight line method over four to five years.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Revaluations
Fair value is determined by reference to market-based evidence, which is the amount for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm's length transaction as at the valuation date.
Any revaluation surplus is credited to the asset revaluation reserve included in the equity section of the Statement of Financial Position unless it reverses a revaluation decrease of the same asset previously recognised in the Statement of Comprehensive Income.
Any revaluation deficit is recognised in the Statement of Comprehensive Income unless it directly offsets a previous surplus of the same asset in the Asset Revaluation Reserve.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the Statement of Comprehensive Income in the period the item is derecognised.
(iii) Exploration and evaluation expenditure
Exploration and evaluation expenditures in relation to separate areas of interest, for which rights of tenure are current, are capitalised in the year in which they are incurred and are carried at cost less accumulated impairment losses where the following conditions are satisfied:
(i) the right to tenure of the area of interest are current; and (ii) at least one of the following conditions is also met;
the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and
exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.
Capitalised exploration costs are reviewed at each reporting date as to whether an indication of impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
Indicators that an entity should test exploration and evaluation assets for impairment:
(a) the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed;
(b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned;
(c) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area;
(d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development.
If any such indication exists, the recoverable amount of the capitalised exploration costs is estimated to determine the extent of the impairment loss (if any).
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision is made to proceed with development, accumulated expenditure will be tested for impairment, transferred to development properties, and then amortised over the life of the reserves associated with the area of interest once mining operations have commenced.
Restoration, Rehabilitation and Environmental Expenditure
Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are provided for as part of the cost of those activities. Costs are estimated on the basis of current legal requirements, anticipated technology and future costs. Estimates of future costs are re-assessed at each reporting date.
Project Costs
Project costs relating to the oil and gas sector are carried forward to the extent that the following conditions have been met:
it is probable that the future economic benefits embodied in the asset will eventuate; and
the asset possesses a cost or other value that can be measured reliably.
Costs which no longer satisfy the above conditions are written off against the results for the year (iv) Impairment of assets
At each reporting date, the consolidated entity assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the consolidated entity makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the Statement of Profit or Loss and Other Comprehensive Income, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised though profit or loss.
Impairment losses are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimate used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(v) Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
(vi) Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised at amortised cost less adjustments for impairment or uncollectible amounts. An estimate for doubtful debt is made when collection of the full amount is no longer probable.
Bad debts are written off when identified.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (vii) Trade and other payables
Trade and other payables are stated at amortised cost. Trade payables and other accounts payable are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services.
(viii) Employee Benefits Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.
The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position.
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Any re-measurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the changes occur.
The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions.
(ix) Leases
Operating lease payments are recognised as an expense in the Consolidated Statement of Profit or Loss and other Comprehensive Income on a straight-line basis over the lease term.
(x) Share Capital
Ordinary share capital is recognised at the fair value of the consideration received by the Company. Transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the consideration received, net of any related income tax benefit.
(xi) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the consolidated entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
Interest
Revenue is recognised as the interest accrues to the net carrying amount of the financial asset.
