TIDMTLOU
RNS Number : 1578O
Tlou Energy Ltd
29 September 2023
29 September 2023
Tlou Energy Limited
("Tlou" or "the Company")
Final Results
Tlou Energy Limited is pleased to announce its 2023 results. The
Annual Report and Consolidated Financial Statements for the year
ended 30 June 2023 are available on the Company's website:
https://tlouenergy.com/reports
Highlights:
-- Construction of the transmission line to connect Tlou's
Lesedi gas-to-power project to the electricity grid is 90%
complete
-- A new 3-well production pod (Lesedi 6) has been drilled and
the lateral wells of Lesedi 4 have been redrilled and are being put
into the production phase
-- 4,000 hectares of land has been acquired for the Lesedi
project which will including the central gas processing facility,
planned power generation assets and further gas wells
-- Significant funds were raised from ILC Investment Pty Ltd who
is now Tlou's largest shareholder with 34.86% of the Company
Tlou's Managing Director, Mr Tony Gilby commented, "The past
year has seen the Company make good progress toward the target of
supplying electricity into the power grid in Botswana. The
transmission line work is nearing completion, substations are in
progress and new wells are being completed ahead of expected gas
flow.
It has not been easy and has taken a lot of time, effort and
money to get to this stage. There remain significant challenges
ahead.
Nonetheless, I believe gas will continue to play a very
important, if not vital role for many years to come in order to
meet increasing energy demand in southern Africa. We look forward
to moving Tlou Energy's Lesedi project into production and are
grateful to our shareholders for their continuing support."
By Authority of the Board of Directors
Mr. Anthony Gilby
Managing Director
****
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information regarding this announcement please
contact:
Tlou Energy Limited +61 7 3040 9084
Tony Gilby, Managing Director
----------------------
Solomon Rowland, General Manager
----------------------
Grant Thornton (Nominated Adviser) +44 (0)20 7383 5100
----------------------
Harrison Clarke, Colin Aaronson, Ciara Donnelly
----------------------
Zeus Capital (UK Broker) +44 (0)20 3829 5000
----------------------
Simon Johnson
----------------------
Investor Relations
----------------------
Ashley Seller (Australia) +61 418 556 875
----------------------
FlowComms Ltd - Sasha Sethi (UK) +44 (0) 7891 677 441
----------------------
About Tlou
Tlou is developing energy solutions in Sub-Saharan Africa
through gas-fired power and ancillary projects. The Company is
listed on the ASX (Australia), AIM (UK) and the BSE (Botswana). The
Lesedi Gas-to-Power Project ("Lesedi") is 100% owned and is the
Company's most advanced project. Tlou's competitive advantages
include the ability to drill cost effectively for gas, operational
experience and Lesedi's strategic location in relation to energy
customers. All major government approvals have been achieved.
Forward-Looking Statements
This announcement may contain certain forward-looking
statements. Actual results may differ materially from those
projected or implied in any forward-looking statements. Such
forward-looking information involves risks and uncertainties that
could significantly affect expected results. No representation is
made that any of those statements or forecasts will come to pass or
that any forecast results will be achieved. You are cautioned not
to place any reliance on such statements or forecasts. Those
forward-looking and other statements speak only as at the date of
this announcement. Save as required by any applicable law or
regulation, Tlou Energy Limited undertakes no obligation to update
any forward-looking statements.
Chairman's letter
Dear Shareholders,
We continue to make excellent progress towards establishing
ourselves as a key power player in Botswana and Southern Africa
through the exploration and evaluation of our gas to power
project.
During the year Tlou progressed the construction of transmission
lines to connect the Lesedi project to the grid, acquired a
4,000-hectare farm for the central processing facility, contracted
the construction of the Lesedi substations, and the next phase of
the production drilling commenced.
One of the final stages in the evaluation of the Lesedi project
is commencement of the 10MW gas to electricity operation. To
connect this project to the Botswana power grid, Tlou engaged Zismo
Engineering Pty Ltd to construct a 100 km transmission line from
the Lesedi project to Serowe. Construction of the 66kV transmission
line is over 90% complete and is expected to be fully completed in
the coming months. Tlou has also engaged South African based
Optipower, a division of Murray & Roberts Ltd to undertake the
construction of associated substations as part of the grid
connection.
Tlou has acquired a 4,000-hectare property within the Lesedi
project area. The property will be the location of the power
generation assets, central processing facility, mechanical
workshops, stores, casing and core yards, medical centre including
helipad, and accommodation units.
Production drilling recommenced with the completion of the
Lesedi 6 production pod and the drilling of new lateral sections of
the Lesedi 4 pod. Lesedi 6 is the first of a series of new pods,
funds permitting, that the Company will drill to supply gas for the
initial 10MW project. While Lesedi 4 has produced gas for several
years, redrilling of the laterals is aimed at providing straighter
lateral sections to improve dewatering and gas flow. Tlou's current
2P gas reserves stand at approximately 41 billion cubic feet (7.2m
BOE).
The Company's Mamba and Boomslang project areas are located
adjacent to the Lesedi project. Tlou will continue to evaluate
these projects and successful results could allow the Company to
progress these areas separately to Lesedi, with the potential for
gas-fired power.
We are privileged to have the continued support of the
government of Botswana and the inclusion of coal bed methane (CBM)
as part of the country's forward plan to combat power
deficiency.
During the 12-month period ending 30 June 2023, the Company
successfully raised approximately AUD 14.8 million in equity and
AUD 2.0 million loan funding to support ongoing project
development. The Company's major shareholder ILC Investments Pty
Ltd (ILC) now holds 34.86% of the Company's ordinary shares.
This has been a highly active year for Tlou. We look forward to
another successful year ahead. I would like to take this
opportunity to thank the Tlou Board, management, field staff and
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,
This year has been one characterised by significant activity in
the field with our primary focus being the advancement of the
Lesedi project.
We have recently completed drilling of additional gas production
wells, with the Lesedi 4 and Lesedi 6 pods now dewatering ahead of
expected gas flow. Additional drilling is planned at the Lesedi
project as well as in our exploration tenements subject to
available funding as we ready ourselves to generate first
electricity as part of the final evaluation stage for the Lesedi
project.
Tlou plans to have the Lesedi gas to power project producing
electricity in 2024 and remains driven to ensuring the objective is
met.
Southern Africa continues to operate under a severe energy
deficit. This has the potential to impose significant constraint on
economic activities, provision of public services, and quality of
life, as well as on adoption of new technologies in various sectors
such as education, agriculture, and finance.
Tlou Energy aims to be part of the solution to solve the
regional energy deficit beginning with integrating gas fired power
into the grid in Botswana.
With gas expected to be a vital part of the regional power mix
in the coming years Tlou Energy is well positioned to become a
significant power supplier.
We continue to monitor projects risks and opportunities and work
towards creating value for all stakeholders.
Yours faithfully,
Anthony (Tony) Gilby
Managing Director
Directors' report
The Directors present their report, together with the financial
statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity' or the 'Group') consisting of Tlou Energy
Limited (referred to hereafter as the 'Company' or 'parent entity')
and the entities it controlled at 30 June 2023.
General Information
Directors
The following persons were directors of Tlou Energy Limited
during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Martin McIver Non-Executive Chairman
Anthony Gilby Managing Director & Chief Executive Officer
Gabaake Gabaake Executive Director
Colm Cloonan Finance Director
Hugh Swire Non-Executive Director
Dividends
There were no dividends recommended or paid during the financial
year.
Principal activities
The principal activity of the consolidated entity is to explore,
evaluate and develop power solutions in Sub-Saharan Africa through
Coalbed Methane (CBM) gas-fired power. No revenue from these
activities has been earned to date, as the consolidated entity is
still in the exploration and evaluation or pre-development
stage.
Significant changes in the state of affairs
There were no other significant changes to the state of affairs
of the consolidated entity other than those disclosed in the
financial report and notes thereof.
Review and results of operations
The loss for the year after interest amounted to $4,241,208 (30
June 2022: $4,329,116).
As a pre-revenue entity a loss for the year is expected and is
in line with expectations. The key focus for the Company continues
to be the Lesedi project area and specifically the work in relation
to the planned 10MW gas-to-power project. Payments for exploration
and evaluation assets amounted to $11,886,628 over the year which
included $5,802,386 on construction of transmission lines and
substations that will connect the Lesedi project to the electricity
grid in Botswana. Payment to suppliers and employees over the year
was $3,164,020. Significant project funding was also acquired
during the year, totalling $14,853,721 in equity and $2,000,000 by
way of a loan. Most of these funds were received from ILC
Investment Pty Ltd who is now the Company's largest shareholder at
34.86%.
Gas to Power Project
The Lesedi power project ("Lesedi") is Tlou's most advanced
project. The first electricity to be generated at Lesedi is planned
to go towards satisfying a 10MW Power Purchase Agreement (PPA) that
has been signed with Botswana Power Corporation (BPC), the national
power utility in Botswana. The Lesedi project currently has several
components underway as part of the final evaluation stage including
the construction of transmission lines, substations, a field
operations facility and generation site as well as production well
drilling.
Transmission Line and Substations
Lesedi is approximately 100km from the nearest BPC substation
connection in Serowe. To connect to the national grid, the Company
is undertaking the construction and installation of a 100km 66kV
transmission line. This, together with the ongoing drilling program
should enable the Company to connect and provide electricity into
Botswana's power network.
The construction of the 66kV transmission line continued
throughout the year and is over 90% complete. Key items outstanding
include a road crossing and further stringing of the line.
Transmission line work is on track to be completed later this year
and in advance of planned first power into the grid.
Substations are required at either end of the transmission line,
one to tie Tlou's generators to the transmission line at Lesedi and
another to integrate the line with the existing BPC substation at
Serowe. The planned substation at Lesedi is currently designed for
an initial 5MW of power. The Company is now assessing options that
may allow the current substation design to be adapted to facilitate
expansion beyond 10MW. Based on the current timetable the
substations are expected to be completed around Q2 2024.
Drilling Operations
Coalbed Methane (CBM) gas is the feedstock for power generation
at Lesedi. The planned gas production wells to be used are referred
to as Dual Lateral Pods that consist of three wells in total, one
vertical production well intersected by two lateral wells drilled
horizontally through the target reservoir section for several
hundred metres. The Company recently drilled a new pod (Lesedi 6)
and also redrilled the lateral sections of an existing pod, Lesedi
4. The aim of redrilling the Lesedi 4 lateral wells is to provide
straighter lateral sections compared to the original lateral wells.
The Lesedi 4 pod has flowed gas for a number of years and these
straighter laterals are expected to assist with removing water from
the reservoir to more efficiently dewater and flow gas. Both Lesedi
4 and Lesedi 6 pods were flushed to clear the wells and now have
production equipment installed for dewatering ahead of gas
production. In addition to requiring sufficient gas form Lesedi 4
and Lesedi 6, the Company will need to drill further wells that can
supply sufficient gas for the planned 10MW project.
Exploration and Evaluation
As well as the Lesedi project area, the Company also holds six
other prospecting licences (PL) at varying stages of exploration
and evaluation. These include the Mamba project which consists of
five PL's covering an area of approximately 4,500 Km2 and the
Boomslang licence (approx. 1,000 Km2). The Mamba and Boomslang
licences are situated adjacent to Lesedi and could provide the
Company with flexibility and optionality subject to results.
Matters subsequent to the end of the financial year
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.
Likely developments, risks and expected results of
operations
The Company is drilling wells in the Lesedi project area to
produce CBM gas. These wells are designed to achieve sufficient gas
flow rates for the Company's initial project development. The gas
flow rates from these wells are vitally important to assess the
viability and commerciality of the Lesedi project. However, at the
date of this report the level of gas that may be produced from the
project and if gas production rates will be at commercial rates is
not yet known. Further wells will also be required to produce
sufficient gas for the planned Lesedi project.
The Company is evaluating additional projects including solar
power and possibly hydrogen production, carbon black/graphite
production and crypto currencies in addition to the gas-fired power
project. These projects may be subject to regulatory approvals. No
guarantee can be given in relation to the results of the Company's
operations, gas flow rates, regulatory approvals being granted or
the ability to secure the funds required to progress all or any of
the Company's existing or planned operations.
The Company is subject to risks which may have a material
adverse effect on operating and financial performance. Tlou's Risk
Management Policy can be found on the Company's website. It is not
possible to identify every risk that could affect the business or
shareholders. Any actions taken to mitigate these risks cannot
provide complete assurance that a risk will not materialise or have
a material adverse effect on the business, strategies, assets or
performance of the Company. A list of risks currently considered
material and mitigation strategies are set out below. This is not
an exhaustive list and risks are outlined in no particular
order.
Risk Description Mitigation
===========================================
Funding The Company will need to raise The Company has operated in Botswana for over a decade
additional debt and/or equity with extensive local and international
funds to support its ongoing relationships with investors who have supported the
operations or implement its Company.
planned activities and strategies.
This includes but is not limited The Company actively manages its capital requirements and
to funding to complete the infrastructure maintains close relationships with
necessary to connect to the potential investors. The Company continues to explore
power grid and generate electricity sources of both equity and debt capital.
at the Lesedi project and funds
to facilitate drilling of additional
gas wells to deliver sufficient
gas for development of the proposed
10MW power project. There can
be no assurance that such funding
will be available when required
or on satisfactory terms or
at all. Inability to find sufficient
funds may result in the delay
or abandonment of certain activities
which would likely have an adverse
effect on the Company's progress.
Health The project operations are in The Company employs highly skilled and experienced
and Safety a remote location, in a sometimes-harsh personnel where possible. The Chief Operations
environment and involves the Officer is supported by a dedicated Safety, Health and
use of heavy machinery and equipment. Environment (SHE) officer and a paramedic
is also on duty at all times at the field operations. The
Company has a training and safety
management system and external audits of the safety
management system are conducted. All visitors
to site are given a safety briefing.
===========================================
Freedom The Company has licences to The Company continues to support regular and extensive
to Operate operate over 8,000 square km Government engagement activities to
and has had continued access interest and educate lawmakers to the country's natural
to key licence areas when required. resource opportunities as well as
Negative sentiment towards the keep up to date with changing national power strategies
project or industry may impair and requirements.
Tlou's freedom to operate. Changes
to key Government personnel Tlou supports and interacts with a wide network of local
and/or national policy could stakeholders including farmers and
also impact ability to operate landowners to try and ensure that the needs of the
effectively. community are being met and that the project
can provide benefits for all stakeholders including
providing long term and sustainable employment
opportunities.
Environment Botswana's natural habitat, Tlou has full environmental approval in place for
water and wildlife needs to development of the gas-to-power project.
be protected. Botswana rigorously The Company aims to not just meet environmental
enforces its environmental regulations requirements but exceed them.
so the risk of fines or other
liabilities for noncompliance The Company uses local specialists to support its ongoing
is commensurately high. permit renewals, environmental assessments
and licence applications. Continual monitoring of actual
and potential impacts on the environment
is practiced to try and ensure that any impact on the
natural habitat is eliminated or minimised.
===========================================
Climate Climate change initiatives could Tlou's Lesedi gas-to-power project aims to be part of a
have an impact on Tlou's operations power market in sub-Saharan Africa
in the future. Climate initiatives that will move away from carbon intensive coal and diesel
could have a material impact fired power generation. While also
on fossil fuel projects such a fossil fuel, gas is viewed as a transitional fuel that
as Tlou's Lesedi gas-to power can assist with providing base load
project. power until such time that sustainable and/or renewable
power sources can provide reliable
24-hour base load power.
The Company is aware that it may need to adapt its process
to meet future climate needs and
will continue to assess new information as it becomes
available.
Power Sales The Company has signed a 10MW The Company works closely with its contractors and
Power Purchase Agreement (PPA) engineers to progress infrastructure projects
with Botswana Power Corporation in a timely manner.
(BPC) with the aim for first
power to be supplied into the Management continues to explore opportunities with other
national grid in 2024. There potential customers across the region,
is a risk that the grid connection potentially via the Southern African Power Pool or within
infrastructure could be delayed Botswana. The Company also aims
thereby postponing first power to diversify its products including potentially producing
sales. No other agreements are solar power, hydrogen, carbon black/graphite
currently in place for sale and crypto currencies.
of power or gas to other parties.
===========================================
Geological The Company has over 8,000 square Tlou has invested in seismic surveys and core hole
Risk km of licence areas part of drilling to identify areas of lower risk
which has not had significant prior to conducting further exploration and evaluation.
CBM operations to date. There This strategy is planned for undeveloped
remains significant geological areas of the project. After a decade of operating in the
risk in these areas and subject region and supported by external
to operational results these resource certifications, the operations team have and
areas may not be commercial. continue to develop an excellent knowledge
of the geological area to help de-risk future exploration
and evaluation operations.
Remote The Company operates over 100km The Company has on-site paramedic support and has invested
Operations from established medical and in its own stock of equipment so
engineering support facilities that it can operate as autonomously as possible over a
in the closest urban area which greater range of activities. A purpose-built
increases costs and risks as field operations camp is under construction which will be
well as requiring adequate insurance. suitable for full development of
the initial 10MW project and for further expansion.
===========================================
People The Company may lose key executives The Company continues to search for skilled staff to grow
and management. The Company the team to satisfy the Company's
operates in a competitive environment needs and ideally to have a lead person and back-up
in relation to talented corporate support person for all key positions.
and technical personnel. In addition, implementation of appropriate staff training
and succession plans is a key target.
The Company offers incentives and development
opportunities for key executives and management
to attract the best talent to the Company.
===========================================
Environmental regulation
The Directors are satisfied that adequate systems are in place
for the management of its environmental responsibilities and
compliance with its various licence requirements and regulations.
The Directors are not aware of any breaches of these requirements
and to the best of their knowledge, all activities have been
undertaken in compliance with environmental regulations.
Information on Directors
Martin McIver MBA
Special Responsibilities Non-Executive Chairman
Member of the Audit Committee
Member of the Risk Committee
Chairman of the Nomination & Remuneration Committee
Interest in Shares and options 1,097,816 Ordinary Shares
750,000 Performance Rights
Experience
Martin holds an MBA (International) from the American Graduate
School of International Management, a Graduate Diploma in Applied
Finance and Valuations (FINSIA/Kaplan) and a Bachelor of Business
(Marketing) from the Queensland University of Technology.
Martin has over 15 years' experience as General Manager for
mining services companies including bulk and dangerous goods
logistics, and drilling services. Martin was the Executive General
Manager of the Mitchell Group, a vertically integrated coal and
coal seam gas company with investments and operations across
Australia, Asia and Africa. Prior to joining the Mitchell Group,
Martin was a Director in Mergers and Acquisitions with
PricewaterhouseCoopers.
Martin was appointed Non-Executive Director in September 2010
and is currently the Chief Financial Officer of PWR Holdings
Limited (ASX:PWH). During the past three years Martin has not
served as a director of any other ASX listed companies.
Anthony Gilby B.Sc. (First Class Honours)
Special Responsibilities Managing Director and Chief Executive
Officer
Member of the Audit Committee
Member of the Nomination & Remuneration Committee
Interest in Shares and options 50,000,000 Ordinary Shares
750,000 Performance Rights
Experience
Tony was appointed Managing Director and Chief Executive Officer
in March 2012 and has over 30 years' experience in the oil and gas
industry. He is a founding director of Tlou Energy Limited.
Tony was awarded a Bachelor of Science (First Class Honours)
degree in Geology from the University of Adelaide in 1984, and also
won the University Medal in Geology (Tate Memorial Medal). Tony
began his career working as a well-site geologist for Delhi
Petroleum in the Cooper Basin. He subsequently joined ESSO
Australia. His roles with ESSO included exploration geology,
geophysics, petrophysics and a period of time working in the Exxon
Production Research Centre in Houston studying the seismic
application of sequence stratigraphy.
On his return to Australia, he continued to work with ESSO in a
New Ventures capacity working on a variety of projects prior to
relocating to Brisbane where he worked for MIM Petroleum and the
Louisiana Land and Exploration Company (LL&E). In 1996, he left
LL&E to take on a consulting role as well as the acquisition of
prospective Queensland acreage in a private capacity. This work
culminated with the founding of Sunshine Gas Limited where he
remained Managing Director until its sale in late 2008. He is a
former Non-Executive director of ASX listed Comet Ridge
Limited.
Gabaake Gabaake M.Sc.
Special Responsibilities Executive Director
Member of the Risk Committee
Member of the Nomination & Remuneration Committee
Interest in Shares and options 385,999 Ordinary Shares
2,750,000 Performance Rights
Experience
Gabaake graduated with a Bachelor of Science degree in Geology
from the University of Botswana in 1986 followed by a Masters
degree in groundwater hydrology from the University College of
London in 1989.
Gabaake is a Botswana citizen based in Gaborone. He is a former
Botswana Government senior public servant having worked as
Permanent Secretary at the Ministry of Minerals, Energy and Water
Resources. Prior to that, he served at the Ministry of Local
Government.
Gabaake has served on various private company boards including
De Beers Group, Debswana Diamond Company (Pty) Limited and Diamond
Trading Company Botswana. During the past three years, Gabaake has
not served as a director of any other ASX listed companies.
Colm Cloonan FCCA
Special Responsibilities Finance Director
Member of the Audit Committee
Member of the Nomination & Remuneration Committee
Interest in Shares and options 4,581,387 Ordinary Shares
4,750,000 Performance Rights
Experience
Colm is a Fellow of the Association of Chartered Certified
Accountants (FCCA) with 20 years' experience in various finance
roles.
Colm joined Tlou in 2009 at the early stages of the Company's
activities and has been with the Company through all phases of its
operations and development to date. Colm has worked in Europe and
Australia in a range of finance roles including audit and business
services, as well as providing financial and management accounting
services to clients in various industries including power
generation in Australia.
Colm studied accountancy at the Galway-Mayo Institute of
Technology in Ireland. During the past three years Colm has not
served as a director of any other ASX listed companies.
Hugh Swire BA (Hons)
Special Responsibilities Non-Executive Director
Chair of the Risk Committee
Chair of the Audit Committee
Member of the Nomination & Remuneration Committee
Interest in Shares and options 12,065,921 Ordinary Shares
500,000 Performance Rights
Experience
Hugh started his career working with Mahon China, an established
investment management and advisory partnership based in Beijing.
Active in China since 1985, Mahon China have over 3 decades of
experience advising foreign companies with investments and
corporate activities in China. Hugh has remained a Partner of the
firm and now supports UK / EU companies from London looking to
expand and find partners in China or increasingly support Chinese
companies looking to make investments internationally.
After leaving Mahon China, Hugh spent a decade working for
Investment funds and international banks in Hong Kong and Tokyo
where he worked for Nomura as well as in London for JP Morgan where
he was Vice President.
Since 2010, Hugh has been focused on supporting fast growing UK
companies in the low carbon and technology sectors by investing
growth capital in Water Powered Technologies Ltd, a leading
innovator in zero energy water management systems as well as MWF
Ltd, one of the largest suppliers of renewable heat in the UK,
which has since been sold to Aggregated Micro Power Holdings plc.
Hugh also helped found a leading technology education company Black
Country Atelier Ltd, which provides specialist training courses to
students globally in 3D printing (CAM) digital electronics and
CAD.
Hugh still travels to China after studying Chinese at Oxford
University graduating with a BA Hons. During the past three years
Hugh has not served as a director of any other ASX listed
companies.
Company secretary
Mr Solomon Rowland was appointed Company Secretary on 19 August
2015 and continues in office at the date of this report. Mr Rowland
is a commercial lawyer with over 20 years' experience in various
private, government and in-house legal roles. Solomon holds a Juris
Doctor from the University of Queensland.
Prior to joining Tlou Energy Limited as Legal Counsel in
February 2013, Solomon worked for Crown Law representing various
Queensland government departments in a range of legal matters.
During his time in government, Solomon was involved in advising
government departments on commercial, corporate governance and
policy matters as well as representing the state in various courts,
tribunals, and commissions of inquiry. Solomon brings many years of
experience in commercial, advocacy, administrative and planning and
environment law.
Meetings of directors
The number of meetings of the consolidated entity's Board of
Directors and committees held during the year ended 30 June 2023,
and the number of meetings attended by each Director are listed
below. The Nomination & Remuneration committee comprises the
full board.
Board / Nomination Audit Committee Risk Committee
& Remuneration
Committee
Attended Held Attended Held Attended Held
M McIver 7 8 1 2 4 4
A Gilby 8 8 2 2 - -
G Gabaake 6 8 - - 4 4
C Cloonan 8 8 2 2 - -
H Swire 8 8 2 2 4 4
Held: represents the number of meetings held during the time the
director held office or was a member of the relevant committee.
Remuneration Report - audited
This report outlines the remuneration arrangements in place for
the key management personnel of the consolidated entity.
Remuneration policy
Ensuring that the level of Director and Executive remuneration
is sufficient and reasonable is dealt with by the full Board. The
Remuneration Policy of Tlou Energy Limited has been designed to
align the objectives of key management personnel with shareholder
and business objectives. The Board of Tlou Energy Limited believes
the remuneration policy to be appropriate and effective in its
ability to attract and retain the best key management personnel to
run and manage the consolidated entity, as well as create shared
goals between key management personnel and shareholders.
The Board's policy for determining the nature and amount of
remuneration for the executive Directors and senior executives of
the consolidated entity is as follows:
-- The remuneration policy is developed by the Board after
seeking, if appropriate, professional advice from independent
external consultants.
-- Executives employed by the consolidated entity receive a base
salary (which is based on factors such as length of service and
experience), inclusive of superannuation, fringe benefits, options,
and performance incentives where appropriate. If performance
incentives are put in place these will generally only be paid once
predetermined key performance indicators have been met.
-- Executives engaged through professional service entities are
paid fees based on an agreed market based hourly rate for the
services provided and may also be entitled to options and
performance-based incentives.
-- Incentives paid in the form of options or performance rights
are intended to align the interests of management, the Directors
and Company with those of the shareholders. In this regard,
executives are prohibited from limiting risk attached to those
instruments by use of derivatives or other means.
The Board reviews executive remuneration arrangements annually
by reference to the consolidated entity's performance, executive
performance and comparable information from industry sectors.
Key management personnel including Non-executive Directors
located in Australia and employed executives receive the
superannuation guarantee contribution required by the Commonwealth
Government, which is currently 11% and do not receive any other
retirement benefits. Individuals, however, can chose to sacrifice
part of their salary to increase payments towards
superannuation.
Non-Executive Director Remuneration
The Board's policy is to remunerate Non-Executive Directors for
time, commitment, and responsibilities. The Board determines
payments to the Non-Executive Directors and reviews their
remuneration annually, based on market practice, duties, and
accountability. Independent external advice is sought when
required.
The maximum aggregate amount of fees that can be paid to
Non-Executive Directors is $500,000 per year. This was approved by
shareholders at a general meeting held on 10 July 2012.
Fees for Non-Executive Directors are not linked to the
performance of the consolidated entity, however, to align Directors
interests with shareholder interests, where possible the Directors
are encouraged to hold shares in the Company. There is no minimum
holding prescribed in the Constitution.
Performance conditions linked to remuneration
The Board provides advice on remuneration and incentive policies
and practices and specific recommendations on remuneration packages
and other terms of employment for executive Directors, other senior
executives, and Non-Executive Directors. The aim is to ensure that
reward for performance is competitive and appropriate for the
results delivered.
Remuneration and the terms and conditions of employment for
executive Directors and Company executives are reviewed annually
having regard to performance and relative comparative information
and are approved by the Board following independent professional
advice, as required. In this respect, consideration is given to
normal commercial rates of remuneration for similar levels of
responsibility.
Key management personnel during the financial year ended 30 June
2023
Directors
Martin McIver Non-Executive Chairman
Anthony Gilby Managing Director and Chief Executive Officer
Gabaake Gabaake Executive Director
Colm Cloonan Finance Director
Hugh Swire Non-Executive Director
Executives
Solomon Rowland Company Secretary
There were no other key management personnel of the consolidated
entity during the financial year ended 30 June 2023.
Details of remuneration
Details of remuneration of each of the Directors and executives
of the consolidated entity during the financial year are set out in
the table below.
Benefits and Payments for the year ended 30 June 2023
Short-term Post Long Share
benefits Employment term based
benefits benefits payments
Salary Cash Superannuation Leave Total Cash Performance Equity Total
& Fees Bonus Benefits Remuneration Rights Compensation
Directors $ $ $ $ $ $ $
M McIver 60,000 - 6,300 - 66,300 - 0.0% 66,300
A Gilby 323,318 - 13,087 - 336,405 - 0.0% 336,405
G Gabaake 127,547 - 13,392 - 140,939 25,456 15.3% 166,395
C Cloonan 236,356 - 24,817 - 261,173 50,913 16.3% 312,086
H Swire 67,448 - - - 67,448 - 0.0% 67,448
Total
Directors 814,669 - 57,596 - 872,265 76,369 948,634
-------- ------- --------------- ---------- ------------- ------------ ----------
Executives
S Rowland 176,963 - 18,581 - 195,544 - 0.0% 195,544
Total
Executives 176,963 - 18,581 - 195,544 - 195,544
-------- ------- --------------- ---------- ------------- ------------ ----------
Total 991,632 - 76,177 - 1,067,809 76,369 1,144,178
-------- ------- --------------- ---------- ------------- ------------ ----------
During the 2023 year, no proportion of the remuneration of any
key management personnel was performance based. No key management
personnel received cash bonuses, performance related bonuses,
termination benefits or non-cash benefits during the year. The
share-based payments amount included in the table above relate to
performance rights granted in the 2022. These amounts were not paid
to staff. The figures represent an accounting valuation attributed
to the performance rights. This valuation has been spread across
2022 and 2023.
Benefits and Payments for the year ended 30 June 2022
Short-term Post Long Share
benefits Employment term based
benefits benefits payments
Salary & Cash Bonus Superannuation Leave Total Cash Performance Equity Total
Fees Benefits Remuneration Rights Compensation
Directors $ $ $ $ $ $ $
M McIver 44,000 - 4,400 - 48,400 - 0.0% 48,400
A Gilby 152,365 - 6,545 - 158,910 - 0.0% 158,910
G Gabaake 106,210 - 10,621 - 116,831 77,400 39.8% 194,231
C Cloonan 119,367 - 34,256 - 153,623 154,800 50.2% 308,423
H Swire 44,000 - - - 44,000 - 0.0% 44,000
Total
Directors 465,942 - 55,822 - 521,764 232,200 753,964
--------- ----------- --------------- --------- ------------- ------------ --------
Executives
S Rowland 160,254 - 16,025 - 176,279 - 0.0% 176,279
Total
Executives 160,254 - 16,025 - 176,279 - 176,279
--------- ----------- --------------- --------- ------------- ------------ --------
Total 626,196 - 71,847 - 698,043 232,200 930,243
--------- ----------- --------------- --------- ------------- ------------ --------
During the 2022-year, performance rights were issued to key
management personnel as outlined in the 2022 annual report under
the heading Performance Rights. No key management personnel
received other performance related bonuses, cash bonuses,
termination benefits or non-cash benefits during the year.
Service agreements
The following outlines the remuneration and other terms of
employment for the following personnel during the reporting period
which are formalised in employment contracts for services.
Anthony Gilby Managing Director and Chief Executive Officer
Term of Agreement: Mr Gilby's services are provided in a
personal capacity. The agreement has no fixed term.
Base Fee: Mr Gilby has waived 50% of his contracted rate up to
the end of the reporting period. The amount waived will not be
payable by the Company at a future date. The annual cost to the
Company excluding share-based payments (if any), after taking
account of the 50% deduction, adjustments for industry standards
and CPI was approximately $336,000.
Termination Benefit: No termination benefit is payable if
terminated for cause.
Termination Notice: The Company may give Mr Gilby three months'
notice or pay 1.5 times his contracted salary in lieu of notice to
terminate the Agreement.
Solomon Rowland Company Secretary
Term of Agreement: Mr Rowland's services are provided in a
personal capacity. The agreement has no fixed term.
Base Fee: Mr Rowland has agreed to waive up to 25% of his
current contracted rate up to the end of the reporting period. The
amount waived will not be payable by the Company at a future date.
The annual cost to the Company excluding share-based payments (if
any), after taking account of the 25% deduction, adjustments for
industry standards and CPI was approximately $196,000.
Termination Benefit: No termination benefit is payable if
terminated for cause.
Termination Notice: The Company may give the Company Secretary
six months' notice of its intention to terminate the Agreement.
Gabaake Gabaake Executive Director
Term of Agreement: Mr Gabaake's services are provided in a
personal capacity. The agreement has no fixed term.
Base Fee: The annual cost to the Company excluding share-based
payments (if any), adjustments for industry standards and CPI was
approximately $141,000.
Termination Benefit: No termination benefit is payable if
terminated for cause.
Termination Notice: The Company may give the Executive Director
six months' notice of its intention to terminate the Agreement.
Colm Cloonan Finance Director
Term of Agreement: Mr Cloonan's services are provided in a
personal capacity. The agreement has no fixed term.
Base Fee: The annual cost to the Company excluding share-based
payments (if any), adjustments for industry standards and CPI was
approximately $261,000.
Termination Benefit: No termination benefit is payable if
terminated for cause.
Termination Notice: The Company may give the Finance Director
six months' notice of its intention to terminate the Agreement.
Key management personnel shareholdings
The number of ordinary shares in Tlou Energy Limited held by
each key management person of the consolidated entity during the
financial year is set out below. These figures do not include any
shares issued post year end.
30 June 2023 Balance at Granted as Additions Disposals Balance at date Balance at end of
beginning of year remuneration of resignation / year
during the year appointment
M McIver 812,102 - 285,714 - - 1,097,816
A Gilby 34,489,580 - 15,510,420 - - 50,000,000
G Gabaake 385,999 - - - - 385,999
C Cloonan 1,931,112 - 2,650,275 - - 4,581,387
H Swire 10,065,921 - 2,000,000 - - 12,065,921
S Rowland 475,000 - 571,429 - - 1,046,429
48,159,714 - 21,017,838 - - 69,177,552
------------------ ------------------ ----------- ---------- ----------------- ------------------
Key management personnel Options
The number of options in Tlou Energy Limited held by each key
management person of the consolidated entity during the financial
year is set out below. These figures do not include any options
issued post year end. The options in this table are attaching
options to shares that were issued.
30 June 2023 Balance at Granted as Additions Expired Balance at date Balance at end of
beginning of year remuneration of resignation / year
during the year appointment
M McIver - - - - - -
A Gilby 6,249,999 - - (6,249,999) - -
G Gabaake 27,571 - - (27,571) - -
C Cloonan 375,000 - - (375,000) - -
H Swire 2,750,415 - - (2,750,415) - -
S Rowland 87,500 - - (87,500) - -
9,490,485 - - (9,490,485) - -
------------------ ----------------- ---------- ------------ ----------------- ------------------
Performance rights
Performance Rights are linked to the share price performance of
the Company, ensuring alignment with the interests of the Company's
shareholders. For the Performance Rights to vest and, therefore,
become exercisable by a participant, certain performance conditions
are 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.
Performance rights held by key management personnel at 30 June
2023 are as set out below:
Tranche Issue Opening Issued Exercised Lapsed Balance at Unvested Value
Date Balance Year End
M McIver (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
-
A Gilby (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
-
G Gabaake (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
(iv) 15-Dec-21 1,000,000 - - - 1,000,000 1,000,000 41,800
(v) 15-Dec-21 1,000,000 - - - 1,000,000 1,000,000 35,600
-
C Cloonan (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
(iv) 15-Dec-21 2,000,000 - - - 2,000,000 2,000,000 83,600
(v) 15-Dec-21 2,000,000 - - - 2,000,000 2,000,000 71,200
-
H Swire (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
-
S Rowland (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
Total 10,250,000 - - - 10,250,000 10,250,000 661,100
----------- ------- ---------- ------- --------------- ----------- --------
Tranche Performance conditions and expiry date
(i) To vest the share price needs to be AUD $0.165 or greater
for a period of 10 consecutive trading days. These
performance rights expire on 31/01/2025.
----------------------------------------------------------
(ii) To vest the share price needs to be AUD $0.22 or greater
for a period of 10 consecutive trading days. These
performance rights expire on 31/01/2025.
----------------------------------------------------------
(iii) To vest the share price needs to be AUD $0.28 or greater
for a period of 10 consecutive trading days. These
performance rights expire on 31/01/2024.
----------------------------------------------------------
(iv) To vest the share price needs to be AUD $0.10 or greater
for a period of 10 consecutive trading days. These
performance rights expire on 31/01/2025.
----------------------------------------------------------
(v) To vest the share price needs to be AUD $0.165 or greater
for a period of 10 consecutive trading days. These
performance rights expire on 31/01/2025.
----------------------------------------------------------
Shares issued on exercise of performance rights
Other than as shown in the table above, no other shares were
issued on exercise of performance rights up to the date of this
report.
Relationship between remuneration and Company performance
The factors that are considered to affect shareholder return
during the last five years is summarised below:
2023 2022 2021 2020 2019
Share price at end of financial year
($) 0.034 0.028 0.039 0.040 0.12
Market capitalisation at end of
financial year ($M) 35 17 23 18 52
Loss for the financial year ($) (4,241,208) (4,329,116) (2,054,237) (12,950,601) (3,216,695)
Cash spend on exploration programs ($) (11,886,628) (2,639,000) (797,340) (1,766,761) (6,942,758)
------------- ------------ ------------ ------------- ------------
Director and Key Management Personnel
remuneration ($) 1,144,178 930,243 637,521 1,033,623 1,560,338
------------- ------------ ------------ ------------- ------------
Given that the remuneration is commercially reasonable, the link
between remuneration, Company performance and shareholder wealth
generation is tenuous, particularly in the exploration and
development and pre-development stage. Share prices are subject to
market sentiment towards the sector and increases or decreases may
occur independently of executive performance or remuneration.
The Company may issue options or performance rights to provide
an incentive for key management personnel which, it is believed, is
in line with industry standards and practice and is also believed
to align the interests of key management personnel with those of
the Company's shareholders.
No remuneration consultants were used in the 2023 financial
year.
Other transactions with key management personnel and their
related parties
2023 2022
$ $
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a director-related
entity of
Anthony Gilby. 15,600 12,900
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. There
were no amounts payable as at 30 June 2023 (2022: Nil).
(End of Remuneration Report)
Shares under option
There were no unissued ordinary shares of Tlou Energy Limited
under option at the date of this report.
Performance rights
Issued performance rights at the date of this report are as
follows:
Issue Hurdle Expiry Total
Date Price date
31/01/2017 $0.28 31/01/2024 2,275,000
19/10/2018 $0.165 31/01/2025 2,175,000
19/10/2018 $0.22 31/01/2025 2,175,000
15/12/2021 $0.10 31/01/2025 3,000,000
15/12/2021 $0.165 31/01/2025 3,000,000
1/02/2023 $0.165 31/01/2025 2,000,000
1/02/2023 $0.22 31/01/2025 2,000,000
1/02/2023 $0.28 31/01/2025 2,000,000
18,625,000
------------
Shares issued on the exercise of options and performance
rights
Other than those disclosed in the tables above there were no
ordinary shares of Tlou Energy Limited issued during or since the
year ended 30 June 2023 on the exercise of options or performance
rights granted or up to the date of this report.
Indemnity and insurance of officers
The consolidated entity has indemnified the Directors and
executives of the consolidated entity for costs incurred, in their
capacity as a director or executive, for which they may be held
personally liable, except where there is a lack of good faith.
During the financial year, the consolidated entity paid a
premium in respect of a contract to insure the Directors and
executives of the consolidated entity against a liability to the
extent permitted by the Corporations Act 2001 . The contract of
insurance prohibits disclosure of the nature of liability and the
amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial
year, indemnified or agreed to indemnify the auditor of the company
or any related entity against a liability incurred by the
auditor.
During the financial year, the company has not paid a premium in
respect of a contract to insure the auditor of the company or any
related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the
Corporations Act 2001 for leave to bring proceedings on behalf of
the Company, or to intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings.
Currency and rounding
The financial report is presented in Australian dollars and
amounts are rounded to the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required
under section 307C of the Corporations Act 2001 can be found on
page 24.
Auditor
BDO Audit Pty Ltd continues in office in accordance with section
327 of the Corporations Act 2001 .
Non-audit services
The Company may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor's
expertise and experience with the Company and/or the consolidated
entity are important.
The Board of Directors has considered the position and, in
accordance with advice received from the Audit Committee, is
satisfied that the provision of the non-audit services is
compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001 . The Directors are satisfied
that the provision of non-audit services by the auditor, as set out
below, did not compromise the auditor independence requirements of
the Corporations Act 2001 for the following reasons:
-- all non-audit services have been reviewed to ensure they do
not impact the impartiality and objectivity of the auditor; and
-- none of the services undermine the general principles
relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants.
Details of the amounts paid or payable to the auditor for
non-audit services provided during the year are set out below.
2023 2022
$ $
Non-audit services -
BDO Australia:
Tax consulting and compliance
services 10,000 9,575
Total 10,000 9,575
------- ------
This report is made in accordance with a resolution of
Directors, pursuant to section 298(2)(a) of the Corporations Act
2001 .
On behalf of the Directors
Anthony Gilby
Director
Brisbane, 29 September 2023
2023 Annual Reserves Statement
Tlou Energy Limited is pleased to present its Annual Reserves
Statement for the period ending 30 June 2023. There has been no
adjustment to the net gas reserves and contingent resources of the
Company since the last upgraded reserves were announced on 20
February 2018. Please refer to the ASX announcement on 20 February
2018 for full details of the consolidated entity's gas reserves and
contingent resources.
An independent review of the Company's gas reserves and
contingent resources is planned which may result in an upgrade or
downgrade of the current gas reserves and contingent resources.
Having conducted an internal review of its gas reserves and
resources position during the reporting period and satisfying
itself that there was no new data available that might materially
increase or decrease the reserves or resources estimates reported
during the reporting period, the Company hereby presents the net
gas reserves and contingent resources on a combined basis as well
as for each of its individual tenements as at 30 June 2023.
This information was prepared and first disclosed under the
SPE-PRMS 2007. It has not been updated since to comply with the
SPE-PRMS 2018 on the basis that the information has not materially
changed since it was last reported.
Lesedi CBM
(all coal seams)
PL001/2004,
Karoo Basin Botswana ML 2017/18L 100% 0.34 0.34 25.2 25.2 252 252
------------------------
Mamba CBM
(Lower Morupule coal)
PL238/2014 -
Karoo Basin Botswana PL241/2014 100% 0.01 0.01 15.5 15.5 175 175
------------------------
Karoo Basin Botswana PL003/2004, 100% - - - - - -
PL035/2000,
PL037/2000
------------------------
Total 0.35 0.35 40.7 40.7 427 427
----- ----- ----- ----- ----- ---- ----
Lesedi CBM
(all coal seams)
PL001/2004,
Karoo Basin Botswana ML 2017/18L 100% 4.6 4.6 214 214 3,043 3,043
------------------------
Karoo Basin Botswana Mamba CBM 100% - - - - - -
(Lower Morupule coal)
PL238/2014 -
PL241/2014
------------------------
Karoo Basin Botswana PL003/2004, 100% - - - - - -
PL035/2000,
PL037/2000
------------------------
Total 4.6 4.6 214 214 3,043 3,043
----- ---- ---- ---- ---- ------ ------
ASX Listing Rules Annual Report Requirements
*Listing Rule 5.39.1:
-- All 1P and 2P petroleum reserves recorded in the table are
undeveloped and are attributable to unconventional gas.
-- 100% of all 1P and 2P petroleum reserves are located in the Karoo Basin in Botswana.
*Listing Rule 5.39.2:
-- All 1P and 2P petroleum reserves reported are based on unconventional petroleum resources.
Listing Rule 5.39.3:
-- The table shows the 2P and 3P petroleum reserves as at 30
June 2023 and comparative petroleum reserves certified at 30 June
2022.
Governance Arrangements and Internal Controls Listing Rule
5.39.5:
-- Tlou Energy has obtained all its gas reserves and resources
reported as at 30 June 2023 from external independent consultants
who are qualified petroleum reserves and resource evaluators as
prescribed by the ASX Listing Rules.
-- Tlou Energy estimates and reports its petroleum reserves and
resources in accordance with the definitions and guidelines of the
Petroleum Resources Management System 2007, published by the
Society of Petroleum Engineers (SPE PRMS).
-- To ensure the integrity and reliability of data used in the
reserves estimation process, the raw data is reviewed by senior
reservoir and geological staff and consultants at Tlou Energy
before being provided to the independent reserve certifiers. Tlou
Energy has not and does not currently intend to conduct internal
reviews of petroleum reserves preferring to appoint independent
external experts prior to reporting any updated estimates of
reserves or resources to ensure an independent and rigorous review
of its data.
-- Tlou Energy reviews and updates its gas reserves and
resources position on an annual basis to ensure that if there is
any new data that might affect the reserves or resources estimates
of the Company steps can be taken to ensure that the estimates are
adjusted accordingly.
** Listing Rule 5.40.1:
-- All 2C contingent resources recorded in the table are
undeveloped. 100% of the reported 2C contingent resource is
attributable to unconventional gas.
-- The geographical areas where the 2C contingent resources are
located is the Karoo Basin in Botswana.
Listing Rule 5.40.2:
-- The table shows the 2C and 3C contingent resources as at 30
June 2023 as against the previous year. The net 2C and 3C
contingent resources did not increase from the 2022 year to the
2023 year.
-- There were no other changes to the 2C and 3C contingent
resources since the announcement on 20 February 2018.
Listing Rule 5.44:
-- The estimates of Reserves and Contingent Resources appearing
in the 2023 Annual Reserves Statement for Tlou Energy Limited and
its subsidiaries are based on, and fairly represent, information
and supporting documentation determined by the various qualified
petroleum reserves and resource evaluators listed below.
-- The gas reserves and resource estimates for the Lesedi CBM
Project provided in this report were released to the Market on 20
February 2018 ('Announcement'). Tlou Energy confirms that it is not
aware of any new information or data that materially affects the
information included in the Announcement and that all the material
assumptions and technical parameters underpinning the estimates in
the Announcement continue to apply and have not materially changed.
The gas reserve and resource estimates are based on and fairly
represents, information and supporting documentation and were
determined by Dr. Bruce Alan McConachie of SRK Consulting
(Australasia) Pty Ltd, in accordance with Petroleum Resource
Management System guidelines which were issued in 2007 and were in
use in February 2018. The most recent changes to these guidelines,
which revised those 2007 guidelines, was issued in June 2018. These
revised guidelines will form the basis of any future assessments.
The guidelines were re-affirmed by Mr Carl D'Silva of SRK. Mr
D'Silva is considered to be a qualified person as defined under the
ASX Listing Rule 5.42 and has given his consent to the use of the
resource figures in the form and context in which they appear in
this report.
Notes to Net Reserves and Resources Table:
1) Gas Reserve and Resource numbers have been rounded to the nearest whole number.
2) Gas Resource numbers have been rounded to the nearest tenth
for amounts less than 100 BCF, otherwise to the nearest whole
number.
3) Tlou's Gas Reserves have not been adjusted for fuel or
shrinkage and have been calculated at the wellhead (which is the
reference point for the purposes of Listing Rule 5.26.5).
4) Contingent Gas Resources are (100%) Unrisked Gross and are
derived from the SRK certification at 31 March 2015 for all coal
seams (as previously announced by Tlou on 9 April 2015) with
adjustment for the gas volumes which have now been certified by SRK
in the Gas Reserves category.
5) ASX Listing Rule 5.28.2 Statement relating to Prospective Resources:
The estimated quantities of petroleum gas that may potentially
be recovered by the application of a future development project(s)
relate to undiscovered accumulations. These estimates have both an
associated risk of discovery and a risk of development. Further
exploration appraisal and evaluation is required to determine the
existence of a significant quantity of potentially moveable
hydrocarbons.
6) Prospective Gas Resources are (100%) Unrisked Gross and are
derived from a report to Tlou from Netherland, Sewell and
Associates Inc (NSAI) dated 16th February 2012 regarding
certification for all coal seams located in the remaining
prospecting licences (as previously announced by Tlou in its
prospectus dated 20 February 2013).
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2023
Consolidated
Note June 2023 June 2022
$ $
Interest income 21,747 9
Expenses
Employee benefits expense 3 (1,104,063) (683,630)
Depreciation expense 11 (209,320) (547,217)
Impairment - exploration and evaluation assets 9 - (166,054)
Foreign exchange gain/(loss) 140,528 (153,643)
Interest expense 14/15 (647,457) (241,917)
Share based payment expense 3/19 (99,651) (232,200)
Professional fees (440,509) (284,451)
Occupancy costs 3 (15,600) (18,048)
Other expenses 3 (1,790,078) (1,311,694)
Fair value gain/(loss) on financial instruments 16 (96,805) (690,271)
------------ ------------
LOSS BEFORE INCOME TAX (4,241,208) (4,329,116)
Income tax 4 - -
------------ ------------
LOSS FOR THE PERIOD (4,241,208) (4,329,116)
------------ ------------
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (2,728,403) (1,717,869)
Tax effect - -
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) (2,728,403) (1,717,869)
------------ ------------
TOTAL COMPREHENSIVE INCOME/(LOSS) (6,969,611) (6,046,985)
------------ ------------
Earnings per share
Cents Cents
Basic loss per share 5 (0.5) (0.7)
Diluted loss per share 5 (0.5) (0.7)
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 2023
Consolidated
Note June 2023 June 2022
$ $
CURRENT ASSETS
Cash and cash equivalents 6 6,848,717 7,875,025
Trade and other receivables 7 1,311,444 424,220
Other current assets 8 1,140,791 178,887
TOTAL CURRENT ASSETS 9,300,952 8,478,132
------------- -------------
NON-CURRENT ASSETS
Exploration and evaluation assets 9 60,442,961 50,180,613
Other non-current assets 10 483,775 602,112
Property, plant and equipment 11 1,399,531 366,492
TOTAL NON-CURRENT ASSETS 62,326,267 51,149,217
------------- -------------
TOTAL ASSETS 71,627,219 59,627,349
------------- -------------
CURRENT LIABILITIES
Trade and other payables 12 2,405,713 563,599
Derivatives 16 - 696,153
Lease liabilities 15,968 13,792
Provisions 13 417,158 319,903
TOTAL CURRENT LIABILITIES 2,838,839 1,593,447
------------- -------------
NON-CURRENT LIABILITIES
Convertible notes 14 8,086,011 7,263,643
Long term loan 15 2,000,000 -
Derivatives 16 122,005 67,600
Lease liabilities 37,797 56,530
Provisions 13 134,000 113,000
TOTAL NON-CURRENT LIABILITIES 10,379,813 7,500,773
------------- -------------
TOTAL LIABILITIES 13,218,652 9,094,220
------------- -------------
NET ASSETS 58,408,567 50,533,129
------------- -------------
EQUITY
Contributed equity 17 121,509,325 106,763,927
Reserves (9,344,768) (6,716,016)
Accumulated losses (53,755,990) (49,514,782)
------------- -------------
TOTAL EQUITY 58,408,567 50,533,129
------------- -------------
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 2023
Contributed Equity Share Based Foreign Currency Accumulated Losses Total
Payments Reserve Translation
Reserve
$ $ $ $ $
Consolidated
Balance at 1 July
2021 106,763,927 925,604 (6,155,951) (45,185,666) 56,347,914
------------------- ------------------- ------------------- ------------------- ------------
Loss for the period - - - (4,329,116) (4,329,116)
Other comprehensive
income, net of tax - - (1,717,869) - (1,717,869)
Total comprehensive
income - - (1,717,869) (4,329,116) (6,046,985)
------------------- ------------------- ------------------- ------------------- ------------
Transactions with owners in their capacity as owners
Share based
payments - 232,200 - - 232,200
- 232,200 - - 232,200
------------------- ------------------- ------------------- ------------------- ------------
Balance at 30 June
2022 106,763,927 1,157,804 (7,873,820) (49,514,782) 50,533,129
------------------- ------------------- ------------------- ------------------- ------------
Balance at 1 July
2022 106,763,927 1,157,804 (7,873,820) (49,514,782) 50,533,129
------------------- ------------------- ------------------- ------------------- ------------
Loss for the period - - - (4,241,208) (4,241,208)
Other comprehensive
income, net of tax - - (2,728,403) - (2,728,403)
Total comprehensive
income - - (2,728,403) (4,241,208) (6,969,611)
------------------- ------------------- ------------------- ------------------- ------------
Transactions with owners in their capacity as owners
Share based
payments - 99,651 - - 99,651
Shares issued, net
of costs 14,745,398 - - - 14,745,398
14,745,398 99,651 - - 14,845,049
------------------- ------------------- ------------------- ------------------- ------------
Balance at 30 June
2023 121,509,325 1,257,455 (10,602,223) (53,755,990) 58,408,567
------------------- ------------------- ------------------- ------------------- ------------
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 2023
Consolidated
Note June 2023 June 2022
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST and VAT) (3,164,020) (2,461,808)
Interest received 21,747 9
Interest paid (16,438) -
GST and VAT received 422,234 93,187
NET CASH USED IN OPERATING ACTIVITIES 27 (2,736,477) (2,368,612)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets (11,886,628) (2,639,000)
Payment for property, plant and equipment (1,883,994) (274,654)
NET CASH USED IN INVESTING ACTIVITIES (13,770,622) (2,913,654)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 17 14,853,721 -
Proceeds from borrowings 2,000,000 7,036,000
Issue costs 17 (108,323) (167,973)
Payments of lease liabilities (13,336) (15,997)
NET CASH PROVIDED BY FINANCING ACTIVITIES 16,732,062 6,852,030
------------- ------------
Net (decrease)/increase in cash held 224,963 1,569,764
Cash at the beginning of the period 7,875,025 6,385,384
Effects of exchange rate changes on cash (1,251,271) (80,123)
------------- ------------
CASH AND CASH EQUIVALENTS AT THE OF THE PERIOD 6 6,848,717 7,875,025
------------- ------------
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 30.
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 to explore,
evaluate and develop power solutions in Sub-Saharan Africa through
Coalbed Methane (CBM) gas-fired power. No revenue from these
activities has been earned to date, as the consolidated entity is
still in the exploration and evaluation or pre-development
stage.
Currency
The financial report is presented in Australian dollars, rounded
to the nearest dollar, which is the functional and presentation
currency of the parent entity.
Authorisation of financial report
The financial report was authorised for issue on 29 September
2023.
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 except for
derivative financial instruments which are measured at fair
value.
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 the functional
currency 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. Refer to Note 18 for accounting policy on
translation of foreign operations.
Going Concern
The consolidated financial statements have been prepared on a
going concern basis which contemplates that the consolidated entity
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 or
pre-development companies, such as Tlou Energy Limited, find it
necessary on a regular basis to raise additional cash funds for
future exploration and development activity and meet other
necessary corporate expenditure. The Company is currently
discussing potential equity investments with interested parties.
These funds will be needed to fund ongoing operations and working
capital requirements for the next 12 months. In addition, the
consolidated entity may need to raise further capital to expand and
develop its projects. Accordingly, the consolidated entity 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 consolidated entity's and the Company's ability to
continue as a going concern and therefore the consolidated entity
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 consolidated entity 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 consolidated entity not be able to continue as
a going concern.
Accounting Policies
(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.
(b) Income recognition
Interest
Interest income 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 income
Other income is recognised when it is received or when the right
to receive payment is established.
(c) 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.
(d) 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.
(e) Comparative figures
When required by accounting standards comparative figures have
been adjusted to conform to changes in presentation for the current
financial year.
(f) Financial Instruments
Classification
The group classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value (either
through OCI, or through profit or loss); and
-- those to be measured at amortised cost.
The classification depends on the group's business model for
managing the financial assets and the contractual terms of the cash
flows.
Measurement
At initial recognition, the group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed
in profit or loss.
Financial assets with embedded derivatives are considered in
their entirety when determining whether their cash flows are solely
payment of principal and interest.
Impairment
The group assesses on a forward-looking basis the expected
credit losses associated with its debt instruments carried at
amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
For trade receivables, the group applies the simplified approach
permitted by AASB 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently remeasured
to their fair value at each reporting date. The fair value
adjustment is through profit or loss.
(g) Leases
The Group leases office space and a leasehold property. Office
contracts are typically made for fixed periods of 1 to 5 years but
may have extension options. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and
conditions. Leasehold property is for periods up to 50 years.
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is
available for use by the Group.
Assets and liabilities arising from a lease are initially
measured on a present value basis.
Lease Liabilities
Lease liabilities include the net present value of the following
lease payments:
Ø fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
Ø variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date;
Ø amounts expected to be payable by the Group under residual
value guarantees;
Ø the exercise price of a purchase option if the group is
reasonably certain to exercise that option; and
Ø payments of penalties for terminating the lease, if the lease
term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability. The
lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be readily determined, which is
generally the case for leases that relate to building premises, the
entity's incremental borrowing rate is used, being the rate that
the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms,
security, and conditions.
To determine the incremental borrowing rate, the Group uses
recent third-party financing received by the individual lessee as a
starting point, adjusted to reflect changes in financing conditions
since third party financing was received, making adjustments
specific to the lease (e.g., term, country, currency, and
security).
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
to produce a constant periodic rate of interest on the remaining
balance of the liability for each period.
Right-of-use Assets
Right-of-use assets are measured at cost comprising the
following:
Ø the amount of the initial measurement of lease liability;
Ø any lease payments made at or before the commencement date
less any lease incentives received;
Ø any initial direct costs; and
Ø restoration costs.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. If the Group is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying
asset's useful life.
Low Value Assets
Payments associated with leases of low value assets are
recognised on a straight-line basis as an expense in profit or
loss. Low value assets comprise small items of office
equipment.
(h) Borrowings
Financial liabilities
Non-derivative financial liabilities other than financial
guarantees are subsequently measured at amortised cost using the
effective interest method.
The Consolidated entity's financial liabilities measured at
amortised cost include trade and other payables and the host
liability of convertible notes.
Convertible notes
The conversion feature included in convertible notes is assessed
to determine if it satisfies or fails the fixed-for-fixed
requirement to be classified as a compound financial instrument
containing an equity component. If this requirement is failed the
notes are separated into the host liability and the derivative
liability component of the notes.
Subsequent to initial recognition any changes in fair value of
the derivative liability at each balance date are recognised in
profit or loss.
The host liability is subsequently recognised on an amortised
cost basis until extinguished on conversion or maturity of the
notes.
(i) Revenue
The consolidated entity currently does not recognise any revenue
from the sale of goods or services but may do in future.
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the
consideration to which the consolidated entity is expected to be
entitled in exchange for transferring goods or services to a
customer. For each contract with a customer, the consolidated
entity: identifies the contract with a customer; identifies the
performance obligations in the contract; determines the transaction
price which takes into account estimates of variable consideration
and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative
stand-alone selling price of each distinct good or service to be
delivered; and recognises revenue when or as each performance
obligation is satisfied in a manner that depicts the transfer to
the customer of the goods or services promised.
The consolidated entity recognises an impairment loss in profit
or loss to the extent that the carrying amount of an asset
recognised exceeds: the remaining amount of consideration that the
consolidated entity expects to receive in exchange for the goods or
services to which the asset relates; less the costs that relate
directly to providing those goods or services and that have not
been recognised as expenses.
The consolidated entity recognises in profit or loss a reversal
of some or all of an impairment loss previously recognised when the
impairment conditions no longer exist or have improved. The
increased carrying amount of the asset will not exceed the amount
that would have been determined (net of amortisation) if no
impairment loss had been recognised previously.
(j) New Accounting Standards and Interpretations
There were no new or revised accounting standards adopted that
had any impact on the Group's accounting policies and required
retrospective adjustments.
(k) New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 30 June 2023 reporting
periods. The consolidated entity has decided against early adoption
of these standards. The consolidated entity has assessed the impact
of these new standards that are not yet effective and determined
that they are not expected to have a material impact on the
consolidated entity in the current or future reporting periods and
on foreseeable future transactions.
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 and liabilities. 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.
Management has considered whether Tlou is still in the E&E
phase or has moved into development. The projects should still be
classified as E&E as the technical and commercial feasibility
has not been established. In particular:
-- whilst there has been independently certified gas reserves
and contingent resources whether or not these reserve gas flow
rates will be of a commercial quantity has not been
established;
-- funding for the commercialisation of reserves and for a
commercial level of production has not been confirmed; and
-- a final investment decision has not been made.
At the date of this report the Directors consider that Tlou is
still in the E&E phase. While the Company has made significant
strides during 2023, the three points above are still relevant,
i.e. (i) commercial gas flow rates are yet to be established, (ii)
agreed funding to commercialise the project is not yet in place,
(iii) we have not reached a final investment decision. Based on
these facts and despite the progress this year the project remains
in the E&E stage.
Deferred Tax assets
The Company 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 consolidated entity
estimates its tax liabilities based on the consolidated entity'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 consolidated entity 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 must rely on the same business test.
As at 30 June 2023 the consolidated entity has not received advice
that the losses are unavailable, however should this change in the
future the consolidated entity may be required to derecognise these
losses.
Note 3. Expenses
Consolidated
June 2023 June 2022
Loss before income tax includes the following specific expenses: $ $
Employee benefits expense
Defined contribution superannuation
-- expense 86,731 64,637
-- Performance rights 99,651 232,200
-- Other employee benefits expense 1,017,332 618,993
1,203,714 915,830
---------- ----------
Occupancy costs
Rental expense relating to short-term
-- leases -- minimum lease rentals 15,600 12,900
-- Other occupancy costs - 5,148
15,600 18,048
---------- ----------
Other expenses include the following specific items:
-- Travel and accommodation costs 216,403 75,695
-- Consultants 174,488 443,082
Stock exchange, advisory, secretarial
-- fees 400,602 258,001
-- Investor relations 634,999 314,250
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 June
2023 2022
$ $
Loss before income tax (4,241,208) (4,329,116)
------------ ------------
Tax at the domestic tax rates applicable to profits
in the country concerned at 30% (2022: 30%) (1,272,362) (1,298,735)
Tax effect of amounts which are not deductible/(taxable) in
calculating taxable income:
Other non-deductible items (844,141) 1,142,896
Difference in overseas tax rates (38,637) (97,877)
Deferred tax asset not recognised 2,155,140 253,716
Income tax benefit - -
------------ ------------
Recognised deferred tax assets
Unused tax losses 6,701,070 6,327,074
6,701,070 6,327,074
Recognised deferred tax liabilities
Assessable temporary differences 6,701,070 6,327,074
6,701,070 6,327,074
Net deferred tax liability recognised - -
------------ ------------
Unrecognised temporary differences and tax losses
Unused tax losses and temporary differences for which
no deferred tax asset has been recognised 47,594,215 45,777,185
------------ ------------
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 consolidated entity 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 2023 June 2022
$ $
Reconciliation of earnings used in calculating basic and diluted loss per share:
Loss for the year attributable to owners of Tlou Energy Limited (4,241,208) (4,329,116)
Loss used in the calculation of the basic and dilutive loss per share (4,241,208) (4,329,116)
------------ ------------
Weighted average number of ordinary shares used as the denominator
Number Number
Number used in calculating basic and diluted loss per share 803,547,703 600,199,039
------------ ------------
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 include 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.
Consolidated
June 2023 June 2022
$ $
Cash at bank 6,848,717 7,875,025
6,848,717 7,875,025
---------- ----------
Note 7. Trade and Other Receivables
Consolidated
June 2023 June 2022
$ $
Current
Other receivables 23,443 34,448
GST/VAT receivable 1,288,001 389,772
1,311,444 424,220
---------- ----------
Note 8. Other Current Assets
Consolidated
June 2023 June 2022
$ $
Prepayments 1,140,791 178,887
1,140,791 178,887
---------- ----------
Note 9. Exploration and Evaluation Assets
Exploration and evaluation expenditure incurred is accumulated
in respect of each identifiable area of interest or project. 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 or project 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
and project to determine the appropriateness of continuing to carry
forward related costs.
Consolidated
June 2023 June 2022
$ $
Exploration and evaluation assets 60,442,961 50,180,613
60,442,961 50,180,613
------------ ------------
Movements in exploration and evaluation assets
Balance at the beginning of period 50,180,613 48,855,466
Exploration and evaluation expenditure during the year 12,281,203 2,874,610
Impairment expense - (166,054)
Foreign currency translation (2,018,855) (1,383,409)
Balance at the end of period 60,442,961 50,180,613
------------ ------------
Included in exploration and evaluation assets is expenditure
incurred on contracts for the construction of a transmission line
and associated substations to connect the Company's Lesedi Power
Project to the existing power grid in Botswana. At 30 June 2023
total costs on these items amounted to $7,265,668 (2022: $948,446).
In the prior year financial statement these assets were itemised
separately under non-current assets.
The recoupment of costs carried forward in relation to projects
or 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.
There is a risk that one or 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 consolidated entity is not aware of any
reasons why the licences will not be renewed.
Note 10. Other non-current assets
Inventory and well consumables are valued at lower of cost and
net realisable value. Inventory and well consumables are allocated
to exploration and evaluation expenditure when the assets are used
in operations.
Consolidated
June 2023 June 2022
$ $
Inventory and well consumables - at cost 483,775 602,112
483,775 602,112
---------- ----------
Note 11. 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 and amortisation is calculated on a straight-line
basis to write off the net cost of each item of plant and equipment
and right of use assets over their expected useful lives as
follows:
Plant and equipment 3-7 years
Right-of-use assets over the actual or expected term of the lease
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 2023 June 2022
$ $
Right-of-use assets, plant and equipment at cost 5,221,832 4,186,262
Accumulated depreciation (3,822,301) (3,819,770)
1,399,531 366,492
--------------- ---------------
Movements in Carrying Amounts
Movement in the carrying amounts between the beginning and the end of the current financial
year:
Land and Site Motor Office Furniture and Total
Buildings Equipment Vehicles Equipment Fittings
Balance at the
beginning of
year 130,354 150,964 33,509 51,665 - 366,492
Additions 1,058,057 116,821 14,443 133,373 1,322,694
Disposals (3,307) (15,758) (2,374) (21,439)
Depreciation and
amortisation (16,342) (129,261) (26,484) (4,555) (11,671) (188,313)
Foreign exchange
movements (58,159) (12,943) (1,640) (777) (6,384) (79,903)
-------------- -------------- --------------
Carrying amount
at the end of
year 1,113,910 122,274 5,385 45,018 112,944 1,399,531
-------------- -------------- -------------- -------------- -------------- ----------
Included in property, plant and equipment are right-of-use
assets with a carrying value of $60,059 (2022: $70,323).
Note 12. 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 2023 June 2022
$ $
Current
Trade payables 1,828,818 445,994
Accruals 533,379 95,337
Other payables 43,516 22,268
2,405,713 563,599
---------- ----------
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 13. 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.
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. 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.
Employee benefits - Botswana Severance
A provision has been recognised for employee benefits relating
to severance pay payable in Botswana.
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 2023 June 2022
Current $ $
Employee benefits 243,590 189,912
Employee benefits - Botswana severance 173,568 129,991
417,158 319,903
---------- ----------
Non-current
Rehabilitation 134,000 113,000
134,000 113,000
---------- ----------
Movements in rehabilitation provision during the year
Balance at the beginning of the year 113,000 114,000
Rehabilitation required on wells drilled during the year 21,000 -
Completed during the year - (1,000)
Carrying amount at the end of the year 134,000 113,000
---------- ----------
Note 14. Convertible notes
The parent entity issued convertible notes totalling
US$5,000,000 on 24 January 2022. The notes are convertible into
ordinary shares of the parent entity, at the option of the holder
at the higher of:
(a) A 10% discount to the weighted average traded price of the
Company's shares on the ASX over the 90 days prior to the
Conversion Date; and
(b) A$0.06
The notes incur interest at 7.75% and the Company may capitalise
interest for the first 18 months, thereafter, interest must be paid
at each six-month anniversary of issue date. The notes expire on 24
January 2027, being 5 years after issue.
The notes fail the fixed-for-fixed requirement to be classified
as a compound financial instrument containing an equity component.
As a result, the notes have been separated into the host liability
and the derivative liability component of the notes.
On initial recognition the fair value of the embedded derivative
has been calculated first with the residual value being assigned to
the host liability, as shown below:
Consolidated
June 2023 June 2022
$ $
Face value of notes issued - 7,036,000
Derivative - refer note 17 - (73,482)
Issue costs - (167,673)
---------- ----------
Host liability on initial recognition - 6,794,845
Opening Balance/Host liability on initial recognition 7,263,643 6,794,845
Interest expense 614,581 241,917
Interest paid - -
Effect of foreign exchange movement 207,787 226,881
---------- ----------
Non-current host liability 8,086,011 7,263,643
Total Borrowings 8,086,011 7,263,643
---------- ----------
Interest expense is calculated by applying the effective
interest rate of 8.08% to the host liability component.
The initial fair value of the derivative portion of the note was
determined using a binomial option model on issue date.
The host liability is subsequently recognised on an amortised
cost basis until extinguished on conversion or maturity of the
notes.
The derivative is subsequently recognised at fair value at each
reporting date - refer note 16 for further details.
Note 15. Long Term Loan
Consolidated
June 2023 June 2022
Non-current Liabilities $ $
Loan from ILC Investments Pty Ltd 2,000,000 -
Interest expense 32,876 -
Interest paid/accrued (32,876) -
2,000,000 -
---------- ----------
ILC Investments Pty Ltd ("ILC") provided a $2m loan to the
Company. ILC is Tlou's largest shareholder. The Loan has a
three-year term, commencing on 1 May 2023 and there are no
arrangement fees. Interest will be charged at 10% per annum and
payable each quarter. The Loan is unsecured and is scheduled to be
repaid at the end of the term (30 April 2026). However, the Loan
can be repaid in advance at any time without penalty should funds
be available to do so.
Note 16. Derivatives
Consolidated
June 2023 June 2022
Current $ $
Opening balance 696,153 -
Fair value movement recognised in profit or loss 42,400 696,153
Settlement of forward contracts (738,553) -
Closing balance - 696,153
---------- ----------
Consolidated
June 2023 June 2022
Non-current $ $
Opening balance 67,600 -
On initial recognition - 73,482
Fair value movement recognised in profit or loss 54,405 (5,882)
Closing balance 122,005 67,600
---------- ----------
Non-current derivatives relate to the conversion feature
included in the convertible notes issued on 24 January 2022. The
initial fair value and the value as at 30 June 2023 of the
derivative portion of the note was determined using a binomial
option model.
Fair value measurements
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or for disclosure
purposes.
AASB 13 Fair Value Measurement requires disclosure of fair value
measurements by level of the following fair value measurement
hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
(b) inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices) (level 2), and
(c) inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (level 3).
The fair value of the consolidated entity's derivatives is
determined using valuation techniques as they are not traded in an
active market. These valuation techniques maximise the use of
observable market data where it is available and rely as little as
possible on entity specific estimates. The conversion feature
derivative is considered to be a level 3 measurement as the
binomial pricing model includes unobservable inputs.
Foreign currency forward contracts have been valued using the
present value of future cash flows based on the forward exchange
rates at balance date. The foreign currency forward contract is
considered to be a level 3 measurement as the valuation model
includes unobservable inputs.
Changes in the value of the derivatives that have been
recognised are included in the tables above.
Note 17. 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 2023 June 2022 June 2023 June 2022
Shares Shares $ $
Opening balance 600,199,039 600,199,039 106,763,927 106,763,927
Issue of ordinary shares during the year 424,383,986 - 14,853,721 -
Share issue costs - - (108,323) -
Ordinary shares -- fully paid 1,024,583,025 600,199,039 121,509,325 106,763,927
-------------- ------------ ------------ ------------
Ordinary shares issued during the year
Issue Date No. of Shares Issue Price
(AUD)
Exercise of Options 18-Jul-22 6,250 $0.08
Placement 9-Nov-22 57,142,857 $0.035
Placement 16-Nov-22 85,714,286 $0.035
Placement 27-Jan-23 87,653,278 $0.035
Placement 27-Mar-23 5,714,284 $0.035
Entitlement Offer 22-Jun-23 188,153,031 $0.035
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.
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 consolidated entity may seek to issue new shares. Consistent
with other exploration companies, the consolidated entity,
including the parent entity monitors 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.
Note 18. 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 and performance rights
granted to employees and others under equity-settled share-based
payment arrangements.
Note 19. Share-based payments
Equity-settled and cash-settled share-based compensation
benefits are provided to employees and other service providers.
Equity-settled transactions are awards of shares, options or
performance rights over shares that are provided to employees or
other service providers 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.
Share 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 are linked to the share price performance of
the Company, ensuring alignment with the interests of the Company's
shareholders. For the Performance Rights that are issued but not
yet exercised at the date of this report to vest and, therefore,
become exercisable by a participant, certain performance conditions
are 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.
Options
At 30 June 2023, the were no outstanding options for ordinary
shares in Tlou Energy Limited.
Exercise Expiry
Issued to: Grant Date Price date 1/07/2022 Issued Exercised Expired 30/06/2023
Shareholders 20-Jul-20 $0.08 20-Jul-22 37,509,400 - (6,250) (37,503,150) -
Service
providers 20-Jul-20 $0.08 20-Jul-22 20,000,000 - - (20,000,000) -
57,509,400 - (6,250) (57,503,150) -
----------- -------- -------------- ---------------- -----------
At 30 June 2022, the following options for ordinary shares in
Tlou Energy Limited were on issue.
Issued to: Grant Date Exercise Price Expiry date 1/07/2021 Issued Exercised Expired 30/06/2022
Shareholders 20-Jul-20 $0.08 20-Jul-22 37,509,400 - - - 37,509,400
Service
providers 20-Jul-20 $0.08 20-Jul-22 20,000,000 - - - 20,000,000
57,509,400 - - - 57,509,400
----------- -------- ---------- -------- -----------
Options may be granted 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 for services provided or
on specific performance-based criteria. Options granted as
described above carry no dividend or voting rights. When
exercisable, each option is convertible to one ordinary share.
The fair value of options at grant date is determined using
generally accepted valuation techniques that take into account
exercise price, the term of the option, 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 right and an
appropriate probability weighting to factor the likelihood of the
satisfaction of non-vesting conditions. The expected volatility is
based on historic volatility, adjusted for any expected changes to
future volatility due to publicly available information.
Performance Rights
At 30 June 2023, the following performance rights were on
issue.
Issue Date Hurdle Price Expiry date 1/07/2022 Issued Exercised Lapsed 30/06/2023
31/01/2017 $0.28 31/01/2024 2,275,000 - - - 2,275,000
19/10/2018 $0.165 31/01/2025 2,225,000 - - (50,000) 2,175,000
19/10/2018 $0.22 31/01/2025 2,225,000 - - (50,000) 2,175,000
15/12/2021 $0.10 31/01/2025 3,000,000 - - - 3,000,000
15/12/2021 $0.165 31/01/2025 3,000,000 - - - 3,000,000
1/02/2023 $0.165 31/01/2025 - 2,000,000 - - 2,000,000
1/02/2023 $0.22 31/01/2025 - 2,000,000 - - 2,000,000
1/02/2023 $0.28 31/01/2025 - 2,000,000 - - 2,000,000
12,725,000 6,000,000 - (100,000) 18,625,000
--------------- ------------ ---------- ---------------- -----------
Performance Condition
(i) To vest the share price needs to be AUD $0.28 or greater for a period of 10 consecutive trading
days. These performance rights expire on 31/01/2024.
(ii) To vest the share price needs to be AUD $0.165 or greater for a period of 10 consecutive trading
days. These performance rights expire on 31/01/2025.
-------------------------------------------------------------------------------------------------
(iii) To vest the share price needs to be AUD $0.22 or greater for a period of 10 consecutive trading
days. These performance rights expire on 31/01/2025.
-------------------------------------------------------------------------------------------------
(iv) To vest the share price needs to be AUD $0.10 or greater for a period of 10 consecutive trading
days. These performance rights expire on 31/01/2025.
-------------------------------------------------------------------------------------------------
(v) To vest the share price needs to be AUD $0.28 or greater for a period of 10 consecutive trading
days. These performance rights expire on 31/01/2025.
-------------------------------------------------------------------------------------------------
Each performance right provides the right to receive one share,
subject to the satisfaction of any applicable performance
conditions. Unless the Board exercises its discretion, performance
rights are forfeited on the occurrence of certain specified events,
including, but not limited to, ceasing to be an employee or
contractor of the Company or its associated entities for any
reason, including, but not limited to death, illness, permanent
disability, redundancy or otherwise.
Fair value of performance rights granted
The fair value at grant date is determined using a binomial
option pricing model that takes into account the exercise price,
the term of the performance rights, 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 performance rights.
The model inputs for performance rights granted during the year
ended 30 June 2023 included:
(a) Performance rights are granted for no consideration and vest
based on the conditions noted above
(b) exercise price: $nil
(c) grant date: 1 February 2023
(d) expiry date: 31 January 2025
(e) share price at grant date: $0.04
(f) expected price volatility: 100%
(g) expected dividend yield: 0%
(h) risk-free interest rate: 3.16%
The expected price volatility is based on the historic
volatility (based on the remaining life of the options), adjusted
for any expected changes to future volatility due to publicly
available information.
The following table shows the number, movements and vesting
price of performance rights for the 2022 year.
Vesting
Date of Approval Price 1/07/2021 Issued Exercised Expired 30/06/2022
17 October 2018 $0.165 2,225,000 - - - 2,225,000
17 October 2018 $0.22 2,225,000 - - - 2,225,000
10 November 2016 $0.28 2,275,000 - - - 2,275,000
24 November 2021 $0.10 - 3,000,000 - - 3,000,000
24 November 2021 $0.165 - 3,000,000 - - 3,000,000
6,725,000 6,000,000 - - 12,725,000
---------------- ----------------- ------------------ --------------------- ------------------
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transaction
recognised during the year were as follows:
Consolidated
June 2023 June 2022
$ $
Performance rights 99,651 232,200
99,651 232,200
---------- ----------
The weighted average remaining contractual life of performance
rights outstanding at the end of the period is 1.47
years (2022: 2.41 years).
Note 20. Commitments
Exploration and evaluation expenditure:
To maintain an interest in the exploration tenements in which it
is involved, the consolidated entity 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 consolidated entity. These
conditions can include proposed expenditure commitments. The timing
and amount of exploration expenditure obligations of the
consolidated entity 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. Subject to renewal
of all prospecting licences, the consolidated entity's proposed
expenditure obligations along with obligations under contracts
related to the construction of transmission lines and associated
infrastructure which are not provided for in the financial
statements are as follows:
Consolidated
June 2023 June 2022
Minimum expenditure requirements $ $
-- not later than 12 months 5,630,270 6,257,100
-- between 12 months and 5 years 263,181 1,769,692
5,893,451 8,026,792
---------- ----------
Note 21. Financial instruments
Overview
The consolidated entity's principal financial instruments
comprise receivables, payables, cash and term deposits, convertible
notes, derivatives and long-term loans. The main risks arising from
the consolidated entity's financial assets are interest rate risk,
foreign currency risk, credit risk and liquidity risk.
This note presents information about the consolidated entity'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 consolidated entity holds the following financial
instruments:
Consolidated
June 2023 June 2022
Financial Assets $ $
Cash and cash equivalents 6,848,717 7,875,025
Trade and other receivables 1,311,444 424,220
8,160,161 8,299,245
----------- ----------
Financial Liabilities
Trade and other payables 2,459,478 633,921
Convertible notes 8,086,011 7,263,643
Derivatives 122,005 763,753
Long-term loan 2,000,000 -
12,667,494 8,661,317
----------- ----------
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
consolidated entity's financial risk management policy is to
support the delivery of the consolidated entity's financial targets
whilst protecting future financial security. During the current
year the consolidated entity has entered into a foreign exchange
forward contract to mitigate its foreign exchange risk. Given the
nature and size of the business and uncertainty as to the timing
and amount of cash inflows and outflows, the consolidated entity
does not enter into any other derivative transactions (apart from
its foreign exchange forward contract) to mitigate the financial
risks. In addition, the consolidated entity's policy is that no
trading in financial instruments shall be undertaken for the
purpose of making speculative gains. As the consolidated entity'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 consolidated
entity'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 consolidated entity
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 2023
Cash and cash equivalents 68,487 (68,487) 68,487 (68,487)
Consolidated - 30 June 2022
Cash and cash equivalents 78,750 (78,750) 78,750 (78,750)
Interest rate risk on other financial instruments is
immaterial.
(b) Liquidity risk
Liquidity risk is the risk that the consolidated entity 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 consolidated entity will always have sufficient
liquidity to meet its obligations when due.
Ultimate responsibility for liquidity risk management rests with
the Board of Directors. The consolidated entity 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 consolidated entity held cash of
$6,848,717 (2022: $7,875,025).
The following table details the remaining contractual maturity
for non-derivative financial liabilities.
Within Between Total Contractual Carrying
1 Year 1 - 5 years Cash Flows Amount
Consolidated - 30 June 2023 $ $ $ $
Trade and other payables 2,421,681 37,797 2,459,478 2,459,478
Long term loan 198,356 2,378,630 2,576,986 2,000,000
Convertible notes & derivatives - 10,727,761 10,727,761 8,208,016
---------- ------------- ------------------ ----------
Consolidated - 30 June 2022
Trade and other payables 577,391 56,530 633,921 633,921
Convertible notes & derivatives 696,153 10,341,158 11,037,311 8,027,396
---------- ------------- ------------------ ----------
(c) Foreign exchange risk
As a result of activities overseas, the consolidated entity's
consolidated statement of financial position can be affected by
movements in exchange rates. The consolidated entity also has
transactional currency exposures. Such exposures arise from
transactions denominated in currencies other than the functional
currency of the relevant entity.
The consolidated entity's exposure to foreign currency risk
primarily arises from the consolidated entity'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.
During the prior year the consolidated entity entered into a
foreign exchange forward contract to mitigate its foreign exchange
risk. Apart from this contract the consolidated entity's policy is
to generally convert its local currency to Pula, Rand, or US
dollars at the time of transaction. The consolidated entity, 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
consolidated entity. This practice is expected to be the exception,
rather than the normal practice.
The consolidated entity's exposure to foreign currency risk at
the reporting date, expressed in Australian dollars, was as
follows:
2023 2023 2023 2023 2022 2022 2022 2022
USD BWP ZAR GBP USD BWP ZAR GBP
A$ A$ A$ A$ A$ A$ A$ A$
Financial Assets
Cash and cash equivalents 37,301 142,007 1,023 965,200 6,143,514 339,500 20,969 1,188,501
Trade and other receivables - 1,284,732 - - - 389,727 - -
Financial Liabilities
Trade and other payables - (1,739,096) - - - (443,622) - -
Net Financial Instruments 37,301 (312,357) 1,023 965,200 6,143,514 285,605 20,969 1,188,501
------- ------------ ------ -------- ---------- ---------- ------- ----------
Foreign currency rate sensitivity
Based on financial instruments held at 30 June 2023, had the
Australian dollar strengthened/weakened by 10% the consolidated
entity's profit or loss and equity would be impacted as
follows:
Profit or loss Equity
10% 10% 10% 10%
Increase Decrease Increase Decrease
2023 $ $ $ $
Dollar (US) (3,730) 3,730 (3,730) 3,730
Pula (Botswana) 31,236 (31,236) 31,236 (31,236)
Rand (South Africa) (102) 102 (102) 102
Pound (UK) (96,520) 96,520 (96,520) 96,520
2022
Dollar (US) (614,351) 614,351 (614,351) 614,351
Pula (Botswana) (28,561) 28,561 (28,561) 28,561
Rand (South Africa) (2,097) 2,097 (2,097) 2,097
Pound (UK) (118,850) 118,850 (118,850) 118,850
Forward foreign exchange rates
The consolidated entity had entered into foreign exchange
forward contracts to mitigate its foreign exchange risk. There were
no outstanding forward contracts at the end of the reporting
period.
Sell US Dollars
2023 2022
Buy Pula (BWP) USD$ USD$
Maturity:
0 - 3 months - 679,488
3 - 6 months - 2,652,635
6 - 12 months - 1,632,602
The valuation of the forward exchange contract was based on a
market reference rate of 12.43BWP compared to a strike price of
11.6BWP. Based on the financial instruments held as at 30 June
2022, had the Pula weakened/ strengthened by 10% against the US
dollar with all other variables held constant, the movement in the
value of the forward foreign exchange contract would not have been
material to the consolidated entity's financial statements.
(c) Credit risk
Credit risk is the risk of financial loss to the consolidated
entity 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
consolidated entity's 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 consolidated entity trades with
recognised, creditworthy third parties. The receivable balances are
monitored on an ongoing basis. The consolidated entity's exposure
to expected credit losses is not significant.
Cash and cash equivalents
The consolidated entity 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 used where possible and non-AAA banks are
utilised where commercially attractive returns are available.
Note 22. 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.
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 2023 June 2022
$ $
Short-term employee benefits 991,632 626,196
Post-employment benefits 76,177 71,847
1,067,809 698,043
---------- ----------
Share based payments 76,369 232,200
1,144,178 930,243
---------- ----------
Note 23. Auditors' Remuneration
During the year the following fees were paid or payable for
services provided by the auditor of the consolidated entity:
Consolidated
June 2023 June 2022
$ $
Audit services
Auditing or reviewing the financial statements - BDO Australia 76,000 48,675
Auditing or reviewing the financial statements - BDO Botswana 34,580 34,580
Non-audit services - BDO Australia
Tax consulting and compliance services 10,000 9,575
Total 120,580 92,830
---------- ----------
Note 24. Contingent Liabilities
The Directors are not aware of any contingent liabilities (2022:
nil).
Note 25. Related Party Transactions
Parent entity
The legal parent entity is Tlou Energy Limited.
Subsidiaries
Interests in subsidiaries are set out in note 28.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2023 2022
$ $
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a director-related
entity of
Anthony Gilby. 15,600 12,900
Loans to/from related parties
Loan from ILC Investment Pty Ltd, a significant shareholder of the Company 2,000,000 -
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:
Interest accrued on the loan to ILC Investments Pty Ltd, a significant shareholder 16,438 -
of the
Company
The loan from ILC Investments Pty Ltd has a three-year term,
commencing on 1 May 2023 and there are no arrangement fees.
Interest will be charged at 10% per annum and payable each
quarter.
Note 26. Segment Reporting
Reportable Segments
Operating segments are identified based on internal reports that
are regularly reviewed by the executive team 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 2023 no revenue has been derived from its
operations (2022: nil).
Segment assets
Segment non-current assets are allocated to countries based on
where the assets are located as outlined below:
June 2023 June 2022
$ $
Botswana 61,802,339 51,147,251
Australia 31,726 1,966
61,834,065 51,149,217
----------- -----------
Note 27. Cash Flow Information
Consolidated
June 2023 June 2022
$ $
Reconciliation of cash flow from operations
Loss for the period (4,241,208) (4,329,116)
Depreciation 209,320 547,217
Share-based payments 99,651 232,200
Impairment charge - exploration and evaluation assets - 166,054
Fair value gain/(loss) on financial instruments 96,805 690,272
Capitalised interest 614,581 241,917
Net exchange differences 59,424 43,997
Changes in operating assets and liabilities, net of the effects of purchase and disposal of
subsidiaries:
Decrease/(increase) in trade and other receivables 82,907 (56,631)
Increase/(decrease) in trade payables and accruals 259,723 113,596
Increase/(decrease) in other payables (13,118) (15,997)
Decrease/(increase) in prepayments 49,515 (5,053)
Increase/(decrease) in provisions 45,923 2,932
(2,736,477) (2,368,612)
-------------- --------------
Refer to Notes 14-16 for non-cash investing or financing
activities during the year.
Note 28. 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 2023 June 2022
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
Pula Holdings Inc Barbados Ordinary 100 100
Tlou Energy Generation Proprietary
Limited Botswana Ordinary 100 100
Note 29. Matters subsequent to the end of the financial year
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 30. Parent entity disclosures
Parent
June 2023 June 2022
$ $
Current assets 6,806,589 7,650,332
Non-current assets 30,245,477 30,255,800
Total assets 37,052,066 37,906,131
------------- -------------
Current liabilities 877,221 1,000,468
Non-current liabilities 10,208,015 7,331,243
Total liabilities 11,085,236 8,331,711
------------- -------------
Net assets 25,966,830 29,574,420
------------- -------------
Contributed equity 121,509,323 106,763,925
Share based payment 1,257,455 1,157,804
Accumulated losses (96,799,948) (78,347,309)
Total equity 25,966,830 29,574,420
------------- -------------
Loss for the period (18,452,639) (6,993,237)
Total comprehensive income (18,452,639) (6,993,237)
------------- -------------
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 reporting date.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR PPUBPBUPWUMB
(END) Dow Jones Newswires
September 29, 2023 03:31 ET (07:31 GMT)
Tlou Energy (LSE:TLOU)
Historical Stock Chart
From Apr 2024 to May 2024
Tlou Energy (LSE:TLOU)
Historical Stock Chart
From May 2023 to May 2024
