REG - Jupiter Energy - Final Results <Origin Href="QuoteRef">JPR.AX</Origin> - Part 4
30/09/2016 09:45
- Part 4: For the preceding part double click ID:nRSd3263Lc
area of interest. Unsuccessful exploration in the area of interest is expensed as incurred even if activities in this area of
interest are continuing. Accumulated costs in relation to an abandoned area are written off in full to profit or loss in the year in which the decision to abandon the
area is made. When a discovered oil or gas field enters the development phase or an individual well is assessed as being in production (once a trial production licence is
granted) the accumulated exploration and evaluation expenditure is transferred to oil and gas properties.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Oil and gas properties
Oil and gas properties usually single oil or gas fields being developed for future production or which are in the production phase. Where several individual oil fields are to be produced through common facilities, the individual oil field and the
associated production facilities are managed and reported as a single oil and gas asset.
Assets in developmentWhen the technical and commercial feasibility of an undeveloped oil or gas field has been demonstrated, the field enters its development phase. The costs of oil and gas assets in the development phase are accounted for as tangible
assets and include past exploration and evaluation costs, development drilling and plant and equipment and any associated land and buildings.
Producing assetsThe costs of oil and gas assets in production are accounted for as tangible assets and include past exploration and evaluation costs, pre-production development costs and the ongoing costs of continuing to develop reserves for production
and to expand or replace plant and equipment and any associated land and buildings. Producing assets are depreciated over total proved and probable reserves on a unit of production basis.
(h) Impairment of assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets (excluding goodwill) to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount
of the asset, being the higher of the asset's fair value less costs of disposal and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the profit or loss.
(i) Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at amortised cost amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable.
Bad debts are written off when identified.
(j) Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
(k) Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and any estimated selling costs. Cost includes those costs
incurred in bringing each component of inventory to its present location and condition.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l) Trade and other payables
Trade payables and other payables are carried at amortised costs and due to their short-term nature are not discounted. They represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase
of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.
(m) Financial liabilities
Financial liabilities within the scope of AASB 139 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives,
as appropriate. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair
value and in the case of loans and borrowings, plus directly attributable transaction costs and are either subsequently measured at amortised cost or fair value through
profit or loss. The Group's financial liabilities include trade and other payables, loans and borrowings and derivative financial instruments. Derivative Financial
InstrumentsDerivatives are fair valued using appropriate valuation techniques. Such techniques may include using recent arm's length market transactions; reference to the
current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation techniques. Fair value movements are
recognised in the profit or loss.
(n) Share-based payment transactions
Share-based compensation benefits are provided to directors and executives. Performance RightsThe cost of Performance Rights are measured by reference to the fair value
at the date at which they are granted. The fair value is determined using a Monte Carlo methodology, which considers the incorporation of market based hurdles. Non-market
conditions are not factored into the fair value of the performance rights at grant date. Probability factors are assigned to the vesting expense as to whether non market
conditions will be met.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o) Revenue recognition
Sales revenueRevenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and revenue can be measured reliably. Revenue
generated during the development stage of an asset, is offset against the carrying value of the asset, rather than recognised in the profit or loss within the statement
of comprehensive income. InterestRevenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.
(p) Convertible Note
A Convertible Note is split into two components: a debt component and a component representing the embedded derivatives in the Convertible Note. The debt component
represents the Group's liability for future interest coupon payments and the redemption amount. The embedded derivatives represent the value of the option that note
holders have to convert into ordinary shares in the Company.
(q) Income tax
The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the profit adjusted for any non-assessable or disallowed items. Deferred tax is accounted for using the liability method in respect of
temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income
statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will
be available against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and
the anticipation that the consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST or VAT except: · where the GST or VAT incurred on a
purchase of goods and services is not recoverable from the taxation authority, in which case the GST or VAT is recognised as
part of the cost of acquisition of the asset or as part of the expense item as applicable; and · receivables and payables
are stated with the amount of GST or VAT included. The net amount of GST or VAT recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the Cash Flow
Statement on a gross basis and the GST or VAT component of cash flows arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies
are disclosed net of the amount of GST or VAT recoverable from, or payable to, the taxation authority.
(s) Contributed equity
Ordinary shares are classified as equity. 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.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t) Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted
to exclude any costs of servicing equity (other than dividends) and preference share dividends,
divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted
earnings per share is calculated as net profit attributable to members of the parent, adjusted for: ·
the after tax effect of dividends and interest associated with dilutive potential ordinary shares
that have been recognised as expenses; and· other non-discretionary changes in revenues or
expenses during the period that would result from the dilution of potential ordinary shares; divided
by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for
any bonus element.
(u) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented in the income statement net of
any reimbursement. If the effect of the time value of money is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments
of the time value of money and, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost. RestorationCosts of site restoration are provided over the life of the field or
facility from when exploration commences and are included in the costs of that stage. Site restoration
costs include the dismantling and removal of plant, equipment and building structures, waste removal,
and rehabilitation of the site in accordance with clauses of the permits. Such costs have been
determined based on current legal requirements and technology. In calculating the provision the
future estimated costs are discounted to present value. Any changes in the estimates for the costs
are accounted on a prospective basis. In determining the costs of site restoration, there is
uncertainty regarding the nature and extent of the restoration due to community expectations and
future legislation. Accordingly the costs have been determined on the basis that the restoration will
be completed within one year of abandoning the site.
(v) Employee leave benefits Liabilities for wages and salaries, including non-monetary benefits, annual
leave and accumulating sick leave expected to be settled wholly within 12 months of the reporting date
are recognised in provisions in respect of employees' services up to the reporting date. They are
measured at the nominal amounts based on current wage and salary rates, and include related on-costs.
Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at
the rates paid or payable..
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(w) Foreign currency transactions and balances
(i) Functional and presentation currencyBoth the functional and presentation currency of Jupiter
Energy Limited and each of its Australian subsidiaries are Australian dollars ($). The Singapore
subsidiaries' functional currency is United States Dollars which is translated to the presentation
currency of the Group, being Australian dollars ($). The functional currency of the Branch of the
Singapore subsidiary is Tenge (see below for consolidated reporting). (ii) Transactions and
balancesTransactions in foreign currencies are initially recorded in the functional currency by
applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting
date. Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction. Non-monetary items
measured at fair value in a foreign currency are translated using the exchange rates at the date when
the fair value was determined. (iii) Translation of Group Companies' functional currency to
presentation currencyThe results of the Singapore subsidiaries are translated into Australian Dollars
(presentation currency of the Group) as at the date of each transaction. Assets and liabilities are
translated at exchange rates prevailing at reporting date. Exchange variations resulting from the
translation are recognised in the foreign currency translation reserve in equity. On consolidation,
exchange differences arising from the translation of the net investment in the Singapore subsidiaries
and its Branch are taken to the foreign currency translation reserve. If a Singapore subsidiary was
sold, the proportionate share of exchange differences would be reclassified to profit or loss
(x) Segments
An operating segment is a component of an entity that engages in business activities from which it may
earn revenue and incur expenses (including revenues and expenses relating to transactions with other
components of the same entity), whose operating results are regularly reviewed by the Board of
Directors (the chief operating decision makers) to make decisions about resources to be allocated to
the segment and assess its performance and for which discrete financial information is available.
Management will also consider other factors in determining operating segments such as the existence of
a line manager and the level of segment information presented to the executive management team.
Operating segments are identified based on the information provided to the chief operating decision
makers. Currently the Group has only one operating segment, being the Group.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(y) Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Where funds are borrowed specifically to finance a
project, the amount capitalised represents the actual borrowing costs incurred. Where surplus funds are available for a short term out of money borrowed specifically to
finance a project, the income generated from the temporary investment of amounts is also capitalised and deducted from the total capitalised borrowing cost. Where the
funds used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant general
borrowings of the Group during the period. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Even though exploration
and evaluation assets can be qualifying assets, they generally do not meet the probable economic benefits test and also are rarely debt funded. Any related borrowing
costs are therefore generally recognised in profit or loss in the period they are incurred.
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's principal financial instruments comprise receivables, borrowings, payables, cash and short-term deposits.
Risk exposures and responses
The main purpose of these financial instruments is to provide finance for the Group's operations. The Group has various
other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its
operations. The main risks arising from the Group's financial instruments are cash flow interest rate risk, liquidity risk,
foreign currency risk and credit risk.
Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews the risks
identified below, including the setting of limits for trading in derivatives, hedging cover of foreign currency and
interest rate risk, credit allowances, and future cash flow forecast projections.
Interest rate risk
The Group's exposure to market risk for changes in interest rates is only on short term deposits and cash and cash
equivalents.
At balance date, the Group had the following mix of financial assets and liabilities exposed to interest rate risk:
Consolidated
2016 2015
$ $
Financial Assets
Cash and cash equivalents 663,446 1,613,560
Net exposure 663,446 1,613,560
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
The following table summarises the sensitivity of the fair value of the financial instruments held at balance date, if
interest rates had moved, with all other variables held constant, post tax profit would have been affected as follows:
Consolidated
Post - tax gain / (loss) 2016 2015
$ $
+1% 6,634 16,136
-1% (6,634) (16,136)
Foreign currency risk
The Group has transactional currency exposures. Such exposure arises from sales or purchases by an operating entity in
currencies other than the functional currency.
At balance date, the Group had the following exposure to United States Dollars (USD), Great Britain Pound (GBP) and
Singapore Dollars (SGD) foreign currency that is not designated in cash flow hedges:
Consolidated
2016 2015
$ $
Financial Assets
Cash and cash equivalents
- USD 653,866 1,583,211
- SGD 1,859 1,859
- GBP 3,098 17,164
658,823 1,602,234
Financial Liabilities
Other financial liabilities (42,936,226) (33,372,417)
Derivative - (1,612)
(42,936,226) (33,374,029)
Net exposure (42,277,403) (31,771,795)
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
The following table summarises the sensitivity of financial instruments held at balance date to movement in the exchange
rate of the Australian dollar to the United States Dollar, with all other variables held constant. The 5% sensitivity is
based on reasonably possible changes, over a financial year, using the observed range of actual historical rates for the
preceding 5 periods.
Consolidated
Post - tax gain / (loss) 2016 2015
$ $
+5% (2,114,118) (1,557,046)
-5% 2,114,118 1,557,046
Credit risk
Credit risk represents the loss that would be recognised if counterparties fail to perform as contracted.
Part of the Group's receivables balances are represented by VAT input tax credits, which are received on a quarterly basis,
and deposits held in trust in respect of leases for office premises.
With respect to credit risk arising from the financial assets of the Group, which comprise cash and cash equivalents and
trade receivables, the Group's exposure to credit risk arises from default of the counter party, with a maximum exposure
equal to the carrying amount of these instruments.
There are no significant concentrations of credit risk within the Group.
Liquidity Risk
The Group's objective is to maintain a balance between continuity of funding and flexibility through use of bank
overdrafts, promissory notes, finance leases and hire purchase contracts.
The contractual maturities of the Group's financial assets and liabilities are shown in the table below. Undiscounted cash
flows for the respective years are presented. This excludes cash and cash equivalents and current trade and other
receivables.
Consolidated
2016 2015
$ $
Financial Assets
Within one year - -
After one year but not more than five years - -
More than five years 387,382 630,874
387,382 630,874
Financial Liabilities
Within one year (755,133) (1,612)
After one year to two years - (11,234,458)
More than two years (42,936,226) (27,968,013)
(43,691,359) (39,204,083)
Net Exposure (43,303,977) (38,573,209)
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Management and the Board monitor the Group's liquidity on the basis of expected cash flow. The information that is prepared
by senior management and reviewed by the Board includes monthly and annual cash flow budgets.
Fair value
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 - the fair value is calculated using quoted prices in active markets.
Level 2 - the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 - the fair value is estimated using inputs for the asset or liability that are not based on observable market
data.
All of the Group's other financial liabilities are carried at amortised cost, with the carrying value approximating the
fair value.
The fair value of the derivative was determined using the level 3 method.
4. GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated
2016 2015
$ $
Administration and compliance expenses 1,791,817 1,296,936
Employee benefits1 822,043 951,064
Superannuation 40,333 50,233
Consulting fees 362,021 186,015
Depreciation and amortisation expenses 155,873 33,333
Directors fees 199,120 285,502
Legal fees 20,283 104,546
Occupancy expenses 243,662 262,242
Share based payments - 68,176
Total expenses 3,653,152 3,238,047
1In 2015, Cost of Sales included $285,000 of employee benefits. From February 2015 payment of director fees have been deferred until such time that at least US$5,000,000 in new equity is raised or alternatively the Group sells the Block 31 licence and receives the funds associated with that sale.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
5. TAXATION
Prima facie income tax on operating (loss) is reconciled to the income tax benefit provided in the financial statements as
follows:
Consolidated
2016 2015
$ $
Prima facie income tax benefit on operating (loss) at the Australian tax rate of 30% (2015: 30%) (3,142,461) (3,294,678)
Non-deductible expenditure:
- Effect of tax rates in foreign jurisdictions 143,528 322,384
- Share Based payments - 20,453
- Interest expense 1,812,399 -
Temporary differences and tax losses not bought to account as a deferred tax asset 1,186,534 2,951,841
Income tax expense - -
Deferred Income Tax
Deferred income tax at 30 June relates to the following:
Consolidated - -
Deferred tax liabilities - -
Deferred tax assets
Unrealised FX (gain) / loss 2,356,420 (1,028,376)
Unrealised derivative (gain) / loss 54 (252,627)
Share issue costs - 7,519
Revenue tax losses - Australia 7,111,664 7,383,121
E&E assets 910,468 4,503,790
Provision for impairment - 2,163,087
Deferred tax assets not recognised (10,378,606) (14,651,789)
Deferred tax (income)/expense - -
Net deferred tax recognised in Balance Sheet - -
The Consolidated Group has tax losses of $24,844,409 (2015: $23,799,948) that are available indefinitely for offset against
future taxable profits of the companies in which the losses arose.
The potential deferred tax asset will only be realised if:
(a) The relevant Group derives future assessable income of a nature and an amount sufficient to enable the asset to be
realised, or the asset can be utilised by another Group in the consolidated entity in accordance with Division 170 of the
Income Tax Assessment Act 1997;
(b) The relevant Group and/or consolidated entity continues to comply with the conditions for deductibility imposed by the
Law; and
(c) No changes in tax legislation adversely affect the relevant Group and/or consolidated entity in realising the asset.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
6. CASH AND CASH EQUIVALENTS
Consolidated
2016 2015
$ $
Cash at bank and in hand 663,446 1,613,560
663,446 1,613,560
The bank accounts are at call and pay interest at a weighted average interest rate of 0.04% at 30 June 2016 (2015: 0.04%)
7. TRADE AND OTHER RECEIVABLES
Consolidated
2016 2015
Current $ $
Trade receivables - 66,715
Other debtors 24,064 11,336
24,064 78,051
Non-current
VAT receivable 2,787,367 4,842,743
The Group's exposure to credit and currency risks is disclosed in Note 3. The majority of the non-current other debtor
balance is VAT receivable which will be offset against future taxes payable on oil revenue.
At 30 June 2016, the aging analysis of receivables is as follows:
Total 0 - 30Days 31 - 60 days 61 - 90days 90+days
2016 2,811,431 24,064 - - 2,787,367
2015 4,920,794 78,051 - - 4,842,743
There are no receivables as at 30 June 2016 that are impaired (2015: nil)
8. OTHER CURRENT ASSETS
Consolidated
2016 2015
$ $
Prepayment 67,459 122,110
67,459 122,110
9. INVENTORIES
Raw materials 17,886 82,351
Crude oil - 3,103
Provision of obsolete items - (16,919)
17,886 68,535
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
10. OIL AND GAS PROPERTIES
Consolidated
$
Cost as at 30 June 2014 21,749,075
Net exchange differences 4,478,843
Cost as at 30 June 2015 26,227,918
Depletion and impairment as at 30 June 2014 (1,465,282)
Charge for the year (363,607)
Depletion and impairment as at 30 June 2015 (1,828,889)
Net book value as at 30 June 2015 24,399,029
Cost as at 30 June 2015 26,227,918
Net exchange differences (9,422,479)
Cost as at 30 June 2016 16,805,439
Depletion and impairment as at 30 June 2015 (1,828,889)
Charge for the year -
Depletion and impairment as at 30 June 2016 (1,828,889)
Net book value as at 30 June 2016 14,976,550
Year ended 30 June 2016 Consolidated $
At 1 July 2015 net of accumulated depreciation 967,247
Additions -
Disposals -
Depreciation charge for the year (155,873)
Net exchange differences (394,232)
At 30 June 2016 net of accumulated depreciation 417,142
At 30 June 2016
Cost 2,055,094
Accumulated depreciation (1,637,952)
Net carrying amount 417,142
- More to follow, for following part double click ID:nRSd3263LeRecent news on Jupiter Energy
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