- Part 5: For the preceding part double click ID:nRSd3263Ld
Year ended 30 June 2015
At 1 July 2014 net of accumulated depreciation 1,042,507
Additions -
Disposals (23,098)
Depreciation charge for the year (101,224)
Net exchange differences 49,062
At 30 June 2015 net of accumulated depreciation 967,247
At 30 June 2015
Cost 2,055,094
Accumulated depreciation (1,087,847)
Net carrying amount 967,247
11. PLANT AND EQUIPMENT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
12. EXPLORATION AND EVALUATION EXPENDITURE
Consolidated
2016 2015
$ $
Exploration expenditure carried forward:
Exploration and evaluation expenditure at cost 28,215,402 44,166,103
Movements during the year
Balance at beginning of year 44,166,103 31,986,316
Expenditure incurred during the year 279,759 5,519,880
Impairment - (787,046)
Foreign exchange translation (16,230,460) 7,446,953
Balance at end of year 28,215,402 44,166,103
Oil sales revenue capitalised into exploration and evaluation expenditure for the year was $nil (2015: $nil).
In the prior period, Management decided to write-off well NZW 2. No further work had been planned for this particular
well.
13. OTHER FINANCIAL ASSETS
Liquidation fund 387,732 630,874
Other - 9,364
387,732 640,238
The Group has a deposit for the purpose of a Liquidation fund in the amount of $387,732. The deposit is to be used for
land restoration when required. Under the laws of Kazakhstan, the deposit must be replenished in the amount of 1% of the
annual investments. The fair value approximates the carrying value.
14. TRADE AND OTHER PAYABLES
Trade creditors 652,938 1,253,357
Accrued expenses 102,195 27,392
755,133 1,280,749
Trade payables are non-interest-bearing and are normally settled on 30-day terms.
15. DEFERRED REVENUE
As at 1 July 60,111 844,773
Deferred during the year - -
Released during the year - (892,988)
Repaid during the year (60,111) -
Foreign exchange translation - 108,326
At 30 June - 60,111
The deferred revenue refers to an amount received in advance for oil sales. As at 30 June 2016, there is 0 tonnes of oil
to be delivered under contracts. (2015: nil)
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
16. PROVISIONS
Consolidated
2016 2015
$ $
Non - current
Provision for rehabilitation 154,442 527,827
154,442 527,827
The Group accrues provisions for the forthcoming costs of rehabilitation of the territory. On the basis of forecasts the
cost of rehabilitation of the oilfield would be $154,442 (2015: $527,827). The costs are denominated are Tenge. The
timing of rehabilitation is likely to depend on when the field ceases to produce at economically viable rates which is
currently estimated to be 2044 (2015: 2039). This will depend upon future oil and gas prices, which are inherently
uncertain. The underlining rehabilitation costs are denominated in Tenge and in calculating the provision at 30 June 2016
a discount rate of 10.37% (2015: 6.94%) was used.
Movements in rehabilitation provision
2016$ 2015$
Carrying amount at beginning of the year 527,827 294,538
Unwinding of discount rate 20,850 24,952
Foreign exchange translation (228,195) 65,025
Provision for the year - 143,312
Re-measurement for changes in estimates1 (166,040) -
Carrying amount at the end of year 154,442 527,827
1Due to a change in the discount rate and the expected timing of when the rehabilitation activities will be undertaken.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
17. DERIVATIVES AND OTHER FINANCIAL LIABILITIES
Consolidated
2016 2015
$ $
Current
Derivative liability - 1,612
- 1,612
Non-Current
Promissory notes (unsecured) 42,936,226 9,744,164
Convertible note - 23,628,253
42,936,226 33,372,417
Promissory Notes
On 31 May 2016, the major shareholder Waterford Petroleum Limited ("Waterford") agreed to re-finance its current Promissory
Note (as originally announced on 7 October 2014 and subsequently amended on 30 April 2015) that, as at 31 May 2016,
amounted to US$8,633,333 (A$11,636,956) in principal with accrued interest of US$1,250,894 (A$1,686,092) (total
US$9,914,227)(A$13,323,048) into a new Promissory Note with the following key terms:
· Unsecured
· Effective 31 May 2016
· Repayable on 1 July 2018
· Interest rate of 15% pa
· Interest will accrue and be repayable with principal
· Lender can elect to be repaid if there is a change of control in Jupiter Energy Limited or Jupiter Energy Pte Ltd or
there is a change in control in contract 2275 covering the Block 31 Licence
The previous Promissory Note and all accrued interest were due for repayment on 1 July 2016.
On 24 May 2016, the Group and Waterford agreed to put in place a new Framework Funding Agreement that makes up to a further
US$5,000,000 (including accrued interest) available to the Group by way of a new US$5,000,000 Promissory Note. This takes
the total facility available under the existing and the new Framework Funding Agreement to US$15,000,000 (including accrued
interest) of which a further US$5,088,822 (A$6,859,274) can be drawn down on (including accrued interest). This is in order
to fund the Group's operations whilst it continues to finalise long term funding arrangements for the development of its
Block 31 licence area in Kazakhstan.
The key terms of the new Framework Agreement with Waterford are:
· Effective 24 May 2016
· Drawdowns will roll into a Promissory Note
· Promissory Note is repayable on 1 July 2018
· Interest rate of 15% pa
· Interest will accrue and be repayable with principal
· Lender can elect to be repaid if there is a change of control in Jupiter Energy Limited or Jupiter Energy Pte Ltd or
there is a change in control in contract 2275 covering the Block 31 Licence
As at 30 June 2016, US$744,989 (A$1,004,171) has been drawn from the US$5,000,000 facility.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
US$15.5m Convertible Notes (Series B):
On 3 June 2016, the Group announced it had reached agreement with its Convertible Note holders to refinance the 12,400,000
Convertible Notes with a total value of approx. US$20,800,000 (including accrued interest) into Promissory Notes with a
repayment date of 1 July 2018.
The key terms for the new Promissory Notes are:
· Unsecured
· Effective 31 May 2016
· Repayable on 1 July 2018
· Interest rate of 15% pa
· Interest will accrue and be repayable with the principal
· Lenders can elect to be repaid if there is a change of control in Jupiter Energy Limited or Jupiter Energy Pte Ltd or
there is a change in control of the ownership of the Block 31 Licence
The Convertible Notes and all accrued interest were due for repayment on 20 September 2016. At the date of refinancing the
carrying value of the Convertible Note liability and derivative liability relating to the conversion option was
derecognised and the new Promissory Notes liability were recognised at fair value. A gain on extinguishment of A$282,672
was recognised in the profit or loss being the difference between the fair value of the Promissory Notes liability and the
carrying value of the Convertible Note liability and derivative liability that was derecognised. As the Convertible Notes
holders and Promissory Notes holders are the same parties, the refinancing was a non cash transaction. Subsequent to
initial recognition the Promissory Notes are being measured at amortised cost.
Valuation Techniques of the Convertible Notes
The Notes had an embedded derivative in the form of a call option for the holder to convert the Notes at US$1.25 into
Jupiter ordinary shares.
The convertible equity feature of the Notes has been separated from the liability component of the Notes for financial
reporting purposes. The call option to convert the notes into shares did not meet the definition of an equity instrument,
as the exercise price was denominated in a currency that is different to the Company's functional currency. The convertible
call option was classified as a Derivative liability and measured at fair value through the profit or loss.
The Derivative component of the Notes was valued using the Black Scholes option valuation methodology. The Black Scholes
option valuation methodology calculates the expected benefit from acquiring the shares outright less the present value of
paying the exercise price for the options at expected exercise date. An input into the Black Scholes option valuation is
the expected share price volatility over the remaining term of the options. The expected share price volatility used in the
option valuation at reporting date was 55% which was based on historical share price volatility.
The fair value of the embedded derivative was sensitive to changes in share price volatility. The table below outlines the
impact a change in the share price volatility input had on the fair value of the embedded derivative.
30 June 2016$ 30 June 2015$
15% increase in volatility - 313,077
15 % decrease in volatility - (231,405)
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
Fair value hierarchy
All financial instruments, such as the Series B Convertible Notes, for which fair value is recognised or disclosed are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to
the fair value measurement as a whole:
Level 1 - Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities
Level 2 - Valuation techniques (for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable)
Level 3 - Valuation techniques (for which the lowest level input that is significant to the fair value measurement is
unobservable)
For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers
have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
As at 30 June 2016, the Group held the following classes of financial instruments measured at fair value:
30 June 2016 30 June 2015
Level 3 Level 3
$ $
Derivative financial liabilities
Embedded derivative - 1,612
There were no transfers between Level 1, Level 2 or Level 3 fair value measurements during the year ended 30 June 2016
(2015: Nil).
Reconciliation of recurring fair value measurements categorised within level 3 of the fair value hierarchy
30 June 2016$ 30 June 2015$
Opening balance (1,612) (229,400)
Fair Value at inception - -
Net unrealised gain recognised in the profit or loss during the period 1,612 227,788
Closing balance - (1,612)
18. CONTRIBUTED EQUITY
Consolidated
2016 2015
$ $
Shares issued and fully paid
Ordinary shares (a) 85,633,935 85,633,935
85,633,935 85,633,935
Number Number
(a) Movements in ordinary share capital: 2016 2015
Balance 30 June 2015 153,377,693 153,377,693
Balance 30 June 2016 153,377,693 153,377,693
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
18. CONTRIBUTED EQUITY (continued)
(b) Movement in performance rights
Balance as at 30 June 2015 - 8,075,000
Lapsed during year - (8,075,000)
Granted during the year - -
Balance as at 30 June 2016 - -
Capital risk management
When managing capital, management's objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, enter into joint ventures or
sell assets. The entity does not have a defined share buy-back plan. No dividends were paid in 2016 and none are expected to be paid in 2017. The Group is not subject to any externally imposed capital requirements.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
19. RESERVES
CONSOLIDATED
Foreign currency translation reserve Share based payments reserve Total
$ $ $
At 30 June 2014 (11,573,714) 5,695,838 (5,877,876)
Share based payment - 68,176 68,176
Foreign currency translation 12,738,847 - 12,738,847
At 30 June 2015 1,165,133 5,764,014 6,929,147
Share based payment - - -
Foreign currency translation (27,468,783) - (27,468,783
At 30 June 2016 (26,303,650) 5,764,014 (20,539,636)
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
Share based payments reserve
The share based payments plan reserve is used to record the value of equity benefits provided to eligible employees as part of their remuneration. Refer to note 21 for further details of this plan.
20. KEY MANAGEMENT PERSONNEL AND RELATED PARTY DISCLOSURE
This note is to be read in conjunction with the Remuneration Report, which is included in the Directors Report on pages 11
to 19.
(a) Key management personnel compensation
Consolidated
2016 2015
$ $
Short-term employee benefits 639,141 569,250
Post-employment benefits 40,333 50,233
Other 163,106 151,682
Share-based payments - 68,176
842,580 839,341
(b) Transactions between the Group and other related parties
Consultancy fees
During the year, consulting fees of $40,599 (2015: $144,096) were accrued and paid under normal terms and conditions to
Meridian Petroleum LLP, of which Mr. Kuandykov is a director, for the provision of geological services at normal commercial
rates.
During the year, consulting fees of $211,000 (2015: $146,333) were accrued and paid under normal terms and conditions to
Symdean Pty Ltd, of which Mr Gander is a director.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
21. SHARE BASED PAYMENTS
Employee Share Option Plan (ESOP) and Performance Rights Plan
There was no share based payments expense in the income statement for 2016 (2015: $68,176).
Options
The fair value of the options is estimated at the date of grant using the Black -Scholes option pricing model.
No options were granted during the year ended 30 June 2016 (2015: Nil).
During the year ended 30 June 2016, no options were exercised over ordinary shares (2015: Nil).
Performance Rights
The Jupiter Energy Performance Rights Plan was established whereby Jupiter Energy Limited may, at the discretion of the
Jupiter Energy Limited Board, grant performance rights over unissued shares of Jupiter Energy Limited to directors,
executives, employees and consultants of the consolidated entity. The rights are issued for nil consideration, will not be
quoted on the ASX, cannot be transferred and are granted at the discretion of the Jupiter Energy Board subject to
shareholder approval.
The number of performance rights on issue as at 30 June 2016 was nil.
During the 2015 year, 8,075,000 expired unvested.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
22. COMMITMENTS FOR EXPENDITURE
Exploration Work Program Commitments
The Group has entered into a subsoil utilisation rights for petroleum exploration and extraction in Areas 1 and 2 in
Mangistau Oblast in accordance with Contract No. 2272 dated 29 December 2006 with the Ministry of Energy and Mineral
Resources of the Republic of Kazakhstan.
Exploration work program commitments contracted for (but not capitalised in the accounts) that are payable:
2016 2015
$ $
- not later than one year - 5,118,377
- later than one year but not later than five years - -
- 5,118,377
23. AUDITORS REMUNERATION
The auditor of Jupiter Energy Limited is Ernst & Young.
Amounts received or due and receivable by Ernst & Young (Australia) for:
- auditing or reviewing the financial report 78,500 80,000
78,500 80,000
Amounts received or due and receivable by Ernst & Young (Kazakhstan) for:
- auditing or reviewing the financial report 18,645 78,315
18,645 78,315
Amounts received or due and receivable by Ernst & Young (Singapore) for:
- auditing or reviewing the financial report 12,477 12,085
12,477 12,085
Total paid to Ernst & Young 109,622 170,400
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
24. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share are calculated by dividing the profit / (loss) attributable to equity holders of the Group by the
weighted average number of ordinary shares outstanding during the period.
The following reflects the income and data used in the basic and diluted earnings per share computations:
Consolidated
2016 2015
Net loss attributable to ordinary equity holders of the Parent from continuing operations (10,474,870) (10,982,261)
Number of shares Number of shares
Weighted average number of ordinary shares for basic and diluted earnings per share 153,377,693 153,377,693
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and
the date of authorisation of these financial statements.
25. SEGMENT REPORTING
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are used by the chief operating decision
makers in assessing performance and determining the allocation of resources.
The Group has identified that it has one operating segment being related to the activities in Kazakhstan, on the basis that
the operations in Australia relate to running the Corporate Head Office only.
All significant Oil and Gas and Exploration and evaluation expenditure are domiciled in Kazakhstan.
Accounting policies and inter-segment transactions
The accounting policies used by the Group in reporting segments internally are the same as those contained in Note 1 to the
accounts.
Interest revenue is derived in Australia. Non-current assets relate to capitalised exploration and evaluation expenditure
and oil and gas properties located in Kazakhstan.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
26. STATEMENT OF CASHFLOWS RECONCILIATION
(a) Reconciliation of operating (loss) after income tax to net cash (used in) operating activities
Consolidated
2016 2015
$ $
Operating (loss) after income tax: (10,474,870) (10,982,261)
Add/(less) non-cash items:
Depreciation / Depletion 155,873 361,566
Share based payments - 68,176
(Gain) / Loss on derivative 54 (227,788)
Finance costs 6,041,331 3,161,784
Effect of foreign exchange translation 969,858 4,468,779
Gain on extinguishment1 (282,672) -
Changes in assets and liabilities:
Decrease/(increase) in receivables 986,236 (430,233)
Decrease/(increase in inventories 50,651 (18,929)
(Increase)/decrease in other current assets 54,650 146,770
Increase/ (decrease) in deferred revenue (60,111) (784,662)
Increase/ (decrease) in payables (525,614) 405,531
Decrease/(increase) in provisions (373,385) (58,061)
Net cash flows from operating activities (3,457,999) (3,889,328)
1Relates to the refinancing of the Convertible Notes, refer to note 17.
For the purposes of the cash flow statement, cash includes cash on hand, at banks, and money market investments readily
convertible to cash on hand, net of outstanding bank overdrafts.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
27. EVENTS OCCURING AFTER THE BALANCE SHEET DATE
On 19 September 2016 the Group announced that it had signed Addendum 7 to Contract 2275 which confirmed that the Ministry
of Energy had agreed to a three (3) year extension to the Exploration Licence taking the Exploration Period through to 29
December 2019. The 3 year extension is based on the Group maintaining its current acreage and the Ministry of Energy
indicated that if the Group did proceed with the North East and South East land extensions that are being considered, then
a further one (1) year extension (to 29 December 2020) could be available.
There have been no other significant events occurring subsequent to 30 June 2016 apart from those noted above.
28. INFORMATION ON PARENT ENTITY
2016 2015
(a) Information relating to Jupiter Energy Limited: $ $
Current assets 709,903 1,385,083
Total assets 47,592,924 75,227,570
Current liabilities (409,456) (198,641)
Total liabilities (43,341,521) (33,572,670)
Issued capital 85,633,935 85,633,935
Retained earnings (60,958,761) (49,743,049)
Share based payment reserve 5,764,014 5,764,014
Total shareholders' equity (4,251,403) 41,654,900
Profit or (loss) of the parent entity (19,735,223) (1,756,586)
Total comprehensive income / (loss) of the parent entity (19,735,223) (1,756,586)
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
28. INFORMATION ON PARENT ENTITY (continued)
Country of Equity Holding
incorporation 2016 2015
% %
Name of Entity
Jupiter Energy (Victoria) Pty Ltd Australia 100 100
Jupiter Biofuels Pty Ltd Australia 100 100
Jupiter Energy (Kazakhstan) Pty Ltd Australia 100 100
Jupiter Energy Pte Ltd Singapore 100 100
Jupiter Energy (Services) Pte Ltd Singapore 100 100
(b) Details of any guarantees entered into by the parent entity in relation to the debts of its subsidiaries
There are no guarantees entered into by the parent entity.
(c) Details of any contingent liabilities of the parent entity
There are no contingent liabilities of the parent entity as at reporting date.
(d) Details of any contractual commitments by the parent entity
There are no contractual commitments by the parent entity
29. CONTINGENT LIABILITIES
The Group has no contingent liabilities as at 30 June 2016 (30 June 2015: Nil)
Directors' Declaration
In accordance with a resolution of the directors of Jupiter Energy Limited, I state that:
1 In the opinion of the directors:
(a) the financial statements and notes of Jupiter Energy Limited for the financial year ended 30 June 2016 are in accordance with
the Corporations Act 2001, including:
(i) Giving a true and fair view of its financial position as at 30 June 2016 and performance for the year ended on that date.
(ii) Complying with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001
(b) The financial statements and notes also comply with International Financial Reporting Standards, as disclosed in note 2(b)
(c) Subject to the matter set out in Note 2(a) there are reasonable grounds to believe that the Group will be able to pay its debts
as and when they become due and payable.
3 This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001
for the financial year ended 30 June 2016.
On behalf of the Board
Geoff Gander
Executive Chairman
Perth, Western Australia 30 September 2016
AUDITORS REPORT
AUDITORS REPORT (continued)
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Ltd Listing Rules and not disclosed elsewhere in this
report is as follows.
SHAREHOLDINGS (as at 31 August 2016)
Substantial shareholders
Waterford Petroleum Limited 45,246,108 29.5%
Arrow Business Limited 30,917,255 20.2%
Central Asian Oil Holdings Ltd 29,731,484 19.4%
Voting Rights
Each shareholder is entitled to receive notice of and attend and vote at general meetings of the Group. At a general
meeting, every shareholder present in person or by proxy, representative or attorney will have one vote on a show of hands
and on a poll, one vote for each share held.
DISTRIBUTION OF EQUITY SECURITY HOLDINGS
Category Total holders OrdinaryShares
1 - 1,000 436 172,342
1,001 - 5,000 549 1,439,836
5,001 - 10,000 213 1,538,323
10,001 - 100,000 256 6,955,688
100,001 and over 26 143,271,504
Total 1,480 153,377,693
The number of shareholders holding less than a marketable parcel of ordinary shares is 634.
On-market buy back
There is no current on-market buy back.
Securities on Issue
The number of shares issued by the Group are set out below:
Category Number
Ordinary Shares 153,377,693
TWENTY LARGEST SHAREHOLDERS
Name of Holder No. of Ordinary Shares % of Issued capital
1. COMPUTERSHARE CLEARING PTY LTD 50,008,958 32.61
2. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 48,354,956 31.53
3. BNP PARIBAS NOMS PTY LTD DRP 29,667,795 19.34
4. J P MORGAN NOMINEES AUSTRALIA LIMITED 6,829,357 4.45
5. CITICORP NOMINEES PTY LIMITED 2,234,562 1.46
6. GLENNBROWN PTY LTD 1,333,334 0.87
7. MR GEOFFREY ANTHONY GANDER 769,445 0.50
8. MR ATHOL GEOFFREY JAMES 608,148 0.40
9. GOLDEN BOUNTY LIMITED 506,450 0.33
10. GLENNBROWN PTY LTD 465,000 0.30
11. MR WARREN GILMOUR + MRS CATHERINE GILMOUR 282,753 0.18
12. MR ERKIN SVANBAYEV 240,000 0.16
13. MR SCOTT MISON 207,038 0.13
14. SOUTHAM INVESTMENTS 2003 PTY LTD 179,511 0.12
15. MR IAN SHERWOOD LOVE + MRS ANNE MARGARET LOVE 166,667 0.11
16. DR NEIL TANUDISASTRO + MRS YANI SUTANIMAN 154,667 0.10
17. R & L EVANS PTY LTD 150,000 0.10
18. MR YERKIN SVANBAYEV 150,000 0.10
19. NATIONAL NOMINEES LIMITED 148,335 0.10
20. DALY SF PTY LTD 146,668 0.10
TOTAL 142,603,644 92.98
"The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation
596/2014."
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