REG - Synergia Energy Ltd - Annual Report 2023
21/09/2023 07:00
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RNS Number : 1939N Synergia Energy Ltd 21 September 2023
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SYNERGIA ENERGY LTD
ABN 50 078 652 632
ANNUAL REPORT
2023
CHAIRMAN'S REVIEW
Dear Shareholder,
The past year has seen many positive events in your company including
significant progress in existing core projects, the addition of a very
substantial new opportunity, enhancement of the Company's corporate position
and resolution of all legacy and long-standing issues. The Company's primary
focus is on carbon reduction and contribution to the energy transition that is
currently under way globally. Our strategy has two fundamental components, the
production of gas as a key transition energy source and carbon capture and
sequestration ("CCS").
In India, important steps leading to the development of the known large gas
resource at the Cambay Field are underway, including a farmout / funding plan
which is well advanced. In addition, the Company has developed early-stage
plans for a CCS scheme in India. In the UK, the Company has been awarded a CCS
licence in the Southern North Sea as the result of competitive bidding in an
initiative set up by the UK government.
The ability to undertake these projects is underscored by the extensive
experience of the management team in the design, construction and operation of
UK-based gas production and storage projects. It is further demonstrated by
the partnership with Wintershall Dea in the UK CCS licence. Wintershall Dea is
among the leading CCS players in the North Sea with four licences in three
North Sea countries.
On the corporate side, the Company has delisted from the ASX and is now solely
traded on the London AIM market. This brings into alignment the location of
our assets and the location of the executive management team. The Company
remains an Australian corporation subject to ASIC regulations. Indian
operations are managed by an expert team of Indian nationals located in
Gujarat, close to the Cambay project. The Company has appointed a new UK-based
broker, Panmure Gordon, to assist the Company with achieving its short- and
medium-term corporate objectives in reaching out to institutional investors to
support the developing projects. Additionally, Panmure Gordon's in-house
analyst will provide a third-party review of the Company and its projects.
Closing down of the legacy joint venture in Timor Leste is complete with
payment of the final loan instalment now made.
The outlook for the Company is very positive with a focused strategy
positioning our in-house expertise with the changing global energy and
environmental requirements and opportunities.
The major shareholders of the Company, continue to provide essential support
for the Company, and I am very pleased to report that Synergia Energy has a
dedicated and highly experienced board of directors working closely with the
executive management team who together provide the experience and direction
needed for the current re-building stage of the Company.
On behalf of the Board, I wish to thank our staff, contractors, local
communities, shareholders, and stakeholders for the ongoing support of the
Company and I invite that continued support as we reach for realisation of
value in our projects and plans.
Mr J Salomon
Non-Executive Chairman
21 September 2023
BUSINESS REVIEW
Industry Overview
Global governmental energy policies continued to evolve in an attempt to
reconcile the tensions between global gas shortages caused by the Ukraine war,
sustained tightening of production quotas from OPEC members combined with the
overriding need to address climate change by reducing dependence on fossil
fuels.
In India, the inability to compete for increasingly costly LNG imports
resulted in renewed emphasis on coal-fired power generation. Although global
LNG prices eased during H1 2023, the India Directorate General of Hydrocarbons
continued to emphasise the need for increased indigenous gas supplies.
The increase in oil and gas prices has caused a surge in oil and gas activity,
particularly in the US and Middle East. This increased activity has resulted
in global shortages of drilling services and equipment and generally increased
costs.
In the UK, the government reversed the previous years' antipathy towards the
oil and gas sector by launching the 33(rd) round of exploration licensing in
recognition of the importance of energy supply self-sufficiency. Conversely,
the UK government imposed a windfall tax on oil and gas company profits,
further reducing the attractiveness of new field development on the UK
Continental Shelf.
The UK government increased its resolve to implement carbon capture and
storage schemes by launching the 1(st) Carbon Storage Licensing Round and by
pledging £20 billion of investment over the next 5 years.
Synergia Energy Strategy
The Company continued to execute two of its three strategic components:
· Focus on gas production from its Cambay, India gas field
· Development of CCS projects in the UK and India
The Company has temporarily ceased its attempt to acquire mature producing gas
assets in the UKCS due to the reluctance of operators to dispose of producing
gas assets in the current high gas price environment.
To reinforce its commitment to CCS activities, the Company launched its Cambay
CCS scheme, the first end-to-end CCS scheme in India which has been well
received by the Government of India regulators.
Cambay Field, Onshore Gujarat, India
(Synergia Energy: Operator and 100% Participating Interest)
The Cambay licence area is located onshore in the state of Gujarat in the
heart of one of India's most prolific hydrocarbon provinces. It is ideally
located within a major industrial corridor and approximately 20 km from the
existing national gas trunk pipeline grid. India's large energy market is
currently dependent on gas imports. The Cambay operation is well-positioned to
partially displace the need for imported gas with indigenous gas supplies.
The Cambay field development is centred on the successful exploitation of the
gas resources held in the Eocene EP-IV reservoir which extends across the
field and has been penetrated by over 30 wells. The EP-IV reservoir comprises
low permeability ("tight") siltstones and requires fracture stimulation to
provide economic gas production rates.
Having resumed production in April 2022 after a 3.5 year hiatus, the Company
has been producing both gas and condensate from two gas wells (C-77H and C-73)
in addition to oil from several intermittent legacy oilwells.
Cambay C-77H Well - Trialling New Fracking Methodology and Artificial Lift
The re-fracture of the C-77H well in July 2022 has proven successful with the
two new re-fracked zones having been on plateau production since September of
2022 at rates of 140-150 mscfd. This is despite the presence of a c.1500m
column of gas condensate in the wellbore that inhibits gas production.
Prior to re-fracturing, the well's four fracked zones would produce for 4 to 5
days before fluid loading in the wellbore would stop production. The well
would then have to be shut in for circa 1 week in order for the pressure to
re-build after which the cycle was repeated. This intermittent production was
an unsatisfactory basis for a full field development and attributed to a
combination of less than optimum fracking methodology and absence of
artificial lift to remove wellbore fluids.
The first step in installing a jet pump artificial lift solution was commenced
in July 2023 to both remove gas condensate and to increase gas production. The
jet pump installation is expected to be completed in September 2023.
Artificial lift will be implemented on future new wells.
The successful re-fracturing operation gives the Company confidence that new
wells can be drilled and fracked with initial production rates of 4-6 mmscfd
in conjunction with the jet pump artificial lift.
Cambay Full Field Development
Based on the success of the C-77H well, the Company plans a full field
development commencing in calendar quarter Q1 2024, subject to securing
funding, to exploit the certified 205 BCF of P50 gas reserves together with
the associated gas condensate.
The field development plan comprises an initial 10 new well drilling programme
which will be supplemented by additional wells to fully exploit the field's
reserves. All wells will be fracked incorporating artificial lift. The initial
10 wells will be drilled from the existing C‑77H drilling pad and will share
a common export tie-in point and common processing facilities. Due to the
anticipated (greater than 30 mmscfd) gas volumes, a new export pipeline to
connect to the high-pressure gas grid will be implemented together with
enhanced processing facilities and compression.
Carbon Capture and Storage ("CCS")
UK
The Company applied for two carbon storage licences under the NSTA's 1(st)
Carbon Storage Licensing Round to complement its Medway Hub CCS project. Under
this scheme, the Company plans to transport CO(2) emissions from three large
CCGT power stations in liquid form in special marine tankers for permanent
storage in depleted fields or aquifers in the Southern North Sea. The CO(2)
tankers will offload liquid CO(2) onto a Floating Injection, Storage and
Offloading ("FISO") vessel for subsequent injection into the CO(2) store via
subsea manifolds. The target is to store c. 7.6 MTa (million tonnes per annum)
of CO(2) which would make a major contribution towards the UK's Net Zero
goals.
The Company and its joint venture partner, Wintershall Dea, via its UK branch,
Wintershall Dea Carbon Management Solutions UK ("Wintershall Dea"), were
successful in one of its two licensing round applications, with the award of
Licence CS019 covering the now depleted Camelot gas field and the overlying
BC18 saline aquifer. The licence was awarded jointly with Wintershall Dea in a
50:50 partnership with Synergia as operator. Wintershall Dea has a strong
corporate CCS commitment with existing projects in Norway and Denmark. The
carbon storage licence has a work program that incorporates an appraisal phase
comprising seismic re-processing, technical evaluations and risk assessment,
and a contingent FEED study leading to a potential storage licence application
in 2028, following the final investment decision ("FID"). The CS019 licence
also includes a contingent appraisal well. First CO(2) injection is
anticipated for 2032. The Company's share of the initial work phase and FID is
subject to funding, which will be addressed in due course.
India
The Company has developed the Cambay CCS scheme which comprises the
transportation of CO(2) from emissions from the many significant gas- and
coal-fired power stations surrounding the Cambay gas field, via onshore
pipeline, to a CCS hub located at the Cambay field. The CO(2) would then be
injected into the regionally extensive Olpad formation which underlies the
Cambay Eocene gas reservoir. The initial goal is to provide a "Transportation
and Storage" service to the power station emitters to sequester CO(2)
emissions which total circa 45 MTa from the currently targeted power stations
in the proximity of the Cambay field.
The Cambay CCS scheme has been well received by key Government of India
regulators but its viability is contingent on, inter alia, the development of
a regulatory framework that incentivises the CO(2) emitter customers. Synergia
plans to assist the regulators in the development of such a framework based on
its UK CCS experience.
JPDA 06-103, Timor Sea
In August 2020, on behalf of its Joint Venture Participants, Synergia Energy
Ltd announced a Deed of Settlement and Release ("Deed") with the Autoridade
Nacional Do Petroleo E Minerais ("ANPM"). Under the terms of the Deed,
Synergia Energy committed to a settlement of US$800,000 payable up to the
financial year 2024. During the year, the final instalment payable of
US$250,000 was made to ANPM on 7 September 2022, thereby fully extinguishing
the Group's obligations to ANPM.
To fund the settlement to ANPM, Synergia Energy entered into an unsecured loan
facility agreement with two of the JPDA joint venture partners, Japan Energy
E&P JPDA Pty Ltd ("JX") and Pan Pacific Petroleum (JPDA 06 103) Pty Ltd
("PPP"). The portion which was owing to PPP was fully repaid in the previous
financial year in December 2021. The portion which was owing to JX was repaid
in instalments during the year in August 2022, February 2023 and April 2023
with the balance of the loan from JX being US$225,355 at year-end. This
balance plus interest was repaid in the Company's final repayment of
US$228,324 to JX on 14 August 2023 to settle the balance of the loan to nil.
The details and movement in the loan payable during the period are detailed in
Note 16 to the consolidated financial statements.
On 13 October 2022, the non-defaulting parties to the JPDA joint venture
agreed to terminate the Joint Operating Agreement. Synergia Energy is in the
process of progressing the final closure of the joint venture accounts to
conclude this matter.
Financial
Treasury Policy
The funding requirements of the Group are reviewed on a regular basis by the
Group's Chief Financial Officer and reported to the Board to ensure the Group
can meet its financial obligations as and when they fall due. Internal cash
flow models are used to review and test investment decisions. Until sufficient
operating cash flows are generated from its operations, the Group remains
reliant on equity or debt funding, as well as assets divestiture or farmouts
to fund its expenditure commitments.
Formal control over the Group's activities is maintained through a budget and
cash flow monitoring process with annual budgets considered in detail and
monitored monthly by the Board and forming the basis of the Company's
financial management strategy.
Cash flows are tested under various scenarios to ensure that expenditure
commitments can be met under all reasonably likely scenarios. Expenditures are
also carefully monitored against the budget. The Company continues to actively
develop funding options in order to meet its expenditure commitments and its
planned future discretionary expenditure.
During the year, the following debt and equity capital raisings were completed
to provide working capital for the Company's activities:
September 2022 quarter
· Completion of the May 2022 Placement previously arranged and
announced on 4 May 2022 via the issue of 174,831,394 fully paid ordinary
shares at £0.002 (A$0.0035) per share; and
March 2023 quarter
· Issue of convertible notes to the value of £650,000 (6,500
convertible notes at a face value of £100 each). See Notes 16 and 17 to the
consolidated financial statements for further information on the convertible
notes.
Corporate
The Company maintained a dual listing on the Australian Securities Exchange
("ASX") and the Alternative Investment Market ("AIM") of the London Stock
Exchange ("LSE") up until the Company's delisting on the ASX on 30 December
2022. After the Company's delisting on the ASX the Company's shares remain
publicly traded on AIM.
As at 30 June 2023 the Company had:
· Available cash resources of A$938,589;
· Borrowings (excluding derivative liability component of convertible
notes) of A$774,666 (refer to Note 16 to the consolidated financial
statements);
· Derivative liabilities (from convertible notes) of A$1,050,334 (refer
to Note 17 to the consolidated financial statements); and
· Issued capital of 8,417,790,704 fully paid ordinary shares and
449,928,560 unlisted options.
Executive and Board Changes
On 29 June 2023, Mr. Joe Salomon, the previous Executive Chairman, moved into
the role of Non-Executive Chairman. There were no other board changes during
the year.
Risk Management
The full Board undertakes the function of the Audit and Risk Committee and is
responsible for the Group's internal financial control system and the
Company's risk management framework. Management of business risk, particularly
exploration, development and operational risk is essential for success in the
oil and gas business. The Group manages risk through a risk identification and
risk management system.
Health, Safety, Security and Environment
Synergia Energy is committed to protecting the health and safety of everybody
who plays a part in our operations or lives in the communities where we
operate. Wherever we operate, we will conduct our business with respect and
care for both the local and global, natural and social environment and
systematically manage risks to drive sustainable business growth. We will
strive to eliminate all injuries, occupational illness, unsafe practices and
incidents of environmental harm from our activities. The safety and health of
our workforce and our environmental stewardship are just as important to our
success as operational and financial performance and the reputation of the
Company.
Synergia Energy respects the diversity of cultures and customs that it
encounters and endeavours to incorporate business practices that accommodate
such diversity and that have a beneficial impact through our working
involvement with local communities. We strive to make our facilities safer and
better places in which to work and our attention to detail and focus on
safety, environmental, health and security issues will help to ensure high
standards of performance. We are committed to a process of continuous
improvement in all we do and to the adoption of international industry
standards and codes wherever practicable. Through implementation of these
principles, Synergia Energy seeks to earn the public's trust and to be
recognised as a responsible corporate citizen.
Qualified Person
The technical information contained in the above disclosure has been prepared
by or under the supervision of Mr Jonathan Salomon (B App Sc (Geology),
GAICD), Non-Executive Chairman employed by Synergia Energy Ltd. Mr Salomon has
over 37 years' experience in petroleum geology and is a member of the American
Association of Petroleum Geologists, and the Society of Petroleum Engineers.
Mr Salomon meets the requirements of and acts as the Qualified Person under
the Alternative Investment Market Rules - AIM Note for Mining and Oil &
Gas Companies, and consents to the inclusion of this information in this
report in the form and context in which it appears.
PERMIT SCHEDULE
PETROLEUM AND CCS PERMIT SCHEDULE - 30 JUNE 2023
ASSET LOCATION ENTITY CHANGE IN INTEREST DURING THE YEAR % EQUITY % OPERATOR
Cambay Field PSC Gujarat, India Synergia Energy Ltd - 85 Synergia Energy Ltd
Oilex N.L. Holdings (India) Limited - 15
CS019 - SNS Area 4 (Camelot Area) ((1)) Southern North Sea (United Kingdom) Synergia Energy CCS Limited - - Synergia Energy CCS Limited
((1)) The NSTA granted the CS019 licence for the Camelot area to Synergia
Energy CCS Limited and its 50% joint venture partner, Wintershall Dea Carbon
Management Solutions UK, with Synergia Energy CCS Limited as operator. The
licence was effective from 1 August 2023 (after year-end).
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
For the Year Ended 30 June 2023
The directors of Synergia Energy Ltd present their report (including the
Remuneration Report) together with the consolidated financial statements of
the group comprising Synergia Energy Ltd (the "Company" or "Synergia Energy")
and its subsidiaries (together collectively referred to as the "Group") for
the financial year ended 30 June 2023 and the auditors' report thereon.
Unless otherwise indicated, the directors' report is presented in Australian
dollars ("$" or "A$"), which is the Company's functional and presentation
currency (see Note 2(e) of the Notes to the Consolidated Financial
Statements).
DIRECTORS
The directors of Synergia Energy Ltd in office at any time during or since the
end of the financial year are:
Mr Jonathan Salomon (B App Sc (Geology), GAICD)
(Executive Chairman until moved to Non-Executive Chairman role on 29 June
2023)
Mr Salomon was appointed as a Non-Executive Director in November 2015,
Managing Director on 18 March 2016, and Interim Chairman on 5 May 2020. Mr
Salomon continued as Managing Director and Interim Chairman until he was
appointed as Executive Chairman on 16 June 2021. On 29 June 2023 Mr Salomon
moved to a Non-Executive Chairman role.
Mr Salomon has a Bachelor Degree in Applied Science and is a member of the
American Association of Petroleum Geologists and the Society of Petroleum
Engineers, and has over 37 years of experience working for upstream energy
companies. Mr Salomon has worked for a number of oil and gas companies in
various senior positions including General Manager Exploration and New
Ventures at Murphy Oil Corporation and Global Head of Geoscience at RISC PL,
in addition to a number of Executive Director roles including Strategic Energy
Resources, Norwest Energy and Nido Petroleum. At several times in his career,
Mr Salomon has acted as an independent consultant for various oil and gas
companies, including New Standard Energy and Pacrim Energy. Mr Salomon first
worked on Indian projects in 1994 while at Ampolex and since that time has
maintained a connection with the Indian industry, at various times bidding in
India's exploration and field development rounds and working with Indian
companies as joint venture partners, both in India and internationally.
During the last three financial years and up to the date of this report, Mr
Salomon has not been a director of any other listed companies.
Mr Roland Wessel
(Chief Executive Officer and Director)
Mr Wessel was appointed Chief Executive Officer and Director on 16 June 2021.
Mr Wessel is a geologist with over 40 years' experience in all of the world's
major oil and gas regions. Further details of Mr Wessel's qualifications and
experience can be found in the Executive Management section of the Directors'
Report.
During the last three financial years and up to the date of this report, Mr
Wessel has not been a director of any other listed companies.
Mr Colin Judd
(Chief Financial Officer and Director)
Mr Judd was appointed as Chief Financial Officer on 1 July 2021 and as
Director on 27 January 2022. Mr Judd is a chartered accountant with over 40
years' experience in corporate financial management. Further details of Mr
Judd's qualifications and experience can be found in the Executive Management
section of the Director's Report.
During the last three financial years and up to the date of this report, Mr
Judd has not been a director of any other listed companies.
Mr Mark Bolton (B Business)
(Non-Executive Director)
Mr Bolton was appointed Chief Financial Officer and Company Secretary on 3
June 2016, and as Executive Director on 26 March 2020. Mr Bolton continued
as Chief Financial Officer until 1 July 2021 transitioning to a Non-Executive
Director. Mr Bolton resigned as Company Secretary on 25 August 2021.
Mr Bolton has significant experience in the resource sector in Australia,
having worked as Chief Financial Officer and Company Secretary for a number of
resource companies since 2003. Prior to this, Mr Bolton worked with Ernst
& Young as an Executive Director in Corporate Finance. Mr Bolton has
experience in the areas of commercial management and the financing of resource
projects internationally. He also has extensive experience in capital and
equity markets in a number of jurisdictions including ASX, AIM and the TSX. Mr
Bolton has significant experience in the development and financing of new
resources projects, particularly in emerging economies.
Mr Bolton is the Managing Director of Panthera Resources PLC (AIM:PAT) and a
Non-Executive Director of West Cobar Metals Limited (ASX:WC1). During the last
three financial years and up to the date of this report, Mr Bolton has not
been a director of any other listed company.
Mr Paul Haywood
(Non-Executive Director)
Mr Haywood was appointed as a Non-Executive Director in May 2017. Mr Haywood
has over 19 years of international experience in delivering value for his
investment network through a blended skill set of corporate and operational
experience, including more than six years in the Middle East, building early
stage and growth projects. More recently, Mr Haywood has held senior
management positions with UK and Australian public companies in the natural
resource and energy sectors including oil and gas exploration and development
in UK, EU and Central Asia. Mr Haywood's expertise stretches across UK and
Australian public markets, with a cross-functional skill set encompassing
research, strategy, implementation, capital and transactional management. Mr
Haywood is currently Chief Executive Officer of Block Energy Plc.
Mr Haywood is the Director and CEO of Block Energy plc (AIM:BLOE). During the
last three financial years and up to the date of this report, Mr Haywood has
not been a director of any other listed companies.
Mr Peter Schwarz (B Sc (Geology), M Sc (Petroleum Geology))
(Non-Executive Director)
Mr Schwarz was appointed as a Non-Executive Director in September 2019. A
former director of BG Exploration and Production Limited and CEO of
independent exploration company Virgo Energy Ltd, Mr Schwarz is an AAPG
Certified Petroleum Geologist and business development professional with over
45 years' experience in the oil and gas industry. Mr Schwarz has previously
held various senior management roles with Amerada Hess, BG, and Marubeni and
is currently a director of Finite Energy Limited, an oil and gas consultancy
business he founded over 15 years ago, specialising in strategy and business
development advice in the UK and Europe.
During the last three financial years and up to the date of this report, Mr
Schwarz has not been a director of any other listed companies.
COMPANY SECRETARY
Ms Lisa Wynne was the Company Secretary from the beginning of the financial
year until 28 September 2022, and Mr Jack Rosagro was the Company Secretary
from 28 September 2022 to 8 September 2023. Synergia Energy's current
Company Secretary, Ms Anshu Raghuvanshi was appointed on 8 September 2023.
Ms Raghuvanshi leads the company secretarial services for Computershare
Governance Services, Melbourne, Australia. She has over 12 years' experience
in company secretarial roles, working with listed companies to ensure their
compliance with annual and ad-hoc reporting, and to guide them in their
governance processes. Ms Raghuvanshi supports clients with the administration
of their board, committee, and annual general meetings, including notices,
agendas and minutes.
CORPORATE GOVERNANCE STATEMENT
In establishing its corporate governance framework, the Company (during the
year up to March 2023) referred to the recommendations set out in the ASX's
Corporate Governance Council's Corporate Governance Principles and
Recommendations (4(th) Edition) ("Principles"). From March 2023, the Company
adopted the recommendations of the Quoted Companies Alliance Corporate
Governance Code for Small and Mid-Size Quoted Companies ("QCA Code").
To the extent they are applicable to the Company, and to the extent possible,
the Board considers that the Company has complied with each recommendation of
the Principles and the QCA Code during the year.
The Company's Corporate Governance Statement, which reports on Synergia
Energy's key governance principles and practices, and provides detailed
information on the Board and committee structure, diversity and risk
management, is available on the Synergia Energy website in the "Corporate
Governance" section (see
https://www.synergiaenergy.com/about-us/corporate-governance
(https://www.synergiaenergy.com/about-us/corporate-governance) ).
DIRECTORS' MEETINGS
Directors in office and directors' attendance at meetings during the financial
year ended 30 June 2023 are as follows:
Board Meetings ((1)) Remuneration Committee Meetings ((1))
( ) Held ((2)) Attended Held ((2)) Attended
Non-Executive Directors
J Salomon ((3)) 12 12 - -
M Bolton 12 11 1 1
P Haywood 12 11 1 1
P Schwarz 12 11 1 1
Executive Directors
R Wessel 12 12 - -
C Judd 12 11 - -
((1) ) The full Board performs the role of the Audit and Risk
Committee. The Company does not have a Nomination Committee.
((2) ) Held indicates the number of meetings available for
attendance by the director during the tenure of each director.
((3) ) Mr Salomon moved to a Non-Executive Chairman role from 29
June 2023.
EXECUTIVE MANAGEMENT
Mr Roland Wessel
(Chief Executive Officer and Director)
Mr Wessel was appointed as Chief Executive Officer and Director on 16 June
2021. Mr Wessel is a geologist with over 40 years' experience in all of the
world's major oil and gas regions. Mr Wessel founded and built Star Energy,
the UK onshore operator of 25 oil and gas fields, through to its listing on
AIM in 2004 and its sale to Petronas in 2008. During its evolution, Star
Energy grew rapidly through acquisitions and diversification, culminating in
it becoming a major gas storage developer and operator. During his career, Mr
Wessel has founded and managed a drilling services company and has developed
and patented several key oilfield technologies. He has extensive experience in
both project and corporate management.
Mr Colin Judd
(Chief Financial Officer and Director)
Mr Judd was appointed as Chief Financial Officer on 1 July 2021 and as
Director on 27 January 2022. Mr Judd qualified as a chartered accountant with
Price Waterhouse in 1979, where he fulfilled various professional accounting
positions in the UK, Europe and the Far East. Mr Judd joined Christian
Salvesen plc in 1987, undertaking senior financial management roles
culminating in the position of European Financial Controller. In 1994, Mr Judd
moved to Aberdeen where he undertook Chief Financial Officer roles for two
private-equity-backed oil service businesses. In 1999, Mr Judd joined Star
Energy Limited as a founder member and Chief Financial Officer and was
instrumental in the company's successful listing on AIM in 2004, various
subsequent share placings and the company's ultimate sale to Petronas. Mr Judd
cofounded Trans European Oil & Gas Limited, a company backed by KKR, with
the strategy to develop a pan-European oil and gas business.
Mr Ashish Khare
(Bachelor of Engineering (BE in Chemical Engineering, including Petroleum
Management))
(Head of India Assets)
Mr Khare was appointed Head of India Assets on 8 November 2016 and is based in
India. Mr Khare has over 22 years of experience in the petroleum industry. Mr
Khare's area of expertise include upstream oil and gas, as well as midstream
and downstream project implementation and operations management. Mr Khare
originally worked for Synergia Energy Ltd as GM Operations & Business
Development; and has experience working for various Indian companies including
Cairn India Ltd and Reliance Petroleum.
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the financial year
included:
· exploration for oil and gas;
· appraisal and development of oil and gas prospects; and
· production and sale of oil and gas.
The Group is now also focused on carbon-neutral gas production and aims to
become a major contributor to CO(2) emission reduction by developing CCS
projects, leveraging the extensive management experience in this sector.
There were no other significant changes in the nature of the activities during
the year.
OPERATING RESULTS
The Group incurred a consolidated loss after income tax of A$5,382,902 for the
year (2022: loss of A$2,061,924)
During the year, production continued on the Cambay field together with oil
and gas sales following recommencement of production which happened in the
previous financial year in April 2022. Gas sales during the year amounted to
A$755,589 (2022: A$141,435) and oil sales amounted to A$540,561 (2022: A$nil),
providing total revenues of A$1,296,150 during the year (2022: A$141,435).
Cost of sales including production costs incurred during the year amounted to
A$2,563,873 (2022: A$754,365), which included re-fraccing costs of
A$1,850,924 (2022: A$687,184). This resulted in the Group incurring a gross
loss of A$1,267,723 during the year (2022: A$612,930).
The prior year results included care and maintenance expenditure of A$441,338
(which included re‑fraccing costs of A$335,717). There was no care and
maintenance expenditure during the current year due to the recommencement of
production in April 2022.
During the year, A$34,853 of expected credit losses ("ECLs") was reversed
(2022: A$3,131,282 reversed). The 2022 ECLs reversed included A$3,187,168 of
ECLs relating to the share of balances directly receivable from the Cambay
operation to the Group, which were reversed as part of the Cambay Acquisition
which occurred during the previous financial year ended 30 June 2022.
Net finance costs of A$769,981 (2022: A$377,812) includes interest from the
unwinding of discount on the Group's site restoration provision which
increased to A$289,540 (2022: A$76,753), interest expense from the Group's
loan from JX which increased to A$54,525 (2022: A$19,836), interest expense
from the Group's convertible note (debt component) of A$19,178 (2022: A$nil)
and a loss of A$227,668 (2022: A$nil) resulting from the fair value
revaluation of the derivative liability component of the Group's convertible
note.
FINANCIAL POSITION
The net assets of the Group totalled A$10,337,516 at 30 June 2023 (2022:
A$14,583,598) and included the following balances:
· Cash and cash equivalents of A$938,589 (2022: A$4,838,459);
· Borrowings (excluding derivative liability component of convertible
notes) of A$774,666 (2022: A$451,355); and
· Derivative liabilities (from convertible notes) of A$1,050,334 (2022:
A$nil).
DIVIDENDS
No dividend was paid or declared during the year and the directors do not
recommend the payment of a dividend.
REVIEW OF OPERATIONS
A review of the operations of the Group during the financial year and the
results of those operations are set out in the Review of Operations on pages 3
to 7 of this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Review of Operations details those changes that have had a significant
effect on the Group.
Other than those matters, there have been no other significant changes in the
state of affairs of the Group that occurred during the financial year.
LIKELY DEVELOPMENTS
Additional comments on expected results on operations of the Group are
included in the Review of Operations on pages 3 to 7.
Further disclosure as to likely developments in the operations of the Group
and expected results of those operations have not been included in this report
as, in the opinion of the Board, these would be speculative and as such,
disclosure would not be in the best interests of the Group.
ENVIRONMENTAL ISSUES
The Group's oil and gas exploration and production activities are subject to
environmental regulation under the legislation of the respective states and
countries in which they operate. The majority of the Group's activities
involve low level disturbance associated with its drilling programmes and
production from existing wells. The Board actively monitors compliance with
these regulations and as at the date of this report is not aware of any
material breaches in respect of these regulations.
The Group also has an active program of education, monitoring and reporting
within the Group's business to identify and mitigate any other environmental
risks.
SIGNIFICANT EVENTS AFTER BALANCE DATE
On 27 July 2023, the Group submitted a bank guarantee of US$124,000 relating
to the Cambay field. A further US$124,000 is expected to be submitted in
calendar Q1 2024. See Note 19 to the notes to the consolidated financial
statements for further details on the bank guarantee.
Effective on 1 August 2023, the NSTA granted the CS019 licence for the Camelot
area to Synergia Energy CCS Limited and its 50% joint venture partner,
Wintershall Dea, with Synergia Energy CCS Limited as operator.
On 7 August 2023, the Company issued 704,545,454 shares at £0.0011 (A$0.0021)
per ordinary share pursuant to the placement announced on 25 July 2023. As
part of this placement, the Company will also be issuing 13,636,363 unquoted
options (exercisable at £0.0011 and expiring on 31 July 2026) to Novum
Securities Limited ("Novum"), pursuant to the capital raising advisory
agreement relating to this placement. These options are expected to be issued
in the coming months.
On 10 August 2023, the Company made its final repayment to JX of US$228,324,
settling the Company's liability payable to JX to nil.
There were no other significant subsequent events occurring after the
year-end.
CAPITAL STRUCTURE AND TREASURY POLICY
As at 30 June 2023 the Group had unsecured loans, excluding the derivative
liability component of convertible notes, at face value A$774,666 (2022:
A$451,355). Refer to Note 16 of the Consolidated Financial Statements for
details of the carrying amount, terms and conditions, repayment schedule, and
options attached to the loans.
The Group's balance of the derivative liability component of convertible notes
at 30 June 2023 is A$1,050,334 (refer to Note 17 to the consolidated financial
statements).
Details of transactions involving ordinary shares during the financial year
are as follows:
Number of Shares Issued Gross Amount Raised (A$)
July/August 2022 174,831,394 608,378
· Share Placements (approved at GM 13 July 2022)
Total 174,831,394 608,378
As at the date of this report the Company had a total issued capital of
9,122,336,158 ordinary shares (following a placement completed in August 2023)
and 449,928,560 unlisted options exercisable at weighted average price of
£0.0019 (A$0.0037) per option.
DIRECTORS' INTERESTS
The relevant interest of each director in shares and unlisted options issued
by the Company at the date of this report is as follows:
Number of Ordinary Shares Number of Unlisted Options
Over Ordinary Shares
( ) Direct Interest Indirect Interest Direct Interest Indirect Interest
Non-Executive Directors
J Salomon - 14,987,013 - 96,626,905((1))
M Bolton - - - -
P Haywood 12,933,513 - - -
P Schwarz 10,611,250 10,611,250 - -
Executive Directors
R Wessel - - 163,636,363((2)) -
C Judd - - 118,200,000((3)) -
((1) ) 88,311,688 options exercisable at £0.0022, expiring 12
August 2027. Two thirds (2/3) of these options were exercisable at reporting
date; and
8,315,217 options exercisable at nil cost, expiring 1 April 2028. All of these
options were exercisable at reporting date.
((2) ) 136,363,636 options exercisable at £0.0022, expiring 12
August 2027. Two thirds (2/3) of these options were exercisable at reporting
date; and
27,272,727 options exercisable at nil cost, expiring 1 April 2028. All of
these options were exercisable at reporting date.
((3) ) 100,000,000 options exercisable at £0.0022, expiring 12
August 2027. Two thirds (2/3) of these options were exercisable at reporting
date; and
18,200,000 options exercisable at nil cost, expiring 1 April 2028. All of
these options were exercisable at reporting date.
SHARE OPTIONS
Unissued Shares under Option
At the date of this report, unissued ordinary shares of the Company under
option (with an exercise price) are:
Expiry Date Number of Shares Exercise Price
Unlisted Options
Granted and Issued in 2022:
31 May 2024 25,210,084 £0.00238 (A$0.0045)
Granted and Issued in 2023:
30 April 2024 30,000,000 £0.00200 (A$0.0034)
12 August 2027 324,675,324 £0.00220 (A$0.0037)
1 April 2028 70,043,152 £0.00000 (A$0.0000)
Total 449,928,560
These options do not entitle the holder to participate in any share issue of
the Company or any other body corporate.
Unissued Shares under Option that Expired
During or since the end of the financial year, the following unlisted options
expired:
Date Lapsed Number Exercise Price
31 December 2022 711,295,152 £0.0028 (A$0.0052)
Total 711,295,152 £0.0028 (A$0.0052)
Shares Issued on Exercise of Unlisted Options
No ordinary shares were issued, during or since the end of the financial year,
as a result of the exercise of unlisted options.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the Group paid a premium in respect of insurance
cover for the directors and officers of the Group. The Group has not included
details of the nature of the liabilities covered or the amount of the premium
paid in respect of the directors' liability and legal expense insurance
contracts, as such disclosure is prohibited under the terms of the insurance
contract.
PROCEEDINGS ON BEHALF OF THE COMPANY
No proceedings have been brought on behalf of the Company, nor has any
application been made in respect of the Company under Section 237 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 Group is important.
The Board has considered the non-audit services provided during the year and
is satisfied that the provision of the non-audit services is compatible with,
and did not compromise, 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 were subject to the corporate governance
procedures adopted by the Group and these have been reviewed by the Board to
ensure they do not impact the impartiality and objectivity of the auditor; and
· the non-audit services provided do not undermine the general
principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants, as they did not involve reviewing or
auditing the auditor's own work, acting in a management or decision-making
capacity for the Group, acting as an advocate for the Group or jointly sharing
risks and rewards.
Refer Note 28 of the Consolidated Financial Statements for details of the
amounts paid to the auditors of the Group, PKF Perth and their network firms
for audit and non-audit services provided during the year.
ROUNDING OF AMOUNTS
The Company is a company of the kind referred to in ASIC Corporations
(Rounding in Financial/Directors' Reports) Instrument 2016/191 and therefore
the amounts contained in this report and in the financial report have been
rounded to the nearest dollar, unless otherwise indicated.
LEAD AUDITOR'S INDEPENDENCE DECLARATION
The Lead Auditor's Independence Declaration for the year ended 30 June 2023
has been received and can be found on page 29.
DIRECTORS' REPORT - REMUNERATION REPORT (AUDITED)
FOR THE YEAR ENDED 30 JUNE 2023
REMUNERATION REPORT - AUDITED
On 24 November 2021, the Board established a Remuneration Committee, in
accordance with the Company's Remuneration Committee Charter, comprising
Messrs Paul Haywood (Independent Chair), Peter Schwarz (Independent
Non-Executive Director) and Mark Bolton (Non-Independent Non-Executive
Director).The Remuneration Committee is responsible for the review and
recommendation to the Board, of the Company's Remuneration Policy, senior
executives' remuneration and incentives, the remuneration framework for
directors, superannuation arrangements, incentive plans and remuneration
reporting.
1. PRINCIPLES OF COMPENSATION
Remuneration is referred to as compensation throughout this report. The
Remuneration Report explains the remuneration arrangements for directors and
senior executives of Synergia Energy Ltd who have authority and responsibility
for planning, directing and controlling the activities of the Group (key
management personnel).
The compensation structures explained below are designed to attract, retain
and motivate suitably qualified candidates, reward the achievement of
strategic objectives and achieve the broader outcome of the creation of value
for shareholders. The compensation structures take into account:
· the capability and experience of the key management personnel;
· the ability of key management personnel to control the performance of
the relevant segments;
· the current downturn and uncertainty within the resources industry;
· the Company's performance including:
o the Group's earnings; and
o the growth in share price and delivering constant returns on shareholder
wealth;
· exploration success; and
· development of projects.
Compensation packages include a mix of fixed compensation and long-term
performance-based incentives. In specific circumstances, the Group may also
provide short-term cash incentives based upon the achievement of Company
performance hurdles or in recognition of specific achievements.
1.1 Fixed Compensation
Fixed compensation consists of base compensation and employer contributions to
superannuation funds. Compensation levels are reviewed annually through a
process that considers individual, sector and overall performance of the
Group. In addition, reviews of available data on oil and gas industry
companies provide comparison figures to ensure the directors' and senior
executives' compensation is competitive in the market.
Remunerations for Executive, Non-Executive Directors and staff members
impacted were reviewed early in the 2022 financial year. Remuneration
increases were implemented for certain individuals with effect from 1
September 2021.
Compensation for senior executives is separately reviewed at the time of
promotion or initial appointment.
1.2 Performance Linked Compensation
Performance linked compensation includes both short-term and long-term
incentives designed to reward key management personnel for growth in
shareholder wealth. The short-term incentive ("STI") is an "at risk" bonus
provided in the form of cash or shares, while the long-term incentive plan
("LTI") is used to reward performance by granting options over ordinary shares
of the Company.
Short-Term Incentives
The Group has introduced a short-term incentive scheme for key management
personnel with effect from 1 January 2022.
The short-term incentive scheme has been designed by the Remuneration
Committee and approved by the Board, having regard to the business plans as
well as the achievement of performance targets as determined by the Board.
These targets include a combination of key strategic, financial and personal
performance measures which have a major influence over company performance in
the short term.
On 3 April 2023, the Company issued unlisted nil-cost options over 70,043,152
shares as a non-cash settlement of amounts due to the Company's three
executive directors and the Head of India Assets in accordance with the
Company's short-term incentive plan and recommendations by the Company's
Remuneration Committee for the 12-month period ended 31 December 2022. The
options are fully vested with the holder on 3 April 2023; and are exercisable
on or before 1 April 2028.
Long-Term Incentives
On 13 July 2022, following shareholder approval, the Company released its
Employee Incentive Plan. The shareholders approved the issue of up to a
maximum of 388,559,703 shares under the Company's Employee Incentive Plan.
The primary objectives of the Employee Incentive Plan are to:
· establish a method by which eligible participants can participate in
the future growth and profitability of the Company;
· to provide an incentive and reward for eligible participants for
their contribution to the Company; and
· attract and retain a high standard of managerial and technical
personnel for the benefit of the Company.
Under the Employee Incentive Plan, an award (i.e. options or performance
rights, etc.) may be awarded to an eligible participant.
The Board, at its sole and absolute discretion, may invite an eligible person
selected by it to complete an application relating to a specified number of
awards allocated to that eligible person by the Board. The Board may offer an
award (as applicable) to any eligible person it elects and determine the
extent of that person's participation in the Employee Incentive Plan
(Participant).
An offer by the Board is required to specify, among other things, the type of
award offered, the date and total number of awards granted, the exercise price
and exercise period and any other matters the Board determines necessary,
including the exercise conditions and disposal restrictions attaching to the
awards.
At the General Meeting held on 13 July 2022, the shareholders approved the
issue of 324,675,324 unlisted options as long term incentives to the Executive
Directors. The options are to vest with the holder over a period of three (3)
years, commencing on 1 July 2021. The Company issued the 324,675,324 unlisted
options on 12 August 2022. No other long-term incentives were issued to senior
executives or staff during the year ended 30 June 2023.
1.3 Non-Executive Directors
Total compensation for all Non-Executive Directors is based on a comparison
with external data with reference to fees paid to Non-Executive Directors of
comparable companies. Directors' fees cover all main Board activities and
membership of committees, if applicable.
The annual fee for Mr Salomon has been set at A$105,000 plus statutory
superannuation per annum effective from the date of his appointment as
Non-Executive Chairman on 29 June 2023.
The annual fee for Mr Bolton was set at A$55,381 plus statutory superannuation
per annum effective from 1 July 2021 when he was appointed as Non-Executive
Director and remains unchanged.
The annual fee for Mr Haywood, the Company's UK based Non-Executive Director
was set at £30,000 per annum on commencement in May 2017 and remains
unchanged.
The annual fee for Mr Schwarz, the Company's UK based Non-Executive Director
was set at £30,000 per annum on commencement in September 2019 and remains
unchanged.
The aggregate maximum fixed annual amount of remuneration available for
Non-Executive Directors of A$500,000 per annum was approved by Shareholders on
9 November 2011.
In addition to the fixed component, the Company can remunerate any director
called upon to perform extra services or undertake any work for the Company
beyond their general duties. This remuneration may either be in addition to,
or in substitution for, the director's share of remuneration approved by
Shareholders.
1.4 Clawback Policy
The Board has adopted the following Clawback Policy applicable from August
2015.
In relation to circumstances where an employee acts fraudulently or
dishonestly, or wilfully breaches his or her duties to the Company or any of
its subsidiaries, the Board has adopted a clawback policy in relation to any
cash performance bonuses (including deferred share awards) or LTIs. The Board
reserves the right to take action to reduce, recoup or otherwise adjust an
employee's performance based remuneration in circumstances where in the
opinion of the Board, an employee has acted fraudulently or dishonestly or
wilfully breached his or her duties to the Company or any of its subsidiaries.
The Board may:
· deem any bonus payable, but not yet paid, to be forfeited;
· require the repayment by the employee of all or part of any cash
bonus received;
· determine that any unvested and/or unexercised LTIs will lapse;
· require the repayment of all or part of the cash amount received by
the employee following vesting and subsequent sale of a LTI;
· reduce future discretionary remuneration to the extent considered
necessary or appropriate to take account of the event that has triggered the
clawback;
· initiate legal action against the employee; and/or
· take any other action the Board considers appropriate.
1.5 Remuneration Consultants
There were no remuneration recommendations made in relation to key management
personnel by remuneration consultants in the financial year ended 30 June
2023.
1.6 Adoption of year ended 30 June 2022 Remuneration Report
At the AGM held 23 November 2022 shareholders adopted the 30 June 2022
Remuneration Report with a clear majority of 1,458,204,495 votes in favour,
being 99.90% of the votes cast.
2. EMPLOYMENT CONTRACTS
The following table summarises the terms and conditions of contracts between
key executives and the Company:
Executive Position Contract Start Date Contract Termination Date Resignation Notice Required Unvested Options on Resignation Termination Notice Required from the Company ((1)) Termination Payment
J Salomon ((2)) Non-Executive Chairman ((2)) 18 March 2016 n/a 3 months Forfeited 3 months For termination by the Company, three months' salary plus any accrued leave
entitlement. If a Material Change Event occurs, employee may give notice to
the Company within one month of the Material Change Event, terminating the
Contract of Employment and following that effective date, the Company will pay
a Termination Payment equal to six months' fixed annual remuneration. Subject
to the Corporations Act 2001 and any necessary approvals required thereunder.
R Wessel Chief Executive Officer and Director 15 June 2021 n/a 3 months Forfeited 3 months For termination by the Company, 1 month's salary plus any accrued leave
entitlement.
C Judd Chief Financial Officer and Director 1 July 2021 n/a 3 months Forfeited 3 months For termination by the Company, 1 month's salary plus any accrued leave
entitlement.
A Khare Head of India Assets 1 May 2015 n/a 90 days Forfeited 90 days For termination by the Company, 1 month's salary plus any accrued leave
entitlement.
((1) )The Company may terminate the contract immediately if serious
misconduct has occurred. In this case the termination payment is only the
fixed remuneration earned until the date of termination and any unvested
options will immediately be forfeited.
((2) )Mr Salomon was the Executive Chairman until he moved to the
Non-Executive Chairman role on 29 June 2023. There were no changes to the
terms of Mr Salomon's employment, as listed above, upon his move to the
Non-Executive Chairman role.
3. DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION
Details of the nature and amount of each major element of remuneration of each
director of the Company and other key management personnel of the consolidated
entity are:
Year Short-Term Post-Employment Other Termination Share-Based Payments Total Proportion of Remuneration Performance Related ((3)(4))
Super-annuation Benefits Long-Term Benefits ((2)) Benefits
Salary & Fees STI Cash Bonus Benefits Total Shares, Options and Rights ((3))
(Including Non-Monetary) ((1))
A$ A$ A$ A$ A$ A$ A$ A$ A$ %
((3) ) Non-Executive Directors ((4))
J Salomon ((8)) 2023 134,213 - 2,233 136,446 17,861 15,423 - 60,028 229,758 6%
Non-Executive Chairman 2022 166,586 - 3,039 169,625 16,659 20,176 - 45,747 252,207 -
M Bolton ((5)) 2023 55,381 - - 55,381 5,815 - - - 61,196 -
Non-Executive Director 2022 55,381 - - 55,381 5,538 - - - 60,919 -
P Haywood ((6)) 2023 53,589 - - 53,589 - - - - 53,589 -
Non-Executive Director 2022 51,471 - - 51,471 - - - 3,750 55,221 -
P Schwarz ((7)) 2023 53,589 - - 53,589 - - - - 53,589 -
Non-Executive Director 2022 45,970 - - 45,970 - - - 9,376 55,346 -
((4) ) Executive Directors
R Wessel ((9)) 2023 273,386 - - 273,386 - - - 117,478 390,864 12%
Chief Executive Officer and Director 2022 273,657 - - 273,657 - - - 70,639 344,296 -
C Judd ((10)) 2023 200,483 - - 200,483 - - - 83,059 283,542 11%
Chief Financial Officer and Director 2022 201,651 - - 201,651 - - - 51,802 253,453 -
((5) ) Executives
A Khare ((11)) 2023 202,472 - - 202,472 4,121 - - 27,918 234,511 12%
Head of India Assets 2022 173,380 - 10,929 184,309 3,914 - - - 188,223 -
Total 2023 973,113 - 2,233 975,346 27,797 15,423 - 288,483 1,307,049
Total 2022 968,096 - 13,968 982,064 26,111 20,176 - 181,314 1,209,664 -
The Directors and Executives of the Company may be Directors or Executives of
the Company's subsidiaries. No remuneration is received for directorships of
subsidiaries. All key management personnel other than Mr Wessel, Mr Judd and
Mr Khare are employed by the parent entity.
Refer to the following explanatory notes for additional information.
Notes in Relation to Directors' and Executive Officers' Remuneration
((1) )Benefits, including non-monetary include relocation costs and
related expenses, as well as minor benefits, such as payments on behalf of
employees considered personal, insurance premiums, car parking and any
associated fringe benefits tax.
((2) ) Includes, where applicable, accrued employee leave entitlement
movements.
((3) )At the General Meeting held on 13 July 2022, the shareholders
approved the issue of 324,675,324 unlisted options as long term incentives to
the Executive Directors. The options are to vest with the holder over a period
of three (3) years, commencing on 1 July 2021. The Company issued the
324,675,324 unlisted options on 13 July 2022. No other long-term incentives
were issued to senior executives or staff during the year ended 30 June 2023.
On 3 April 2023, the Company issued unlisted nil-cost options over 70,043,152
shares as a non-cash settlement of amounts due to the Company's three
executive directors and the Head of India Assets in accordance with the
Company's short-term incentive plan and recommendations by the Company's
Remuneration Committee for the 12-month period ended 31 December 2022. The
options are fully vested with the holder on 3 April 2023; and are exercisable
on or before 1 April 2028.
Further details of the terms and conditions of the options is included in
section 4.2.
((4) ) The options issued as long-term incentives to the Executive
Directors are not linked to the performance of the Group.
Fees for Non-Executive Directors are not linked to the performance of the
Group.
((5) ) Mr Bolton resigned as Executive Director and Chief Financial
Officer and was appointed as Non‑Executive Director on 1 July 2021, with his
annual remuneration negotiated to A$55,381 plus statutory superannuation per
annum effective from this date.
((6) ) Mr Haywood was appointed a Non-Executive Director on 29 May 2017.
Mr Haywood is based in the United Kingdom and is paid £30,000 per annum. The
amount disclosed is converted into Australian dollars at the applicable
exchange rate at the date of payment.
((7) ) Mr Schwarz was appointed a Non-Executive Director on 4 September
2019. Mr Schwarz is based in the United Kingdom and is paid £30,000 per
annum. The amount disclosed is converted into Australian dollars at the
applicable exchange rate at the date of payment.
((8) ) Mr Salomon was appointed Managing Director in March 2016 with an
initial fixed annual remuneration of A$350,000 per annum, inclusive of
statutory superannuation, which was reduced to A$271,950 inclusive of
statutory superannuation effective from 1 October 2016, following the
implementation of cost reductions by the Company. A reduction in Mr Solomon's
working hours to further reduce costs was implemented on 1 April 2020. Mr
Salomon was appointed as Interim Chairman on 5 May 2020 and continued as
Managing Director and Interim Chairman until he was appointed as Executive
Chairman on 16 June 2021. His annual remuneration was renegotiated to
A$170,100 effective from 1 September 2021.
Mr Salomon was appointed as Non-Executive Chairman on 29 June 2023. His annual
remuneration was renegotiated to A$105,000 plus superannuation, effective from
his date of appointment for this new role.
On 12 August 2022, the Company issued 88,311,688 unlisted options as a
long-term incentive to Mr Salomon, following approval by shareholders at the
General Meeting held on 13 July 2022. Two-thirds of the unlisted options were
vested as at 30 June 2023.
On 3 April 2023, the Company issued unlisted nil-cost options over 8,315,217
shares to Mr Salomon as part a non-cash settlement of amounts due to the
Company's three executive directors and the Head of India Assets in accordance
with the Company's short-term incentive plan and recommendations by the
Company's Remuneration Committee for the 12-month period ended 31 December
2022. The options were fully vested on 3 April 2023.
Further details of the terms and conditions of the options is included in
section 4.1.
((9) ) Mr Wessel was appointed as Chief Executive Officer and Director on
16 June 2021 at a fixed annual remuneration of £150,000 per annum, plus 14%
UK National Insurance.
On 12 August 2022, the Company issued 136,363,636 unlisted options as a
long-term incentive to Mr Wessel, following approval by shareholders at the
General Meeting held on 13 July 2022. Two-thirds of the unlisted options were
vested as at 30 June 2023.
On 3 April 2023, the Company issued unlisted nil-cost options over 27,272,727
shares to Mr Wessel as part a non-cash settlement of amounts due to the
Company's three executive directors and the Head of India Assets in accordance
with the Company's short-term incentive plan and recommendations by the
Company's Remuneration Committee for the 12-month period ended 31 December
2022. The options were fully vested on 3 April 2023.
Further details of the terms and conditions of the options is included in
section 4.1.
((10) ) Mr Judd was appointed as Chief Financial Officer on 1 July 2021 and
Executive Director on 27 January 2022 at fixed annual remuneration of
£110,000 per annum, plus 14% UK National Insurance.
On 12 August 2022, the Company issued 100,000,000 unlisted options as a
long-term incentive to Mr Judd, following approval by shareholders at the
General Meeting held on 13 July 2022. Two-thirds of the unlisted options were
vested as at 30 June 2023.
On 3 April 2023, the Company issued unlisted nil-cost options over 18,200,000
shares to Mr Judd as part a non-cash settlement of amounts due to the
Company's three executive directors and the Head of India Assets in accordance
with the Company's short-term incentive plan and recommendations by the
Company's Remuneration Committee for the 12-month period ended 31 December
2022. The options were fully vested on 3 April 2023.
Further details of the terms and conditions of the options is included in
section 4.1.
((11) ) Mr Khare became key management personnel on 8 November 2016 and is
based in India. The amount paid during the year ended 30 June 2021 reflects
the reduced working hours implemented 1 October 2017 to facilitate a 20%
reduction in salaries together with a further reduction in working hours which
was implemented on 1 May 2020. Mr Khare's terms and conditions of employment
were revised with effect from 1 September 2022, which included an ex-gratia
joining bonus of INR 595,546 (A$10,929) as a full time employee (previously
engaged as a consultant from 1 May 2020); with a subsequent revision to his
remuneration effective on 1 April 2023. Mr Khare's remuneration has been
converted from Indian Rupees at the average exchange rate for the year.
On 3 April 2023, the Company issued unlisted nil-cost options over 16,255,208
shares to Mr Khare as part a non-cash settlement of amounts due to the
Company's three executive directors and the Head of India Assets in accordance
with the Company's short-term incentive plan and recommendations by the
Company's Remuneration Committee for the 12-month period ended 31 December
2022. The options were fully vested on 3 April 2023.
Further details of the terms and conditions of the options is included in
section 4.1.
Analysis of Bonuses Included in Remuneration
There were no short-term incentive cash bonuses awarded as remuneration to key
management personnel during the financial year.
4. Equity Instruments
All rights and options refer to rights and unlisted options over ordinary
shares of the Company, which are exercisable on a one-for-one basis.
4.1 Rights and Options Over Equity Instruments Granted as Compensation
a) At the General Meeting held on 13 July 2022, shareholders approved
the issue of:
· 88,311,688 options to Mr Salomon (and/or his nominee(s));
· 136,363,636 options to Mr Wessel (and/or his nominee(s)); and
· 100,000,000 options to Mr Judd (and/or his nominee(s)).
The above options were issued on 12 August 2022, with one third (1/3) of the
options vesting on 30 June 2022, one third (1/3) of the options vesting on 30
June 2023 and one third (1/3) of the options vesting on 30 June 2024. The fair
value of the options issued to the Executive Directors were calculated at
A$0.0016 each using the Black-Scholes valuation model, based on the following
inputs:
Grant Date Expiry Date Fair Value Per Option Exercise Price Price of Shares on Grant Date Expected Volatility Risk Free Interest Rate Dividend Yield
13 July 2022 12 August 2027 £0.0009 £0.0022 £0.0016 75.15% 1.35% -
(A$0.0016)
(A$0.0039)
(A$0.0028)
Based on the above, the value of the options granted to the Executive
Directors, as well as the number and percentages of options vested (or
otherwise) were as follows:
((6) ) No. Options Granted Value of Options Granted at the Grant Date No. Options Vested on 30 June 2023 % of Granted Options Vested on 30 June 2023 % of Granted Options Forfeited
((7) ) J Salomon 88,311,688 A$137,241 58,874,459 66.66% N/A
((8) ) R Wessel 136,363,636 A$211,916 90,909,091 66.66% N/A
((9) ) C Judd 100,000,000 A$155,405 66,666,667 66.66% N/A
b) On 3 April 2023, the Company issued unlisted nil-cost options over
70,043,152 shares as a non-cash settlement of amounts due to the Company's
three executive directors and the Head of India Assets in accordance with the
Company's short-term incentive plan and recommendations by the Company's
Remuneration Committee for the 12-month period ended 31 December 2022; as
follows:
· 8,315,217 options to Mr Salomon (and/or his nominee(s));
· 27,272,727 options to Mr Wessel (and/or his nominee(s));
· 18,200,000 options to Mr Judd (and/or his nominee(s)); and
· 16,255,208 options to Mr Khare (and/or his nominee(s)).
The above options were issued as fully-vested on 3 April 2023. The fair value
of the options issued to the Executive Directors and Head of India Assets were
calculated at A$0.0017 each using the Black-Scholes valuation model, based on
the following inputs:
Grant Date Expiry Date Fair Value Per Option Exercise Price Price of Shares on Grant Date Expected Volatility Risk Free Interest Rate Dividend Yield
2 April 2023 1 April 2028 £0.0009 £0.0000 £0.0009 97.92% 3.60% -
(A$0.0017)
(A$0.0000)
(A$0.0017)
Based on the above, the value of the options granted to the Executive
Directors and Head of India Assets, as well as the number and percentages of
options vested (or otherwise) were as follows:
((10) ) No. Options Granted Value of Options Granted at the Grant Date No. Options Vested on 30 June 2023 % of Granted Options Vested on 30 June 2023 % of Granted Options Forfeited
((11) ) J Salomon 8,315,217 A$14,281 8,315,217 100.00% N/A
((12) ) R Wessel 27,272,727 A$46,840 27,272,727 100.00% N/A
((13) ) C Judd 18,200,000 A$31,258 18,200,000 100.00% N/A
((14) ) A Khare 16,255,208 A$27,918 16,255,208 100.00% N/A
4.2 Rights and Options Over Equity Instruments Granted as Compensation
Granted Since Year End
No other rights and options over ordinary shares in the Company were granted
as compensation to key management personnel and executives since the end of
the financial year.
4.3 Modification of Terms of Equity-Settled Share-based Payment
Transactions
No terms of equity-settled share-based payment transactions (including options
granted as compensation to key management personnel) have been altered or
modified by the issuing entity during the financial year.
4.4 Exercise of Options Granted as Compensation
During the financial year no shares were issued on the exercise of options
previously granted as compensation.
4.5 Details of Equity Incentives Affecting Current and Future
Remuneration
There are no rights or options currently held by key management personnel at
year end other than those disclosed above in Section 1.4 (2022: nil).
Details of the terms of the options, the value of the options as well as the
number of options vested during the year are detailed in Section 4.1.
4.6 Analysis of Movements in Equity Instruments
There were no shares, rights or options over ordinary shares in the Company
granted to or exercised by key management personnel in the current year.
4.7 Options or Rights over Equity Instruments Granted as Compensation
There are no rights or options held by key management personnel, or their
related parties as at 1 July 2022 through to 30 June 2023, other than those
disclosed in Section 4.1.
5. KEY MANAGEMENT PERSONNEL TRANSACTIONS
5.1 Other Transactions with Key Management Personnel
There were no other transactions with entities associated with key management
personnel in the year ended 30 June 2023 (2022: nil).
5.2 Movements in Shares
The movement during the financial year in the number of ordinary shares in the
Company held, directly, indirectly or beneficially, by each key management
person, including their related parties, is as follows:
((15) ) Held at Received on Exercise of Options Other Changes ((1)) Held at
1 July 2022 30 June 2023
((16) ) Non-Executive Directors
((17) ) M Bolton - - - -
((18) ) P Haywood 12,933,513 - - 12,933,513
((19) ) P Schwarz 21,222,500 - - 21,222,500
((20) ) Executive Directors
((21) ) J Salomon 14,987,013 - - 14,987,013
((22) ) R Wessel - - - -
((23) ) C Judd - - - -
((24) ) Executives
((25) ) A Khare - - - -
((1) ) Other changes represent shares that were granted, purchased or
sold during the year.
5.3 Movements in Options
The movement during the financial year in the number of options in the Company
held, directly, indirectly or beneficially, by each key management person,
including their related parties, is as follows:
Held at Issued During the Year Exercised During the Year Held at Vested and Exercisableat 30 June 2023
1 July 2022 30 June 2023
((26) ) Non-Executive Directors
((27) ) M Bolton - - - - -
((28) ) P Haywood - - - - -
((29) ) P Schwarz - - - - -
((30) ) Executive Directors
((31) ) J Salomon - 96,626,905 - 96,626,905 67,189,675
((32) ) R Wessel - 163,636,363 - 163,636,363 118,181,817
((33) ) C Judd - 118,200,000 - 118,200,000 84,866,666
((34) ) Executives
((35) ) A Khare - 16,255,208 - 16,255,208 16,255,208
END OF REMUNERATION REPORT - AUDITED
Signed in accordance with a resolution of the Directors.
Mr Jonathan Salomon Mr Roland Wessel
Non-Executive Chairman Chief Executive Officer
Perth
Western Australia
21 September 2023
PKF Perth
AUDITOR'S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF SYNERGIA ENERGY LTD
In relation to our audit of the financial report of Synergia Energy Ltd for
the year ended 30 June 2023, to the best of my knowledge and belief, there
have been no contraventions of the auditor independence requirements of the
Corporations Act 2001 or any applicable code of professional conduct.
PKF Perth
Shane Cross
Partner
21 September 2023
West Perth,
Western Australia
Level 4, 35 Havelock Street, West Perth, WA 6005
PO Box 609, West Perth, WA
6872
T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au
PKF Perth is a member firm of the PKF International Limited family of legally
independent firms and does not accept any responsibility or liability for the
actions or inactions of any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards
Legislation.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
2023 2022
A$ A$
Note
Revenue 4(a) 1,296,150 141,435
Cost of sales 4(b) (2,563,873) (754,365)
Gross Loss (1,267,723) (612,930)
Other income 4(c) - 24,588
Exploration expenditure and write-off 4(d) (608,592) (937,181)
Care and maintenance expenditure 4(e) - (441,338)
Administration expense 4(f) (2,473,982) (2,578,317)
Reversal of expected credit losses 8 34,853 3,131,282
Share-based payments expense 22 (288,484) (187,677)
Other expenses 4(g) (8,993) (82,539)
Results from Operating Activities (4,612,921) (1,684,112)
Finance income 4(h) 3,862 1,829
Finance costs 4(i) (630,295) (356,113)
Foreign exchange loss 4(j) (143,548) (23,528)
Net Finance Costs (769,981) (377,812)
Loss Before Tax (5,382,902) (2,061,924)
Tax expense 5 - -
Loss After Tax for the Year (5,382,902) (2,061,924)
Other Comprehensive Income
Items that may be reclassified to profit or loss
Foreign operations - foreign currency translation differences 187,425 480,791
Other Comprehensive Income, Net of Tax 187,425 480,791
Total Comprehensive Loss (5,195,477) (1,581,133)
Loss per Share from Continuing Operations
Basic loss per share (cents per share) 6 (0.06) (0.03)
Diluted loss per share (cents per share) 6 (0.06) (0.03)
The above Consolidated Statement of Profit or Loss and Other Comprehensive
Income is to be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
2023 2022
Note A$ A$
Assets
Cash and cash equivalents 7 938,589 4,838,459
Trade and other receivables 8 220,331 127,058
Prepayments 89,507 15,617
Inventories 9 113,819 387,685
Total Current Assets 1,362,246 5,368,819
Exploration and evaluation 10 - -
Development assets 11 17,558,182 20,310,614
Plant and equipment 12 24,217 29,830
Investments 13 34,593 69,185
Total Non-Current Assets 17,616,992 20,409,629
Total Assets 18,979,238 25,778,448
Liabilities
Trade and other payables 14 485,968 1,729,185
Employee benefits 15 174,116 180,827
Borrowings 16 774,666 451,355
Derivative financial liability 17 1,050,334 -
Total Current Liabilities 2,485,084 2,361,367
Provisions 15 6,156,638 8,833,483
Total Non-Current Liabilities 6,156,638 8,833,483
Total Liabilities 8,641,722 11,194,850
Net Assets 10,337,516 14,583,598
Equity
Issued capital 21(a) 192,817,143 192,181,384
Reserves 21(b) 8,299,925 7,798,864
Accumulated losses (190,779,552) (185,396,650)
Total Equity 10,337,516 14,583,598
The above Consolidated Statement of Financial Position is to be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Attributable to Owners of the Company
Issued Capital Share-Based Payments Reserve Foreign Currency Translation Reserve Accumulated Losses Total Equity
A$ A$ A$ A$ A$
Note 21(a) 21(b) 21(b)
Balance at 1 July 2022 192,181,384 221,321 7,577,543 (185,396,650) 14,583,598
Comprehensive Income/(Loss)
Loss after tax for the year - - - (5,382,902) (5,382,902)
Other Comprehensive Income
Foreign currency translation differences - - 187,425 - 187,425
Total Comprehensive Income/(Loss) - - 187,425 (5,382,902) (5,195,477)
for the Year
Transactions with Owners of the Company
Contributions and Distributions
Shares issued for cash 21(a) 608,378 - - - 608,378
Capital raising costs ((1)) 21(a) 27,381 - - - 27,381
Share-based payment transactions 22 313,636 313,636
Total Transactions with Owners of the Company 635,759 313,636 949,395
Balance at 30 June 2023 192,817,143 534,957 7,764,968 (190,779,552) 10,337,516
Balance at 1 July 2021 185,355,925 - 7,096,752 (183,469,774) 8,982,903
Comprehensive Income/(Loss)
Loss after tax for the year - - - (2,061,924) (2,061,924)
Other Comprehensive Income
Foreign currency translation differences - - 480,791 - 480,791
Total Comprehensive Income/(Loss) - - 480,791 (2,061,924) (1,581,133)
for the Year
Transactions with Owners of the Company
Contributions and Distributions
Shares issued for cash 21(a) 7,503,616 - - - 7,503,616
Capital raising costs ((1) ) 21(a) (834,039) - - - (834,039)
Shares issued on exercise of options 21(a) 136,393 - - - 136,393
Transfer on exercise of options - (135,048) - 135,048 -
Share-based payment transactions 21(a) 19,489 356,369 - - 375,858
22
Total Transactions with Owners of the Company 6,825,459 221,321 - 135,048 7,181,828
Balance at 30 June 2022 192,181,384 221,321 7,577,543 (185,396,650) 14,583,598
((1) ) Capital raising costs include cash payments and the fair
value of options granted to the underwriter.
The above Consolidated Statement of Changes in Equity is to be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
2023 2022
Note A$ A$
Cash Flows from Operating Activities
Cash receipts from customers 1,462,911 141,435
Recovery of prior period operating cost 94,923 554,487
Payments to suppliers and employees (5,678,985) (4,085,306)
Repayment of JPDA 06-103 PSC termination penalty 14 (372,523) (697,045)
Cash outflow from operations (4,493,674) (4,086,429)
Payments for exploration and evaluation expenses (831,797) (706,841)
Interest received 3,862 1,829
Interest paid (52,462) (9,693)
Net Cash Used in Operating Activities 7 (5,374,071) (4,801,134)
Cash Flows from Investing Activities
Payment for deposit for Cambay Acquisition (paid to bank guarantee and called - (2,903,141)
upon by GSPC)
Cash acquired upon Cambay Acquisition - 213,777
Payments for capitalised exploration and evaluation - (7,092)
Acquisition of plant and equipment 12 (3,227) (26,834)
Proceeds from sale of investments - 119,500
Proceeds from sale of other assets 4(c) - 24,589
Net Cash Used in Investing Activities (3,227) (2,579,201)
Cash Flows from Financing Activities
Proceeds from issue of share capital 21(a) 608,378 7,503,616
Proceeds from exercise of share options 21(a) - 136,393
Payment for share issue costs (106,168) (487,156)
Proceeds from borrowings 1,530,101 697,045
Repayment of borrowings (488,984) (50,925)
Net Cash from Financing Activities 1,543,327 7,798,973
Net Increase in Cash and Cash Equivalents (3,833,971) 418,638
Cash and cash equivalents at 1 July 4,838,459 4,310,767
Effect of exchange rate fluctuations on cash held (65,899) 109,054
Cash and Cash Equivalents at 30 June 7 938,589 4,838,459
The above Consolidated Statement of Cash Flows is to be read in conjunction
with the accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
ABOUT THIS REPORT - OVERVIEW
NOTE 1 - REPORTING ENTITY
Synergia Energy Ltd (the "Company") is a for-profit entity domiciled in
Australia. These consolidated financial statements comprise the Company and
its subsidiaries (collectively the "Group" and individually "Group Entities").
Synergia Energy Ltd is a company limited by shares incorporated in Australia
whose shares are publicly traded on AIM of the LSE. The Company's shares were
also publicly traded on the ASX until its delisting from the ASX on 30
December 2022.
The Group is primarily involved in the exploration, evaluation, development
and production of hydrocarbons.
Unless otherwise indicated, these financial statements are presented in
Australian dollars ("$" or "A$"), which is the Company's functional and
presentation currency (see Note 2(e)) and are rounded to the nearest
Australian dollar.
Parent Entity Information
In accordance with the Corporations Act 2001, these financial statements
present the results of the consolidated entity only. Supplementary information
about the parent entity is disclosed in Note 24.
NOTE 2 - BASIS OF PREPARATION
(a) Statement of Compliance
The consolidated financial statements are general purpose financial statements
which have been prepared in accordance with Australian accounting standards,
interpretations and other authoritative pronouncements of the Australian
Accounting Standards Board ("AASB") and the Corporations Act 2001. The AASB
include Australian equivalents of the international financial reporting
standards adopted by the International Accounting Standards Board ("IFRS").
Compliance with the AASB ensures compliance with the IFRS.
The consolidated financial statements were authorised for issue by the Board
of Directors on 21 September 2023.
(b) Basis of Measurement
The financial statements have been prepared under the historical cost
convention, except for, where applicable, the revaluation of financial assets
and liabilities (including derivative financial liabilities) at fair value
through profit or loss, share-based payment arrangements measured at fair
value and the foreign currency translation reserve.
A number of the Group's accounting policies and disclosures require the
determination of fair value, for both financial and non-financial assets and
liabilities. Fair values have been determined for some measurement and/or
disclosure purposes and where applicable, further information about the
assumptions made in determining fair values is disclosed in the notes specific
to that asset or liability.
(c) Going Concern Basis
The Directors believe it is appropriate to prepare the consolidated financial
statements on a going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and settlement of
liabilities in the ordinary course of business.
The Group incurred a loss of A$5,382,902 (2022: A$2,061,924) and had cash
outflows from operating activities of A$5,374,071 (2022: A$4,801,134). The
Group also concluded the year with cash and cash equivalents of A$938,589
(2022: A$4,838,459), loans outstanding (excluding derivative liability
component of convertible notes) of A$774,666 (2022: A$451,355), and
derivative liabilities of A$1,050,334 (2022: A$nil).
The Group also requires further funding within the next twelve months in order
to repay its loan balances, continue its exploration activities, progress the
Cambay development and drilling programme, meet its ongoing administrative
expenses, and for any new business opportunities that the Group may pursue.
The Directors believe that the Group will be able to secure sufficient funding
to meet the requirements to continue as a going concern, due to its history of
previous capital raisings, acknowledging that the structure and timing of any
capital raising is dependent upon investor support, prevailing capital
markets, shareholder participation, oil and gas prices and the outcome of
planned exploration and evaluation activities, which creates uncertainty.
The Directors consider the going concern basis of preparation to be
appropriate based on its forecast cash flows for the next twelve months and
that the Group will be in a position to continue to meet its minimum
administrative, evaluation and development expenditures and commitments for at
least twelve months from the date of this report.
If further funds are not able to be raised or realised, then it may be
necessary for the Group to sell or farmout its exploration and development
assets and to reduce discretionary administrative expenditure.
The ability of the Group to achieve its forecast cash flows, particularly the
raising of additional funds, represents a material uncertainty that may cast
significant doubt about whether the Group can continue as a going concern, in
which case it may not be able to realise its assets and extinguish its
liabilities in the normal course of business and at the stated amounts in the
financial statements.
(d) Basis and Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities
of all subsidiaries of Synergia Energy Ltd (the "Company" or "parent entity")
as at 30 June 2023 and the results of all subsidiaries for the year then
ended. Synergia Energy Ltd and its subsidiaries together are referred to in
these financial statements as the "consolidated entity" or the "Group".
Subsidiaries
Subsidiaries are all those entities over which the Group has control. The
Group controls an entity when the Group 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 Group. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions
between entities in the Group are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method
of accounting. A change in ownership interest, without the loss of control, is
accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the
non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown
separately in the statement of profit or loss and other comprehensive income,
statement of financial position and statement of changes in equity of the
Group. Losses incurred by the Group are attributed to the non-controlling
interest in full, even if that results in a deficit balance.
Where the Group loses control over a subsidiary, it derecognises the assets
including goodwill, liabilities and non-controlling interest in the subsidiary
together with any cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received and the fair
value of any investment retained together with any gain or loss in profit or
loss.
The list of entities controlled by the Group is contained in Note 23.
Joint Ventures and Joint Arrangements for Joint Operations
Joint ventures are those entities over whose activities the Group has joint
control, established by contractual agreement.
The interests of the Group in unincorporated joint operations and jointly
controlled assets are brought to account by recognising, in its consolidated
financial statements, the assets it controls, the liabilities that it incurs,
the expenses it incurs and the share of income that it earns from the sale of
goods or services by the joint operations.
The interests of the Group in unincorporated joint operations and jointly
controlled assets are contained in Note 25.
(e) Currency and Foreign Currency Translation
The financial statements are presented in Australian dollars, which is the
Company's functional and presentation currency. The functional currency of the
Company's subsidiaries is United States dollars or Pounds Sterling.
Foreign currency transactions are translated into Australian dollars (or the
respective functional currencies of the Group entities) 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.
The assets and liabilities of foreign operations are translated into
Australian dollars using the exchange rates at the reporting date. The
revenues and expenses of foreign operations are translated into Australian
dollars using historical exchange rates or the average exchange rate which
approximate the rates at the dates of the transactions for the period. All
resulting foreign exchange differences are recognised in other comprehensive
income through the foreign currency reserve in equity. The foreign currency
reserve is recognised in profit or loss when the foreign operation or net
investment is disposed of.
(f) Critical Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts in the
financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements, estimates and assumptions on
historical experience and on other various factors, including expectations of
future events management believes to be reasonable under the circumstances.
The resulting accounting judgements and estimates will seldom equal the
related actual results.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
A key assumption underlying the preparation of the financial statements is
that the entity will continue as a going concern. An entity is a going concern
when it is considered to be able to pay its debts as and when they fall due,
and to continue in operation, without any intention or necessity to liquidate
or otherwise wind up its operations.
Judgement has been required in assessing whether the entity is a going concern
as set out in Note 2(c).
Other 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 as listed below (and discussed
in the respective notes as indicated below):
· Income tax - refer Note 5
· Trade and other receivables - refer Note 8
· Exploration and evaluation assets - refer Note 10
· Development assets - refer Note 11
· Plant and equipment - refer Note 12
· Provisions - refer Note 15
· Share-based payments - refer Note 22
(g) Rounding of Amounts
The Company is of a kind referred to in Corporations Instrument 2016/191,
issued by the Australian Securities and Investments Commission, relating to
'rounding-off'. Amounts in this report have been rounded off in accordance
with that Corporations Instrument to the nearest dollar, unless otherwise
indicated.
(h) Accounting Policies
Other than as listed in Notes 2(i) and 2(j), significant accounting policies
that are relevant to the understanding of the consolidated financial
statements have been provided throughout the notes to the financial
statements. Accounting policies that are determined to be non-significant have
not been included in the consolidated financial statements.
The accounting policies disclosed have been applied consistently to all
periods presented in these consolidated financial statements and have been
applied consistently by Group entities, except where there have been any
changes in accounting policies.
Changes in Significant Accounting Policies
The Group has adopted all new or amended accounting standards, interpretations
and other accounting pronouncements issued by the AASB that are effective for
reporting periods beginning on or after 1 January 2022 and therefore mandatory
for the current reporting period. The adoption of these accounting standards,
interpretations and other accounting pronouncements did not have any
significant impact on the financial performance or position of the Group.
Any new or amended accounting standards, interpretations and other accounting
pronouncements issued by the AASB that are not yet mandatory for the current
reporting period have not been early adopted.
Accounting Standards and Interpretations Issued But Not Yet Effective
A number of new or amended accounting standards, interpretations and other
accounting pronouncements issued by the AASB (as applicable to the Group) are
effective for reporting periods beginning on or after 1 January 2023, and are
as follows:
Title Application Issue Date
Date of
Standard *
AASB 2014-10 Amendments to AASs - Sale or Contributions of Assets between an 1 January 2025 December 2014
Investor and its Associate or Joint Venture
AASB 2020-1 Amendments to AASs - Classification of Liabilities as Current or 1 January 2024 March 2020
Non-current
AASB 2021-2 Amendments to Australian Accounting Standards - Disclosure of 1 January 2023 March 2021
Accounting Policies and Definition of Accounting Estimates
AASB 2021-5 Amendments of AASs - Deferred Tax related to Assets and 1 January 2023 July 2021
Liabilities arising from a Single Transaction
AASB 2021-7c Amendments to Australian Accounting Standards - Effective Date of 1 January 2025 December 2021
Amendments to AASB 10 and AASB 128 and Editorial Corrections [deferred AASB 10
and AASB 128 amendments in AASB 2014-10 apply]
AASB 2022-1 Amendments of AASs -Initial Application of AASB 17 and AASB 9 - 1 January 2023 March 2022
Comparative information
AASB 2022-7 Editorial Corrections to Australian Accounting Standards and 1 January 2023 December 2022
Repeal of Superseded and Redundant Standards
AASB 2022-8 Amendments to Australian Accounting Standards - Insurance 1 January 2023 December 2022
Contracts: Consequential Amendments
AASB 17 Insurance Contracts 1 January 2023 July 2017
AASB 2023-1 Amendments to Australian Accounting Standards - Supplier Finance 1 January 2024 June 2023
Arrangements
The above new or amended accounting pronouncements are not yet effective, with
early application permitted. However, at the date of authorisation of these
financial statements, the Group has not early adopted the above accounting
pronouncements in preparing these consolidated financial statements.
The Group has not yet assessed the impact of these new or amended accounting
pronouncements, however, none of the above accounting pronouncements are
expected to have a significant impact on the financial performance or position
of the Group in the current or future financial periods.
(i) Current and Non-Current Classification
Assets and liabilities are presented in the statement of financial position
based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised
or intended to be sold or consumed in the consolidated entity's normal
operating cycle; it is held primarily for the purpose of trading; it is
expected to be realised within 12 months after the reporting period; or the
asset is cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least 12 months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled
in the consolidated entity's normal operating cycle; it is held primarily for
the purpose of trading; it is due to be settled within 12 months after the
reporting period; or there is no unconditional right to defer the settlement
of the liability for at least 12 months after the reporting period. All other
liabilities are classified as non-current.
Deferred tax assets and liabilities (if any) are always classified as
non-current.
(j) 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 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.
SYNERGIA'S RESULTS FOR THE YEAR
This section focuses on the results and performance of the Group.
NOTE 3 - OPERATING SEGMENTS
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group's
other components.
Operating segments are presented using the "management approach", where the
information presented is on the same basis as the internal reports provided to
the Chief Operating Decision Makers ("CODM"). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
The operating segments identified by management are generally based on the
geographical location of the business. Each segment has responsible officers
that are accountable to the Chief Executive Officer ("CEO") (the Group's chief
operating decision maker). The operating results of all operating segments are
regularly reviewed by the Group's CEO to make decisions about resources to be
allocated to the segment and assess its performance and for which discrete
financial information is available. Segment results that are reported to the
CEO include items directly attributable to a segment as well as those that can
be allocated on a reasonable basis.
The Group's executive management team evaluates the financial performance of
the Group and its segments principally with reference to revenues, production
costs, expenditure on exploration evaluation and development costs. Financing
requirements, finance income and expenses are managed at a Group level.
Corporate items include administration costs comprising personnel costs, head
office occupancy costs and investor and registry costs. It may also include
expenses incurred by non-operating segments, such as new ventures and those
undergoing relinquishment. Assets and liabilities not allocated to operating
segments and disclosed are corporate, and mostly comprise cash, plant and
equipment, receivables as well as accruals for head office liabilities.
Major Customer
The Group's most significant customers are:
· Enertech Fuel Solutions Pvt Limited, with gas sales representing 58%
of the Group's total revenues (2022: 100%); and
· Navkar Enterprise, with oil sales representing 42% of the Group's
total revenues (2022: nil%).
Accounting Policies
a) Revenue
The Group recognises revenue as follows:
Revenue from Contracts with Customers
Revenue is recognised at an amount that reflects the consideration to which
the Group is expected to be entitled in exchange for transferring goods or
services to a customer. For each contract with a customer, the Group:
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.
Variable consideration within the transaction price, if any, reflects
concessions provided to the customer such as discounts, rebates and refunds,
any potential bonuses receivable from the customer and any other contingent
events. Such estimates are determined using either the "expected value" or
"most likely amount" method. The measurement of variable consideration is
subject to a constraining principle whereby revenue will only be recognised to
the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable
consideration is subsequently resolved. Amounts received that are subject to
the constraining principle are recognised as a refund liability.
Sale of Goods
Revenue from the sale of goods is recognised at the point in time when the
customer obtains control of the goods, which is generally at the time of
delivery.
Interest
Interest revenue is recognised as interest accrues using the effective
interest method. This is a method of calculating the amortised cost of a
financial asset and allocating the interest income over the relevant period
using the effective interest rate, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial
asset to the net carrying amount of the financial asset.
Other Revenue
Other revenue is recognised when it is received or when the right to receive
payment is established.
b) Expenses
The Group recognises expenses as follows:
· Amortisation - refer to Note 11
· Impairment - refer to Notes 10 and 11
· Depreciation - refer to Note 12
· Expected credit losses - refer to Note 8
· Employee benefits - refer to Note 15
· Leases - refer to Note 18
India JPDA ((1)) Indonesia United Kingdom Corporate ((2)) Consolidated
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
A$ A$ A$ A$ A$ A$ A$ A$ A$ A$ A$ A$
Revenue
External revenue 1,296,150 141,435 - - - - - - - - 1,296,150 141,435
Cost of Sales
Production costs (2,250,046) (886,177) - - - - - - - - (2,250,046) (886,177)
Amortisation of development assets (24,112) (1,136) - - - - - - - - (24,112) (1,136)
Movement in oil stocks inventory (289,715) 132,948 - - - - - - - - (289,715) 132,948
Total Cost of Sales (2,563,873) (754,365) - - - - - - - - (2,563,873) (754,365)
Gross Loss (1,267,723) (612,930) - - - - - - - - (1,267,723) (612,930)
Care and Maintenance Expenditure
Care and maintenance costs - (475,986) - - - - - - - - - (475,986)
Movement in oil stocks inventory - 34,648 - - - - - - - - - 34,648
Total Care and Maintenance Expenditure - (441,338) - - - - - - - - - (441,338)
Exploration expenditure (537,047) (313,339) - - - - (71,545) (7,468) - - (608,592) (320,807)
Write-off of exploration and evaluation asset - (616,374) - - - - - - - - - (616,374)
Depreciation (1,051) (70,190) - - - - - - (6,405) (7,822) (7,456) (78,012)
Share-based payments - - - - - - - - (288,484) (187,677) (288,484) (187,677)
Other income - 24,588 - - - - - - - - - 24,588
Reversal of (expected credit losses) (13,191) 3,188,806 11,255 102,194 - - - - 36,789 (159,718) 34,853 3,131,282
Other expenses (27,528) (25,388) (15,916) (131,449) 52,807 (3,121) (28,726) (2,687) (2,456,156) (2,420,199) (2,475,519) (2,582,844)
Reportable Segment Profit/(Loss) Before Income Tax (1,846,540) 1,133,835 (4,661) (29,255) 52,807 (3,121) (100,271) (10,155) (2,714,256) (2,775,416) (4,612,921) (1,684,112)
India JPDA ((1)) Indonesia United Kingdom Corporate ((2)) Consolidated
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
A$ A$ A$ A$ A$ A$ A$ A$ A$ A$ A$ A$
Reportable Segment Profit/(Loss) Before Income Tax (1,846,540) 1,133,835 (4,661) (29,255) 52,807 (3,121) (100,271) (10,155) (2,714,256) (2,775,416) (4,612,921) (1,684,112)
Net finance costs (626,433) (354,284)
Foreign exchange loss (143,548) (23,528)
Income tax expense - -
Net Loss for the Year (5,382,902) (2,061,924)
Segment Assets 18,501,114 19,426,958 414 10,657 - - - - 477,710 6,340,833 18,979,238 25,778,448
Segment Liabilities 6,436,301 9,823,249 9,199 372,034 - 86,190 15,568 - 2,180,654 913,377 8,641,722 11,194,850
There were no significant inter-segment transactions during the year.
((1)) Joint Petroleum Development Area.
((2)) Corporate represents a reconciliation of reportable segment revenues,
profit or loss, assets and liabilities to the consolidated figure.
note 4 - revenue and expenses
Loss from ordinary activities before tax has been determined after the
following revenues and expenses:
Note 2023 2022
A$ A$
(a) Revenue
Gas sales 755,589 141,435
Oil sales 540,561 -
1,296,150 141,435
(b) Cost of sales
Production costs (2,250,046) (886,177)
Amortisation of development assets (24,112) (1,136)
Movement in oil stocks inventory (289,715) 132,948
(2,563,873) (754,365)
(c) Other income
Profit from disposal of other assets - 24,588
(d) Exploration expenditure and write-off
Exploration expenditure (608,592) (320,807)
Write-off of exploration and evaluation asset 12 - (616,374)
(608,592) (937,181)
(e) Care and maintenance expenditure
Care and maintenance expenditure - (475,986)
Movement in oil stocks inventory - 34,648
- (441,338)
(f) Administration expenses
Employee benefits expense (1,226,601) (1,023,136)
Administration expense (1,247,381) (1,555,181)
(2,473,982) (2,578,317)
(g) Other expenses
Depreciation expense 14 (7,456) (78,012)
Loss on disposal of plant and equipment (1,537) (4,527)
(8,993) (82,539)
(h) Finance income
Interest income 3,862 1,829
(i) Finance costs
Interest expense - loan facility 16 (54,525) (19,836)
Interest expense - convertible notes 16 (19,178) -
Interest expense - other borrowings (4,791) (5,407)
Unwinding of discount on site restoration provision 15 (289,540) (76,753)
Equity securities designated at FVTPL - net change in fair value 13 (34,593) (254,117)
Derivative liability - net change in fair value 17 (227,668) -
(630,295) (356,113)
(j) Foreign exchange loss - net
Foreign exchange loss - realised (44,647) -
Foreign exchange loss - unrealised (98,901) (23,528)
(143,548) (23,528)
The Group's revenue policy is outlined in Note 3.
NOTE 5 - INCOME TAX EXPENSE
Numerical reconciliation between tax expense and pre-tax accounting loss:
2023 2022
A$ A$
Loss before tax (5,382,902) (2,061,924)
Tax using the domestic corporation tax rate of 25% (2022: 25%) (1,345,726) (515,481)
Effect of tax rate in foreign jurisdictions (932,253) (1,098,009)
Non-deductible expenses
Share-based payments 72,121 46,919
Foreign expenditure non-deductible 777,723 1,855,187
Other non-deductible expenses 1,329 51,628
Non assessable income
Other non-assessable income (12,500) -
Tax losses not brought to account as a deferred tax asset 1,439,307 -
- 340,244
Unrecognised deferred tax assets ("DTA") generated during the year and not - -
brought to account at reporting date as realisation is not regarded as
probable
Tax expense - 340,244
Tax losses utilised not previously brought to account - (340,244)
Impact of reduction in future tax rates - -
Unrecognised DTA not brought to account - -
Tax Expense for the Year - -
Tax Assets and Liabilities
During the previous year ended 30 June 2022, A$340,244 of previously
unrecognised DTA on tax losses were recognised and offset against the current
tax liability resulting in nil income tax expense in the previous year.
2023 2022
A$ A$
Unrecognised Deferred Tax Assets Not Brought to Account at Reporting Date as
Realisation is Not Regarded as Probable - Temporary Differences
Other 20,348,421 20,086,534
Losses available for offset against future taxable income 9,496,896 7,427,740
Deferred Tax Asset Not Brought to Account 29,845,317 27,514,274
Indian-based tax losses are available to offset against future Indian-based
assessable income for a period of up to 8 years, upon which they expire. All
other deductible temporary differences and tax losses do not expire under
current tax legislation.
The deferred tax asset not brought to account for the 2023 financial year will
only be realised if:
· It is probable that future assessable income will be derived of a
nature and of an amount sufficient to enable the benefit to be realised;
· The conditions for deductibility imposed by the tax legislation
continue to be complied with; and
· The companies are able to meet the continuity of ownership and/or
continuity of business tests.
The foreign component of the deferred tax asset not brought to account for the
2023 financial year will only be realised if the Group derives future
assessable income of a nature and of an amount sufficient to enable the
benefit to be realised and the Group continues to comply with the
deductibility conditions imposed by the Income Tax Act 1961 (India) and there
is no change in income tax legislation adversely affecting the utilisation of
the benefits.
Tax Consolidation
In accordance with tax consolidation legislation the Company, as the head
entity of the Australian tax-consolidated group, has assumed the deferred tax
assets initially recognised by wholly-owned members of the tax-consolidated
group with effect from 1 July 2004. Total tax losses of the Australian
tax-consolidated group, available for offset against future taxable income are
A$2,664,907 (2022: A$3,354,135).
Accounting Policy
The income tax expense (or benefit) for the period is the tax payable (or
receivable) on that period's taxable income based on the applicable income tax
rate for each jurisdiction, adjusted by the changes in deferred tax assets and
liabilities attributable to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences
at the tax rates expected to be applied 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
interests in subsidiaries, associates or 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 at 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 deferred tax assets against deferred 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.
Synergia Energy Ltd (the "head entity") and its wholly-owned Australian
subsidiaries have formed an income tax consolidated group under the tax
consolidation regime. The head entity and each subsidiary in the tax
consolidated group continue to account for their own current and deferred tax
amounts. The tax consolidated group has applied the "separate taxpayer within
group" approach in determining the appropriate amount of taxes to allocate to
members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also
recognises the current tax liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax credits assumed from each
subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax
consolidated entities are recognised as amounts receivable from or payable to
other entities in the tax consolidated group. The tax funding arrangement
ensures that the intercompany charge equals the current tax liability or
benefit of each tax consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the
subsidiaries to the head entity.
Critical Accounting Judgements, Estimates and Assumptions
The consolidated entity is subject to income taxes in the jurisdictions in
which it operates. Significant judgement is required in determining the
provision for income tax. There are many transactions and calculations
undertaken during the ordinary course of business for which the ultimate tax
determination is uncertain. The consolidated entity recognises liabilities for
anticipated tax audit issues based on the consolidated entity's current
understanding of the tax law. Where the final tax outcome of these matters is
different from the carrying amounts, such differences will impact the current
and deferred tax provisions in the period in which such determination is made.
Deferred tax assets are recognised for deductible temporary differences only
if the consolidated entity considers it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
NOTE 6 - LOSS PER SHARE
(a) Basic Loss Per Share
2023 2022
A$ cents A$ cents
Basic and Diluted Loss per Share
Total basic and diluted loss per share (0.06) (0.03)
2023 2022
A$ A$
Loss Used in Calculating Loss per Share
Loss for the year attributable (5,382,902) (2,061,924)
to ordinary shareholders
Note 2023 2022
Number Number
Weighted Average Number of
Ordinary Shares
Issued ordinary shares at 1 July 21(a) 8,242,959,310 5,685,971,571
Effect of shares issued 161,036,479 788,013,582
Effect of share options exercised - 15,925,900
Weighted average number of 8,403,995,789 6,489,911,053
ordinary shares at 30 June
(b) Diluted Loss Per Share
The Company's potential ordinary shares, being its options granted, are not
considered dilutive as the conversion of these instruments would result in a
decrease in the net loss per share.
Accounting Policy
Basic earnings or loss per share is calculated by dividing the profit or loss
attributable to the owners of Synergia Energy Ltd, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the financial year.
Diluted earnings per share adjusts the figures used in the determination of
basic earnings or loss per share to take into account the after income tax
effect of interest and other financing costs associated with dilutive
potential ordinary shares (which may comprise outstanding options, warrants,
or their equivalents) and the weighted average number of shares assumed to
have been issued for no consideration in relation to dilutive potential
ordinary shares.
ASSETS AND LIABILITIES
This section provides information on the assets employed to develop value for
shareholders and the liabilities incurred as a result.
NOTE 7 - CASH AND CASH EQUIVALENTS
2023 2022
A$ A$
Cash at bank and on hand 938,589 4,838,459
The Group's exposure to interest rate risk and a sensitivity analysis for
financial assets and liabilities are disclosed in Note 27(d).
Accounting Policy
Cash and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of
changes in value.
Reconciliation of Cash Flows from Operating Activities
2023 2022
A$ A$
Loss after tax for the year (5,382,902) (2,061,924)
Amortisation of development assets 24,112 1,136
Depreciation 7,456 78,012
Interest expense accrued (including unwinding of discount on site restoration 315,571 92,303
provision)
Reversal of expected credit losses (34,853) (3,131,282)
Write-off of exploration and evaluation asset - 616,374
Equity securities designated at FVTPL - net change in fair value 34,593 254,117
Derivative liability - net change in fair value 227,668 -
Loss on disposal of plant and equipment 1,537 4,527
Profit from disposal of other assets - (24,588)
Equity settled share-based payments 288,484 187,677
Foreign exchange losses 143,548 23,528
Operating Loss Before Changes in Working Capital and Provisions (4,374,786) (3,960,120)
Movement in trade and other receivables ((1)) (48,483) 566,737
Movement in prepayments ((1)) (73,890) 1,321
Movement in inventories ((1)) 289,715 (167,003)
Movement in trade and other payables ((1)) (1,159,916) (1,205,636)
Movement in employee benefits ((1)) (6,711) (36,433)
Net Cash Used in Operating Activities (5,374,071) (4,801,134)
((1) ) Excludes movements related to the Cambay Acquisition.
NOTE 8 - TRADE AND OTHER RECEIVABLES
2023 2022
A$ A$
Current
Allocation of Receivables
Joint operation receivables 16,205 43,543
Other receivables 204,126 83,515
220,331 127,058
Joint Operation Receivables
Joint operation receivables 49,371 400,341
Less: Provision for expected credit losses (33,166) (356,798)
16,205 43,543
Other Receivables
Corporate receivables 234,903 114,859
Less: Provision for expected credit losses (30,777) (31,344)
204,126 83,515
Joint operation receivables include the Group's share of outstanding cash
calls and recharges owing from the joint operation partners, as well as other
minor receivables as follows:
2023 2022
A$ A$
Schedule of Gross Joint Operation Receivables
Receivables relating to Cambay joint operation 19,198 19,418
Receivables relating to JPDA joint operation ((1)) - 314,074
Other receivables 30,173 66,849
49,371 400,341
(1) ) On 13 October 2022, the non-defaulting parties to the
JPDA joint venture agreed to terminate the Joint Operating Agreement. As such,
all of the receivables relating to the JPDA joint operation was written off
during the year (see movement in provision for expected credit losses below).
The Group considers that there is evidence of impairment if any of the
following indicators are present: financial difficulties of the debtor,
probability that the debtor will dispute amounts owing and default or
delinquency in payment (more than one year old). The movement in the Group's
provision for expected credit losses ("ECLs") are detailed below:
2023 2022
A$ A$
Movement in Provision for Expected Credit Losses
Balance at 1 July (388,142) (4,941,011)
ECLs reversed during the year 34,853 3,131,282
Provision for ECLs offset against part of cost of Cambay Acquisition - 4,025,567
Write-off of negative provisions related to previously transferred amounts to - (2,365,658)
development assets
ECLs relating to additional portion of receivables acquired as part of Cambay - (10,530)
Acquisition
Write-off of receivables previously provided for 323,715 -
Effect of movements in exchange rates (34,369) (227,792)
Balance at 30 June (63,943) (388,142)
Allocation of Provision for Expected Credit Losses
Joint venture receivables (33,166) (356,798)
Other receivables (30,777) (31,344)
(63,943) (388,142)
The carrying value of trade and other receivables approximates its fair value
due to the assessment of recoverability. Details of the Group's credit risk
are disclosed in Note 27(b).
Accounting Policy
Trade receivables are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest method, less any
allowance for expected credit losses. Trade receivables are generally due for
settlement within 30 days. Other receivables are recognised at amortised cost,
less any allowance for expected credit losses.
Trade and other receivables are derecognised when the rights to receive cash
flows have expired or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its
carrying value is written off.
Impairment of Receivables and Expected Credit Losses ("ECLs")
The Group recognises loss allowances for "expected credit losses" ("ECLs") on
trade and other receivables measured at amortised cost. The amount of ECLs is
updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective receivable.
The Group always recognises lifetime ECLs for trade and other receivables. The
ECLs on these assets are estimated using a provision matrix based on the
Group's historical credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions and an assessment of both
the current as well as the forecast direction of conditions at the reporting
date, including time value of money where appropriate.
Lifetime ECL represents the ECLs that will result from all possible default
events over the expected life of a financial instrument. In contrast, 12-month
ECL represents the portion of lifetime ECL that is expected to result from
default events on a receivable that are possible within 12 months after the
reporting date.
In assessing whether the credit risk on a receivable has increased
significantly since initial recognition, the Group compares the risk of a
default occurring on the receivable at the reporting date with the risk of a
default occurring on the receivable at the date of initial recognition. In
making this assessment, the Group considers both quantitative and qualitative
information that is reasonable and supportable, including historical
experience and forward-looking information that is available without undue
cost or effort.
The Group assumes that the credit risk on a receivable has increased
significantly if it is more than 30 days past due. The Group considers a
financial asset to be in default when the financial asset is more than 90 days
due past.
Measurement and ECL Assessment
ECLs are a probability-weighted estimate of credit losses. Credit losses are
measured as the present value of all cash shortfalls (i.e. the difference
between the cash flows due to the entity in accordance with the contract and
the cash flows that the Group expects to receive). ECL's are discounted at the
effective interest rate of the financial asset.
The Group uses its allowance schedule to measure the ECLs of trade and other
receivables. The allowance schedule is based on actual credit loss experience
over the past years. The ECLs computed are purely derived from historical
data; management is of the view that historical conditions are representative
of the conditions prevailing at the reporting date.
Critical Accounting Judgements, Estimates and Assumptions
The allowance for ECLs assessment requires a degree of estimation and
judgement. It is based on the lifetime ECLs, grouped based on days overdue,
and makes assumptions to allocate an overall expected credit loss rate for
each group. These assumptions include recent sales experience, historical
collection rates and forward-looking information that is available. The
allowance for ECLs, as disclosed above, is calculated based on the information
available at the time of preparation. The actual credit losses in future years
may be higher or lower.
NOTE 9 - INVENTORIES
2023 2022
A$ A$
Oil on hand - net realisable value 47,223 323,588
Drilling inventory - net realisable value 66,596 64,097
113,819 387,685
Accounting Policy
Inventories comprising materials and consumables and petroleum products are
measured at the lower of cost and net realisable value, on a "weighted
average" basis. Costs comprises direct materials and delivery costs, direct
labour, import duties and other taxes, an appropriate portion of variable and
fixed overhead expenditure based on normal operating capacity. Given that oil
activities have not achieved commercial levels of production, oil on hand is
recognised at net realisable value. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
NOTE 10 - EXPLORATION AND EVALUATION
2023 2022
A$ A$
Balance at 1 July - 549,778
Capitalised exploration and evaluation expenditure, net of recovery - 46,926
Write-off of exploration and evaluation assets - (616,374)
Effect of movements in foreign exchange rates - 19,670
Balance at 30 June - -
Exploration and evaluation assets are reviewed at each reporting date to
determine whether there is any indication of impairment or reversal of
impairment (as referred to in the accounting policy below). When exploration
and evaluation expenditure does not result in the successful discovery of
potentially economically recoverable reserves, or if sufficient data exists to
indicate the carrying amount of the exploration and evaluation asset is
unlikely to be recovered in full, either by development or sale, it is
impaired.
Cambay Field
During the previous financial year, the balance of the exploration and
evaluation costs were fully impaired following an internal evaluation which
showed that these assets were unlikely to recover costs capitalised to date.
As a consequence of this assessment, A$616,374 was impaired as at 30 June
2022. No further exploration and evaluation expenditures were capitalised
during the current year.
Subsequent Events - CCS Licence on Camelot Area
Effective on 1 August 2023, the NSTA granted the CS019 licence for the Camelot
area ("CS019 - SNS Area 4") to Synergia Energy CCS Limited and its 50% joint
venture partner, Wintershall Dea Carbon Management Solutions UK ("Wintershall
Dea"), with Synergia Energy CCS Limited as operator. All costs incurred
pertaining to obtaining the licence was expensed during the current and
previous financial years (see United Kingdom "Exploration expenditure" as
stated in Note 3).
Accounting Policy
Exploration and evaluation expenditures in relation to each separate area of
interest are recognised as an exploration and evaluation asset in the year in
which they are incurred where the following conditions are satisfied:
· The rights to tenure of the area of interest are current; and
· At least one of the following conditions is also met:
o The exploration and evaluation expenditures are expected to be recouped
through successful development and exploration of the area of interest, or
alternatively, by its sale; or
o Exploration and evaluation activities in the area of interest have not, at
the reporting date, reached a stage which permits a reasonable assessment of
the existence or otherwise of economically recoverable reserves, and active
and significant operations in, or in relation to, the area of interest are
continuing.
Expenditure incurred prior to securing legal rights to explore or appraise an
area is expensed. Once legal rights are obtained, exploration and appraisal
costs are capitalised. The costs of drilling exploration and appraisal wells
are initially capitalised pending the results of the well. Costs are expensed
where the well does not result in a successful outcome.
An area of interest is an individual geological area that is considered to
constitute a favourable environment for the presence of hydrocarbon resources,
has been proven to contain such resources or is considered to be a suitable
reservoir for CO(2) storage.
Exploration and evaluation assets are initially measured at cost and include
acquisition of rights to explore, studies, exploratory drilling, trenching and
sampling and associated activities and an allocation of depreciation and
amortisation of assets used in exploration and evaluation activities. General
and administrative costs are only included in the measurement of exploration
and evaluation costs where they are related directly to operational activities
in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and
circumstances suggest that the carrying amount of an exploration and
evaluation asset may exceed its recoverable amount. The recoverable amount of
the exploration and evaluation asset (or the cash-generating unit(s) to which
it has been allocated, being no larger than the relevant area of interest) is
estimated to determine the extent of the impairment loss (if any). Where an
impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but only to the
extent that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the
asset in previous years.
Where a decision is made to proceed with development in respect of a
particular area of interest, the relevant exploration and evaluation asset is
tested for impairment and the balance is then reclassified as development
assets.
Impairment of Exploration and Evaluation Expenditure
The carrying value of exploration and evaluation assets are assessed at each
reporting date to see if any of the following indicators of impairment exist:
· The Group's right to explore or appraise in the specific area has
expired during the reporting period or will expire in the near future, and is
not expected to be renewed;
· Substantive expenditure on further exploration and evaluation in
the specific area is neither budgeted nor planned;
· Exploration and evaluation in the specific area have not led to
the discovery of commercially viable quantities of resources or the discovery
of suitable reservoirs for CO(2) injection and storage, or the entity has
decided to discontinue such activities in the specific area; or
· Sufficient data exist to indicate that, regardless of whether a
development in the specific area is likely to proceed or not, the carrying
amount of the exploration and evaluation asset is unlikely to be recovered in
full, either from successful development or by sale.
Critical Accounting Judgements, Estimates and Assumptions
The application of the Group's accounting policy for exploration and
evaluation expenditure necessarily requires management to make certain
estimates and assumptions as to future events and circumstances, particularly
the assessment of whether economic quantities of resources have been found, or
that the sale of the respective areas of interest will be achieved. Critical
to this assessment are estimates and assumptions as to contingent and
prospective resources, the timing of expected cash flows, exchange rates,
commodity prices and future capital requirements. These estimates and
assumptions may change as new information becomes available. If, after having
capitalised expenditure under this policy, it is determined that the
expenditure is unlikely to be recovered by future exploitation or sale, then
the relevant capitalised amount will be written off to the consolidated
statement of profit or loss and other comprehensive income.
NOTE 11 - DEVELOPMENT ASSETS
2023 2022
A$ A$
Non-Current
Allocation of Development Assets
Cambay development asset 11,832,652 11,595,853
Cambay restoration asset 5,725,530 8,714,761
17,558,182 20,310,614
Cambay Development Asset
Cost
Balance at 1 July 33,617,561 15,974,727
Development asset (cost) portion of Cambay Acquisition - 15,975,553
Effect of movements in foreign exchange rates (226,118) 1,667,281
Balance at 30 June 33,391,443 33,617,561
Amortisation and Impairment Losses
Balance at 1 July (22,021,708) (11,119,720)
Development asset (accumulated amortisation and impairment) portion of Cambay - (9,786,419)
Acquisition
Amortisation charge for the year (9,170) (1,131)
Effect of movements in foreign exchange rates 472,087 (1,114,438)
Balance at 30 June (21,558,791) (22,021,708)
Carrying Amount - Cambay Development Asset 11,832,652 11,595,853
Cambay Restoration Asset
Cost
Balance at 1 July 8,714,761 3,855,483
Restoration asset (cost) portion of Cambay Acquisition - 5,053,022
Reduction due to reassessment of restoration provision (3,314,730) (635,263)
Effect of movements in foreign exchange rates 340,441 441,519
Balance at 30 June 5,740,472 8,714,761
Amortisation and Impairment Losses
Balance at 1 July - -
Amortisation charge for the year (14,942) -
Balance at 30 June (14,942) -
Carrying Amount - Cambay Restoration Asset 5,725,530 8,714,761
2023 2022
A$ A$
Carrying Amounts - Total
At 1 July 20,310,614 8,710,490
At 30 June 17,558,182 20,310,614
Cambay Field Development Assets
Development assets are reviewed at each reporting date to determine whether
there is any indication of impairment or reversal of impairment. Indicators of
impairment can include changes in market conditions, future oil and gas prices
and future costs.
No impairment indicators were identified during 2022 or during 2023. Upon
impairment testing at both year ends, no impairment was found necessary and
therefore no impairment charges were applied to the Cambay Field development
assets for the financial year ended 30 June 2023 (30 June 2022: A$nil).
During the year, a reassessment was made of the restoration asset and
provision, resulting in the reduction of the restoration asset and provision
by A$3,314,730 (2022: A$635,263).
Accounting Policy
Development expenditure is recognised at cost less accumulated amortisation
and any impairment losses. Where commercial production in an area of interest
has commenced, the associated costs are amortised over the estimated economic
life of the field, based on the field's economically recoverable reserves, on
a units-of-production basis.
Development expenditure includes past exploration and evaluation costs,
pre-production development costs, development drilling, development studies
and other subsurface expenditure pertaining to that area of interest. Costs
related to surface plant and equipment and any associated land and buildings
are accounted for as property, plant and equipment.
The definition of an area of interest for development expenditure is narrowed
from the exploration permit for exploration and evaluation expenditure to the
individual geological area where the presence of an oil or natural gas field
exists, and in most cases will comprise an individual oil or gas field.
Restoration costs expected to be incurred are provided for as part of
development mine assets that give rise to the need for restoration.
Impairment of Development Assets
The carrying value of development assets are assessed on a cash generating
unit ("CGU") basis at each reporting date to determine whether there is any
indication of impairment or reversal of impairment. Indicators of impairment
can include changes in market conditions, future oil and gas prices and future
costs. Where an indicator of impairment exists, the assets recoverable amount
is estimated.
An impairment loss is recognised if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. A CGU is the smallest identifiable
asset group that generates cash flows that are largely independent from other
assets and groups. The CGU is the Cambay Field, India. Impairment losses are
recognised in profit or loss.
The recoverable amount of an asset or CGU is the greater of its value in use
and its fair value less costs to sell ("FVLCS"). As a market price is not
available, FVLCS is determined by using a discounted cash flow approach. In
assessing FVLCS, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Valuation principles that apply when determining FVLCS are that future events
that would affect expected cash flows are included in the calculation of
FVLCS.
Impairment losses are reversed when there is an indication that the loss has
decreased or no longer exists and there has been a change in the estimate used
to determine the recoverable amount. Such estimates include beneficial changes
in reserves and future costs, or material increases in selling prices. An
impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined,
net of amortisation, if no impairment loss had been recognised.
Critical Accounting Judgements, Estimates and Assumptions
Significant judgements and assumptions are required by management in
estimating the present value of future cash flows particularly in the
assessment of long life development assets. It should be noted that discounted
cash flow calculations are subject to variability in key assumptions
including, but not limited to, the expected life of the relevant area of
interest, long-term oil and gas prices, currency exchange rates, pre-tax
discount rates, number of future wells, production profiles and operating
costs.
An adverse change in one or more of the assumptions used to estimate FVLCS
could result in an adjustment to the development asset's recoverable amount.
Development costs are amortised on a units of production basis over the life
of economically recoverable reserves, so as to write off costs in proportion
to the depletion of the estimated reserves. The estimation of reserves
requires the interpretation of geological and geophysical data. The geological
and economic factors which form the basis of reserve estimates may change over
reporting periods. There are a number of uncertainties in estimating resources
and reserves, and these estimates and assumptions may change as new
information becomes available.
NOTE 12 - PLANT AND EQUIPMENT
Motor Plant and Equipment Office Total
Vehicles A$ Furniture A$
A$ A$
Cost
Balance at 1 July 2021 8,357 845,201 77,765 931,323
Plant and equipment (cost) portion of Cambay Acquisition 9,906 117,270 - 127,176
Other additions - 26,834 - 26,834
Disposals (826) (423,049) (71,310) (495,185)
Currency translation differences 894 38,107 5,638 44,639
Balance at 30 June 2022 18,331 604,363 12,093 634,787
Additions - 3,227 - 3,227
Disposals - (217,765) (12,093) (229,858)
Currency translation differences 716 8,505 - 9,221
Balance at 30 June 2023 19,047 398,330 - 417,377
Depreciation and Impairment Losses
Balance at 1 July 2021 8,265 775,111 69,042 852,418
Plant and equipment (accumulated depreciation) portion of Cambay Acquisition 9,892 113,034 - 122,926
Depreciation charge for the year 115 69,877 8,020 78,012
Disposals (826) (418,522) (71,310) (490,658)
Currency translation differences 885 35,893 5,481 42,259
Balance at 30 June 2022 18,331 575,393 11,233 604,957
Depreciation charge for the year - 7,062 394 7,456
Disposals - (216,694) (11,627) (228,321)
Currency translation differences 716 8,352 - 9,068
Balance at 30 June 2023 19,047 374,113 - 393,160
Carrying amounts
At 1 July 2022 - 28,970 860 29,830
At 30 June 2023 - 24,217 - 24,217
Accounting Policy
Plant and equipment is stated at historical cost less accumulated depreciation
and impairment. The cost of self-constructed assets includes the cost of
materials, direct labour, the initial estimate, where relevant, of the costs
of dismantling and removing the items and restoring the site on which they are
located and an appropriate proportion of overheads.
An item of plant and equipment is derecognised upon disposal or when there is
no future economic benefit to the Group. Gains and losses on disposal are
determined by comparing the proceeds from disposal with the carrying amount of
property, plant and equipment and are recognised net in the consolidated
statement of profit or loss and other comprehensive income.
Depreciation is calculated using the reducing balance or straight-line method
over the estimated useful life of the assets, with the exception of software
which is depreciated at prime cost. The estimated useful lives in the current
and comparative periods are as follows:
· Motor vehicles 4 to 7 years
· Plant and equipment 2 to 8 years
· Office furniture 2 to 10 years
Depreciation methods, useful lives and residual values are reviewed and
adjusted, if appropriate, at each reporting date.
Impairment of Property, Plant and Equipment
The carrying value of assets are assessed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists,
then the assets recoverable amount is estimated.
Critical Accounting Judgements, Estimates and Assumptions:
Estimation of Useful Lives of Assets
The Group determines the estimated useful lives and related depreciation and
amortisation charges for its property, plant and equipment. The useful lives
could change significantly as a result of technical innovations or some other
event. The depreciation and amortisation charge will increase where the useful
lives are less than previously estimated lives, or technically obsolete or
non-strategic assets that have been abandoned or sold will be written off or
written down.
NOTE 13 - INVESTMENTS
2023 2022
A$ A$
Non-Current Investments
Equity securities - designated as at FVTPL 34,593 69,185
34,593 69,185
At 30 June 2023 and as at 30 June 2022, the Group had 11,530,847 Armour Energy
Limited shares on hand. The balance of the investment has been reclassified
from current to non-current as the Company has no plans to sell these shares.
Fair Value Measurement
The fair value measurement of the equity securities has been determined using
a three-level hierarchy, based on the lowest level of input that is
significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets
that the Group can access at the measurement date;
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset, either directly or indirectly; and
Level 3: Unobservable inputs for the asset.
Equity securities - designated as at FVTPL have been valued using quoted
market rates (Level 1). This valuation technique maximises the use of
observable market data where it is available and relies as little as possible
on entity specific estimates.
Dividends
Dividends received are recognised as other income by the Company when the
right to receive payment is established.
Accounting Policy
Investments and other financial assets are initially measured at fair value.
Transaction costs are included as part of the initial measurement, except for
financial assets at fair value through profit or loss ("FVTPL"). Such assets
are subsequently measured at either amortised cost or fair value depending on
their classification. Classification is determined based on both the business
model within which such assets are held and the contractual cash flow
characteristics of the financial asset unless an accounting mismatch is being
avoided.
Financial assets are derecognised when the rights to receive cash flows have
expired or have been transferred and the consolidated entity has transferred
substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its
carrying value is written off.
Financial Assets at FVTPL
Financial assets not measured at amortised cost or at fair value through other
comprehensive income are classified as financial assets at FVTPL. Typically,
such financial assets will be either: (i) held for trading, where they are
acquired for the purpose of selling in the short-term with an intention of
making a profit, or a derivative; or (ii) designated as such upon initial
recognition where permitted. Fair value movements are recognised in profit or
loss.
Financial Assets at Fair Value Through Other Comprehensive Income
Financial assets at fair value through other comprehensive income include
equity investments which the consolidated entity intends to hold for the
foreseeable future and has irrevocably elected to classify them as such upon
initial recognition.
Impairment of Financial Assets
The consolidated entity recognises a loss allowance for expected credit losses
on financial assets which are either measured at amortised cost or fair value
through other comprehensive income. The measurement of the loss allowance
depends upon the consolidated entity's assessment at the end of each reporting
period as to whether the financial instrument's credit risk has increased
significantly since initial recognition, based on reasonable and supportable
information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk
since initial recognition, a 12-month expected credit loss allowance is
estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the
next 12 months. Where a financial asset has become credit impaired or where it
is determined that credit risk has increased significantly, the loss allowance
is based on the asset's lifetime expected credit losses. The amount of
expected credit loss recognised is measured on the basis of the probability
weighted present value of anticipated cash shortfalls over the life of the
instrument discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other
comprehensive income, the loss allowance is recognised in other comprehensive
income with a corresponding expense through profit or loss. In all other
cases, the loss allowance reduces the asset's carrying value with a
corresponding expense through profit or loss.
NOTE 14 - TRADE AND OTHER PAYABLES
2023 2022
A$ A$
Trade creditors 78,481 285,127
Accruals 407,487 1,081,161
Termination penalty payable (JPDA 06-103 PSC) - 362,897
485,968 1,729,185
Trade and Other Payables
The carrying value of trade and other payables is considered to approximate
its fair value due to the short-term nature of these financial liabilities.
Termination Penalty Payable (JPDA 06-103 PSC) 2023 2022
A$ A$
Movement in Termination Penalty Balance
Balance at 1 July 362,897 997,605
Repayment of termination penalty (372,523) (697,045)
(2023: US$250,000; 2022: US$500,000)
Effect of movements in exchange rates 9,626 62,337
Balance at 30 June - 362,897
The termination penalty payable was payable to Autoridade Nacional Do Petroleo
E Minerais ("ANPM"). The final instalment of the termination penalty
(US$250,000) was paid to ANPM on 7 September 2022, thereby fully extinguishing
the Group's obligations to ANPM.
Accounting Policy
Trade and other payables are recorded at the value of the invoices received
and subsequently measured at amortised cost and are non-interest bearing. The
liabilities are for goods and services provided before year end, that are
unpaid and arise when the Group has an obligation to make future payments in
respect of these goods and services. The amounts are unsecured. Financial
assets and liabilities are offset and the net amount is presented in the
statement of financial position when and only when, the Group has a legal
right to offset the amounts and intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
NOTE 15 - PROVISIONS
2023 2022
A$ A$
Current
Employee Benefits 174,116 180,827
Non-Current
Site Restoration, Well Abandonment and Other Provisions
Balance at 1 July 8,833,483 3,855,483
Unwinding of discount on site restoration provision 289,540 76,753
Site restoration and well abandonment provision portion of Cambay Acquisition - 5,090,457
Reduction of provision due to reassessment of restoration asset and provision (3,314,730) (635,263)
(refer Note 11)
Effect of movements in exchange rates 348,345 446,053
Balance at 30 June 6,156,638 8,833,483
Accounting Policy
Provisions are recognised when the Group has a present (legal or constructive)
obligation as a result of a past event, it is probable the Group 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.
Provision for Employee Benefits
Liabilities for wages and salaries, superannuation and other short-term
benefits (including non-monetary benefits), annual leave and long service
leave expected to be settled wholly within 12 months of the reporting date are
measured at the amounts expected to be paid when the liabilities are settled.
The liability for annual leave and long service leave not expected to be
settled within 12 months of the reporting date are measured at the present
value of expected future payments (including relevant on-costs) 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 (including
through pay increases and inflation), experience of employee departures and
periods of service. Expected future payments are discounted using market
yields at the reporting date on corporate bonds with terms to maturity and
currency that match, as closely as possible, the estimated future cash
outflows.
Provision for Site Restoration and Rehabilitation
A provision for restoration and rehabilitation is recognised when there is a
present obligation as a result of exploration, development, production or
other related activities undertaken, it is probable that an outflow of
economic benefits will be required to settle the obligation, and the amount of
the provision can be measured reliably. The estimated future obligations
include the costs of plug and abandonment operations (the field plant closure
phase), site preparation, removing equipment, structures and debris,
establishment of compatible contours and drainage, replacement of topsoil,
re-vegetation, slope stabilisation, in-filling of excavations, monitoring
activities and other site restoration activities.
The provision for future restoration costs is the best estimate of the present
value of the expenditure required to settle the restoration obligation at the
reporting date, based on current legal, technological and other requirements.
Future restoration costs are reviewed annually and any changes in the estimate
are reflected in the present value of the restoration provision at each
reporting date.
The initial estimate of the restoration and rehabilitation provision relating
to exploration, development, and production facilities is capitalised into the
cost of the related asset and amortised on the same basis as the related
asset, unless the present obligation arises from the production of inventory
in the period, in which case the amount is included in the cost of production
for the period. Changes in the estimate of the provision for restoration and
rehabilitation are treated in the same manner, except that the unwinding of
the effect of discounting on the provision is recognised as a finance cost
rather than being capitalised into the cost of the related asset.
Key Estimates and Assumptions
In relation to restoration and rehabilitation provisions, the Group estimates
the future removal costs of onshore oil and gas production facilities, wells
and pipelines at the time of installation of the assets. In most instances,
the removal of assets occurs many years into the future. This requires
judgemental assumptions regarding removal date, future environmental
legislation, the extent of reclamation activities required, the engineering
methodology for estimating the cost, future removal technologies in
determining the removal cost, and discount rates to determine the present
value of these cash flows.
NOTE 16 - BORROWINGS
2023 2022
A$ A$
Unsecured loans (US$800,000 loan facility) 339,902 451,355
Convertible notes - debt component 434,764 -
774,666 451,355
Terms and Repayment Schedule of US$800,000 Loan Facility
The unsecured loan relates to an unsecured loan facility agreement for
US$800,000, which the Company entered into during the financial year ended 30
June 2021 with two of its JPDA joint venture partners, and which was
restricted to fund the settlement of the termination penalty payable to ANPM
(see Note 14). At 30 June 2023, the loan balance was payable to Japan Energy
E&P JPDA Pty Ltd ("JX") as the loan balance to the other joint venture
partner was fully repaid during the previous financial year. The interest rate
of the loan facility is 11%.
At 30 June 2023, the terms and conditions of the US$800,000 loan facility is
as follows:
2023 2022
A$ A$
Unsecured Loan Currency Nominal Interest Rate Year of Maturity Face Carrying Amount Face Carrying Amount
Value
Value
US$800,000 loan facility USD 11.0% 2023 339,902 339,902 451,355 451,355
339,902 339,902 451,355 451,355
The movement of the loan facility balance during the period was as follows:
2023 2022
A$ A$
Movement in US$800,000 Loan Facility
Balance at 1 July 451,355 (215,274)
Amounts drawn down to pay termination penalty 372,523 697,045
Repayments made to lenders (536,656) (55,211)
Interest on facility balance 54,525 19,836
Effect of movements in exchange rates (1,845) 4,959
Balance at 30 June 339,902 451,355
(2023: US$225,355 ; 2022: US$310,938)
Subsequent Event
The balance of the loan at 30 June 2023, plus interest, was repaid to JX on 10
August 2023 in a final repayment of US$228,324 (A$348,853) settling the
balance of the loan to A$nil.
Convertible Notes
Effective 9 March 2023, the Company entered into a convertible loan agreement
with certain sophisticated and/or professional existing and new shareholders
to secure a new convertible loan facility of £650,000. 6,500 convertible
notes at a face value of £100 each ("Notes") were issued as part of this
agreement and all convertible note proceeds were received by the Company by
9 March 2023.
Summary of Key Terms of the Convertible Loan Facility:
Interest Rate: 5%
Option Date: 9 December 2023
Maturity Date: 9 March 2024
Conversion Rate £0.0008 per share (fixed rate)
Conversion Terms: Option to convert the loan and interest payable (to that point) into shares at
the Conversion Rate, in the period between the Option Date and the Maturity
Date.
Repayment Terms: If conversion not elected, holders can elect to redeem their convertible notes
in cash no earlier than the Maturity Date.
Holders can also elect to have the interest payable repaid by the Company in
cash concurrent to either the conversion of the Notes into shares or the
redemption of the Notes in cash.
No option for the Company to elect to repay ahead of Maturity Date, or for the
Company to elect repayment to be made in cash.
Security: Unsecured
Arrangement Fee: None
Other Terms: If no notice is received from the Note holders before 26 February 2024, the
Notes and interest accrued will automatically convert into shares in the
Company on the Maturity Date.
Reconciliation of Convertible Notes - Debt Component:
2023 2022
A$ A$
Balance at 1 July - -
Proceeds from issue of convertible notes (£650,000) 1,157,578 -
Derivative liability at inception of convertible notes (774,570) -
383,008 -
Interest on convertible notes 19,178 -
Effect of movements in exchange rates 32,578 -
Balance at 30 June 434,764 -
Accounting Policy
All borrowings are initially recognised when the Group becomes a party to the
contractual provisions of the lending instrument. All borrowings are initially
recognised at fair value less transaction costs. Borrowings are subsequently
carried at amortised cost using the effective interest method.
The component of the convertible notes that exhibits characteristics of a
liability is recognised as a liability in the statement of financial position,
net of transaction costs. This is calculated net of the valuation of the
option to convert the notes (see Note 17).
The Group derecognises a financial liability when its contractual obligations
are discharged, cancelled or expire. The Group also derecognises a financial
liability when its terms are modified and the cash flows of the modified
liability are substantially different, in which case a new financial liability
based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying
amount extinguished and the consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in profit or loss.
NOTE 17 - DERIVATIVE FINANCIAL LIABILITY
2023 2022
A$ A$
Convertible notes - derivative liability component 1,050,334 -
The holders of the convertible notes have the option to convert into ordinary
share capital of the Company. Refer to Note 16 for further details.
Fair Value Measurement
The fair value measurement of the derivative liability component has been
determined using a three-level hierarchy, based on the lowest level of input
that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets
that the Group can access at the measurement date;
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset, either directly or indirectly; and
Level 3: Unobservable inputs for the liability.
The derivative liability is determined to be Level 2 and has been valued using
quoted market prices at the end of the reporting period. This valuation
technique maximises the use of observable market data where it is available
and relies as little as possible on entity specific estimates.
Reconciliation of Convertible Notes - Derivative Liability Component:
2023 2022
A$ A$
Balance at 1 July - -
Derivative liability at inception of convertible notes 774,570 -
Change in fair value 227,668 -
Effect of movements in exchange rates 48,096 -
Balance at 30 June 1,050,334 -
Accounting Policy
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 accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging instrument, and
if so, the nature of the item being hedged.
On the issue of the convertible notes the fair value of the derivative
liability component is determined using observable quoted market prices. The
derivative liability is then subsequently remeasured to its fair value at each
reporting date.
NOTE 18 - LEASES
Short-Term Leases and Leases of Low Value Assets
Lease rentals are payable as follows:
2023 2022
A$ A$
Within one year 29,626 36,480
One year or later and no later than five years - -
29,626 36,480
During the current and previous financial years, the Group leased its head
office premises at Level 1, 11 Lucknow Place, West Perth, Australia on a
monthly rolling basis, until the lease for this premise was terminated in
April 2023.
Up until December 2021, the Group leased office premises in Gandhinagar,
Gujarat, India. On 10 December 2021, the Group signed a new lease for its
new Indian premises at 2(nd) Floor, Shreeji Complex, next to Rituraj Complex,
Vasna Road, Village Akota, Vadodara, Gujarat, India. This lease was renewed
during the year on 20 December 2022, which extended its one-year "lock-in
period" to 11 December 2023. After 11 December 2023, the lease continues
on a 3-month rolling basis until 11 December 2025. After 11 December 2025, the
Group has the option to negotiate an extension to the lease at a 12% rent
increment, with other terms yet to be determined between the Group and the
lessor should this option be taken up.
2023 2022
A$ A$
Expenses Related to Short-Term Leases
Operating lease rentals expensed during the financial year 71,067 44,723
Accounting Policy
Definition of a Lease
The Group assesses whether a contract is, or contains, a lease if the contract
conveys a right to control the use of an identified asset for a period of time
in exchange for consideration. At inception or on the reassessment of a
contract that contains a lease component, the Group allocates the
consideration in the contract to each lease and non-lease component on the
basis of their stand-alone prices. However, for leases of properties in which
it is a lessee, the Group has elected not to separate non-lease components and
will instead account for the lease and non-lease components as a single lease
component.
As a Lessee
As a lessee, the Group recognises right-of-use assets and lease liabilities
for most leases - i.e. these leases are on the balance sheet. However, the
Group has elected not to recognise right-of-use assets and lease liabilities
for some leases of low-value assets and short-term leases (lease term of 12
months or less). The Group recognises the lease payments associated with these
leases as an expense on a straight-line basis over the term lease.
For leases of medium to large-value assets and long-term leases, the Group
recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, and
subsequently at cost less any accumulated depreciation and impairment losses;
and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. Generally, the Group uses
its incremental borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the
lease liability and decreased by lease payment made. It is remeasured when
there is a change in future lease payments arising from a change in an index
or rate, a change in the estimate of the amount expected to be payable under a
residual value guarantee, or as appropriate, changes in the assessment of
whether a purchase or extension option is certainly reasonable certain to be
exercised or a termination option is reasonably certain not to be exercised.
The Group shall apply judgement to determine the lease term for some lease
contracts in which it is a lessee that includes renewal options. The
assessment of whether the Group is reasonably certain to exercise such options
impacts the lease term, which significantly affects the amount of lease
liabilities and right-of-use assets recognised.
Leases of Low-Value Assets and Short-Term Leases
The Group has elected not to recognise right-of-use assets and lease
liabilities for leases of low-value assets and short-term leases, including IT
equipment. The Group recognises the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.
NOTE 19 - EXPENDITURE COMMITMENTS
Exploration and Evaluation Expenditure Commitments
In order to maintain rights of tenure to exploration permits, the Group is
required to perform exploration work to meet the minimum expenditure
requirements specified by various state and national governments. These
obligations are subject to renegotiation when an application for an
exploration permit is made and at other times. These obligations are not
provided for in the financial report. The expenditure commitments are
currently estimated to be A$nil (2022: A$nil).
For the extended Cambay PSC period (which started from September 2019), the
Group is required to submit a bank guarantee equivalent to 10% of total
estimated annual expenditure in respect to the work programme approved by the
Ministry of Petroleum and Natural Gas (the Government of India) ("MOPNG").
This amount is reassessed every year according to aspects of the work
programme that have been fulfilled during the year. As at 30 June 2023, the
required bank guarantee amount was US$248,000, out of which US$124,000 was
submitted on 27 July 2023, and the other US$124,000 is expected to be
submitted in calendar Q1 2024. The amounts are guaranteed by Synergia Energy
Ltd in favour of MOPNG (Government of India). This includes 15% which was
guaranteed on behalf of Oilex N.L. Holdings (India) Limited ("OHIL") for
OHIL's share of the bank guarantee. There are no other commitments for the
Cambay PSC.
When obligations expire, are re-negotiated or cease to be contractually or
practically enforceable, they are no longer considered to be a commitment.
Further expenditure commitments for subsequent permit periods are contingent
upon future exploration results. These cannot be estimated and are subject to
renegotiation upon the expiry of the existing exploration leases.
Subsequent Events - CCS Licence on Camelot Area
Effective on 1 August 2023, the NSTA granted the CS019 licence for the Camelot
area ("CS019 - SNS Area 4") to Synergia Energy CCS Limited and its 50% joint
venture partner, Wintershall Dea Carbon Management Solutions UK ("Wintershall
Dea"), with Synergia Energy CCS Limited as operator. The carbon storage
licence has a work program that incorporates an appraisal phase comprising
seismic re-processing, technical evaluations and risk assessment, and a
contingent FEED study leading to a potential storage licence application in
2028, following the final investment decision ("FID"). The CS019 licence also
includes a contingent appraisal well. The Group had no other commitments for
the CCS licence.
Capital Expenditure Commitments
The Group had no capital commitments as at 30 June 2023 (2022: A$nil).
NOTE 20 - CONTINGENT ASSETS, CONTINGENT LIABILITIES AND GUARANTEES
Contingent Assets and Contingent Liabilities at Reporting Date
The Directors are of the opinion that, except as noted in Note 15, there were
no contingent assets or contingent liabilities as at 30 June 2023 and as at 30
June 2022.
Guarantees
Synergia Energy Ltd has issued guarantees in relation to corporate credit
cards. The bank guarantees amount to A$15,000 (2022: A$50,000). After
year-end on 27 July 2023, Synergia Energy Ltd also entered into bank guarantee
for US$124,000 relating to the Cambay field, with another US$124,000 which is
expected to be added to the bank guarantee in calendar Q1 2024 (refer to
Note 19).
EQUITY, GROUP STRUCTURE AND RISK MANAGEMENT
This section addresses the Group's capital structure, the Group structure and
related party transactions, as well as including information on how the Group
manages various financial risks.
NOTE 21 - ISSUED CAPITAL AND RESERVES
The reconciliation of the movement in capital, reserves and accumulated losses
for the consolidated entity can be found in the consolidated statement of
changes in equity.
(a) Issued Capital
2023 2022
Ordinary Shares Number of Ordinary Shares Issued Capital Number of Ordinary Shares Issued Capital
A$ A$
On issue at 1 July - fully paid 8,242,959,310 192,181,384 5,685,971,571 185,355,925
Issue of share capital
Shares issued for cash ((1)) 174,831,394 608,378 2,497,758,909 7,503,616
Shares issued for non-cash - - 4,389,645 19,489
Exercise of unlisted options - - 54,839,185 136,393
Capital raising costs ((2)) - 27,381 - (834,039)
Balance at 30 June - fully paid 8,417,790,704 192,817,143 8,242,959,310 192,181,384
Refer to the following notes for additional information and Note 22 for
details of unlisted options:
(1) ) Following shareholder approval received at the 13 July 2022
General Meeting, 174,831,394 fully paid ordinary shares were issued at £0.002
(A$0.0035) per share. The shares were the final instalment of the placement
previously arranged and announced on 4 May 2022. 69,932,558 shares out of
174,831,394 shares were issued on 21 July 2022 and the remaining 104,898,836
shares were issued on 3 August 2022.
(2) ) The overall credit "inflow" of capital raising costs during the
half-year period is a result of reversals of capital raising costs which were
over-accrued in previous financial periods, and which were more than other
capital raising costs incurred during the period (including those for options
granted to Novum during the period). Refer to Note 22 (footnote (3)) with
regards to the fair value of options granted to Novum.
The Company does not have authorised capital or par value in respect of its
issued shares. The holders of ordinary shares are entitled to receive
dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
Subsequent Event
On 7 August 2023, the Company issued 704,545,454 shares at £0.0011 (A$0.0021)
per ordinary share pursuant to the placement announced on 25 July 2023. As
part of this placement, the Company will also be issuing 13,636,363 unquoted
options (exercisable at £0.0011 and expiring on 31 July 2026) to Novum,
pursuant to the capital raising advisory agreement relating to this placement.
These options are expected to be issued in the coming months.
Accounting Policy
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
(b) Reserves
2023 2022
A$ A$
Foreign currency translation reserve 7,764,968 7,577,543
Share-based payments reserve 534,957 221,321
8,299,925 7,798,864
Foreign Currency Translation Reserve ("FCTR")
The FCTR is comprised of all foreign currency differences arising from the
translation of the financial statements of foreign operations from their
functional currency to Australian dollars.
The assets and liabilities of foreign operations are translated to Australian
dollars at exchange rates at the reporting date. The income and expenses of
foreign operations are translated to Australian dollars at exchange rates at
the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and
accumulated in the FCTR. When the settlement of a monetary item receivable
from or payable to a foreign operation is neither planned nor likely in the
foreseeable future, foreign exchange gains and losses arising from such a
monetary item are considered to form part of a net investment in a foreign
operation and are recognised in other comprehensive income and are presented
within equity in the FCTR.
Share-Based Payments Reserve
The share-based payments reserve recognises the fair value of options issued
but not exercised. Upon the exercise, lapsing or expiry of options, the
balance of the share-based payments reserve relating to those options is
transferred to accumulated losses.
NOTE 22 - SHARE-BASED PAYMENTS
2023 2022
A$ A$
Shares and Rights - Equity Settled
Non-Executive Directors - remuneration shares - 19,489
Executive Directors - options (()(1)) 168,187 168,188
Executive Management - nil cost options ((2)) 120,297 -
Total share-based payments expense and amount recognised in the Condensed 288,484 187,677
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Share-Based Payments Recognised Directly in Equity
Options granted to brokers and advisors during the period ((3)) 25,152 188,181
Total share-based payments recognised directly in equity 25,152 188,181
Total Share-Based Payment Transactions 313,636 375,858
Additional information on share-based payment transactions during the period:
(1) ) Relates to the issue of 324,675,324 unlisted options to Executive
Directors (Messrs Salomon, Wessel and Judd) on 12 August 2022 following
shareholder approval at the General Meeting held on 13 July 2022. The options
are exercisable at £0.0022 (A$0.0039) and expire on 12 August 2027, with one
third (1/3) vesting on 30 June 2022, one third (1/3) vesting on 30 June 2023
and one third (1/3) vesting on 30 June 2024.
The total fair value of the unlisted options issued to Executive Directors
(A$504,564, with one third (1/3) of the amount, A$168,188, being expensed at
30 June 2022 and another third (1/3), A$168,187, being expensed at 30 June
2023) was calculated at the grant date of 13 July 2022 using the Black-Scholes
Model. Expected volatility was estimated by considering historical volatility
of the Company's share price over the period commensurate with the expected
term. The following factors and assumptions were used to determine the fair
value of the 324,675,324 unlisted options granted to Executive Directors on 13
July 2022:
Grant Date Vesting Date Expiry Date Fair Value Per Option Exercise Price Price of Shares on Grant Date Expected Volatility Risk Free Interest Rate Dividend Yield
13 July 2022 As indicated above 12 August 2027 £0.0009 £0.0022 £0.0016 75.15% 1.35% -
(A$0.0016)
(A$0.0039)
(A$0.0028)
(2) ) Relates to the issue of 70,043,152 nil cost unlisted options to
executive management (Messrs Salomon, Wessel, Judd and Khare) on 3 April 2023
which was a non-cash settlement amount in accordance with the Company's
short-term incentive plan for the 12-month period ended 31 December 2022. The
options are exercisable on or before 1 April 2028.
The total fair value of the nil cost unlisted options was calculated at the
grant date of 2 April 2023 using the Black-Scholes Model. Expected volatility
was estimated by considering historical volatility of the Company's share
price over the period commensurate with the expected term. The following
factors and assumptions were used to determine the fair value of the
70,043,152 nil cost options granted to executive management on 2 April 2023:
Grant Date Vesting Date Expiry Date Fair Value Per Option Exercise Price Price of Shares on Grant Date Expected Volatility Risk Free Interest Rate Dividend Yield
2 April 2023 2 April 2023 1 April 2028 £0.0009 - £0.0009 97.92% 3.60% -
(A$0.0017)
(A$0.0017)
(3) ) On 13 September 2022, following shareholder approval on 13 July
2022, the Company issued 30,000,000 unlisted Broker Fee Options, exercisable
at £0.0020 (A$0.0034) on or before 30 April 2024 to Novum, pursuant to a
capital raising advisory agreement the Company had with Novum related to the
May 2022 Placement.
The fair value of the Broker Fee Options (A$25,152) was calculated at the
grant date of 13 July 2022 using the Black-Scholes Model. Expected
volatility was estimated by considering historical volatility of the Company's
share price over the period commensurate with the expected term. The following
factors and assumptions were used to determine the fair value of the
30,000,000 Broker Fee Options granted to Novum during the year:
Grant Date Vesting Date Expiry Date Fair Value Per Option Exercise Price Price of Shares on Grant Date Expected Volatility Risk Free Interest Rate Dividend Yield
13 July 2022 13 July 2022 30 April 2024 £0.0005 £0.0020 £0.0016 75.15% 1.35% -
(A$0.0008)
(A$0.0035)
(A$0.0028)
Number and Weighted Average Exercise Prices ("WAEP") of Unlisted Options
The number and weighted average exercise prices (WAEP) of unlisted share
options are as follows:
WAEP Number WAEP Number
2023 2023 2022 2022
Outstanding at 1 July A$0.005 736,505,236 A$0.009 603,403,361
Lapsed during the year (()(4)) A$0.005 (711,295,152) A$0.009 (603,403,361)
Exercised during the year - - A$0.002 (54,839,185)
Granted during the year
- Granted as part of placements - - A$0.005 711,295,152
- Granted to brokers and advisors (()(5)) A$0.003 30,000,000 A$0.003 80,049,269
- Granted to executive directors and management (()(6)) A$0.003 394,718,476 - -
Outstanding at 30 June A$0.003 449,928,560 A$0.005 736,505,236
Exercisable at 30 June A$0.003 449,928,560 A$0.005 736,505,236
The unlisted options outstanding at 30 June 2023 have an exercise price in the
range of £nil to £0.0024 (A$nil to A$0.0045) (2022: £0.0024 to £0.0028
(A$0.0045 to A$0.0052)) and a weighted average remaining contractual life of
3.82 years (2022: 0.55 years).
(4) ) 711,295,152 unlisted options lapsed during the period on 31
December 2022.
(5) ) See footnote (()(3)) as detailed on the previous page. These
remain exercisable at year-end.
(6) ) See footnotes (()(1)) and ((2)) as detailed on the previous page.
These remain exercisable at year-end.
Accounting Policy
Options allow directors, employees and advisors to acquire shares of the
Company. The fair value of options granted to employees is recognised as an
employee expense with a corresponding increase in equity. The fair value is
measured at grant date and spread over the period during which the employees
become unconditionally entitled to the options. The fair value of the options
granted is measured using the Black-Scholes Model, taking into account the
terms and conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number of share
options that vest except where forfeiture is only due to share prices not
achieving the threshold for vesting.
Options may also be provided as part of the consideration for services by
brokers and underwriters. Any unlisted options issued to the Company's AIM
broker are treated as a capital raising cost.
When the Group grants options over its shares to employees of subsidiaries,
the fair value at grant date is recognised as an increase in the investments
in subsidiaries, with a corresponding increase in equity over the vesting
period of the grant.
The fair value of unlisted options is calculated at the date of grant using
the Black-Scholes Model. Expected volatility is estimated by considering the
historical volatility of the Company's share price over the period
commensurate with the expected term.
Critical Accounting Judgements, Estimates and Assumptions:
Share-Based Payment Transactions
The Group measures the cost of equity-settled transactions with directors,
employees, financiers and advisors by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is
determined by using either the Binomial or Black-Scholes model taking into
account the terms and conditions upon which the instruments were granted. The
accounting estimates and assumptions relating to equity-settled share-based
payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact profit or
loss and equity.
NOTE 23 - CONSOLIDATED ENTITIES
Country of Ownership Interest %
Incorporation
2023 2022
Parent Entity
Synergia Energy Ltd Australia
Subsidiaries
Oilex (JPDA 06-103) Ltd Australia 100 100
Merlion Energy Resources Private Limited India 100 100
Oilex N.L. Holdings (India) Limited Cyprus 100 100
Oilex (West Kampar) Limited Cyprus 100 100
Synergia Energy CCS Limited United Kingdom 100 100
Synergia Energy Services UK Limited ((1)) United Kingdom 100 100
Additional information regarding the changes in the composition of the Group:
(1) ) On 28 July 2023, Oilex Services UK Limited changed its name to
Synergia Energy Services UK Limited.
Accounting Policy
The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
NOTE 24 - PARENT ENTITY DISCLOSURE
As at, and throughout, the financial year ended 30 June 2023 the parent entity
of the Group was Synergia Energy Ltd.
2023 2022
A$ A$
Result of the Parent Entity
Loss for the year (5,923,850) (2,033,911)
Other comprehensive income/(loss) 80,854 301,460
Total Comprehensive Loss for the Year (5,842,996) (1,732,451)
Financial Position of the Parent Entity at Year End
Current assets 585,643 2,681,328
Total assets 17,257,205 23,791,407
Current liabilities 2,389,186 1,704,692
Total liabilities 7,622,328 9,262,928
Net Assets 9,634,877 14,528,479
Total Equity of the Parent Entity Comprising Of:
Issued capital 192,817,143 192,181,384
Option reserve 534,957 221,321
Foreign currency translation reserve (1,137,620) (1,218,474)
Accumulated losses (182,579,603) (176,655,752)
Total Equity 9,634,877 14,528,479
Parent Entity Contingent Assets, Contingent Liabilities and Guarantees
The Directors are of the opinion that Synergia Energy Ltd has no contingent
assets or contingent liabilities as at 30 June 2023 and as at 30 June 2022.
Synergia Energy Ltd has issued a guarantee in relation to corporate credit
cards. The bank guarantee amounts to A$15,000. An equal amount is held in cash
and cash equivalents as security by the bank (2022: A$50,000).
After year-end on 27 July 2023, Synergia Energy Ltd also entered into a bank
guarantee for US$124,000 in relation to DGH approved budgeted activity on the
Cambay field for the financial year ending 31 March 2024, with a further
US$124,000 which is expected to be added to the bank guarantee in calendar Q1
2024 (refer to Note 19). 15% of the amounts are guaranteed by Synergia Energy
Ltd on behalf of Oilex N.L. Holdings (India) Limited ("OHIL") for OHIL's share
of the bank guarantee.
Parent Entity Capital Commitments for Acquisition of Property Plant and
Equipment
Synergia Energy Ltd had no capital commitments as at 30 June 2023 (2022:
A$nil).
Parent Entity Guarantee (in Respect of Debts of its Subsidiaries)
On 7 November 2006, Synergia Energy Ltd issued a Deed of Parent Company
Performance Guarantee in relation to the JPDA 06-103 PSC entered into with the
Timor Sea Designated Authority dated 15 November 2006. Although the PSC was
terminated on 15 July 2015, the Deed of Parent Company Performance Guarantee
was in effect until 13 October 2022 when the Joint Operating Agreement was
terminated by the non-defaulting parties to the JPDA joint venture.
As noted above, Synergia Energy Ltd also entered into a bank guarantee for
US$124,000 after year-end, plus US$124,000 which is expected to be added to
the bank guarantee in calendar Q1 2024. Also as noted above, 15% of the
amounts are guaranteed by Synergia Energy Ltd on behalf of Oilex N.L. Holdings
(India) Limited ("OHIL") for OHIL's share of the bank guarantee.
Synergia Energy Ltd has issued no other guarantees in respect of the debts of
its subsidiaries.
NOTE 25 - JOINT ARRANGEMENTS
The Group's interests in joint arrangements as at 30 June 2023 are detailed
below. The principal activities of the joint arrangements are oil and gas
exploration, evaluation, development and production.
(a) Joint Operations Interest
Permit 2023 2022
% %
OFFSHORE
JPDA 06-103 ((1)) Timor Leste and Australia (JPDA) (-) -
ONSHORE
Cambay Field India (Cambay Basin) 100 100
((1) ) The JPDA 06-103 PSC was terminated on 15 July 2015. The
Joint Operating Agreement between the Joint Venture participants was in effect
until 13 October 2022 when the non-defaulting parties to the JPDA joint
venture agreed to terminate the Joint Operating Agreement.
(b) Joint Operations
The aggregate of the Group's interests in all joint operations is as follows:
2023 2022
A$ A$
Current Assets
Cash and cash equivalents 188,976 1,310,897
Trade and other receivables ((1)) 163,794 208,326
Inventories 113,821 387,682
Prepayments 51,408 7,208
Total Current Assets 517,999 1,914,113
Non-Current Assets
Development assets 17,558,182 20,310,614
Plant and equipment 4,059 3,630
Total Non-Current Assets 17,562,241 20,314,244
Total Assets 18,080,240 22,228,357
Current Liabilities
Trade and other payables (1,603,710) (1,968,280)
Total Current Liabilities (1,603,710) (1,968,280)
Non-Current Liabilities
Provisions (6,156,638) (8,833,483)
Total Non-Current Liabilities (6,156,638) (8,833,483)
Total Liabilities (7,760,348) (10,801,763)
Net Assets 10,319,892 11,426,594
((1) ) The balance of trade and other receivables of the joint
operations is before any impairment and provisions.
(c) Joint Operations Commitments
In order to maintain the rights of tenure to exploration permits, the Group is
required to perform exploration work to meet the minimum expenditure
requirements specified by various state and national governments. These
obligations are subject to renegotiation when an application for an
exploration permit is made and at other times. These obligations are not
provided for in the financial report.
The Group has no exploration expenditure commitments attributable to joint
operations during the year (2022: A$nil).
There are no minimum exploration work commitments in the Cambay PSC.
Accounting Policy
Joint arrangements are arrangements in which two or more parties have joint
control. Joint control is the contractual agreed sharing of control of the
arrangements which exists only when decisions about the relevant activities
required unanimous consent of the parties sharing control. Joint arrangements
are classified as either a joint operation or joint venture, based on the
rights and obligations arising from the contractual obligations between the
parties to the arrangement.
To the extent the joint arrangement provides the Group with rights to the
individual assets and obligations arising from the joint arrangement, the
arrangement is classified as a joint operation and as such, the Group
recognises its:
· Assets, including its share of any assets held jointly;
· Liabilities, including its share of any liabilities incurred
jointly;
· Revenue from the sale of its share of the output arising from the
joint operation;
· Share of revenue from the sale of the output by the joint
operation; and
· Expenses, including its share of any expenses incurred jointly.
The Group's interest in unincorporated entities are classified as joint
operations.
Joint ventures provide the Group a right to the net assets of the venture and
are accounted for using the equity method.
NOTE 26 - RELATED PARTIES
Identity of Related Parties
The Group has a related party relationship with its subsidiaries (refer Note
23), joint operations (refer Note 25) and with its key management personnel.
Key Management Personnel
The following were key management personnel of the Group at any time during
the current and previous financial years and unless otherwise indicated were
key management personnel for the entire period:
Non-Executive Directors Position
Joe Salomon ((1)) Non-Executive Chairman
Mark Bolton ((2)) Non-Executive Director
Paul Haywood Non-Executive Director
Peter Schwarz Non-Executive Director
Executive Directors Position
Roland Wessel Chief Executive Officer and Director
Colin Judd (appointed 1 July 2021) Chief Financial Officer
Executives Position
Ashish Khare Head of India Assets
((1) ) Mr Salomon was appointed Executive Chairman on 16 June 2021,
then his role changed to Non-Executive Chairman on 29 June 2023.
((2) ) Executive Director and Chief Financial Officer until 1 July
2021, Company Secretary during the previous financial period until
25 August 2021, and appointed as Non-Executive Director on 1 July 2021.
Key Management Personnel Compensation
Key management personnel compensation comprised the following:
2023 2022
A$ A$
Short-term employee benefits 973,113 968,096
Other long-term benefits 15,423 20,176
Non-monetary benefits 2,233 13,968
Post-employment benefits 27,797 26,111
Equity compensation benefits 288,483 181,314
1,307,049 1,209,664
Individual Directors' and Executives' Compensation Disclosures
Information regarding individual Directors' and Executives' compensation is
provided in the Remuneration Report section of the Directors' Report. Apart
from the details disclosed in this note or in the Remuneration Report, no
Director has entered into a material contract with the Company since the end
of the previous financial year and there were no material contracts involving
Directors' interests existing at year end.
Key Management Personnel Transactions with the Company or its Controlled
Entities
There were no transactions in the current year between the Group and entities
controlled by key management personnel.
NOTE 27 - FINANCIAL INSTRUMENTS
(a) Financial Risk Management
The Group has exposure to the following risks arising from financial
instruments.
i) Credit risk
ii) Liquidity risk
iii) Market risk
This note presents qualitative and quantitative information in relation to the
Group's exposure to each of the above risks and the management of capital.
The Board of Directors has overall responsibility for the establishment and
oversight of the risk management framework and the development and monitoring
of risk management policies. Risk management policies are established to
identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in
market conditions and the Group's activities.
(b) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations; and arises principally from the Group's receivables from
customers and joint ventures.
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each customer. The demographics of the Group's customer
base, including the default risk of the industry and country in which
customers operate, has less of an influence on credit risk.
The maximum exposure to credit risk is represented by the carrying amount of
each financial asset. The maximum exposure to credit risk at the reporting
date was:
2023 2022
A$ A$
Cash and cash equivalents 938,589 4,838,459
Trade and other receivables - current 220,331 127,058
1,158,920 4,965,517
The Group's cash and cash equivalents are held with major banks and financial
institutions.
The Group's gross share of outstanding cash calls and recharges owing from
joint venture partners and joint operations at 30 June 2023 is A$49,371 (2022:
A$400,341).
Impairment Losses
The aging of the trade and other receivables at the reporting date was:
2023 2022
A$ A$
Consolidated Gross
Not past due 234,903 176,142
Past due 0-30 days - -
Past due 31-120 days - -
Past due 121 days to one year - 74,486
More than one year 49,371 264,572
284,274 515,200
Provision for doubtful debts (63,943) (388,142)
Trade and Other Receivables Net of Provision 220,331 127,058
Receivable balances are monitored on an ongoing basis. The Group may at times
have a high credit risk exposure to its joint venture partners arising from
outstanding cash calls.
The Group considers an allowance for ECLs for all debt instruments. The Group
applies a simplified approach in calculating ECLs. The Group bases its ECL
assessment on its historical credit loss experience, adjusted for factors
specific to the debtors and the economic environment including, but not
limited to, financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganisation and delinquency in payments.
(c) Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group's approach to managing
liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due without incurring
unacceptable losses or risking damage to the Group's reputation.
The Group manages liquidity by monitoring present cash flows and ensuring that
adequate cash reserves, financing facilities and equity raisings are
undertaken to ensure that the Group can meet its obligations.
The table below analyses the Group's financial liabilities by relevant
maturity groupings based on the remaining period at the reporting date to the
contractual maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Contractual Cash Flows
Carrying Face Total 2 Months 2 - 12 Greater
Amount
Value
or Less
Months
Than
1 Year
A$ A$
A$ A$ A$
A$
2023
Trade and other payables 485,968 485,968 485,968 485,968 - -
Borrowings 774,666 774,666 774,666 339,902 434,764 -
Total financial liabilities 1,260,634 1,260,634 1,260,634 825,870 434,764 -
2022
Trade and other payables 1,729,185 1,729,185 1,729,185 1,729,185 - -
Borrowings 451,355 451,355 451,355 203,824 247,531 -
Total financial liabilities 2,180,540 2,180,540 2,180,540 1,933,009 247,531 -
(d) Market Risk
Market risk is the risk that changes in market prices, such as foreign
exchange rates, interest rates and equity prices will affect the Group's
income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return.
i) Currency Risk
An entity is exposed to currency risk on sales and purchases that are
denominated in a currency other than the functional currency of the entity.
The currencies giving rise to this risk are the United States dollar ("USD"),
Indian rupee ("INR") and the British pound ("GBP").
The amounts in the table below represent the Australian dollar equivalent of
balances in the entities within the Synergia Energy Group that are held in a
currency other than the functional currency in which they are measured in
those entities. The exposure to currency risk at balance date was as follows:
In Australian Dollar Equivalents
USD INR GBP
A$ A$ A$
2023
Cash and cash equivalents 171,131 403,695 180,359
Trade and other receivables ((1)) 170,558 87,815 -
Trade and other payables 71,470 (392,398) (45,773)
Loans (339,902) - (434,764)
Net balance sheet exposure 73,257 99,112 (300,178)
2022
Cash and cash equivalents 124,151 1,426,330 1,345,899
Trade and other receivables ((1)) 142,464 102,340 -
Trade and other payables (502,024) - (213,263)
Loans (451,355) - -
Net balance sheet exposure (686,764) 1,528,670 1,132,636
((1) ) Trade and other receivables of joint operations are before
any impairment and provisions.
The following significant exchange rates applied during the year:
Average Rate Reporting Date Spot Rate
AUD 2023 2022 2023 2022
USD 0.6736 0.7258 0.6630 0.6889
INR 54.9359 54.6773 54.3859 54.3500
GBP 0.5595 0.5455 0.5250 0.5671
Foreign currency sensitivity
A 10% strengthening/weakening of the Australian dollar against the following
currencies at 30 June would have (increased)/ decreased the loss by the
amounts shown below. This analysis assumes that all other variables, in
particular interest rates, remain constant.
2023 2022
A$ A$
10% Strengthening
United States dollars (USD) (6,660) 62,433
Indian rupees (INR) (9,010) (138,970)
British pounds (GBP) 27,289 (102,967)
10% Weakening
United States dollars (USD) 8,140 (76,307)
Indian rupees (INR) 11,012 169,852
British pounds (GBP) (33,353) 125,848
ii) Interest Rate Risk
At the reporting date the interest rate profile of the Group's
interest-bearing financial instruments were:
Carrying Amount
2023 2022
A$ A$
Fixed Rate Instruments
Financial assets (short-term deposits included in trade receivables) 15,000 50,000
Financial liabilities (borrowings) (774,666) (451,355)
(759,666) (401,355)
Variable Rate Instruments
Financial assets (cash and cash equivalents) 938,589 4,838,459
Cash flow sensitivity analysis for variable rate instruments
An increase of 100 basis points in interest rates at the reporting date would
have decreased the loss by the amounts shown below. A decrease of 100 basis
points in interest rates at the reporting date would have had the opposite
impact by the same amount. This analysis assumes that all other variables, in
particular foreign currency rates, remain constant.
2023 2022
A$ A$
Impact on profit or loss 9,386 48,385
iii) Equity Price Risk
Exposure
The Group's exposure to equity securities price risk arises from the Group's
equity securities designated as at FVTPL (refer Note 13). The Group's equity
securities are publicly traded on the ASX.
Equity Price Risk Sensitivity Analysis
The Group's equity securities designated as at FVTPL are listed on the ASX.
For such investments classified as at FVTPL, the impact of a 5% increase in
the price of the listed investment would have increased profit or loss by
A$1,730 after tax (2022: increased profit or loss by A$3,459 after tax). An
equal change in the opposite direction would have decreased profit or loss by
A$1,730 after tax (2022: decreased profit or loss by A$3,459 after tax).
Amounts Recognised in Profit or Loss and Other Comprehensive Income
The amounts recognised in profit or loss and other comprehensive income in
relation to the Group's equity securities designated as at FVTPL are disclosed
in Note 4(i).
(e) Capital Risk Management
The Board's policy is to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of
the business. The capital structure of the Group consists of equity
attributable to equity holders of the Company, comprising issued capital,
reserves and accumulated losses as disclosed in the consolidated statement of
changes in equity.
(f) Fair Values of Financial Assets and Liabilities
The net fair values of financial assets and liabilities of the Group
approximate their carrying values. The Group has no off-balance sheet
financial instruments, and no amounts are offset.
OTHER DISCLOSURES
This section provides information (not already disclosed) on items that are
required to be disclosed to comply with Australian Accounting Standards, other
regulatory pronouncements and the Corporations Act 2001.
NOTE 28 - AUDITORS' REMUNERATION
2023 2022
A$ A$
Audit and review services
Auditors of the Company - PKF Perth
Audit and review of financial reports 114,166 69,500
Audit of Joint Operations operated - 600
by Synergia Energy Ltd
Operator proportion only
114,166 70,100
Other Auditors
Audit and review of financial reports (India Statutory) 7,635 5,151
Audit and review of financial reports (Cyprus Statutory) 22,905 20,986
144,706 96,237
Other services
Auditors of the Company - PKF Perth
Taxation compliance services 7,000 9,620
Other consulting services - 12,000
7,000 21,620
Other Auditors
Taxation compliance services (India Statutory) 13,389 6,594
Other consulting services 3,788 -
24,177 28,214
Total Auditor Remuneration 168,883 124,451
NOTE 29 - SUBSEQUENT EVENTS
On 27 July 2023, the Group submitted a bank guarantee of US$124,000 relating
to the Cambay field. A further US$124,000 is expected to be submitted by in
calendar quarter Q1 2024. See Note 19 for further details on the bank
guarantee.
Effective on 1 August 2023, the NSTA granted the CS019 licence for the Camelot
area to Synergia Energy CCS Limited and its 50% joint venture partner,
Wintershall Dea, with Synergia Energy CCS Limited as operator.
On 7 August 2023, the Company issued 704,545,454 shares at £0.0011 (A$0.0021)
per ordinary share pursuant to the placement announced on 25 July 2023. As
part of this placement, the Company will also be issuing 13,636,363 unquoted
options (exercisable at £0.0011 and expiring on 31 July 2026) to Novum,
pursuant to the capital raising advisory agreement relating to this placement.
These options are expected to be issued in the coming months.
On 10 August 2023, the Company made its final repayment to JX of US$228,324,
settling the Company's liability payable to JX to nil.
Other than the above disclosure, there has not arisen in the interval between
the end of the financial year and the date of this report an item, transaction
or event of a material and unusual nature likely, in the opinion of the
Directors of the Company, to affect significantly the operations of the Group,
the results of those operations, or the state of affairs of the Group, in
future financial years.
DIRECTORS' DECLARATION
(1) In the opinion of the Directors of Synergia Energy Ltd (the "Company"):
(a) the consolidated financial statements and notes thereto, as set out on
pages 31 to 82, and the Remuneration Report in the Directors' Report, as set
out on pages 18 to 27, are in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the Group's financial position as at 30
June 2023 and of its performance for the financial year ended on that date;
and
(ii) complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
(b) there are reasonable grounds to believe that the Company and Group will
be able to pay its debts as and when they become due and payable.
(2) The Directors have been given the declarations required by Section 295A
of the Corporations Act 2001 from the Chief Executive Officer and Chief
Financial Officer for the financial year ended 30 June 2023.
(3) The Directors draw attention to Note 2(a) to the consolidated financial
statements, which includes a statement of compliance with the International
Financial Reporting Standards.
Signed in accordance with a resolution of the Directors.
Mr Jonathan Salomon Mr Roland Wessel
Non-Executive Chairman Chief Executive Officer
Perth
Western Australia
21 September 2023
PKF Perth
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF
SYNERGIA ENERGY LTD
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Synergia Energy Ltd (the
Company), which comprises the consolidated statement of financial position as
at 30 June 2023, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising
a summary of significant accounting policies and other explanatory
information, and the Directors' Declaration of the Company and the
consolidated entity comprising the Company and the entities it controlled at
the year's end or from time to time during the financial year.
In our opinion the accompanying financial report of Synergia Energy Ltd is in
accordance with the Corporations Act 2001, including:
i) Giving a true and fair view of the consolidated entity's financial
position as at 30 June 2023 and of its performance for the year ended on that
date; and
ii) Complying with Australian Accounting Standards and the Corporations
Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of the Financial Report section of our report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
Without modifying our opinion, we draw attention to Note 2(c) in the financial
report, which indicated that the consolidated entity incurred a net loss after
tax of $5,382,902 during the year ended 30 June 2023 (2022: net loss after tax
of $2,061,924). This, along with other matters as set forth in Note 2(c),
indicate the existence of a material uncertainty that may cast significant
doubt about the consolidated entity's ability to continue as a going concern
and therefore, the consolidated entity may be unable to realise its assets and
discharge its liabilities in the normal course of business.
The financial report of the consolidated entity does not include any
adjustments in relation to the recoverability and classification of recorded
asset amounts or to the amounts and classification of liabilities that might
be necessary should the consolidated entity not continue as a going concern.
Independence
We are independent of the consolidated entity in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board's APES
110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report
in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
Key Audit Matters
Key audit matters are matters that, in our professional judgement, were of
most significance in our audit of the financial report of the current year.
These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. In addition to the matter described in the
Material Uncertainty Related to Going Concern section, we have determined the
matters described below to be key audit matters to be communicated in our
report.
1 - Valuation of Convertible Note
Why significant How our audit addressed the key audit matter
As at 30 June 2023, the Company had issued 6,500 convertible notes effective 9 Our work included, but was not limited to, the following procedures:
March 2023 at a face value of £100 each totalling £650,000 with a fixed
interest rate of 5% pa. In accordance with the terms of the notes issued the · Reviewed the subscription agreement and other documents related to
investors have an option from 9 December 2023 to convert the loan and interest the convertible notes to obtain an understanding of the underlying terms and
payable to shares in the Company at a fixed conversion rate of £0.0008 per conditions;
share.
· Reviewing and challenging management's position paper in relation to
Refer to notes 16 and 17 in the consolidated financial statements. their assessment of the recognition of the compound financial instrument as a
financial liability and/or equity in accordance with the relevant suite of
These conversion features, and the fact that the notes were issued in Great Financial Instrument Accounting Standards;
British Pounds (which differs from the Group's functional Australian dollar
functional currency) mean that the notes are a compound financial instrument · Reviewing and challenging the valuation methodology utilised and the
with embedded derivatives which must be separated from the underlying debt key assumptions adopted for appropriateness and reasonableness;
component of the issue and accounted for on an individual basis.
· Reviewing the accounting treatment at initial recognition and
Accounting for embedded derivatives is complex and requires the use of subsequent measurement is in accordance with the relevant suite of Financial
valuation methodologies that rely upon observable and unobservable inputs and Instrument Accounting Standards;
assumptions. This creates estimation uncertainty for the amounts recognised in
the financial statements. · Assessing the appropriateness of the related disclosures in Notes 16
and 17.
For these reasons, we consider the valuation of convertible notes to be a key
audit matter.
2 - Carrying value of mine development assets
Why significant How our audit addressed the key audit matter
At 30 June 2023 the carrying value of development assets was $17,558,182 Our work included, but was not limited to, the following procedures:
(2022: $20,310,614), as disclosed in Note 11.
· Reviewing and challenging management's assessment of the indicators
This amount is comprised by the Project development assets of $11,832,852 of impairment as at the reporting date;
(2022: $11,595,853) and Restoration Asset of $5,725,530 (2022: $8,714,761).
· Reviewing and challenging management's fair value less cost to sell
Each year management is required to assess whether there are any indicators assessment of impairment of the Project;
that the total project may be impaired in accordance with AASB 136 Impairment
of Assets. Management's impairment assessment indicated that no impairment was · Ensuring current and valid legal documentation is held for the
required. Project including environmental clearance and government approval obtained;
and
There is a level of judgement applied in determining the treatment of the
development asset in accordance with AASB 138 Intangible Assets and whether · Assessing the appropriateness of the related disclosures in Note 11.
the asset is impaired in accordance with AASB 136 Impairment of Assets.
The evaluation of the recoverable amount of the development asset requires
significant judgement in determining the key assumptions supporting the
expected future cash flows of the Project.
Other Information
Those charged with governance are responsible for the other information. The
other information comprises the information included in the consolidated
entity's annual report for the year ended 30 June 2023, but does not include
the financial report and our auditor's report thereon.
Our opinion on the financial report does not cover the other information and
accordingly we do not express any form of assurance conclusion thereon, with
the exception of the Remuneration Report.
In connection with our audit of the financial report, our responsibility is to
read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Directors' for the Financial Report
The Directors of the Company are responsible for the preparation of the
financial report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of
the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing
the consolidated entity's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the
consolidated entity or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial
report as a whole is free from material misstatement, whether due to fraud or
error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect
a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we
exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
financial report, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
consolidated entity's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Directors.
· Conclude on the appropriateness of the Directors' use of the going
concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast
significant doubt on the consolidated entity's ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor's report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause
the consolidated entity to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
financial report, including the disclosures, and whether the financial report
represents the underlying transactions and events in a manner that achieves
fair presentation.
· Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the consolidated
entity to express an opinion on the consolidated entity financial report. We
are responsible for the direction, supervision and performance of the
consolidated entity audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our
audit.
We also provide the Directors with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters
that were of most significance in the audit of the financial report of the
current period and are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Report on the Remuneration Report
Opinion
We have audited the Remuneration Report included in the Directors' Report for
the year ended 30 June 2023.
In our opinion, the Remuneration Report of Synergia Energy Ltd for the year
ended 30 June 2023, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
PKF Perth
Shane Cross
Partner
21 September 2023
West Perth,
Western Australia
Level 4, 35 Havelock Street, West Perth, WA 6005
PO Box 609, West Perth, WA
6872
T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au
PKF Perth is a member firm of the PKF International Limited family of legally
independent firms and does not accept any responsibility or liability for the
actions or inactions of any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards
Legislation.
ADDITIONAL SHAREHOLDER INFORMATION
Shareholder Information as at 5 September 2023
The address of the principal registered office is Level 24, 44 St Georges
Terrace, Perth, Western Australia 6000, Australia (Telephone +61 8 9485 3200).
The name of the Company Secretary is Ms Anshu Raghuvanshi.
Detailed schedules of exploration and production permits held are included in
the Business Review.
Directors' interest in share capital options are disclosed in the Directors'
Report.
There is currently no on-market buy-back in place.
Shareholding
(a) Distribution of Shareholdings:
Size of Holding Number of Holders Number of Shares % of Issued Capital
1 - 1,000 74 14,213 0.00
1001 - 5,000 36 119,324 0.00
5001 - 10,000 35 267,660 0.00
10,001 - 100,000 121 6,203,438 0.07
100,001 - 250,000 184 34,801,067 0.38
250,001 - 500,000 150 58,797,583 0.64
500,001 - 1,000,000 117 92,821,639 1.02
1,000,001 and over 220 8,929,311,234 97.88
Total 937 9,122,336,158 100.00
(b) Distribution of Optionholdings:
Size of Holding Number of Holders Number of Options % of Options
1 - 1,000 - - -
1001 - 5,000 - - -
5001 - 10,000 - - -
10,001 - 100,000 - - -
100,001 - 250,000 - - -
250,001 - 500,000 - - -
500,001 - 1,000,000 - - -
1,000,001 and over 12 449,928,560 100.00
Total 12 449,928,560 100.00
(c) Voting Rights:
The voting rights attached to the ordinary shares are governed by the
Constitution.
On a show of hands every person present who is a member or representative of a
member shall have one vote and on a poll, every member present in person or by
proxy or by attorney or duly authorised representative shall have one vote for
each share held. None of the options give an entitlement to voting rights.
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the Company on the
Alternative Investment Market ("AIM") of the London Stock Exchange and trades
under the symbol SYN.
Register of Securities
The register of securities is held by Computershare:
· UK branch:
The Office of the Depositary, Computershare Investor Services PLC, The
Pavilions, Bridgwater Road, Bristol BS13 8AE, United Kingdom (Telephone +44
(0) 370 707 1210)
· Australian branch:
Computershare Investor Services Pty Limited, Level 17, 221 St Georges Terrace,
Perth, Western Australia 6000, Australia (Telephone: 1300 850 505 (within
Australia) / +61 (0)3
(https://www.synergiaenergy.com/investors/+61%203%209415%204000)
(https://www.synergiaenergy.com/investors/+61%203%209415%204000) 9415 4000
(https://www.synergiaenergy.com/investors/+61%203%209415%204000) (outside
Australia))
Unquoted Securities - Options
Total unlisted options on issue are 449,928,560.
Class Number of Unquoted Equity Securities Number of Holders Number of Holders Holding 10% or More in the Class
Unlisted options exercisable at £0.0020 expiring 30 April 2024 30,000,000 1 1
Unlisted options exercisable at £0.00238 expiring 31 May 2024 25,210,084 6 6
Unlisted options exercisable at £0.0022 expiring 12 August 2027 324,675,324 3 3
Unlisted options exercisable at £nil expiring 1 April 2028 70,043,152 4 4
Total 449,928,560
Unquoted Equity Security Holdings Greater Than or Equal to 10%
Unlisted Options Exercisable at £0.0020 Expiring 30 April 2024 Number of Unlisted Options Percentage
Intertrader Limited 30,000,000 100.00
Total 30,000,000 100.00
Unlisted Options Exercisable at £0.00238 Expiring 31 May 2024 Number of Unlisted Options Percentage
Colin Rowbury 4,201,681 16.67
Gavin Burnell 4,201,681 16.67
Jon Belliss 4,201,681 16.67
Mike Staten 4,201,681 16.67
Charlie Brook-Partridge 4,201,680 16.67
Hugh McAlister 4,201,680 16.67
Total 25,210,084 100.00
Unlisted Options Exercisable at £0.0022 Expiring 12 August 2027 Number of Unlisted Options Percentage
Roland Wessel 136,363,636 42.00
Colin Judd 100,000,000 30.80
Jonathan Salomon 88,311,688 27.20
Total 324,675,324 100.00
Unlisted Options Exercisable at £Nil Expiring 1 April 2028 Number of Unlisted Options Percentage
Roland Wessel 27,272,727 38.94
Colin Judd 18,200,000 25.98
Ashish Khare 16,255,208 23.21
Mrs Sharyn Lesley Salomon & Mr Jonathan Arnold Salomon
Total 70,043,152 100.00
Twenty Largest Shareholders
Shareholders Shares Held % of Issued
Capital
HSBC Global Custody Nominee (UK) Limited 698392 1,708,602,497 18.73
Hargreaves Lansdown (Nominees) Limited 15942 771,218,567 8.45
Interactive Investor Services Nominees Limited SMKTISAS 590,269,544 6.47
Hargreaves Lansdown (Nominees) Limited VRA 406,859,793 4.46
Interactive Investor Services Nominees Limited SMKTNOMS 378,725,546 4.15
Hargreaves Lansdown (Nominees) Limited HLNOM 338,147,976 3.71
HSBC Global Custody Nominee (UK) Limited 346513 327,818,181 3.59
Barclays Direct Investing Nominees Limited Client1 301,175,355 3.30
HSDL Nominees Limited 292,136,168 3.20
Vidacos Nominees Limited IGUKCLT 215,990,703 2.37
HSDL Nominees Limited Maxi 196,766,313 2.16
Aurora Nominees Limited 2288700 192,310,518 2.11
Lawshare Nominees Limited ISA 177,339,118 1.94
Vidacos Nominees Limited FGN 161,519,404 1.77
Freetrade Nominees Limited FTPOOL 153,214,802 1.68
Cantor Fitzgerald Europe CFE 147,136,364 1.61
HSBC Client Holdings Nominee (UK) Limited 731504 132,438,173 1.45
Jim Nominees Limited Jarvis 117,600,559 1.29
Spreadex Limited 113,636,364 1.25
HSDL Nominees Limited IWMAXI 112,201,882 1.23
Total 6,835,107,827 74.93
Total Issued Shares as at 5 September 2023 9,122,336,158 100.00
Substantial Shareholders
Substantial shareholders of the Company are as follows:
Substantial Shareholders Shares Held % of Issued Unlisted
Options Held
Capital
Republic Investment Management Pte Ltd 1,708,602,497 18.73 -
DEFINITIONS
Associated Gas Natural gas found in contact with or dissolved in crude oil in the reservoir.
It can be further categorised as Gas-Cap Gas or Solution Gas.
Barrels/Bbls Barrels of oil or condensate - standard unit of measurement for all oil and
condensate production. One barrel is equal to 159 litres or 35 imperial
gallons.
BBO Billion standard barrels of oil or condensate.
BCF Billion cubic feet of gas at standard temperature and pressure conditions.
BCFE Billion cubic feet equivalent of gas at standard temperature and pressure
conditions.
BOE Barrels of Oil Equivalent. Converting gas volumes to the oil equivalent is
customarily done on the basis of the nominal heating content or calorific
value of the fuel. Common industry gas conversion factors usually range
between 1 barrel of oil equivalent ("BOE") = 5,600 standard cubic feet ("scf")
of gas to 1 BOE = 6,000 scf. (Many operators use 1 BOE = 5,620 scf derived
from the metric unit equivalent 1 m³ crude oil = 1,000 m³ natural gas).
BOEPD Barrels of oil equivalent per day.
BOPD Barrels of oil per day.
CCGT Combined cycle gas turbines.
CCS "Carbon Capture and Sequestration" or "Carbon Capture and Storage".
CO(2) Carbon dioxide.
Contingent Resources Those quantities of petroleum estimated, as of a given date, to be potentially
recoverable from known accumulations by application of development projects,
but which are not currently considered to be commercially recoverable due to
one or more contingencies.
Contingent Resources may include, for example, projects for which there are
currently no viable markets, or where commercial recovery is dependent on
technology under development, or where evaluation of the accumulation is
insufficient to clearly assess commerciality. Contingent Resources are
further categorised in accordance with the level of certainty associated with
the estimates and may be sub-classified based on project maturity and/or
characterised by their economic status.
Discovered in place volume Is that quantity of petroleum that is estimated, as of a given date, to be
contained in known accumulations prior to production.
FISO Floating injection, storage and offloading.
FEED Front End Engineering Design.
GOI The Government of India.
GOR Gas to oil ratio in an oil field, calculated using measured natural gas and
crude oil volumes at stated conditions. The gas/oil ratio may be the solution
gas/oil, symbol Rs; produced gas/oil ratio, symbol Rp; or another suitably
defined ratio of gas production to oil production. Volumes measured in
scf/bbl.
LNG Liquefied natural gas.
MMBO Million standard barrels of oil or condensate.
mD Millidarcy - unit of permeability.
MD Measured Depth.
MMbbls Million barrels of oil or condensate.
MMscfd Million standard cubic feet (of gas) per day.
MSCFD Thousand standard cubic feet (of gas) per day.
MTa Million tonnes per annum.
NSTA North Sea Transition Authority
PI Participating Interest.
Prospective Resources Those quantities of petroleum which are estimated, as of a given date, to be
potentially recoverable from undiscovered accumulations.
PSC Production Sharing Contract.
Reserves Reserves are those quantities of petroleum anticipated to be commercially
recoverable by application of development projects to known accumulations from
a given date forward under defined conditions.
Proved Reserves are those quantities of petroleum, which by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to
be commercially recoverable, from a given date forward, from known reservoirs
and under defined economic conditions, operating methods and government
regulations.
Probable Reserves are those additional Reserves which analysis of geoscience
and engineering data indicate are less likely to be recovered than Proved
Reserves but more certain to be recovered than Possible Reserves.
Possible Reserves are those additional reserves which analysis of geoscience
and engineering data indicate are less likely to be recoverable than Probable
Reserves. Reserves are designated as 1P (Proved), 2P (Proved plus Probable)
and 3P (Proved plus Probable plus Possible).
Probabilistic methods:
· P90 refers to the quantity for which it is estimated there is at
least a 90% probability the actual quantity recovered will equal or exceed.
· P50 refers to the quantity for which it is estimated there is at
least a 50% probability the actual quantity recovered will equal or exceed.
· P10 refers to the quantity for which it is estimated there is at
least a 10% probability the actual quantity recovered will equal or exceed.
SCF/BBL Standard cubic feet (of gas) per barrel (of oil).
SCFD Standard cubic feet (of gas) per day.
TCF Trillion cubic feet of gas at standard temperature and pressure conditions.
Tight Gas Reservoir The reservoir cannot be produced at economic flow rates or recover economic
volumes of natural gas unless the well is stimulated by a large hydraulic
fracture treatment, a horizontal wellbore, or by using multilateral wellbores.
UKCS The United Kingdom Continental Shelf.
Undiscovered in place volume Is that quantity of petroleum estimated, as of a given date, to be contained
within accumulations yet to be discovered.
CORPORATE INFORMATION
Directors Stock Exchange Listings
Jonathan Salomon Synergia Energy Ltd's shares are listed under the code SYN on the Alternative
(B APP SC (Geology), GAICD) Investment Market ("AIM") of the London Stock Exchange ("LSE").
Non-Executive Chairman
Roland Wessel AIM Nominated Adviser
Chief Executive Officer and Director Strand Hanson Limited
Colin Judd 26 Mount Row
Chief Financial Officer and Director London W1K 3SQ
Mark Bolton (B Business) United Kingdom
Non-Executive Director
Paul Haywood AIM Joint Brokers
Independent Non-Executive Director Novum Securities Limited
Peter Schwarz 2nd Floor, 7-10 Chandos Street
(B Sc (Geology),
M Sc (Petroleum Geology)) London W1G 9DQ
Independent Non-Executive Director United Kingdom
Panmure Gordon
Company Secretary 40 Gracechurch Street
Ms Anshu Raghuvanshi London EC3V 0BT
(FCS, FGIA, LLB)
United Kingdom
Registered and Principal Office Share Registries
Level 24, 44 St Georges Terrace The Office of the Depositary
Perth, Western Australia 6000 Computershare Investor Services PLC
Australia The Pavilions
Ph. +61 8 9485 3200 Bridgwater Road
Fax +61 8 9485 3290 Bristol BS13 8AE
United Kingdom
Postal Address Ph. +44 (0) 370 707 1210
PO Box 255 Website: www.computershare.com/uk (http://www.computershare.com/uk)
West Perth, Computershare Investor Services Pty Limited
Western Australia 6872
Level 17
Australia
221 St Georges Terrace
Perth, Western Australia 6000
India Operations
Gujarat Project Office Australia
2nd Floor, Shreeji Complex Ph: 1300 850 505 (within Australia)
Next to Rituraj Complex Ph: +61 (0)3 9415 4000
(https://www.synergiaenergy.com/investors/+61%203%209415%204000) (outside
Vasna Road, Village Akota Australia)
Vadodara - 390015 Website: www.computershare.com/au (http://www.computershare.com/au)
Gujarat, India.
Website Auditors
www.synergiaenergy.com PKF Perth
Level 5, 35 Havelock Street
Email West Perth, Western Australia 6005
synergiaenergy@synergiaenergy.com Australia
Synergia Energy Ltd
ACN 078 652 632
ABN 50 078 652 632
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