REG - Synergia Energy Ltd - Annual Report 2024
30/09/2024 07:00
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RNS Number : 1019G Synergia Energy Ltd 30 September 2024
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SYNERGIA ENERGY LTD
ABN 50 078 652 632
ANNUAL REPORT
Year Ended 30 June 2024
CHAIRMAN'S REVIEW
Dear Shareholder,
Over the last year the Company has continued to deliver on its carbon
reduction strategy focusing on the production of gas as a key transition
energy source and carbon capture and sequestration ("CCS").
The Company's goal of monetising it's significant gas reserves at the Cambay
field in India received a major boost via the signing of a farm-out agreement
with Selan Exploration Technology Limited ("Selan") on 14 February 2024.
Government of India approval for the Selan JV was gained on 19 July 2024. The
aim of the 18‑month, US$20 million work program in which Synergia is being
carried by Selan in exchange for a 50% interest in the Cambay production
sharing contract is increased production, and on completion of the work
program, sufficient cash flow to self-fund the full field development.
Gas production from the Cambay field can help displace coal as fuel for power
stations in India, thereby reducing carbon emissions.
CCS is central to global CO(2) emissions reduction strategies and the Company
is actively engaged in CCS in both the UK and India.
In the UK, Synergia are operators of the CS019 Camelot carbon storage license
in the Southern North Sea which is central to its Medway Hub CCS project.
Together with JV partners, Wintershall Dea, the Company has been progressing
the NSTA-defined work program on the license as part of the early risk
assessment and site characterisation phase of the project. The Medway Hub
Camelot CCS project has the goal to permanently store 6.5 million tonnes of
CO(2) per annum from 2029/2030.
In India the Company is progressing its Cambay CCS scheme which seeks to store
CO(2) emissions from gas- and coal-fired power stations in the vicinity into
the extensive Olpad formation that underlies the hydrocarbon reservoirs in the
Cambay PSC. The Company aims to be in the vanguard of CCS development in
India.
Synergia's management team's experience and expertise in gas storage projects
and field development projects has given the Company an advantage in
progressing its CCS and Cambay field development projects. The team is being
expanded to incorporate additional technical resources.
Corporate development continues with emphasis on shareholder interaction and
marketing activities to AIM institutional investors aided by the Company's
brokers, Panmure Liberum.
The tangible progress made by the Company over the last 12 months would not
have been possible without the ongoing support of its long-term shareholders,
who have provided the management team the scope to transform the Company
towards its goal of being a significant transition-orientated company in the
energy sector. The outlook for the Company remains positive and Synergia's
management team and the board of directors are committed to demonstrating
added value to its shareholders.
On behalf of the Board, I wish to thank our staff, contractors, local
communities, shareholders and stakeholders for their ongoing support of the
Company.
Mr J Salomon
Non-Executive Chairman
30 September 2024
BUSINESS REVIEW
Industry Overview
The global energy sector has adapted to the new geo-political realities with
sustained high oil and gas prices caused by multiple conflict zones and the
need to reduce fossil fuel reliance to address climate change concerns being
the overriding factors.
In the UK and in Europe in general, the trend towards renewable energy
continues to gain momentum with the realisation that natural gas for flexible
power generation will be required for at least the next few decades. European
governments, including the new UK government, seek to reduce fossil fuel
production via licensing restrictions and higher taxation. This will result in
increased reliance on imported oil and gas, the latter in the form of both
pipeline gas and LNG.
In India, the Directorate of Hydrocarbons ("DGH") has publicly announced the
urgent need for increased domestic production of oil and gas to address the
current high levels of imports. The DGH seeks to reduce the 80% level of oil
imports and the high cost of imported LNG that has driven the use of
coal-fired power stations to even higher levels.
Carbon Capture and Storage ("CCS") has been adopted by most of the major
industrial nations' governments as the primary method to reduce CO(2)
emissions. The new UK government is believed to wish to continue the momentum
for CCS developments in the UK. In India, the DGH has underlined its
commitment to CCS.
The supply chain for energy sector services and equipment appears to be
improving as suppliers adapt to the Covid pandemic hiatus. The cost of
equipment and services is nonetheless significantly higher than pre-pandemic
levels.
Synergia Energy Strategy
The Company's overarching strategy is one of carbon reduction, and we have
positioned ourselves at the forefront of some very exciting initiatives. The
development of the Cambay gas field in India has the potential to displace LNG
imports and to reduce the reliance on coal-fired power stations thereby
reducing overall CO(2) emissions. Furthermore, the Company's two CCS projects
(one in the UK and one in India) have the potential to affect a material
reduction in CO(2) emissions from power stations and other significant
industrial CO(2) emitters.
The Synergia management team has proven in-depth experience concerning gas
storage in the UK, which directly informs our strategy. Three of the Synergia
team were instigators of the last commercial gas storage facility to be built
in the UK - the Humbly Grove gas storage facility in Hampshire. The same three
team members were founders of Star Energy, which in addition to oil and gas
production and power generation, became a leading gas storage development
company. Star Energy studied most of the UKCS depleted reservoirs for gas
storage suitability and had multiple gas storage projects under development.
This provides us with an excellent opportunity to assist in the development of
the CCS industry in the UK.
In the year to 30 June 2024, the Company maintained its focus on the
development of the significant reserves in its Cambay gas field in India, and
also the positioning of the Company as a CCS developer via its Medway Hub
Camelot CCS project in the UK and the Cambay CCS scheme in India.
In order to de-risk projects with significant capital requirements, the
Company decided to farm out a 50% share of its Cambay field in India and also
its UK CCS project. A successful farm out was achieved for the former whilst
we continue to progress the latter.
Cambay Field, Onshore Gujarat, India
(Synergia Energy: Joint Operator and 50% Participating Interest at Report
Date)
The Cambay licence area is located onshore in the state of Gujarat. Located
close to gas infrastructure, the field production was resumed in April 2022
after a 3.5-year hiatus, with production of both gas and condensate from two
gas wells (C-77H and C-73) in addition to oil from several intermittent legacy
oil wells.
The Cambay field's 206 BCF of P50 reserves are centred on 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.
Since the resumption of production in 2022, the Company has expended
considerable effort in de-risking the full field development of the Cambay
field.
In July 2022, the C-77H well was re-fracked to demonstrate plateau production
using a heavily-revised fracking methodology; the re-fracked zones have been
on continuous production demonstrating the efficacy of the revised fracking
approach.
In Q3 2023, the Company commissioned a jet pump to lift the gas condensate
produced in association with the gas from the reservoir.
The successful re-fracturing operation gave the Company confidence that new
wells can be drilled and fracked with initial production rates of circa 4
mmscfd of gas in conjunction with the jet pump artificial lift.
Safety and Environmental Responsibility
The Company has emphasised the importance of safety and environmental
responsibility relating to all aspects of its operations.
The Company has enjoyed an enviable safety record, with the last Lost Time
Incident ("LTI") being recorded in 2014. The cumulative LTI rate is currently
0.82.
The Company aims to maintain excellent relationships with stakeholders and
neighbours in proximity to its operations on the Cambay PSC.
Cambay PSC Production
Production on the Cambay field combined gas and gas condensate production from
two Eocene gas wells, C-73 and C-77H with intermittent oil production from
legacy oil wells, C-8, C-19z, C-20, C-63, C-64, C-70, C-72 and C-74.
The primary producing well, C-77H (a horizontal well drilled in 2014),
produced gas and gas condensate continuously after the re-frack operation in
July 2022. Since the re-frack, the well has produced at rates up to 275,000
scfd despite severe fluid loading from the associated gas condensate. In Q3
2023 a jet pump was installed in the well and the bridge plug isolating the
original 4 fracked zones was removed. After the jet pump installation,
increased water influx was noticed, thought to originate from the re-connected
4 original frack zones, with gas production of 150,000 scfd. Echometer surveys
showed the continued presence of a liquid column in the wellbore and a
workover is planned as part of the Selan JV work program to improve jet pump
efficiency by increasing the diameter of the production tubing.
Oil production from legacy oil wells has made a contribution to cash flow and
indicates potential "low hanging fruit" for the Selan JV work program. None of
the legacy oil wells have artificial lift and the installation of pumps in
selected wells could lead to continuous material production.
Selan Joint Venture
In February 2024 the Company signed a joint venture agreement with Selan
Exploration Technology Limited ("Selan"), which was approved by the Government
of India on 19 July 2024. The farm-out agreement with Selan was closed on 1
August 2024.
Selan is an Indian oil and gas operator listed on the Bombay Stock Exchange
and the National Stock Exchange of India. Selan has currently entered into a
scheme of amalgamation with Antelopus Energy Private Limited, another highly
respected Indian oil and gas operator, which is currently awaiting regulatory
approvals.
The terms of the joint venture agreement are summarised as follows:
· The Company agreed to farm out 50% of the 100% interest held by the
Synergia Group in the Cambay PSC to Selan.
· Synergia and Selan will be joint operators of the Cambay PSC with
Selan to be appointed as Lead Joint Operator.
· Both Synergia and Selan are focussed on developing the Cambay PSC
Eocene gas and gas condensate reservoir which contains independently certified
2P gas reserves of 206 BCF (as at 1 June 2022).
· Synergia and Selan have executed a joint operating agreement for the
Cambay PSC.
· In exchange for the 50% interest, Synergia will be carried by Selan
through an agreed US$20 million work programme ("WP") comprising 3 new wells
focussed on the Eocene reservoir and at least 3 well work-overs.
· The WP is to be completed within 18 months of the close of the
farm-out agreement, extendable by a further six months in certain
circumstances.
· Synergia received a cash payment of US$2.5 million immediately
following the close of the farm-out agreement.
· Synergia retains a 50% interest in the Cambay PSC and a 50% share of
the future production and revenues.
· Synergia will be entitled to bonuses of up to US$9 million, linked to
future cumulative gas sales thresholds being achieved as follows:
o US$0.5 million, if cumulative gross gas sales from the Cambay PSC exceeds
5 Bcf;
o US$1.0 million, if cumulative gross gas sales from the Cambay PSC exceeds
10 Bcf;
o US$1.5 million, if cumulative gross gas sales from the Cambay PSC exceeds
15 Bcf;
o US$2 million, if cumulative gross gas sales from the Cambay PSC exceeds 35
Bcf; and
o US$4 million, if cumulative gross gas sales from the Cambay PSC exceeds 70
Bcf.
· Selan has the option to participate in the Cambay CCS scheme on terms
to be agreed.
The Company anticipates the incremental production and cash flow resulting
from the WP will self-finance a full field development of the Cambay PSC
beyond the 18-month WP period.
The work programme will commence in Q3/Q4 2024 with workovers on a number of
legacy wells followed by the drilling of two new vertical wells. The drilling
of a new horizontal, fracked Eocene well will comprise the final part of the
WP. In addition, the WP will include an upgrading of the surface facilities on
the Cambay PSC, including additional artificial lift equipment and process
equipment.
Carbon Capture and Storage ("CCS")
United Kingdom Continental Shelf
Medway Hub Camelot CCS Project
The Company, together with its joint venture partner Wintershall Dea Carbon
Management Solutions UK, was formally awarded a Carbon Dioxide Appraisal and
Storage Licence (the "CS019 Camelot licence") by the UK Government's North Sea
Transition Authority on 17 August 2023.
Under the terms of the joint venture with Wintershall Dea Carbon Management
Solutions UK, the Company is the operator of the joint venture and the CS019
license.
The CS019 licence award, which covers the former Camelot gas field, marks a
significant milestone for the Company's Medway Hub CCS project. The Medway Hub
CCS
(https://www.synergiaenergy.com/sites/synergia-energy-ltd/files/synergia-energy-ltd/operations/united-kingdom/medway-hub-ccs-r7-we.pdf)
project provides for the capture and transportation of CO(2) emissions from
coastal Combined-Cycle Gas Turbine power stations in liquid form by marine
tanker to a Floating Injection, Storage and Offloading vessel (FISO) from
which the CO(2) would be injected into depleted gas fields and saline
aquifers, which are situated in the UK Continental Shelf, for permanent
sequestration. In addition, the FISO will be able to accept CO(2) cargoes
transported by marine tankers originating from Continental European locations.
On 21 December 2023 Wintershall DEA's parent company BASF and key shareholder
LetterOne announced that it had reached agreement with UK-listed company
Harbour Energy, for the latter to acquire the majority of Wintershall DEA's
Exploration and Production global assets. The deal completed on 3 September
2024.
The CS019 licence has a work program that incorporates an appraisal phase
comprising seismic re-processing, technical evaluations and risk assessment, a
contingent FEED study leading to the potential storage license application in
2028 following the final investment decision ("FID"). The Camelot license also
includes a contingent appraisal well. First CO(2) injection is anticipated
for 2029/2030. The Company's share of the initial work phase is subject to
funding as would be the FID, to be made in due course.
The Company aims to permanently store up to 6.5 million tonnes per annum (MTa)
of CO(2) when the project is fully operational.
Since the CS019 licence award in August 2023, the Company has managed the NSTA
work programme including the delivery of an Early Risk Assessment report and
re-processing and interpretation of the 3D seismic dataset on the licence.
Currently a number of separate workstreams are underway including static and
dynamic modelling, legacy well integrity, geochemical and geomechanical
analyses as part of the site characterisation process.
India
Cambay CCS Scheme
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 power stations and other significant CO(2) emitters
such as refineries. CO(2) emissions from the currently targeted power stations
in the proximity of the Cambay field total circa 45 MTa.
The Cambay CCS scheme is being given support by the key Government of India
regulator, the DGH 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.
As an initial stage of the project, the Company has proposed a
proof-of-concept pilot project comprising the drilling of an appraisal well
and CO(2) injectivity testing in the Olpad Formation. The pilot project is
subject to funding.
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. This obligation was fully met when the Group made its
final instalment on 7 September 2022.
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 December 2021.
The portion which was owing to JX was fully repaid on 10 August 2023 when the
Company made its final repayment of US$228,324 to JX, to settle the balance of
the loan to nil. The details and movement in the loan payable during the
current period are detailed in Note 16(a) of the Notes 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. During the year, Synergia
Energy continued 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 took place in relation to the Company's debt
and equity capital raisings undertaken to provide working capital for the
Company's activities:
September 2023 quarter
· Placement of 704,545,454 ordinary shares ("July Placement") at an
issue price of £0.0011 (A$0.0021) per share for gross proceeds of £775k
(A$1.5 million);
· The last instalment of the US$800k loan facility which was owing to
JX was fully repaid in August 2023.
December 2023 quarter
· Placement of 1,375,000,000 ordinary shares ("December Placement") at
an issue price of £0.0008 (A$0.0015) per share for gross proceeds of
£1.1 million (A$2.07 million);
March 2024 quarter
· 1,070 of the 6,500 convertible notes, plus interest, were converted
into 140,455,821 shares at £0.0008 (A$0.0015) per share effective March 2024;
· 3,680 of the 6,500 convertible notes, plus interest, were redeemed in
cash and repaid to their convertible note holders effective March 2024. The
remaining 1,750 convertible notes, plus interest, had their repayment date
extended to 30 September 2024 as requested by their convertible note holders;
· The Company also obtained short-term loans of £400,000 which bore
interest at a fixed rate of 17.5% for the period of the loan (three months)
and penalty interest at a fixed rate of 8% per month applicable from 11 June
2024; and
June 2024 quarter
· The Company obtained a short-term loan of £200,000 which bears
interest at a fixed rate of 23.87% for the period to 11 September 2024, and
penalty interest at a fixed rate of 8% per month from 11 September 2024.
After the end of the financial year, the Company obtained another short-term
loan of £140,000, which bears interest at a fixed rate of 23.87% for the
period to 11 September 2024 and penalty interest at a fixed rate of 8% per
month thereafter.
The short-term loans obtained in March 2024 (£400,000), plus interest, were
repaid after year-end on 11 September 2024.
Corporate
Following the Company's delisting on the Australian Securities Exchange
("ASX") in the previous financial year, the Company is now solely listed on
the Alternative Investment Market ("AIM").
As at 30 June 2024 the Company had:
· Available cash resources of A$1,069,782;
· Borrowings of A$1,739,983 (refer to Note 16 of the Notes to the
Consolidated Financial Statements); and
· Issued capital of 10,637,791,979 fully paid ordinary shares and
1,865,854,839 unlisted options.
Executive and Board Changes
On 24 January 2024, Mr Peter Schwarz, one of the Company's independent
non-executive directors, was appointed as Deputy Chairman. On 24 January 2024,
Mr Ashish Khare, the Company's Head of India Assets, was appointed as
Executive Director. Mr Khare's appointment was finalised effective on 2 April
2024. 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, evaluation and appraisal, 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 Roland Wessel (BSc (Hons) Geology), CEO and
Executive Director employed by Synergia Energy Ltd. Mr Wessel has over 45
years' experience in the oil and gas industry and is a member of the Society
of Petroleum Engineers. Mr Wessel 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.
PETROLEUM AND CCS PERMIT SCHEDULE
PETROLEUM AND CCS PERMIT SCHEDULE - 30 JUNE 2024
ASSET LOCATION ENTITY CHANGE IN INTEREST DURING THE YEAR % EQUITY % OPERATOR
Cambay Field PSC ((1)) Gujarat, India Synergia Energy Ltd - 85 Synergia Energy Ltd
Oilex N.L. Holdings (India) Limited - 15
CS019 - SNS Area 4 (Camelot Area) ((2)) Southern North Sea (United Kingdom) Synergia Energy CCS Limited 50 50 Synergia Energy CCS Limited
((1)) Subsequent to year-end on 19 July 2024, the Government of India
Ministry of Petroleum and Natural Gas approved the transfer of assignment of
50% participating interest in the Cambay Field Production Sharing Contract
(35% originally held by the Synergia Energy Ltd entity and 15% originally held
by the Oilex N.L. Holdings (India) Limited entity) to Selan Exploration
Technology Limited. After the transfer of the 50%, Synergia Energy Ltd now
holds 50% equity at the date of this report.
((2)) 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.
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2024
For the Year Ended 30 June 2024
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 2024 and the auditors' report thereon.
Unless otherwise indicated, the directors' report is presented in Australian
dollars ("A$"), which is the Company's functional and presentation currency
(refer to Note 2(e) of the Notes to the Consolidated Financial Statements).
DIRECTORS
The directors of the Company at any time during the year and until the date of
this report are detailed below. All directors were in office for this entire
period unless otherwise stated.
Mr Jonathan Salomon Non-Executive Chairman
Mr Peter Schwarz Independent Non-Executive Director and Deputy Chairman
(appointed Deputy Chairman from 24 January 2024)
Mr Roland Wessel Chief Executive Officer ("CEO") and Executive Director
Mr Colin Judd Chief Financial Officer ("CFO") and Executive Director
Mr Mark Bolton Non-Executive Director
Mr Paul Haywood Independent Non-Executive Director
Mr Ashish Khare Head of Indian Assets and Executive Director
(appointed Executive Director on 24 January 2024 with
appointment finalising effective 2 April 2024)
DIRECTORS' information
Mr Jonathan Salomon (B App Sc (Geology), GAICD) (Non-Executive Chairman)
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. Mr Salomon moved to a
Non-Executive Chairman role on 29 June 2023.
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 38 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 Peter Schwarz (B Sc (Geology), M Sc (Petroleum Geology))
(Independent Non-Executive Director and Deputy Chairman)
(Appointed Deputy Chairman from 24 January 2024)
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 16 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.
Mr Roland Wessel (CEO and Executive Director)
Mr Wessel was appointed as CEO and Executive Director on 16 June 2021. Mr
Wessel is a geologist with over 45 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 founded
and managed a drilling services company and has help to develop several key
oilfield technologies. He has extensive experience in both project and
corporate management.
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 (CFO and Executive Director)
Mr Judd was appointed as CFO on 1 July 2021 and as Executive Director on 27
January 2022. Mr Judd is a chartered accountant with over 41 years'
experience in corporate financial management. He 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 CFO roles for two
private-equity-backed oil service businesses. In 1999, Mr Judd joined Star
Energy Limited as a founder member and CFO 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 co-founded Trans
European Oil & Gas Limited, a company backed by KKR, with the strategy to
develop a pan-European oil and gas business.
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 joined the Company as an executive on 3 June 2016 and subsequently
an Executive Director before transitioning to a Non-Executive Director on 1
July 2021. Mr Bolton has significant experience in the resource sector in
Australia, having worked as CFO 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 (Independent Non-Executive Director)
Mr Haywood was appointed as Non-Executive Director in May 2017. Mr Haywood has
over 20 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 Director and CEO 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 Ashish Khare
(Bachelor of Engineering (BE in Chemical Engineering, including Petroleum
Management))
(Head of India Assets and Executive Director)
(Appointed Executive Director on 24 January 2024 with appointment finalising
effective 2 April 2024)
Mr Khare was appointed Head of India Assets on 8 November 2016 and Executive
Director on 24 January 2024 (with his appointment finalising effective 2
April 2024). Mr. Khare is based in India. Mr Khare has over 23 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.
He possesses a wealth of knowledge and expertise accumulated over more than
two decades in the India petroleum industry. Since 2015, Mr Khare has steered
the Company's Indian business through various challenges with skill and
determination. Mr Khare was instrumental in securing 100% PI at Cambay PSC
from GSPC and in the resumption of Cambay field production in 2022. He has
recently assisted in farming out of 50% PI at Cambay PSC to Selan Exploration
Technology Limited.
During the last three financial years and up to the date of this report, Mr
Khare has not been a director of any other listed companies.
COMPANY SECRETARY
Mr Jack Rosagro was the Company Secretary from the beginning of the financial
year until the appointment of Synergia Energy's current Company Secretary, Ms
Anshu Raghuvanshi, on 8 September 2023.
Ms Raghuvanshi leads the company secretarial services for Computershare
Governance Services, Melbourne, Australia. She has over 13 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
During the year, 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 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 2024 are as follows:
Board Meetings ((1)) Remuneration Committee Meetings ((1))
( ) Held ((2)) Attended Held ((2)) Attended
Non-Executive Directors
J Salomon ((3)) 13 8 - -
P Schwarz 13 13 2 2
M Bolton 13 13 2 2
P Haywood 13 11 2 2
Executive Directors
R Wessel 13 13 - -
C Judd 13 13 - -
A Khare ((4)) 7 6 - -
((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 attended two board meetings as an observer during
a period of sick leave.
((4) ) Mr Khare was appointed as Executive Director on 24 January
2024. Mr Khare's appointment was finalised effective 2 April 2024. Prior to
his appointment as Executive Director, Mr Khare also attended four Board
meetings upon Board invitation.
EXECUTIVE MANAGEMENT
The executive management of the Group consists of Executive Directors, Messrs
Wessel, Judd and Khare. The details of their qualifications and experience can
be found in the Directors' Information section of the Director's Report.
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the financial year
included:
· appraisal and development of oil and gas prospects;
· production and sale of oil and gas; and
· development of CCS projects.
There were no significant changes in the nature of the activities during the
year.
FINANCIAL AND OPERATING RESULTS
Income Statement
The Group incurred a consolidated loss after income tax of A$2,798,511 (2023:
A$5,382,902) for the year.
During the year, the Group recognised total revenues from gas and oil sales of
A$638,457 (2023: A$1,296,150). These revenues are recognised net of royalties
and levies imposed by the Government of India directly on gas and oil sales.
Net revenues from gas sales were A$442,948 (2023: A$755,589) which were from
37,847.23 MMBTU of energy supplied at an average price of US$8.45 per MMBTU
(2023: from 66,285.93 MMBTU of energy supplied at an average price of US$8.12
per MMBTU). Net revenues from oil sales were A$195,509 (2023: A$540,561) which
were from 2,748.642 barrels sold at an average price of US$67.819 per barrel
(2023: from 7,554.05 barrels sold at an average price of US$69.976 per
barrel).
Cost of sales for the year were A$1,048,993 (2023: A$2,563,873) which included
A$nil (2023: A$1,850,991) refraccing costs. This resulted in the Group
incurring a gross loss of A$410,536 (2023: A$1,267,723) during the year.
Net expected credit losses ("ECLs") incurred during the year were A$288,424
(2023: reversal of A$34,853), mainly due to a A$420,094 increase recorded to
recognise the ECL on a total of US$247,835 of bank guarantees which was put in
place by the Group during the year (refer to footnote (1) of Note 8). This
was offset by A$131,670 due to amounts the Company received during the year
from the ex-defaulting parties of the now terminated JPDA joint venture (refer
to footnote (4) of Note 8).
An impairment of A$34,593 (2023: A$nil) was recorded on the Company's
investment in Armour Energy Limited ("Armour"), to bring this investment down
to nil. The impairment assessment was based on Armour's circumstances during
the year, having gone into receivership and administration in November 2023,
and currently in the process of liquidation (refer to Note 13 of the Notes to
the Consolidated Financial Statements).
Net finance costs, not including net foreign exchange gains and losses, was
A$466,662 (2023: A$626,433). These net finance costs included interest
charges (including amortised effective interest charges) on borrowings
totalling A$1,196,355 (2023: A$78,494), as well as the unwinding of discount
on provisions of A$233,985 (2023: A$289,540). The interest charges on
borrowings and the unwinding of discount was offset by a gain of A$866,382
(2023: loss of A$227,668) resulting from the fair value revaluation of the
derivative liability component of the Group's convertible notes at year-end.
Net foreign exchange gains were A$1,355,302 (2023: net foreign exchange losses
of A$143,548). The net foreign exchange gains included A$1,325,636 (2023: nil)
of foreign exchange gains recognised on the reclassification of part of the
foreign currency exchange reserve ("FCTR"). The A$1,325,636 related to
accumulated exchange differences on currency translation for one of the
Group's subsidiaries, Oilex (JPDA 06-103) Ltd. The amount was reclassified
from FCTR to profit or loss upon its deregistration on 1 February 2024.
Cash Flow
Net cash used in operating activities for the period was A$2,752,579
(2023: A$5,374,071). The decrease was primarily due to there being no
refraccing costs to be paid during the year, when compared to the previous
year.
Net cash used in investing activities was A$608,954 during the year
(2023: A$3,227). Out of the A$608,954, A$411,477 was invested into an
artificial lift system which was installed at the Cambay field in September
2023 and A$81,430 was paid for costs related to the expected farm out of 50%
participating interest in the Cambay PSC. The remaining A$116,047 was for
payments (net of 50% recoveries from the Group's CCS joint venture partner)
relating to the CS019 licence for the Camelot area since NSTA granted the
Group the licence effective 1 August 2023.
During the year, the Company raised funds net of costs of A$3,359,697
(2023: A$502,210) from the issue of 2,079,545,454 shares (2023: 174,831,394
shares) during the year (excluding from conversion of convertible notes).
704,545,454 shares were from the July Placement, issued at £0.0011 (A$0.0021)
per share, and 1,375,000,000 shares were from the December Placement, issued
at £0.0008 (A$0.0015) per share.
During the year, the Company made total principal repayments of A$1,051,173
(2023: A$488,984). The repayments were for the final loan repayment to JX
(A$337,374) and for the redemption of certain convertible notes into cash
(A$713,799). The Company then obtained unsecured short-term loan funding from
existing investors of A$1,161,226 in March and in June 2024.
Financial Position
The net assets of the Group totalled A$9,955,839 at 30 June 2024 (2023:
A$10,337,516) and included the following balances:
· Cash and cash equivalents of A$1,069,782 (2023: A$938,589);
· Trade and other payables of A$2,373,587 (2023: A$485,968) , of which
A$353,588 was overdue at 30 June 2024 (2023: nil). Subsequent to balance date,
A$117,096 of this amount has been paid;
· Borrowings of A$1,739,983 (2023: A$774,666) and
· Derivative liabilities from convertible notes of A$167,726 (2023:
A$1,050,334).
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
The independent auditor's report contains a statement of material uncertainty
regarding the Company's ability to continue as a going concern. The
Consolidated Financial Report has been prepared 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 funding requirements of the Group are reviewed on a regular basis by the
Group's Executive Directors and are reported to the Board at each board
meeting to ensure the Group can meet its financial obligations as and when
they fall due.
Until sufficient operating cash flows are generated from its operations, the
Group remains reliant on equity raisings, joint venture contributions or debt
funding, as well as asset divestitures or farmouts to fund its expenditure
commitments.
The Group will require additional funding in due course to continue its
activities, including CCS, meet its ongoing working capital requirements
(including any loans payable), and for any new business opportunities that the
Group may pursue.
Further information on the Group's going concern basis of preparation is
provided in Note 2(c) of the of the Notes to the Consolidated Financial
Statements.
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 9 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 9.
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 evaluation, production and CCS development 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
During July and August 2024, the Company obtained further short-term loan
funding from existing investors of £140,000. The loans bear interest at a
fixed rate of 23.87% for the period to 11 September 2024 and penalty interest
at a fixed rate of 8% per month after 11 September 2024.
Effective on 19 July 2024, the Government of India Ministry of Petroleum and
Natural Gas approved the transfer of assignment of the 50% PI in the Cambay
field PSC held by the Group to Selan Exploration Technology Limited ("Selan").
Following the ratification, the farm-out agreement closed on 1 August 2024,
and US$2.5 million, net of withholding taxes, was paid by Selan to the Group
on 1 August 2024. The portion that was withheld is expected to be received in
the coming weeks, in accordance with an agreement the Company entered into on
24 September 2024 to indemnify Selan against any liability for withholding tax
effective from 1 August 2024 until 1 April 2035 (refer to Note 20 of the
Notes to the Consolidated Financial Statements for further details of the
indemnity agreement).
This receipt of the initial cash payment from the closing of the Cambay
farm-out agreement (net of withholding taxes) enabled the Group to repay the
first tranche of its short-term borrowings (which was obtained in March 2024)
on 11 September 2024. The repayment was £566,000, which was based on
principal of £400,000 plus interest of £166,000. The second and third
tranches of the short-term borrowings, totalling £340,000 plus interest,
remain outstanding at the date of this report. The balance outstanding of
those loans at the date of this report is £448,358.
In August 2024, the Company received a notice from one of the Extended Notes
holders indicating his intention to convert his 750 notes and interest
totalling £80,866 into 101,083,050 shares effective 30 September 2024. These
shares are expected to be issued and admitted to trading on AIM on or around
30 September 2024. The remainder of the Extended Notes, at the face value of
1,000 notes plus interest totalling £107,822, will also be repaid in cash to
their holders on 30 September 2024.
There were no other significant subsequent events occurring after the
year-end.
CAPITAL STRUCTURE AND TREASURY POLICY
As at 30 June 2024 the Group had unsecured borrowings at face value
A$1,739,983 (2023: A$774,666). Refer to Note 16 of the Notes to the
Consolidated Financial Statements for details of the carrying amount, terms
and conditions, repayment schedule, and options attached to the borrowings.
Details of transactions involving ordinary shares during the financial year
are as follows:
Shares Issued Value of Shares Gross Amount Raised
(No.) (A$) (A$)
August 2023 704,545,454 - 1,500,194
· Share Placements (July Placement)
December 2023 1,375,000,000 - 2,071,563
· Share Placements (December Placement)
March 2024 140,455,821 217,298 -
· Conversion of certain Convertible Notes
Total 2,220,001,275 217,298 3,571,757
As at the date of this report the Company had a total issued capital of
10,637,791,979 ordinary shares and 1,865,854,839 unlisted options exercisable
at weighted average price of £0.0015 (A$0.0029) 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))
P Schwarz 10,611,250 10,611,250 - -
M Bolton - - - -
P Haywood 12,933,513 - - -
Executive Directors
R Wessel - - 163,636,363((2)) -
C Judd - - 118,200,000((3)) -
A Khare - - 16,255,208((4)) -
((1) ) 88,311,688 options exercisable at £0.0022, expiring 12
August 2027. All of these options were exercisable at report date; and
8,315,217 options exercisable at nil cost, expiring 1 April 2028. All of these
options were exercisable at report date.
((2) ) 136,363,636 options exercisable at £0.0022, expiring 12
August 2027. All of these options were exercisable at report date; and
27,272,727 options exercisable at nil cost, expiring 1 April 2028. All of
these options were exercisable at report date.
((3) ) 100,000,000 options exercisable at £0.0022, expiring 12
August 2027. All of these options were exercisable at report date; and
18,200,000 options exercisable at nil cost, expiring 1 April 2028. All of
these options were exercisable at report date.
((4) ) 16,255,208 options exercisable at nil cost, expiring 1 April
2028. All of these options were exercisable at report date.
( )
SHARE OPTIONS
Unissued Shares under Option
At the date of this report, unissued ordinary shares of the Company under
option are:
Expiry Date Number of Shares Under Option Exercise Price
Unlisted Options
Granted and Issued in 2023:
12 August 2027 324,675,324 £0.0022 (A$0.0043)
1 April 2028 70,043,152 £0.0000 (A$0.0000)
Granted and Issued in 2024:
31 July 2026 13,636,363 £0.0011 (A$0.0021)
31 December 2026 1,375,000,000 £0.0014 (A$0.0027)
31 December 2026 82,500,000 £0.0014 (A$0.0027)
Total 1,865,854,839
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
30 April 2024 (30,000,000) £0.00200 (A$0.00383)
31 May 2024 (25,210,084) £0.00238 (A$0.00457)
Total (55,210,084)
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 to Note 31 of the Notes to 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 2024
has been received and can be found on page 34.
REMUNERATION REPORT - AUDITED
This remuneration report covers the following key management personnel ("KMP")
of the Group:
Non-Executive Directors Position
Joe Salomon ((1)) Non-Executive Chairman
Peter Schwarz ((2)) Independent Non-Executive Director and Deputy Chairman
Mark Bolton Non-Executive Director
Paul Haywood Independent Non-Executive Director
Executive Directors Position
Roland Wessel Chief Executive Officer and Executive Director
Colin Judd Chief Financial Officer and Executive Director
Ashish Khare ((3)) Head of India Assets and Executive Director
((1) ) Mr Salomon's role changed from Executive Chairman to Non-Executive
Chairman on 29 June 2023.
((2) ) Mr Schwarz was appointed as Deputy Chairman on 24 January 2024.
((3) ) Mr Khare was appointed as Executive Director on 24 January 2024
with appointment finalising effective 2 April 2024.
On 24 November 2021, the Board established a Remuneration Committee, in
accordance with the Company's Remuneration Committee Charter, comprising
Messrs Paul Haywood, Peter Schwarz and Mark Bolton. 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 ("key management personnel" or "KMP")
who have authority and responsibility for planning, directing and controlling
the activities of the Group
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 consider:
· the capability and experience of the KMP;
· the ability of KMP to control the performance of the relevant
segments;
· the current downturn and uncertainty within the resources industry;
· the Company's performance including the Group's earnings;
· the growth in share price and delivering constant returns on
shareholder wealth; 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.
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 KMP 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
In the prior year, the Group introduced a short-term incentive scheme for KMP
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.
No short-term incentive options were issued to KMP or other staff during the
year ended 30 June 2024.
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.
No Employee Incentive Plan options were issued to KMP or other staff during
the year ended 30 June 2024.
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 was renegotiated to A$105,000 plus statutory
superannuation per annum effective from the date of his appointment as
Non-Executive Chairman on 29 June 2023. All other terms and conditions from Mr
Salomon's previous employment contract were not changed, and as such, the
following terms and conditions still apply to Mr Salomon's remuneration:
· Mr Salomon is required to provide 3 months' resignation notice;
· if terminated by the Company, the Company is required to provide 3
months' notice, and in which case the Company is also required to pay three
months' directors' fees plus any accrued leave entitlements; and
· where applicable, any unvested options are forfeited upon Mr
Salomon's resignation.
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.
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.
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.
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 KMP by
remuneration consultants in the financial year ended 30 June 2024.
1.6 Adoption of Year Ended 30 June 2023 Remuneration Report
At the AGM held 15 November 2023 shareholders adopted the 30 June 2023
Remuneration Report with 93,550,936 votes in favour, being 86.34% 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 Annual Remuneration Contract Start Date Contract Termination Date Resignation Notice Required Unvested Options on Resignation Termination Notice Required from the Company ((1)) Termination Payment
R Wessel CEO and Director £150,000 per annum 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 CFO and Director £110,000 per annum 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 and Director INR 13,567,656 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.
3. KMP REMUNERATION
Details of the nature and amount of each major element of remuneration of each
KMP of the Group are:
Year Short-Term Post-Employment Other Termination Share-Based Payments Total Proportion of Remuneration Performance Related ((2))
Super-annuation Benefits Long-Term Benefits ((1)) Benefits
Salary & Fees STI Cash Bonus Benefits Total Shares, Options and Rights ((2))
(Including Non-Monetary)
A$ A$ A$ A$ A$ A$ A$ A$ A$ %
Non-Executive Directors
J Salomon 2024 105,000 - - 105,000 11,681 6,058 - 45,747 168,486 -
Non-Executive Chairman 2023 134,213 - 2,233 136,446 17,861 15,423 - 60,028 229,758 6%
P Schwarz 2024 57,523 - - 57,523 - - - - 57,523 -
Non-Executive Director and Deputy Chairman 2023 53,589 - - 53,589 - - - - 53,589 -
M Bolton 2024 55,381 - - 55,381 6,161 - - - 61,542 -
Non-Executive Director 2023 55,381 - - 55,381 5,815 - - - 61,196 -
P Haywood 2024 57,523 - - 57,523 - - - - 57,523 -
Non-Executive Director 2023 53,589 - - 53,589 - - - - 53,589 -
Executive Directors
R Wessel 2024 288,023 - - 288,023 - - - 70,639 358,662 -
CEO and Executive Director 2023 273,386 - - 273,386 - - - 117,478 390,864 12%
C Judd 2024 211,217 - - 211,217 - - - 51,802 263,019 -
CFO and Executive Director 2023 200,483 - - 200,483 - - - 83,059 283,542 11%
A Khare 2024 243,099 - - 243,099 5,866 - - - 248,965 -
Head of India Assets and Executive Director 2023 202,472 - - 202,472 4,121 - - 27,918 234,511 12%
Total 2024 1,017,766 - - 1,017,766 23,708 6,058 - 168,188 1,215,720
Total 2023 973,113 - 2,233 975,346 27,797 15,423 - 288,483 1,307,049 -
The KMP of the Company may be directors or executives of the Company's
subsidiaries. No remuneration is received for directorships of subsidiaries.
All KMP other than Mr Wessel, Mr Judd and Mr Khare are employed by the
parent entity. Refer to the explanatory notes on the following pages for
additional information.
Notes in Relation to KMP Remuneration
((1) ) Includes, where applicable, accrued employee leave entitlement
movements.
((2) ) Includes the vesting during the year, of options granted to
certain directors in previous periods (see "4.1 Rights and Options Over
Equity Instruments Granted as Compensation"). At the General Meeting held on
13 July 2022, the shareholders approved the issue of 324,675,324 unlisted
options under the Employee Incentive Plan to the KMP. The options were vested
with the holder over a period of three (3) years, with the options being fully
vested on 30 June 2024. No further short-term or Employee Incentive Plan
options were granted or issued to KMP or other staff during the year ended 30
June 2024.
Analysis of Bonuses Included in Remuneration
There were no short-term incentive cash bonuses awarded as remuneration to KMP
during the financial year.
4. Equity Instruments
All unlisted options refer to unlisted options over ordinary shares of the
Company, which are exercisable on a one-for-one basis.
4.1 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 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, as well as the number
and percentages of options vested (or otherwise) were as follows:
No. Options Granted Value of Options Granted at Grant Date No. Options Vested on 30 June 2024 % of Granted Options Vested on 30 June 2024 % of Granted Options Forfeited
J Salomon 88,311,688 A$137,241 88,311,688 100% Nil
R Wessel 136,363,636 A$211,916 136,363,636 100% Nil
C Judd 100,000,000 A$155,405 100,000,000 100% Nil
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 certain KMP 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 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, as well as the number
and percentages of options vested (or otherwise) were as follows:
No. Options Granted Value of Options Granted at the Grant Date No. Options Vested on 30 June 2023 and on 30 June 2024 % of Granted Options Vested on 30 June 2023 and on 30 June 2024 % of Granted Options Forfeited
J Salomon 8,315,217 A$14,281 8,315,217 100.00% Nil
R Wessel 27,272,727 A$46,840 27,272,727 100.00% Nil
C Judd 18,200,000 A$31,258 18,200,000 100.00% Nil
A Khare 16,255,208 A$27,918 16,255,208 100.00% Nil
c) No further short-term or long-term incentive options were granted or
issued to KMP during the year ended 30 June 2024, or since the end of the
financial year.
4.2 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 KMP) have been altered or modified by the issuing
entity during the financial year.
4.3 Exercise of Options Granted as Compensation
During the financial year no shares were issued on the exercise of options
previously granted as compensation.
4.4 KMP Shareholdings
The movement during the financial year in the number of ordinary shares in the
Company held, directly, indirectly or beneficially, by each KMP, including
their related parties, is as follows:
Held at Received as Part of Remuneration Received on Exercise of Options Other Changes ((1)) Held at
1 July 2023 30 June 2024
Non-Executive Directors
J Salomon 14,987,013 - - - 14,987,013
P Schwarz 21,222,500 - - - 21,222,500
M Bolton - - - - -
P Haywood 12,933,513 - - - 12,933,513
Executive Directors
R Wessel - - - - -
C Judd - - - - -
A Khare - - - - -
((1) ) Other changes represent shares that were granted, purchased
or sold during the year.
4.5 KMP Optionholdings
The movement during the financial year in the number of options in the Company
held, directly, indirectly or beneficially, by each KMP, including their
related parties, is as follows:
Held at Granted During the Year Exercised During the Year Held at Vested and Exercisable at 30 June 2024
1 July 2023 30 June 2024
Non-Executive Directors
J Salomon 96,626,905 - - 96,626,905 96,626,905((1))
P Schwarz - - - - -
M Bolton - - - - -
P Haywood - - - - -
Executive Directors
R Wessel 163,636,363 - - 163,636,363 163,636,363((2))
C Judd 118,200,000 - - 118,200,000 118,200,000((3))
A Khare 16,255,208 - - 16,255,208 16,255,208((4))
((1) ) 88,311,688 options exercisable at £0.0022, expiring 12
August 2027. All these options were exercisable at report date; and
8,315,217 options exercisable at nil cost, expiring 1 April 2028. All these
options were exercisable at report date.
((2) ) 136,363,636 options exercisable at £0.0022, expiring 12
August 2027. All these options were exercisable at report date; and
27,272,727 options exercisable at nil cost, expiring 1 April 2028. All these
options were exercisable at report date.
((3) ) 100,000,000 options exercisable at £0.0022, expiring 12
August 2027. All these options were exercisable at report date; and
18,200,000 options exercisable at nil cost, expiring 1 April 2028. All these
options were exercisable at report date.
((4) ) 16,255,208 options exercisable at nil cost, expiring 1 April
2028. All these options were exercisable at report date.
5. AMOUNTS PAYABLE TO KMP
At year-end, the following amounts were owing from the Group to the Directors:
2024 2023
A$ A$
Non-Executive Directors
J Salomon 29,269 -
P Schwarz 14,302 -
M Bolton 15,438 -
P Haywood 14,302 -
Executive Directors
R Wessel 71,510 -
C Judd 52,441 -
A Khare 38,486 -
Total 235,748 -
6. OTHER KMP TRANSACTIONS
There were no other transactions with entities associated with KMP during the
year ended 30 June 2024 (2023: nil).
END OF REMUNERATION REPORT - AUDITED
Signed in accordance with a resolution of the Directors made pursuant to
section 298(2)(a) of the Corporations Act 2001.
Mr Peter Schwarz Mr Roland Wessel
Deputy Chairman Chief Executive Officer and Director
Perth
Western Australia
30 September 2024
PKF Perth
ABN 64 591 268 274
Dynons Plaza,
Level 8, 905 Hay Street,
Perth WA 6000
PO Box 7206,
Cloisters Square WA 6850
Australia
+61 8 9426 8999
perth@pkfperth.com.au
pkf.com.au
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 2024, 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
30 September 2024
Perth, Western Australia
PKF Perth is a member of PKF Global, the network of member firms of PKF
International Limited, each of which is a separately owned legal entity and
does not accept any responsibility or liability for the actions or inactions
of any individual member or correspondent firm(s). 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 2024
2024 2023
Note A$ A$
Revenue 4(a) 638,457 1,296,150
Cost of sales 4(b) (1,048,993) (2,563,873)
Gross Loss (410,536) (1,267,723)
Other income 4(c) 10,474 -
Exploration, evaluation and appraisal expenditure (773,213) (608,592)
Administration expense 4(d) (2,017,142) (2,473,982)
Expected credit losses (expense)/reversal 8 (288,424) 34,853
Share-based payments expense 24 (168,187) (288,484)
Impairment of equity securities 13 (34,593)
Other expenses 4(e) (5,530) (8,993)
Results from Operating Activities (3,687,151) (4,612,921)
Finance income 4(f) 963,678 3,862
Finance costs 4(g) (1,430,340) (630,295)
Net foreign exchange gains/(losses) 4(h) 1,355,302 (143,548)
Net Finance Income/(Costs) 888,640 (769,981)
Loss Before Tax (2,798,511) (5,382,902)
Income tax expense 5 - -
Loss After Tax (2,798,511) (5,382,902)
Other Comprehensive (Loss)/Income
Items that May be Reclassified
Subsequently to Profit or Loss
Exchange differences on currency translation of subsidiaries (2,712) 187,425
Reclassification to Profit or Loss
Reclassification of exchange differences on currency translation on 22(a) (1,325,636) -
deregistration of subsidiary
Other Comprehensive (Loss)/Income, Net of Tax (1,328,348) 187,425
Total Comprehensive Loss (4,126,859) (5,195,477)
Loss per Share from Continuing Operations
Basic loss per share (cents per share) 6 (0.03) (0.06)
Diluted loss per share (cents per share) 6 (0.03) (0.06)
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 2024
2024 2023
Note A$ A$
Assets
Cash and cash equivalents 7 1,069,782 938,589
Trade and other receivables 8 116,688 220,331
Prepayments 95,101 89,507
Inventories 9 78,693 113,819
Total Current Assets 1,360,264 1,362,246
Development assets 10 17,336,721 17,558,182
Exploration, evaluation and appraisal asset 11 1,154,230 -
Plant and equipment 12 18,701 24,217
Investments 13 - 34,593
Total Non-Current Assets 18,509,652 17,616,992
Total Assets 19,869,916 18,979,238
Liabilities
Trade and other payables 14 2,373,587 485,968
Provisions 15 333,088 174,116
Borrowings 16 1,739,983 774,666
Derivative financial liability 17 167,726 1,050,334
Total Current Liabilities 4,614,384 2,485,084
Provisions 15 5,299,693 6,156,638
Total Non-Current Liabilities 5,299,693 6,156,638
Total Liabilities 9,914,077 8,641,722
Net Assets 9,955,839 10,337,516
Equity
Issued capital 21 196,252,167 192,817,143
Reserves 22 7,203,449 8,299,925
Accumulated losses 23 (193,499,777) (190,779,552)
Total Equity 9,955,839 10,337,516
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 2024
Attributable to Owners of the Company
Issued Capital Share-Based Payments Reserve Foreign Currency Translation Reserve ("FCTR") Accumulated Losses Total Equity
Note A$ A$ A$ A$ A$
Balance at 1 July 2023 192,817,143 534,957 7,764,968 (190,779,552) 10,337,516
Comprehensive Loss
Loss after tax - - - (2,798,511) (2,798,511)
Other comprehensive loss - - (1,328,348) - (1,328,348)
- - (1,328,348) (2,798,511) (4,126,859)
Transactions with
Owners of the Company
Contributions of equity, net of transaction costs and tax 21 3,435,024 - - - 3,435,024
Share-based payment transactions 24 - 310,158 - - 310,158
Options expired 22(b) - (78,286) - 78,286 -
3,435,024 231,872 - 78,286 3,745,182
Balance at 30 June 2024 196,252,167 766,829 6,436,620 (193,499,777) 9,955,839
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 - - - (5,382,902) (5,382,902)
Other comprehensive income - - 187,425 - 187,425
- - 187,425 (5,382,902) (5,195,477)
Transactions with
Owners of the Company
Contributions of equity, net of transaction costs and tax 21 635,759 - - - 635,759
Share-based payment transactions 24 - 313,636 - - 313,636
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
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 2024
2024 2023
Note A$ A$
Cash Flows from Operating Activities
Cash receipts from customers 904,825 1,462,911
Recovery of prior period operating cost 131,670 94,923
Payments to suppliers and employees (3,003,601) (5,678,985)
Repayment of JPDA 06-103 - (372,523)
PSC termination penalty
Cash Outflow from Operations (1,967,106) (4,493,674)
Payments for exploration, evaluation (743,699) (831,797)
and appraisal expenses
Interest received 5,498 3,862
Interest paid (47,272) (52,462)
Net Cash Used in Operating Activities 7 (2,752,579) (5,374,071)
Cash Flows from Investing Activities
Payments for capitalised development assets (492,907) -
Payments for capitalised exploration, (116,047) -
evaluation and appraisal assets
Acquisition of plant and equipment - (3,227)
Net Cash Used in Investing Activities (608,954) (3,227)
Cash Flows from Financing Activities
Proceeds from issue of share capital 21 3,571,757 608,378
Payment for share issue costs (212,060) (106,168)
Proceeds from borrowings 1,161,226 1,530,101
Repayment of borrowings (1,051,173) (488,984)
Net Cash from Financing Activities 3,469,750 1,543,327
Net Increase in Cash and Cash Equivalents 108,217 (3,833,971)
Cash and cash equivalents at 1 July 938,589 4,838,459
Effect of exchange rate fluctuations on cash held 22,976 (65,899)
Cash and Cash Equivalents at 30 June 7 1,069,782 938,589
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 2024
ABOUT THIS REPORT - OVERVIEW
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 the Alternative Investment Market ("AIM")
of the London Stock Exchange ("LSE").
The principal activities of the Group during the financial year included:
· appraisal and development of oil and gas prospects;
· production and sale of oil and gas; and
· development of CCS projects.
There were no significant changes in the nature of the activities during the
year.
Unless otherwise indicated, these financial statements are presented in
Australian dollars ("A$"), which is the Company's functional and presentation
currency (refer to 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 26.
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 as issued by the
International Accounting Standards Board.
The consolidated financial statements were authorised for issue by the Board
of Directors on 30 September 2024.
(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. In adopting the going concern
basis, the Directors have considered business operations as set out on pages 3
to 9, the financial performance and financial position of the Group, its cash
flows and liquidity position, and the Group's financial risk management
objectives and exposures to liquidity and other financial risks as set out in
Note 30.
During the year, the Group incurred a loss of A$2,798,511 (2023: A$5,382,902)
and had cash outflows from operating and investing activities of A$3,361,533
(2023: A$5,377,298). The Group concluded the year at 30 June 2024 with net
current liabilities of A$3,254,120 (2023: A$1,122,838) which included:
· cash and cash equivalents of A$1,069,782 (2023: A$938,589);
· trade and other payables of A$2,373,587 (2023: A$485,968), of which
A$353,588 was overdue at 30 June 2024 (2023: nil). Subsequent to balance date,
A$117,096 of this amount has been paid;
· borrowings outstanding (being for the first and second tranches of
the short-term borrowings and convertible notes extended to 30 September), of
A$1,739,983 (2023: A$774,666); and
· derivative liabilities of A$167,726 (2023: A$1,050,334).
Since 30 June 2024, the Company obtained a third tranche of short-term loan
funding from existing investors of £140,000 in July and August. The loans
bear interest at a fixed rate of 23.87% for the period to 11 September 2024
and penalty interest at a fixed rate of 8% per month after 11 September 2024.
Effective on 19 July 2024, the Government of India provided their approval of
the farm out of 50% of the Group's interest in the Cambay PSC. On 1 August
2024, the farm-out agreement closed and US$2.5 million, being the initial cash
payment due on the farm-out, net of withholding taxes, was paid by Selan
Exploration Technology Limited ("Selan") to the Group on 1 August 2024. The
portion that was withheld is expected to be received in the coming weeks, in
accordance with an agreement the Company entered into on 24 September 2024 to
indemnify Selan against any liability for withholding tax effective from 1
August 2024 until 1 April 2035 (refer to Note 20 for further details of the
indemnity agreement).
The receipt of the initial cash payment from the closing of the Cambay
farm-out agreement (net of withholding taxes) enabled the Group to repay the
first tranche of its short-term borrowings on 11 September 2024. The
repayment was £566,000 (A$1,079,329 ((1))), which was based on principal of
£400,000 plus interest of £166,000.
The Group will also use the initial net funds received from the Cambay
farm-out to repay part of the convertible notes extended to 30 September 2024.
The repayment that will be made on 30 September 2024 will be £107,822
(A$205,610 ((1))), based on face values of £100,000 and interest of £7,822.
The remainder of the extended convertible notes of £80,866
(A$154,208 ((1))), based on face values of £75,000 and interest of £5,866,
will be converted to shares based on the notice received from one of the
extended convertible note holders' intention to do so.
The second and third tranches of the short-term borrowings, which have
specified "repayment dates" of 11 September 2024, remain outstanding at the
date of this report. The balance outstanding of those loans at the date of
this report is £448,358 (A$854,992 ((1))), which is based on principal of
£340,000 plus interest of £108,358.
This scenario that is the Group's current situation indicates that the Group
would not have sufficient funds to ensure the Group is able continue its
activities, meet its ongoing working capital requirements, and repay its
borrowings and other amounts payable for at least the 12-month period from the
end of September 2024. However, the Directors have assessed the Group's cash
flow forecasts which incorporate the mitigating actions set out below, which
indicates that under such a scenario the Group would meet its liquidity
requirements and continue as a going concern for the foreseeable future.
Mitigating actions taken by the Group after balance sheet date to secure this
outcome will include:
· engaging in discussions with lenders of its remaining short-term
borrowings to negotiate a planned repayment date in December 2024; and
· engaging in discussions with its brokers for future fundraisings.
To this end, the Directors believe that the Group will be able to secure this
additional funding to meet the Group's requirements to continue as a going
concern, due to its history of previous capital raisings. However, the
Directors acknowledge 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,
evaluation and appraisal activities. If funds are not able to be raised or
realised, then it may be necessary for the Group to sell or farmout more of
its interests in its exploration, evaluation and appraisal and development
assets and to reduce discretionary administrative expenditure.
Based on the above indications the Directors believe that it remains
appropriate to prepare the financial statements on a going concern basis.
However, this material uncertainty may cast significant doubt on the Group's
ability to continue as a going concern and, therefore, to continue realising
its assets and discharging its liabilities in the normal course of business.
The financial statements do not include any adjustments that would result from
the basis of preparation being inappropriate.
((1) ) When translated at year-end AUD to GBP foreign exchange rate
of 0.5244.
(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 2024 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 25.
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 27.
(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 are United States dollars or the United Kingdom pound
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 foreign operations or net
investment are 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 to Note 5)
· Trade and other receivables (refer to Note 8)
· Development assets (refer to Note 10)
· Exploration, evaluation and appraisal assets (refer to Note 11)
· Plant and equipment (refer to Note 12)
· Provisions (refer to Note 15);
· Derivative financial liability (refer to Note 17); and
· Share-based payments (refer to Note 24).
(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) Material Accounting Policies
Other than as listed in Notes 2(i) and 2(j), material 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 not material 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 Material 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 2023 and therefore mandatory
for the current reporting period. The adoption of these accounting standards,
interpretations and other accounting pronouncements did not have any material
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 2024, 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 2021-7c 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 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 material 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"), Value Added Tax ("VAT") and Other
Similar Taxes
Revenues, expenses and assets are recognised net of the amount of associated
GST or VAT, unless the GST or VAT 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 or VAT
receivable or payable. The net amount of GST or VAT 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 or VAT 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 or VAT
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.
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 appraisal assets 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.
(a) Major Customers
The Group's most significant customers are:
· Enertech Fuel Solutions Pvt Limited, with net gas sales representing
69% of the Group's total revenues (2023: 58%); and
· Navkar Enterprise, with net oil sales representing 31% of the Group's
total revenues (2023: 42%).
(b) Material Accounting Policies
(i) 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.
(ii) Expenses
The Group recognises expenses as follows:
· Amortisation (refer to Note 10)
· Employee benefits (refer to Note 15); and
· Leases (refer to Note 18)
· Expected credit losses (refer to Note 8)
· Impairment (refer to Notes 10, 11and 13)
· Depreciation (refer to Note 12)
India JPDA Indonesia United Kingdom Corporate ((1)) Consolidated
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
A$ A$ A$ A$ A$ A$ A$ A$ A$ A$ A$ A$
Revenue
External revenue 638,457 1,296,150 - - - - - - - - 638,457 1,296,150
Cost of Sales
Production costs (1,009,827) (2,250,046) - - - - - - - - (1,009,827) (2,250,046)
Amortisation of development assets (4,552) (24,112) - - - - - - - - (4,552) (24,112)
Movement in oil stocks inventory (34,614) (289,715) - - - - - - - - (34,614) (289,715)
Total Cost of Sales (1,048,993) (2,563,873) - - - - - - - - (1,048,993) (2,563,873)
Gross Loss (410,536) (1,267,723) - - - - - - - - (410,536) (1,267,723)
Other income 10,474 - - - - - - - - - 10,474 -
Exploration, evaluation and appraisal expenditure (755,716) (537,047) - - - - (17,497) (71,545) - - (773,213) (608,592)
Administration expenses (28,984) (27,528) (4,081) (15,916) - 52,807 (10,994) (28,726) (1,973,083) (2,456,156) (2,017,142) (2,475,519)
Expected credit losses (expense)/reversal (420,094) (13,191) - 11,255 - - - - 131,670 36,789 (288,424) 34,853
Share-based payments expense - - - - - - - - (168,187) (288,484) (168,187) (288,484)
Impairment of equity securities - - - - - - - - (34,593) - (34,593) -
Depreciation (1,336) (1,051) - - - - - - (4,194) (6,405) (5,530) (7,456)
Reportable Segment (Loss)/Profit Before Income Tax (1,606,192) (1,846,540) (4,081) (4,661) - 52,807 (28,491) (100,271) (2,048,387) (2,714,256) (3,687,151) (4,612,921)
Net finance costs (466,662) (626,433)
Foreign exchange gains/(losses) 1,355,302 (143,548)
Income tax expense - -
Net Loss for the Year (2,798,511) (5,382,902)
Segment Assets 17,626,989 18,501,114 - 414 - - 1,786,958 - 455,969 477,710 19,869,916 18,979,238
Segment Liabilities 6,045,320 6,436,301 - 9,199 - - 1,098,062 15,568 2,770,695 2,180,654 9,914,077 8,641,722
((1)) "Corporate" represents a reconciliation of reportable segment revenues,
profit or loss, assets and liabilities to the consolidated figure. There were
no significant inter-segment transactions during the year.
4. REVENUE AND EXPENSES
Loss from ordinary activities before tax has been determined after the
following revenues and expenses:
2024 2023
Note A$ A$
(a) Revenue
Gas sales 442,948 755,589
Oil sales 195,509 540,561
638,457 1,296,150
(b) Cost of Sales
Production costs (1,009,827) (2,250,046)
Amortisation of development assets (4,552) (24,112)
Movement in oil stocks inventory (34,614) (289,715)
(1,048,993) (2,563,873)
(c) Other Income
Profit from disposal of other assets 10,474 -
10,474 -
(d) Administration Expenses
Employee benefits expense (1,098,348) (1,226,601)
Administration expense (918,794) (1,247,381)
(2,017,142) (2,473,982)
(e) Other Expenses
Depreciation expense 12 (5,530) (7,456)
Loss on disposal of plant and equipment - (1,537)
(5,530) (8,993)
(f) Finance Income
Interest income 5,498 3,862
Extended notes (net change in fair value) 16(c) 91,798 -
Derivative liability (net change in fair value) 17(d) 866,382 -
963,678 3,862
(g) Finance Costs
Interest on closed US$ loan facility 16(a) (4,487) (54,525)
Interest on previously convertible notes 16(b) (854,403) (19,178)
Interest on extended notes 16(c) (51,653) -
Interest on unsecured short-term borrowings 16(d) (285,812) -
Interest on other borrowings - (4,791)
Unwinding of discount on site restoration provision 15 (233,985) (289,540)
Equity securities designated at FVTPL - (34,593)
(net change in fair value)
Derivative liability (net change in fair value) 17(c) - (227,668)
(1,430,340) (630,295)
(h) Net Foreign Exchange Gains/(Losses)
Realised foreign exchange losses (113,917) (44,647)
Unrealised foreign exchange gains/(losses) 143,583 (98,901)
Foreign exchange gains recognised on reclassification of part of FCTR 22(a) 1,325,636 -
1,355,302 (143,548)
The Group's revenue policy is outlined in Note 3(b)(i).
5. INCOME TAX EXPENSE
Numerical reconciliation between tax expense and pre-tax accounting loss:
2024 2023
A$ A$
Loss before tax (2,798,511) (5,382,902)
Tax using the domestic corporation (699,628) (1,345,726)
tax rate of 25% (2023: 25%)
Effect of tax rate in foreign jurisdictions (275,941) (932,253)
Non-deductible expenses
Share-based payments 42,047 72,121
Foreign expenditure non-deductible 253,335 777,723
Other non-deductible expenses 45,025 1,329
Non assessable income
Other non-assessable income - (12,500)
Tax losses not brought to account as a deferred tax asset 635,162 1,439,307
- -
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 - -
Tax losses utilised not previously brought to account - -
Impact of reduction in future tax rates - -
Unrecognised DTA not brought to account - -
Tax Expense for the Year - -
Tax Assets and Liabilities
2024 2023
A$ A$
Unrecognised Deferred Tax Assets Not Brought to Account at Reporting Date as
Realisation is Not Regarded as Probable - Temporary Differences
Other 18,435,810 20,348,421
Losses available for offset against future taxable income 10,531,842 9,496,896
Deferred Tax Asset Not Brought to Account 28,967,652 29,845,317
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 during the 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 during
the 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.
Material 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.
6. LOSS PER SHARE
(a) Basic Loss Per Share
2024 2023
A$ cents A$ cents
Basic and Diluted Loss per Share
Total basic and diluted loss per share (0.03) (0.06)
2024 2023
A$ A$
Loss Used in Calculating Loss per Share
Loss attributable to ordinary shareholders (2,798,511) (5,382,902)
Note 2024 2023
Number Number
Weighted Average Number of Ordinary Shares
Issued ordinary shares at 1 July 21 8,417,790,704 8,242,959,310
Effect of shares issued 1,360,221,063 161,036,479
Effect of conversion of convertible notes 36,457,112 -
Weighted average number of 9,814,468,879 8,403,995,789
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.
Material 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.
7. CASH AND CASH EQUIVALENTS
2024 2023
A$ A$
Cash at bank and on hand 1,069,782 938,589
The Group's exposure to interest rate risk and a sensitivity analysis for
financial assets and liabilities are disclosed in Note 30(d)(ii).
Material 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
2024 2023
A$ A$
Loss after tax for the year (2,798,511) (5,382,902)
Amortisation of development assets 4,552 24,112
Depreciation 5,530 7,456
Interest expense accrued (including unwinding of discount on site restoration 1,383,070 315,571
provision and effective interest amortisation)
Expected credit losses expense/(reversal) (refer to Note 8) 420,094 (34,853)
Equity securities designated at FVTPL - 34,593
(net change in fair value)
Impairment of equity securities 34,593 -
Extended notes (net change in fair value) (91,798) -
Derivative liability (net change in fair value) (866,382) 227,668
Loss on disposal of plant and equipment - 1,537
Equity settled share-based payments 168,187 288,484
Net foreign exchange (gains)/losses (1,355,302) 143,548
Operating Loss Before Changes in (3,095,967) (4,374,786)
Working Capital and Provisions
Movement in trade and other receivables (272,776) (48,483)
Movement in prepayments (5,594) (73,890)
Movement in inventories 34,614 289,715
Movement in trade and other payables 650,982 (1,159,916)
Movement in employee benefits and other current provisions (63,838) (6,711)
Net Cash Used in Operating Activities (2,752,579) (5,374,071)
8. TRADE AND OTHER RECEIVABLES
2024 2023
A$ A$
Current
Allocation of Receivables
Operating receivables 12,454 16,205
Corporate receivables 104,234 204,126
116,688 220,331
Operating Receivables
Operating receivables ((1)) 460,515 49,371
Less: Provision for expected credit losses ((2)) (448,061) (33,166)
12,454 16,205
Corporate Receivables
Corporate receivables 139,391 234,903
Less: Provision for expected credit losses (35,157) (30,777)
104,234 204,126
((1) ) During the year, the Group submitted bank guarantees
totalling US$247,835 in favour of the Ministry of Petroleum and Natural Gas
("MOPNG") of the Government of India. The bank guarantees fulfil Cambay PSC
requirements, which are detailed in Note 19. The amounts guaranteed include a
15% portion which was guaranteed on behalf of Oilex N.L. Holdings (India)
Limited ("OHIL") for OHIL's share of the bank guarantee.
((2) ) A corresponding increase in expected credit losses was
recorded as the bank guarantee is to remain in place and will not be received
back by the Group as long as the Group holds the Cambay PSC.
The Group considers that there is evidence of impairment if any of the
following indicators are present: financial difficulties of the debtor,
probability that the debtor will dispute amounts owing and default or
delinquency in payment (more than one year old). Each receivable has been
assessed individually for recovery, and those deemed to have a low chance of
recovery have been fully provided for in the current period. The movement in
the Group's provision for expected credit losses ("ECLs") are detailed below.
2024 2023
A$ A$
Movement in Provision for Expected Credit Losses
Balance at 1 July (63,943) (388,142)
ECLs incurred/(reversed) on current receivables ((3)) (420,094) 34,853
Write-off of receivables previously provided for - 323,715
Effect of movements in exchange rates 819 (34,369)
Balance at 30 June (483,218) (63,943)
Allocation of Provision for Expected Credit Losses
Operating receivables (448,061) (33,166)
Other receivables (35,157) (30,777)
(483,218) (63,943)
((3) ) See footnote (2) above.
The carrying value of trade and other receivables approximates their fair
value due to the assessment of recoverability. Details of the Group's credit
risk are disclosed in Note 30(b).
2024 2023
A$ A$
Reconciliation of ECL Expense/(Reversal)
ECLs incurred/(reversed) on current receivables 420,094 (34,853)
ECL expense reduced due to receipt of (131,670) -
cash call balances previously written off ((4))
Balance at 30 June 288,424 (34,853)
((4) ) During the year the Company received some amounts from one
of the ex-defaulting parties of the now terminated JPDA joint venture,
relating to overhead charges and cash call balances on this joint venture.
Material 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.
9. INVENTORIES
2024 2023
A$ A$
Oil on hand - net realisable value 12,037 47,223
Drilling inventory - net realisable value 66,656 66,596
78,693 113,819
Material 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.
10. DEVELOPMENT ASSETS
2024 2023
A$ A$
Non-Current
Allocation of Development Assets
Cambay development asset 12,481,500 11,832,652
Cambay restoration asset 4,855,221 5,725,530
17,336,721 17,558,182
Cambay Development Asset
Cost
Balance at 1 July 33,391,443 33,617,561
Additions during the period ((1)) 411,477 -
Costs directly attributable to the farm out of 50% of the participating 246,024 -
interest in the Cambay PSC ((2))
Effect of movements in foreign exchange rates (5,107) (226,118)
Balance at 30 June 34,043,837 33,391,443
Less: Amortisation and Impairment Losses
Balance at 1 July (21,558,791) (22,021,708)
Amortisation charge for the year (4,552) (9,170)
Effect of movements in foreign exchange rates 1,006 472,087
Balance at 30 June (21,562,337) (21,558,791)
Carrying Amount - Cambay Development Asset 12,481,500 11,832,652
(1) ) During the year, A$411,477 was invested into an
artificial lift system which was installed in September 2023.
(2) ) During the year, the Group incurred costs of A$246,024
directly attributable to the farm out of 50% of the participating interest in
the Cambay PSC. These costs have been capitalised at year-end as the
Government of India provided their approval of the farm out effective on 19
July 2024. These costs will count towards the calculation of gain or loss on
the farm out transaction in the subsequent financial year ending 30 June 2025.
2024 2023
A$ A$
Cambay Restoration Asset
Cost
Balance at 1 July 5,740,472 8,714,761
Reduction due to reassessment of restoration provision - (3,314,730)
Movements in economic assumptions and timing of cash flows ((3)) (862,152) -
Effect of movements in foreign exchange rates (8,144) 340,441
Balance at 30 June 4,870,176 5,740,472
Less: Amortisation
Balance at 1 July (14,942) -
Amortisation charge for the year - (14,942)
Effect of movements in foreign exchange rates (13) -
Balance at 30 June (14,955) (14,942)
Carrying Amount - Cambay Restoration Asset 4,855,221 5,725,530
(3) ) During the year, a reassessment was made of the
restoration asset and provision due to changes in interest rates during the
year, resulting in the reduction of the restoration asset and provision by
A$862,152 (refer to Note 15, footnote (1)).
2024 2023
A$ A$
Carrying Amounts - Total
At 1 July 17,558,182 20,310,614
At 30 June 17,336,721 17,558,182
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 2023 or during 2024. Upon
minimum annual 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 2024 (30 June
2023: A$nil).
Subsequent Event
On 14 February 2024, the Group entered into an agreement to farm out 50% of
the Group's participating interest in the Cambay PSC to Selan Exploration
Technology Limited ("Selan"), in exchange of an agreed US$20 million work
programme as well as a cash payment of US$2.5 million. The agreement also
entitles the Group to bonuses of up to US$9 million, linked to certain future
cumulative gas sales thresholds being achieved. The agreement was subject to
Government of India approval, which was received subsequent to year-end on 19
July 2024. Consequently, 50% of the development assets transferred to Selan
effective on 19 July 2024. The farm-out agreement closed on 1 August 2024, and
US$2.5 million, net of withholding taxes, was paid by Selan to the Group on 1
August 2024. The portion that was withheld is expected to be received in the
coming weeks, in accordance with an agreement the Company entered into on
24 September 2024 to indemnify Selan against any liability for withholding
tax effective from 1 August 2024 until 1 April 2035 (refer to Note 20 for
further details of the indemnity agreement).
Material 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 EEA 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 permit for EEA 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
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.
11. EXPLORATION, EVALUATION AND APPRAISAL ("EEA") ASSET
2024 2023
Non-Current A$ A$
Allocation of EEA Asset
Relating to CS019 licence for the Camelot area ((1)) 1,154,230 -
Total Carrying Amount 1,154,230 -
Movement in EEA Asset
Balance at 1 July - -
Capitalised EEA expenditure, net of recovery ((1)) 1,154,675 -
Effect of movements in exchange rates (445) -
Balance at 30 June 1,154,230 -
(1) ) 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. Prior to 1 August 2023, all costs incurred pertaining to obtaining
the licence were expensed.
EEA assets are reviewed at each reporting date to determine whether there is
any indication of impairment. When EEA expenditure does not result in the
successful discovery of potentially economically recoverable reserves or other
assets, or if sufficient data exists to indicate the carrying amount of the
EEA asset is unlikely to be recovered in full, either by development or sale,
it is impaired. Based on a review of key assumptions, no impairment indicators
were identified as at 30 June 2024. As such no impairment charges were
applied to the EEA asset during the year.
Material Accounting Policy
EEA expenditures in relation to each separate area of interest are recognised
as EEA assets 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 EEA expenditures are expected to be recouped through successful
development and exploration of the area of interest, or alternatively, by its
sale; or
o EEA 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.
EEA 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 EEA activities. General and administrative costs are only included in the
measurement of EEA costs where they are related directly to operational
activities in a particular area of interest.
EEA assets are assessed for impairment when facts and circumstances suggest
that the carrying amount of an EEA asset may exceed its recoverable amount.
The recoverable amount of the EEA 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 EEA asset is tested for impairment
and the balance is then reclassified as development assets.
Impairment of EEA Expenditure
The carrying value of EEA 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 EEA in the specific area is
neither budgeted nor planned;
· EEA 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 EEA 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 EEA 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.
12. PLANT AND EQUIPMENT
Motor Plant and Office Total
Vehicles Equipment Furniture A$
A$ A$ A$
Cost
Balance at 1 July 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
Currency translation differences 17 206 - 223
Balance at 30 June 2024 19,064 398,536 - 417,600
Depreciation and Impairment Losses
Balance at 1 July 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
Depreciation charge for the year - 5,530 - 5,530
Currency translation differences 17 192 - 209
Balance at 30 June 2024 19,064 379,835 - 398,899
Carrying Amounts
At 1 July 2023 - 24,217 - 24,217
At 30 June 2024 - 18,701 - 18,701
Material 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.
13. INVESTMENTS
2024 2023
A$ A$
Non-Current Investments
Equity securities in Armour Energy Limited ("Armour") - 34,593
- 34,593
In November 2023, Armour stopped trading its shares and went into receivership
and administration. Armour's creditors also resolved to liquidate Armour on 19
January 2024. The ownership of Armour's underlying business was then
transitioned to ADZ Energy Pty Ltd on 22 January 2024. Armour is still in the
process of liquidation at year-end. Due to these events it is considered that
the value of the Armour shares is not recoverable and as such, the carrying
amount of the Armour investment was fully impaired to A$nil during the year.
Material Accounting Policy
Investments are initially measured at fair value.
Financial assets are derecognised when the rights to receive cash flows have
expired or have been transferred and the consolidated entity has transferred
substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, its
carrying value is written off.
Financial Assets at FVTPL
Financial assets not measured at amortised cost or at fair value through other
comprehensive income are classified as financial assets at FVTPL. Typically,
such financial assets will be either: (i) held for trading, where they are
acquired for the purpose of selling in the short-term with an intention of
making a profit, or a derivative; or (ii) designated as such upon initial
recognition where permitted. Fair value movements are recognised in profit or
loss.
14. TRADE AND OTHER PAYABLES
2024 2023
A$ A$
Trade payables 1,288,715 78,481
Other payables 329,392 -
Accruals 755,480 407,487
2,373,587 485,968
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. At
30 June 2024, A$353,588 of the trade payables amount was overdue (2023: nil).
Subsequent to balance date, A$117,096 of this amount has been paid.
Material Accounting Policy
Trade and other payables are recorded at the value of the invoices received
and subsequently measured at amortised cost and are non-interest bearing. The
liabilities are for goods and services provided before year end, that are
unpaid and arise when the Group has an obligation to make future payments in
respect of these goods and services. The amounts are unsecured. Financial
assets and liabilities are offset and the net amount is presented in the
statement of financial position when and only when, the Group has a legal
right to offset the amounts and intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
15. PROVISIONS
2024 2023
A$ A$
Current
Employee benefits 188,259 174,116
Site restoration and well abandonment 144,829 -
333,088 174,116
Non-Current
Site restoration and well abandonment 5,299,693 6,156,638
5,299,693 6,156,638
Provision for Site Restoration and Well Abandonment
Current 144,829 -
Non-current 5,299,693 6,156,638
5,444,522 6,156,638
Movement in
Provision for Site Restoration and Well Abandonment
Balance at 1 July 6,156,638 8,833,483
Unwinding of discount on site restoration provision 233,985 289,540
Payments made into site restoration fund account (77,982) -
Reduction of provision due to reassessment of restoration asset and provision - (3,314,730)
Movements in economic assumptions and timing of cash flows ((1)) (862,152) -
Effect of movements in exchange rates (5,967) 348,345
Balance at 30 June 5,444,522 6,156,638
(1) ) An adjustment was made during the period due to updates in
underlying discount and inflation rates. There were no other adjustments to
the key assumptions on estimated expenditures required by the Company to
settle its site restoration and well abandonment obligations.
Subsequent Event
Refer to the "Subsequent Event" header under Note 10 with regards to the
Government of India approval of the farm out of 50% of the Group's
participating interest in the Cambay PSC to Selan on 19 July 2024.
Consequently, 50% of the provision for site restoration and well abandonment
transferred to Selan effective on 19 July 2024.
Material 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.
16. BORROWINGS
Note 2024 2023
A$ A$
Current
Unsecured loan (US$800,000 loan facility) 16(a) - 339,902
Convertible notes (debt component) 16(b) - 434,764
Extended notes 16(c) 310,269 -
Unsecured short-term borrowings 16(d) 1,429,714 -
1,739,983 774,666
Terms and Conditions of Borrowings
2024 2023
A$ A$
Unsecured Borrowings Currency Nominal Interest Rate Year of Maturity Face Carrying Amount Face Carrying Amount
Value
Value
US$800,000 loan facility USD 11.00% 2023-2024 - - 324,942 339,902
Convertible notes (debt component) * GBP 5.00% 2023-2024 - - 1,238,095 434,764
Extended notes ** GBP 5.00% 2024-2025 333,715 310,270 - -
Unsecured short-term borrowings *** GBP Fixed at 17.50% 2023-2024 762,778 957,287 - -
Unsecured short-term borrowings **** GBP Fixed at 23.87% 2024-2025 381,388 472,426 - -
1,477,881 1,739,983 1,563,037 774,666
* The carrying amount of convertible notes (debt component) were
lower than their face value at reporting date due to fair value revaluations
(refer to Note 16(b) and Note 17(b)).
** The carrying amount of the extended notes were lower than their
face value at reporting date due to fair value revaluations (refer to Note
16(c)).
*** The short-term loan agreement for these unsecured borrowings state a
"repayment date" of 11 June 2024, after which, additional interest will be
charged on these borrowings at a penalty interest rate of 8% per month.
**** The short-term loan agreement for these unsecured borrowings state a
"repayment date" of 11 September 2024, after which, additional interest is
charged on these borrowings at a penalty interest rate of 8% per month.
(a) US$800,000 Loan Facility
This unsecured loan related to an unsecured loan facility agreement for
US$800,000 at an interest rate of 11%, which the Company entered into during
the financial year ended 30 June 2021 with two of its JPDA joint venture
partners, JX and PPP. The loan was restricted to fund the settlement of the
termination penalty to ANPM, which was fully paid by 7 September 2022. The
portion which was owing to PPP was fully repaid in December 2021. The balance
of the loan was fully repaid to JX on 10 August 2023.
Movement in US$800,000 Loan Facility 2024 2023
A$ A$
Balance at 1 July 339,902 451,355
Amounts drawn down to pay termination penalty - 372,523
Repayments made to lenders (348,853) (536,656)
Interest on facility balance 4,487 54,525
Effect of movements in exchange rates 4,464 (1,845)
Balance at 30 June - 339,902
(b) Convertible Notes (Debt Component)
Movement in 2024 2023
Convertible Notes (Debt Component) Note A$ A$
Balance at 1 July 434,764 -
Proceeds from issue of convertible notes 16(b)(i) - 1,157,578
Derivative liability at inception of convertible notes 17(b) - (774,570)
434,764 383,008
Interest on convertible notes at 5% 16(b)(i) 43,200 19,178
Additional amortised effective interest charge 811,203 -
Convertible notes redeemed in cash 16(b)(ii) (749,590) -
Remaining balance of convertible notes 16(b)(iii) (355,187) -
extended to 30 September 2024
Convertible notes converted into shares 16(b)(iv) (217,298) -
Effect of movements in exchange rates 32,908 32,578
Balance at 30 June - 434,764
(i) Effective 9 March 2023, the Company issued 6,500 unsecured convertible
notes, each having a face value of £100, for total proceeds of £650,000. The
maturity date of the notes was 9 March 2024. The conversion rights and other
terms associated with the notes were as follows:
· Interest is accrued on the face value of the notes at a rate of
5% per annum until such time as the interest is either converted into shares
or redeemed in cash;
· The holder of the notes had the option to convert the face value
of the notes and interest accrued into shares at any time between 9 December
2023 and 9 March 2024 at a conversion price of £0.0008 per share;
· If conversion not elected, holders were able to elect to redeem
their notes in cash no earlier than the maturity date of 9 March 2024;
· All holders' had to notify the Company of their intention to
convert or redeem their notes by 26 February 2024, 10 business days before
the maturity date. If no notice was received by the holders by 26 February
2024, the notes and interest accrued were automatically convert into shares on
the maturity date.
(ii) In line with the 9 March 2024 maturity date of the notes, the Company
received notices from five of the seven note holders that indicated their
intention to redeem their notes and interest accrued into cash. Those holders
had a total of 5,430 notes, and requested for 3,680 of its notes, plus
interest accrued, to be redeemed in cash effective on the maturity date of 9
March 2024. These repayments amounted to £386,451 (A$749,590).
(iii) The holders requested for the other 1,750 notes, plus interest
accrued, to be extended to 30 September 2024. There ability to convert these
"Extended Notes" into shares remain until the extended maturity date of
30 September 2024. The value of the Extended Notes at the 9 March 2024
maturity date was £183,774 (A$355,187). The repayment value of the Extended
Notes will amount to £188,688 (equivalent of A$359,818 at 30 June 2024). The
terms of the Extended Notes, being the extension of the maturity date to 30
September 2024, were assessed to be substantially different from the original
terms of the convertible notes. As such, this portion has been recognised as a
separate financial liability. Refer to Note 16(c) for further information.
(iv) The Company also received a notice from another of the convertible note
holders indicating his intention to convert his 320 notes and interest into
42,005,479 shares effective 9 March 2024. The remaining convertible note
holder did not provide any option or exercise notice to the Company by 26
February 2024 and, as such, in accordance with the convertible note agreement,
the remainder of the 750 notes plus interest automatically converted into
98,450,342 shares effective 9 March 2024. The value of the notes converted
into shares amounted to £112,365 (A$217,172).
(c) Extended Notes
2024 2023
Movement in Extended Notes Note A$ A$
Balance at 1 July - -
Balance of previously convertible notes extended to 30 September 2024 16(b)(iii) 355,187 -
Effect of fair valuation on Extended Notes 16(c)(i) (91,798) -
Initial Recognition of Extended Notes 263,389 -
Interest on Extended Notes at 5% 5,197 -
Additional amortised effective interest charge 46,456 -
Effect of movements in exchange rates (4,773) -
Balance at 30 June 16(c)(ii) 310,269 -
(i) The fair value of the Extended Notes were determined to be £135,635
(A$263,389) at the date of the extension of the previously convertible notes.
This was based on an annualised fair value borrowing rate of 80%.
(ii) The amortised balance of the Extended Notes at 30 June 2024 was
£162,706 (A$310,269). The final repayment value effective 30 September 2024
will be £188,688 (A$359,818 when translated at year-end AUD to GBP foreign
exchange rate of 0.5244).
Subsequent Events
In August 2024, the Company received a notice from one of the Extended Notes
holders indicating his intention to convert his 750 notes and interest
totalling £80,866 into 101,083,050 shares effective 30 September 2024. These
shares are expected to be issued and admitted to trading on AIM on or around
30 September 2024. The remainder of the Extended Notes, at the face value of
1,000 notes plus interest totalling £107,822, will also be repaid in cash to
their holders on 30 September 2024.
(d) Unsecured Short-Term Borrowings
2024 2023
Movement in Unsecured Short-Term Borrowings Note A$ A$
Balance at 1 July - -
Proceeds (first tranche) 16(d)(i) 776,166 -
Proceeds (second tranche) 16(d)(ii) 385,060
Interest 285,812 -
Effect of movements in exchange rates (17,324) -
Balance at 30 June 1,429,714 -
During the year, the Company obtained unsecured short-term loan funding from
existing investors of £600,000:
(i) The first tranche of £400,000 of was received in March 2024 and bears
interest at a fixed rate of 17.50% for the period of the loan (approximately 3
months) and specified a "repayment date" of 11 June 2024. As this tranche was
not repaid at year-end, additional interest was charged on this tranche of
borrowings at a fixed penalty interest rate of 8% per month.
(ii) The second tranche of £200,000 was received in June 2024 and bears
interest at a fixed rate of 23.87% for the period of the loan (approximately 3
months) and specified a "repayment date" of 11 September 2024. This tranche of
borrowings is still outstanding as at the date of this report, and as such
additional interest has been charged on this tranche of borrowings at a fixed
penalty interest rate of 8% per month.
Subsequent Events
Subsequent to year end, a third tranche of £140,000 was received in July and
August 2024. This third tranche bears interest at a fixed rate of 23.87% for
the period of the loan until a specified "repayment date" of 11 September
2024, and penalty interest at a fixed rate of 8% per month thereafter.
Additionally, the first tranche of short-term loans plus interest were repaid
on 11 September 2024. The total repayment including interest was £566,000
(A$1,079,329 when translated at year-end AUD to GBP foreign exchange rate of
0.5244). The second and third tranches of the short-term borrowings, totalling
£340,000 plus interest, remain outstanding at the date of this report. The
balance outstanding of those loans at the date of this report is £448,358
(A$854,992 when translated at year-end AUD to GBP foreign exchange rate of
0.5244).
Material Accounting Policy
All borrowings are initially recognised when the Group becomes a party to the
contractual provisions of the lending instrument. All borrowings are initially
recognised at fair value less transaction costs. Borrowings are subsequently
carried at amortised cost using the effective interest method.
The component of the convertible notes that exhibits characteristics of a
liability is recognised as a liability in the statement of financial position,
net of transaction costs. This is calculated net of the valuation of the
option to convert the notes (refer to Note 17).
The Group derecognises a financial liability when its contractual obligations
are discharged, cancelled or expire. The Group also derecognises a financial
liability when its terms are modified and the cash flows of the modified
liability are substantially different, in which case a new financial liability
based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying
amount extinguished and the consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in profit or loss.
17. DERIVATIVE FINANCIAL LIABILITY
2024 2023
Note A$ A$
Current
Convertible notes (derivative liability 17(a) 167,726 1,050,334
on conversion option component)
167,726 1,050,334
Movement in Convertible Notes
(Derivative Liability Component)
Balance at 1 July 1,050,334 -
Derivative liability at inception of convertible notes 17(b) - 774,570
Net increase in fair value 17(c) - 227,668
Net decrease in fair value 17(d) (866,382) -
Effect of movements in exchange rates (16,226) 48,096
Balance at 30 June 17(c) 167,726 1,050,334
17(d)
(a) The holders of the convertible notes had the option to convert the notes
into ordinary share capital of the Company. This option was effective on 9
December 2023 and expired on 9 March 2024. See Note 16(b)(i) for further
details.
(b) The fair value of the option component of the convertible notes on their
effective date of issue of 9 March 2023 was determined to be £431,900
(A$774,570) and was calculated using the Black Scholes Model with the
following factors and assumptions:
Valuation Date Expiry Date No. of "Options" Fair Value Per "Option" "Exercise" Price Share Price on Effective Issue Date Expected Volatility Risk Free Interest Rate Dividend Yield
9 Mar 2023 9 Mar 2024 812,500,000 £0.0005 £0.0008 £0.0011 96.35% 3.60% -
(A$0.0010)
(A$0.0014)
(A$0.0020)
(c) The fair value of the option component of the convertible notes as at
the previous year-end on 30 June 2023 was determined to be £551,425
(A$1,050,334) and was calculated using the Black Scholes Model with the
following factors and assumptions:
Valuation Date Expiry Date No. of "Options" Fair Value Per "Option" "Exercise" Price Share Price on 30 Jun 2023 Expected Volatility Risk Free Interest Rate Dividend Yield
30 Jun 2023 9 Mar 2024 812,500,000 £0.0007 £0.0008 £0.0013 100% 4.10% -
(A$0.0013)
(A$0.0015)
(A$0.0025)
(d) As detailed in Note 16(b)(ii), 3,680 notes were redeemed in cash, and as
detailed in Note 16(b)(iv), 1,070 notes were redeemed in shares. The ability
to convert remained on the remaining 1,750 Extended Notes, as detailed in Note
16(b)(iii). The fair value of the derivative liability of this option
component on the Extended Notes was determined to be £87,956 (A$167,726) at
30 June 2024. This was calculated using the Black Scholes Model with the
following factors and assumptions:
Valuation Date Expiry Date No. of "Options" Fair Value Per "Option" "Exercise" Price Share Price on 30 Jun 2024 Expected Volatility Risk Free Interest Rate Dividend Yield
30 Jun 2024 30 Sep 2024 218,750,000 £0.0004 £0.0008 £0.0012 86.36% 4.35% -
(A$0.0008)
(A$0.0015)
(A$0.0022)
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.
Material 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.
Critical Accounting Judgements, Estimates and Assumptions
When the fair values of financial liabilities recorded in the balance sheet
cannot be measured based on quoted prices in active markets, their fair value
is measured using the Black-Scholes model valuation technique taking into
account the terms and conditions upon which the instruments were granted. The
inputs to these models are taken from observable markets where possible, but
where this is not feasible, a degree of judgement is required in establishing
fair values. Judgements include considerations of inputs such as liquidity
risk, credit risk and volatility. Changes in assumptions about these factors
could affect the reported fair value of financial instruments.
18. LEASES
Short-Term Rental Lease Commitments
Non-cancellable operating lease rentals are payable as follows:
2024 2023
A$ A$
Within one year 13,971 29,626
One year or later and no later than five years - -
13,971 29,626
During the year the Group continued its lease at its Indian office premises in
Vadodara, Gujarat. The lease's lock-in period ended during the year on 11
December 2023, and 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.
2024 2023
A$ A$
Expenses Related to Short-Term Leases
Operating lease rentals expensed during the financial year 56,845 71,067
Material 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.
19. EXPENDITURE COMMITMENTS
Exploration, Evaluation and Appraisal Expenditure Commitments
In order to maintain rights of tenure to exploration, evaluation and appraisal
permits, the Group is required to perform exploration, evaluation and
appraisal 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, evaluation and appraisal
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$nil at year end (30 June 2023: A$nil).
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, evaluation and appraisal results. These cannot be
estimated and are subject to renegotiation upon the expiry of the existing
exploration, evaluation and appraisal leases.
Cambay Field
For the extended Cambay PSC period (which started from September 2019), the
operators of the Cambay PSC are 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 ("MOPNG") of the
Government of India. During the year, the Company submitted bank guarantees
totalling US$247,835 in favour of MOPNG, thereby satisfying these
requirements. The US$247,835 bank guarantees include a 15% portion which is
guaranteed on behalf of OHIL for its share of the bank guarantee.
Required bank guarantee amounts are reassessed every year according to aspects
of the work programme that have been fulfilled during the year, and according
to aspects of the work programme that is planned to be fulfilled for the
relevant upcoming year.
There are no other commitments for the Cambay PSC that is not disclosed
elsewhere in this report.
Subsequent Event
Refer to the "Subsequent Event" header under Note 10 with regards to the
Government of India approval of the farm out of 50% of the Group's
participating interest in the Cambay PSC to Selan on 19 July 2024. As Selan
will be lead joint operator under the farm-out agreement, the required total
bank guarantees to be submitted in favour of MOPNG may change pending any
updated work programmes that will be submitted by Selan. At the date of this
report, Selan has not yet submitted any updated work programmes and there are
no additional obligations to be fulfilled by the Group in this regard.
CCS Licence on Camelot Area
Effective on 1 August 2023, the NSTA granted the CS019 licence for the Camelot
area ("CS019 - SNS Area 4") to Synergia Energy CCS Limited and its 50% joint
venture partner, Wintershall Dea Carbon Management Solutions UK ("Wintershall
Dea"), with Synergia Energy CCS Limited as operator. The carbon storage
licence has a work program that incorporates an appraisal phase comprising
seismic re-processing, technical evaluations and risk assessment, and a
contingent FEED study leading to a potential storage licence application in
2028, following the final investment decision ("FID"). The CS019 licence also
includes a contingent appraisal well.
Capital Expenditure Commitments
The Group had no capital expenditure commitments as at 30 June 2024 (30 June
2023: A$nil).
20. CONTINGENT ASSETS, CONTINGENT LIABILITIES AND GUARANTEES
Contingent Assets and Contingent Liabilities at Reporting Date
The Directors are of the opinion that there were no contingent assets or
contingent liabilities as at 30 June 2024 and as at 30 June 2023.
Subsequent Event
With reference to the "Subsequent Event" header under Note 10 with regards to
the Government of India approval of the farm out of 50% of the Group's
participating interest in the Cambay PSC to Selan on 19 July 2024, on 24
September 2024, the Company entered into an agreement to indemnify Selan
against any liability for withholding tax on the US$2.5 million cash payment
under the farm-out agreement. The indemnity agreement is effective from 1
August 2024 until 1 April 2035.
Guarantees
Synergia Energy Ltd has issued a guarantee in relation to corporate credit
cards. The bank guarantee amounts to A$15,000 at year-end (30 June
2023: A$15,000).
As referred to in Note 19, during the year, the Company submitted bank
guarantees in favour of MOPNG totalling US$247,835, relating to the Cambay
field. 15% of these guarantees were entered into on behalf of OHIL for its
share of the bank guarantee.
EQUITY, GROUP STRUCTURE AND RISK MANAGEMENT
This section addresses the Group's capital structure, the Group structure and
related party transactions, as well as including information on how the Group
manages various financial risks.
21. ISSUED CAPITAL
2024 2023
Ordinary Shares Number of Ordinary Shares Issued Capital Number of Ordinary Shares Issued Capital
A$ A$
On issue at 1 July - fully paid 8,417,790,704 192,817,143 8,242,959,310 192,181,384
Issue of share capital
Shares issued for cash ((2)) ((3)) 2,079,545,454 3,571,757 174,831,394 608,378
Shares issued on conversion of convertible notes ((4)) 140,455,821 217,298 - -
Capital raising costs ((1)) ((2)) ((3)) - (354,031) - 27,381
Balance at 30 June - fully paid 10,637,791,979 196,252,167 8,417,790,704 192,817,143
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.
Refer to the following notes for additional information and Note 24 for
details of unlisted options issued:
((1) ) Capital raising costs include cash payments of A$212,060 and
fair value of options granted to Novum Securities Limited ("Novum") of
A$141,971. For details of the options granted to Novum, see footnotes (2) and
(3) below.
((2) ) On 7 August 2023, the Company issued 704,545,454 shares at
£0.0011 (A$0.0021) per share pursuant to the July Placement announced on 25
July 2023.
As part of this placement, the Company issued 13,636,363 unquoted options to
Novum pursuant to the capital raising advisory agreement relating to this
placement ("July Fee Options"). These options were issued on 26 September
2023, are exercisable at £0.0011 per share on or before 31 July 2026. The
fair value of the July Fee Options was A$20,902. Refer to Note 24 (footnote
(2)) to see the factors and assumptions used to determine the fair value of
the July Fee Options.
((3) ) On 19 December 2023, the Company issued 1,375,000,000 shares
at £0.0008 (A$0.0015) per share pursuant to the December Placement announced
on 5 December 2023. These shares were ratified by shareholders at a General
Meeting held by the Company on 15 February 2024.
As part of this placement, the Company also issued 1,375,000,000 unquoted
options to the participants of this placement ("Placement Options") and
82,500,000 unquoted options to Novum pursuant to the capital raising advisory
agreement relating to this placement ("December Fee Options").
Both the Placement Options and the December Fee Options are exercisable at
£0.0014 per share on or before 31 December 2026. The options were issued on
27 February 2024 following shareholder approval at the General Meeting on
15 February 2024.
The fair value of the December Fee Options was A$121,069. Refer to Note 24
(footnote (3)) to see the factors and assumptions used to determine the fair
value of the December Fee Options.
((4) ) The Company received a notice from one of the convertible
note holders indicating his intention to convert his 320 notes and interest
into 42,005,479 shares, effective on the maturity date of the notes on 9 March
2024. The 320 notes plus interest of £33,604 (A$64,986) was converted into
the 42,005,479 shares at £0.0008 (A$0.0015) per share on 27 March 2024, in
accordance with the terms of the notes.
Another convertible note holder who held 750 notes did not provide any option
or exercise notice to the Company by the maturity date of the notes on 9 March
2024. As such, in accordance with the terms of the convertible notes, the 750
notes plus interest of £78,760 (A$152,311) was automatically converted into
98,450,342 shares at £0.0008 (A$0.0015) per share. The shares were issued on
27 March 2024.
Material Accounting Policy
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
22. RESERVES
2024 2023
A$ A$
Foreign currency translation reserve 6,436,620 7,764,968
Share-based payments reserve 766,829 534,957
7,203,449 8,299,925
(a) 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.
2024 2023
Movement in FCTR A$ A$
Balance at 1 July 7,764,968 7,577,543
Exchange differences on currency translation of subsidiaries (2,712) 187,425
Reclassification of exchange differences on currency translation to profit or (1,325,636) -
loss on deregistration of Oilex (JPDA 06‑103) Ltd ((1))
Balance at 30 June 6,436,620 7,764,968
((1) ) On 1 February 2024, one of the Group's subsidiaries, Oilex
(JPDA 06-103) Ltd was deregistered under section 601AA(4) of the Corporations
Act 2001 (refer to Note 25). Accordingly, the cumulative amount of the
exchange differences on currency translation relating to Oilex (JPDA 06-103)
Ltd has been reclassified from the FCTR to profit or loss.
(b) 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. Refer to Note 24 for further information
on share-based payments incurred during the year.
2024 2023
Movement in Share-Based Payments Reserve A$ A$
Balance at 1 July 534,957 221,321
Share-based payments expenses ((1)) 168,187 288,484
Share-based payments recognised directly in equity ((1)) 141,971 25,152
Options expired ((2)) (78,286) -
Balance at 30 June 766,829 534,957
((1) ) Refer to Note 24.
((2) ) No options were exercised, and 55,210,084 options lapsed
during the year. The balance of unlisted options at year-end was 1,865,854,839
(30 June 2023: 449,928,560 options). See "Balance of Unlisted Options at
Year-End" schedule below.
Balance of Unlisted Options at Year-End
Exercise Balance at 1 July 2023 Issued During the Period ((3) (4)) Options Expired Balance at
30 June 2024
Issue Date Expiry Date Price No. No. No. No.
19 Jan 2022 31 May 2024 £0.0024 25,210,084 - (25,210,084) -
12 Aug 2022 12 Aug 2027 £0.0022 324,675,324 - - 324,675,324
13 Sep 2022 30 Apr 2024 £0.0020 30,000,000 - (30,000,000) -
3 Apr 2023 1 Apr 2028 £0.0000 70,043,152 - - 70,043,152
26 Sep 2023 31 Jul 2026 £0.0011 - 13,636,363 - 13,636,363
27 Feb 2024 31 Dec 2026 £0.0014 - 1,375,000,000 - 1,375,000,000
27 Feb 2024 31 Dec 2026 £0.0014 - 82,500,000 - 82,500,000
449,928,560 1,471,136,363 (55,210,084) 1,865,854,839
((3) ) Refer to Note 24, footnotes (2) and (3) for further
information on the 13,636,363 options and 82,500,000 options issued on 26
September 2023 and 27 February 2024 respectively.
((4) ) In addition to the share-based payment transactions as
listed in Note 24, on 27 February 2024, the Company issued 1,375,000,000
unquoted December Placement Options, as part of the December Placement
detailed in Note 21 (footnote (3)). The December Placement Options were
offered to subscribers of the December Placement, who were offered one
free-attaching unquoted option per each December Placement share subscribed
for, resulting in the issue of the 1,375,000,000 December Placement Options.
The December Placement Options are exercisable at £0.0014 (A$0.0027) per
share on or before 31 December 2026; and were approved by shareholders at a
general meeting of Synergia Energy shareholders held on 15 February 2024.
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
2024 2024 2023 2023
Outstanding at 1 July A$0.0031 449,928,560 A$0.0050 736,505,236
Lapsed during the year A$0.0041 (55,210,084) A$0.0050 (711,295,152)
Exercised during the year - - - -
Granted during the year
- Granted as part of placements A$0.0027 1,375,000,000 - -
- Granted to brokers and advisors A$0.0026 96,136,363 A$0.0034 30,000,000
- Granted to executive directors and management - - A$0.0030 394,718,476
Outstanding at 30 June A$0.0028 1,865,854,839 A$0.0031 449,928,560
Exercisable at 30 June A$0.0028 1,865,854,839 A$0.0030 341,703,452
The unlisted options outstanding at year-end have the following minimum and
maximum prices, and a weighted average remaining contractual life as follows:
2024 2023
Minimum exercise price of unlisted Nil Nil
options outstanding at 30 June
Maximum exercise price of unlisted £0.0022 £0.0024
options outstanding at 30 June
(A$0.0042)
(A$0.0045)
Weighted average remaining contractual life 2.65 years 3.82 years
23. ACCUMULATED LOSSES
Movements in accumulated losses during the year were as follows:
2024 2023
A$ A$
Balance at 1 July (190,779,552) (185,396,650)
Loss after tax for the year (2,798,511) (5,382,902)
Options expired (refer to Note 22(b), footnote (2)) 78,286 -
Balance at 30 June (193,499,777) (190,779,552)
24. SHARE-BASED PAYMENTS
2024 2023
A$ A$
Shares and Rights - Equity Settled
Executive Directors - options ((1)) 168,187 168,187
Executive Management - nil cost options - 120,297
Total share-based payments expense and amount recognised in the Condensed 168,187 288,484
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 ((2) (3)) 141,971 25,152
Total share-based payments recognised directly in equity 141,971 25,152
Total Share-Based Payment Transactions 310,158 313,636
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 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 of
A$504,562 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)
The whole fair value of the options of A$504,562 have been expensed, with
A$168,188 expensed at 30 June 2022, A$168,187 expensed during the year ended
30 June 2023, and A$168,187 expensed during the current year ended 30 June
2024.
((2) ) On 26 September 2023, the Company issued 13,636,363 unquoted
July Fee Options to Novum pursuant to the capital raising advisory agreement
relating to the July Placement. The options are exercisable at £0.0011 per
share and expire on 31 July 2026.
The fair value of the unquoted options of A$20,902 was calculated at the grant
date of 7 August 2023 (being the issue date of the July Placement shares)
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 July Fee Options granted to Novum
during the period:
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
7 Aug 2023 7 Aug 2023 31 July 2026 £0.0008 £0.0011 £0.0012 110.67% 4.10% -
(A$0.0015)
(A$0.0021)
(A$0.0022)
((3) ) On 27 February 2024, following shareholder approval on 15
February 2024, the Company issued 82,500,000 unlisted December Fee Options to
Novum, exercisable at £0.0014 (A$0.0027) per share on or before 31 December
2026, pursuant to a capital raising advisory agreement related to the December
Placement.
The fair value of the December Fee Options of A$121,069 was calculated at the
grant date of 15 February 2024 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
82,500,000 December Fee Options granted to Novum:
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
15 Feb 2024 15 Feb 2024 31 Dec 2026 £0.0008 £0.0014 £0.0013 100% 4.35% -
(A$0.0015)
(A$0.0027)
(A$0.0024)
Material 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.
25. CONSOLIDATED ENTITIES
Country of Ownership Interest %
Incorporation
2024 2023
Parent Entity
Synergia Energy Ltd Australia
Subsidiaries
Oilex (JPDA 06-103) Ltd ((1)) Australia - 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 United Kingdom 100 100
Additional information regarding the changes in the composition of the Group:
(1) ) On 1 February 2024, Oilex (JPDA 06-103) Ltd was deregistered
under section 601AA(4) of the Corporations Act 2001.
Material 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.
26. PARENT ENTITY DISCLOSURE
As at, and throughout, the financial year ended 30 June 2024 the parent entity
of the Group was Synergia Energy Ltd.
2024 2023
A$ A$
Result of the Parent Entity
Loss for the year (4,168,243) (5,923,850)
Other comprehensive (loss)/income (4,515) 80,854
Total Comprehensive Loss for the Year (4,172,758) (5,842,996)
Financial Position of the Parent Entity at Year End
Current assets 329,088 1,134,924
Total assets 17,541,991 17,806,486
Current liabilities (3,829,951) (2,938,467)
Total liabilities (8,334,690) (8,171,609)
Net Assets 9,207,301 9,634,877
Total Equity of the Parent Entity Comprising Of:
Issued capital 196,252,167 192,817,143
Foreign currency translation reserve (1,142,135) (1,137,620)
Share-based payments reserve 766,829 534,957
Accumulated losses (186,669,560) (182,579,603)
Total Equity 9,207,301 9,634,877
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 2024 and as at 30 June 2023.
Synergia Energy Ltd has issued a guarantee in relation to corporate credit
cards. The bank guarantee amounts to A$15,000 (2023: A$15,000). An equal
amount is held in cash and cash equivalents as security by the bank.
During the year, Synergia Energy Ltd also submitted bank guarantees totalling
US$247,835 in favour of MOPNG in relation to DGH approved budgeted activity on
the Cambay field. 15% of the amounts are guaranteed by Synergia Energy Ltd on
behalf of OHIL for OHIL's share of the bank guarantee. Refer to Note 19,
"Cambay Field" heading for further details on the bank guarantee requirements
by MOPNG.
Parent Entity Capital Commitments for Acquisition of Property Plant and
Equipment
Synergia Energy Ltd had no capital commitments as at 30 June 2024 (2023:
A$nil).
Parent Entity Guarantee (in Respect of Debts of its Subsidiaries)
As noted above, 15% of the bank guarantees totalling US$247,835 were
guaranteed by Synergia Energy Ltd on behalf of OHIL for OHIL's share of the
bank guarantees.
Synergia Energy Ltd has issued no other guarantees in respect of the debts of
its subsidiaries.
27. JOINT ARRANGEMENTS
The Group's interests in joint arrangements at year end are detailed below.
The principal activities of the joint arrangements is the development of CCS
projects.
(a) Joint Operations Interest
Permit Location 2024 2023
% %
OFFSHORE (CCS LICENcE)
CS019 - SNS Area 4 ((1)) UK (Camelot Area) 50 -
((1) ) The NSTA granted the CS019 licence for the Camelot area to
Synergia Energy CCS Limited and its 50% joint venture partner, Wintershall Dea
Carbon Management Solutions UK, with Synergia Energy CCS Limited as operator.
The licence was effective from 1 August 2023.
(b) Joint Operations Assets
The aggregate of the Group's interests in all joint operations is as follows:
2024 2023
A$ A$
Non-Current Assets
Exploration, evaluation and appraisal assets 1,154,230 -
Net Assets 1,154,230 -
(c) Joint Operations Commitments
In order to maintain the rights of tenure to exploration, evaluation and
appraisal permits, the Group is required to perform exploration, evaluation
and appraisal 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, evaluation and appraisal
permit is made and at other times. These obligations are not provided for in
the financial report. The expenditure commitments attributable to joint
operations are currently estimated to be A$nil at year end (30 June 2023:
A$nil).
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, 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.
(d) Material 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.
28. ASSETS AND LIABILITIES RELATED TO THE CAMBAY PSC
During the years ended 30 June 2023 and 30 June 2024, the Group owned 100% PI
in the Cambay PSC for the Cambay field which is located in the Cambay Basin of
India.
The aggregate of the Group's interests in the Cambay PSC is as follows:
2024 2023
A$ A$
Current Assets
Cash and cash equivalents 28,175 188,976
Trade and other receivables ((1)) 60,692 163,794
Inventories 78,695 113,821
Prepayments 51,567 51,408
Total Current Assets 219,129 517,999
Non-Current Assets
Development assets 17,336,720 17,558,182
Plant and equipment 2,739 4,059
Total Non-Current Assets 17,339,459 17,562,241
Total Assets 17,558,588 18,080,240
Current Liabilities
Trade and other payables (2,542,989) (1,603,710)
Provision for site restoration and well abandonment (144,829) -
Total Current Liabilities (2,687,818) (1,603,710)
Non-Current Liabilities
Provision for site restoration and well abandonment (5,299,693) (6,156,638)
Total Non-Current Liabilities (5,299,693) (6,156,638)
Total Liabilities (7,987,511) (7,760,348)
Net Assets 9,571,077 10,319,892
((1) ) The balance of trade and other receivables of the joint
operations is before any impairment and provisions.
(a) Cambay PSC Commitments
For the extended Cambay PSC period (which started from September 2019), the
operators of the Cambay PSC are required to submit a bank guarantee equivalent
to 10% of total estimated annual expenditure in respect to the work programme
approved by MOPNG. During the year, the Group submitted bank guarantees
totalling US$247,835 in favour of MOPNG, thereby satisfying MOPNG
requirements. The US$247,835 bank guarantees include a 15% portion which is
guaranteed on behalf of OHIL for its share of the bank guarantee.
Required bank guarantee amounts are reassessed every year according to aspects
of the work programme that have been fulfilled during the year, and according
to aspects of the work programme that is planned to be fulfilled for the
relevant upcoming year.
There are no other commitments for the Cambay PSC joint operation at year-end.
(b) Subsequent Event
Refer to the "Subsequent Event" header under Note 10 with regards to the
Government of India approval of the farm out of 50% of the Group's
participating interest in the Cambay PSC to Selan on 19 July 2024.
Consequently, 50% of the development assets and 50% of the provision for site
restoration and well abandonment transferred to Selan effective on 19 July
2024 with the agreement closing on 1 August 2024. The other net liabilities
related to the Cambay PSC incurred up to 1 August 2024 remain the
responsibility of the Group. The Group and Selan will share the
responsibilities of net liabilities incurred from 1 August and onwards.
In addition, as Selan will be lead joint operator under the farm-out
agreement, the required total bank guarantees to be submitted in favour of
MOPNG may change pending any updated work programmes that will be submitted by
Selan. At the date of this report, Selan has not yet submitted any updated
work programmes and there are no additional obligations to be fulfilled by the
joint operation in this regard.
29. RELATED PARTIES
(a) Identity of Related Parties
The Group has a related party relationship with its subsidiaries (refer to
Note 25), joint operations (refer to Note 27) and with its key management
personnel ("KMP").
(b) Key Management Personnel ("KMP")
The following were KMP of the Group at any time during the current and
previous financial years and, unless otherwise indicated, were KMP for the
entire period:
Non-Executive Directors Position
Joe Salomon ((1)) Non-Executive Chairman
Peter Schwarz ((2)) Independent Non-Executive Director and Deputy Chairman
Mark Bolton Non-Executive Director
Paul Haywood Independent Non-Executive Director
Executive Directors Position
Roland Wessel Chief Executive Officer and Executive Director
Colin Judd Chief Financial Officer and Executive Director
Ashish Khare ((3)) Head of India Assets and Executive Director
((1) ) Mr Salomon's role changed from Executive Chairman to Non-Executive
Chairman on 29 June 2023.
((2) ) Mr Schwarz was appointed as Deputy Chairman on 24 January 2024.
((3) ) Mr Khare was appointed as Executive Director on 24 January 2024,
with his appointment being finalised effective on 2 April 2024.
(c) KMP Compensation
KMP compensation comprised the following:
2024 2023
A$ A$
Short-term employee benefits 1,017,766 973,113
Other long-term benefits 6,058 15,423
Non-monetary benefits - 2,233
Post-employment benefits 23,708 27,797
Equity compensation benefits 168,188 288,483
1,215,720 1,307,049
(d) Individual KMP Compensation Disclosures
Information regarding individual KMP 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.
(e) Amounts Payable to KMP
At year-end, the following amounts were owing from the Group to the Directors:
2024 2023
A$ A$
Non-Executive Directors
J Salomon 29,269 -
P Schwarz 14,302 -
M Bolton 15,438 -
P Haywood 14,302 -
Executive Directors
R Wessel 71,510 -
C Judd 52,441 -
A Khare 38,486 -
Total 235,748 -
(f) Other KMP Transactions with the Company or its Controlled Entities
There were no other transactions in the current or prior years between the
Group and entities controlled by KMP.
30. 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:
2024 2023
A$ A$
Cash and cash equivalents 1,069,782 938,589
Trade and other receivables - current 116,688 220,331
1,186,470 1,158,920
The credit risk on the Group's liquid funds is limited because the majority of
funds are held with counterparties which are major banks and financial
institutions with high credit ratings assigned by international credit rating
agencies across Australia, India and United Kingdom.
Impairment Losses
The aging of the trade and other receivables at the reporting date was:
2024 2023
A$ A$
Consolidated Gross
Not past due 556,668 234,903
Past due 0-30 days 2,713 -
Past due 31-120 days - -
Past due 121 days to one year - -
More than one year 40,525 49,371
599,906 284,274
Provision for expected credit losses (483,218) (63,943)
Trade and Other Receivables Net of Provision 116,688 220,331
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 to 12 Greater
Amount
Value
Than
A$ or Less Months
A$ A$
1 Year
A$ A$
A$
2024
Trade and other payables((1)) 2,373,587 2,373,587 2,373,587 2,373,587 - -
Borrowings 1,739,983 1,739,983 1,739,983 957,287 782,696 -
Total Financial Liabilities 4,113,570 4,113,570 4,113,570 3,330,874 782,696 -
2023
Trade and other payables((1)) 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 -
((1)) At 30 June 2024, A$353,588 of the trade payables amount was overdue
(2023: nil). Subsequent to balance date, A$117,096 of this amount has been
paid.
(d) Market Risk
Market risk is the risk that changes in market prices, such as foreign
exchange rates, interest rates and equity prices will affect the Group's
income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return.
(i) Currency Risk
An entity is exposed to currency risk on sales and purchases that are
denominated in a currency other than the functional currency of the entity.
The currencies giving rise to this risk are the United States dollar ("USD"),
Indian rupee ("INR"), the British pound ("GBP") and the European euro ("EUR").
The amounts in the table below represent the Australian dollar equivalent of
balances in the entities within the Synergia Energy Group that are held in a
currency other than the functional currency in which they are measured in
those entities. The exposure to currency risk at balance date was as follows:
In Australian Dollar Equivalents
USD INR GBP EUR
A$ A$ A$ A$
2024
Cash and cash equivalents 7,546 85,988 962,864 -
Trade and other receivables ((1)) 76,422 474,903 29,389 -
Trade and other payables (327,019) (548,962) (333,923) (995,279)
Loans - - (1,739,983) -
Net Balance Sheet Exposure (243,051) 11,929 (1,081,653) (995,279)
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) (2,809)
Loans (339,902) - (434,764) -
Net Balance Sheet Exposure 73,257 99,112 (300,178) (2,809)
((1) ) Trade and other receivable balances listed here are before
any impairment and provisions.
The following significant exchange rates applied during the year:
Average Rate Reporting Date Spot Rate
AUD 2024 2023 2024 2023
USD 0.6560 0.6736 0.6624 0.6630
INR 54.4963 54.9359 55.2442 54.3859
GBP 0.5208 0.5595 0.5244 0.5250
EUR 0.6063 0.6430 0.6196 0.6099
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.
2024 2023
A$ A$
10% Strengthening
United States dollars (USD) 22,096 (6,660)
Indian rupees (INR) (1,084) (9,010)
British pounds (GBP) 98,332 27,289
European euros (EUR) 90,480 255
10% Weakening
United States dollars (USD) (27,006) 8,140
Indian rupees (INR) 1,325 11,012
British pounds (GBP) (120,184) (33,353)
European euros (EUR) (110,587) (312)
(ii) Interest Rate Risk
At the reporting date the interest rate profile of the Group's
interest-bearing financial instruments were:
Carrying Amount
2024 2023
A$ A$
Fixed Rate Instruments
Financial assets 15,000 15,000
(short-term deposits included in trade receivables)
Financial liabilities (borrowings) (1,739,983) (774,666)
(1,724,983) (759,666)
Variable Rate Instruments
Financial assets (cash and cash equivalents) 1,069,782 938,589
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.
2024 2023
A$ A$
Impact on profit or loss 10,698 9,386
(iii) Equity Price Risk
Exposure
The Group's equity securities were publicly traded on the ASX until November
2023, with the balance considered not recoverable (refer to Note 13). As
such, the balance of the equity securities was fully impaired to nil and as
such, the Group's exposure to equity securities price risk ceased to exist
after that impairment.
(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.
31. AUDITORS' REMUNERATION
2024 2023
A$ A$
Audit and Review Services
Auditors of the Company - PKF Perth
Audit and review of financial reports 101,614 114,166
101,614 114,166
Other Auditors
Audit and review of financial reports (India Statutory) 18,903 7,635
Audit and review of financial reports (Cyprus Statutory) 23,149 22,905
42,052 30,540
Total Audit and Review Services 143,666 144,706
Other Services
Auditors of the Company - PKF Perth
Taxation compliance services 11,100 7,000
11,100 7,000
Other Auditors
Taxation compliance services (India Statutory) 434 13,389
Other consulting services - 3,788
434 17,177
Total Other Services 11,534 24,177
total AUDITORS' REMUNERATION 155,200 168,883
32. SUBSEQUENT EVENTS
During July and August 2024, the Company obtained further short-term loan
funding from existing investors of £140,000. The loans bear interest at a
fixed rate of 23.87% for the period to 11 September 2024 and penalty interest
at a fixed rate of 8% per month after 11 September 2024.
Effective on 19 July 2024, the Government of India Ministry of Petroleum and
Natural Gas approved the transfer of assignment of the 50% PI in the Cambay
field PSC held by the Group to Selan Exploration Technology Limited ("Selan").
Following the ratification, the farm-out agreement closed on 1 August 2024,
and US$2.5 million, net of withholding taxes, was paid by Selan to the Group
on 1 August 2024. The portion that was withheld is expected to be received in
the coming weeks, in accordance with an agreement the Company entered into on
24 September 2024 to indemnify Selan against any liability for withholding tax
effective from 1 August 2024 until 1 April 2035 (refer to Note 20 for further
details of the indemnity agreement).
This receipt of the initial cash payment from the closing of the Cambay
farm-out agreement (net of withholding taxes) enabled the Group to repay the
first tranche of its short-term borrowings (which was obtained in March 2024)
on 11 September 2024. The repayment was £566,000, which was based on
principal of £400,000 plus interest of £166,000. The second and third
tranches of the short-term borrowings, totalling £340,000 plus interest,
remain outstanding at the date of this report. The balance outstanding of
those loans at the date of this report is £448,358.
In August 2024, the Company received a notice from one of the Extended Notes
holders indicating his intention to convert his 750 notes and interest
totalling £80,866 into 101,083,050 shares effective 30 September 2024. These
shares are expected to be issued and admitted to trading on AIM on or around
30 September 2024. The remainder of the Extended Notes, at the face value of
1,000 notes plus interest totalling £107,822, will also be repaid in cash to
their holders on 30 September 2024.
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.
CONSOLIDATED ENTITY DISCLOSURE STATEMENT AS AT 30 JUNE 2024
The following entities were part of the consolidated entity as at 30 June
2024:
Entity Name Type of Entity Parent Entity's Ownership Interest Partner or Participant in Joint Venture Country of Incorporation Place of Business Australian or Foreign Resident Foreign Jurisdictions of Foreign Residents
%
Parent Entity
Synergia Energy Ltd ((1)) Body Corporate N/A Yes Australia Australia Australian N/A
Subsidiaries
Merlion Energy Resources Private Limited Body Corporate 100 No India India Foreign India
Oilex N.L. Holdings (India) Limited ((1)) Body Corporate 100 Yes Cyprus Cyprus Foreign Cyprus
Oilex (West Kampar) Limited Body Corporate 100 No Cyprus Cyprus Foreign Cyprus
Synergia Energy CCS Limited Body Corporate 100 No United Kingdom United Kingdom Foreign United Kingdom
Synergia Energy Services UK Limited Body Corporate 100 No United Kingdom United Kingdom Foreign United Kingdom
BASIS OF PREPARATION
The consolidated entity disclosure statement ("CEDS") has been prepared in
accordance with subsection Section 295(3A) of the Corporations Act 2001. The
entities listed in the statement are Synergia Energy Ltd and all the entities
it controls in accordance with AASB 10 Consolidated Financial Statements.
KEY ASSUMPTIONS AND JUDGEMENTS
Determination of Tax Residency
Section 295(3A) of the Corporations Act 2001 requires that the tax residency
of each entity which is included in the CEDS be disclosed. In the context of
an entity which was an Australian resident, "Australian resident" has the
meaning provided in the Income Tax Assessment Act 1997 (Cth). The
determination of tax residency involves judgment as the determination of tax
residency is highly fact dependent and there are currently several different
interpretations that could be adopted, and which could give rise to a
different conclusion on residency.
In determining tax residency, the Group has applied the following
interpretations:
Australian Tax Residency
The Group has applied current legislation and judicial precedent, including
having regard to the Commissioner of Taxation's public guidance in Tax Ruling
TR 2018/5.
Foreign Tax Residency
The Group has applied current legislation and where available judicial
precedent in the determination of foreign tax residency.
((1)) The parent entity, Synergia Energy Ltd, and one of its
subsidiaries, Oilex N.L. Holdings (India) Limited, have project offices in
India. The project offices are tax residents of India, and any income earned
and expenditures incurred by those project offices are subject to Indian
income tax.
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 36 to 97, and the Remuneration Report in the Directors' Report, as set
out on pages 23 to 33, are in accordance with the Corporations Act 2001,
including:
(i) complying with Australian Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the Group's financial position as at 30
June 2024 and of its performance for the financial year ended on that date;
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; and
(c) the information disclosed in the consolidated entity disclosure
statement on page 98 is true and correct; and
(2) 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 as issued by the International Accounting
Standards Board.
(3) 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 2024.
Signed in accordance with a resolution of the Directors made pursuant to
section 295(5)(a) of the Corporations Act 2001.
Mr Peter Schwarz Mr Roland Wessel
Deputy Chairman Chief Executive Officer and Director
Perth
Western Australia
30 September 2024
PKF Perth
ABN 64 591 268 274
Dynons Plaza,
Level 8, 905 Hay Street,
Perth WA 6000
PO Box 7206,
Cloisters Square WA 6850
Australia
+61 8 9426 8999
perth@pkfperth.com.au
pkf.com.au
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SYNERGIA ENERGY LTD
Report on the Financial Report
Opinion
We have audited the financial report of Synergia Energy Ltd (the "Company"),
which comprises the consolidated statement of financial position as at 30 June
2024, 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, and notes to the financial
statements, including material accounting policy information, the consolidated
entity disclosure statement, 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 2024 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 the financial report which
indicates the consolidated entity has incurred a loss of $2,798,511 and
operating cash outflows of $2,752,579 for the year ended 30 June 2024. These
conditions along with other matters 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 those matters that, in our professional judgement, were
of most significance in our audit of the financial report for the current
period. 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 the key audit matters to be
communicated in our report.
1 - Valuation of Convertible Note
Why significant How our audit addressed the key audit matter
On 9 March 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. The maturity date of the notes was 9 March 2024. In · Reviewed the subscription agreement and other documents related to
accordance with the terms of the notes issued the investors have an option the convertible notes to obtain an understanding of the underlying terms and
from 9 December 2023 to convert the loan and interest payable to shares in the conditions.
Company at a fixed conversion rate of £0.0008 per share.
· Reviewing and challenging management's position paper in relation
to their assessment of the recognition of the compound financial instrument as
a financial liability and/or equity in accordance with the relevant suite of
The Company received notices from note holders that indicated their intention Financial Instrument Accounting Standards.
as below:
· Reviewing and challenging the valuation methodology utilised, and
· The note holders for 3,680 had requested their principal outstanding plus the key assumptions adopted for appropriateness and reasonableness.
interest accrued, to be redeemed in cash effective on the maturity date of 9
March 2024. These repayments amounted to £386,451 (A$749,590). · Test of repayments and conversion of convertible notes in
accordance with terms of the agreement
· The note holder for 320 had requested his principal outstanding plus
interest accrued to be converted into 42,005,479 shares effective 9 March · Reviewing the accounting treatment of recognition and
2024. One convertible note holder did not provide any option or exercise de-recognition of derivative liability.
notice to the Company by 26 February 2024 and, as such, in accordance with the
convertible note agreement, thus 750 notes plus interest automatically · Assessing the appropriateness of the related disclosures in Notes
converted into 98,450,342 shares effective 9 March 2024. The value of the 16 and 17.
notes converted into shares amounted to £112,365 (A$217,172).
· The note holders for the other 1,750 notes, plus interest accrued, to be
extended to 30 September 2024. The value of the Extended Notes at the 9 March
2024 maturity date was £183,774 (A$355,187)
Refer to notes 16 and 17 in the consolidated financial statements.
These conversion features, and the fact that the notes were issued in Great
British Pounds (which differs from the Group's functional Australian dollar
functional currency) mean that the notes are a compound financial instrument
with embedded derivatives which must be separated from the underlying debt
component of the issue and accounted for on an individual basis.
Accounting for embedded derivatives is complex and requires the use of
valuation methodologies that rely upon observable and unobservable inputs and
assumptions. This creates estimation uncertainty for the amounts recognised in
the financial statements.
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 2024 the carrying value of development assets was $17,336,721 Our work included, but was not limited to, the following procedures:
(2023: $17,558,182), as disclosed in Note 10.
· Reviewing and challenging management's assessment of the indicators
This amount is comprised by the Project development assets of $12,481,500 of impairment as at the reporting date;
(2023: $11,832,852) and Restoration Asset of $4,855,221 (2023: $5,725,530).
· 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 10.
the asset is impaired in accordance with AASB 136 Impairment of Assets.
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 2024, 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:-
a) the financial report (other than the consolidated entity disclosure
statement) that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001; and
b) the consolidated entity disclosure statement that is true and correct
in accordance with the Corporations Act2001; and
for such internal control as the Directors determine is necessary to enable
the preparation of:-
i) the financial report (other than the consolidated entity
disclosure statements) that gives a true and fair view and is free from
material misstatement, whether due to fraud or error; and
ii) the consolidated entity disclosure statement that is true and
correct and is free of 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 group financial report. We are responsible
for the direction, supervision and performance of the group 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 2024.
In our opinion, the Remuneration Report of Synergia Energy Ltd for the year
ended 30 June 2024, 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
30 September 2024
Perth, Western Australia
PKF Perth is a member of PKF Global, the network of member firms of PKF
International Limited, each of which is a separately owned legal entity and
does not accept any responsibility or liability for the actions or inactions
of any individual member or correspondent firm(s). Liability limited by a
scheme approved under Professional Standards Legislation.
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.
FEED Front End Engineering Design.
FISO Floating injection, storage and offloading.
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.
KMP Key Management Personnel.
LNG Liquefied natural gas.
mD Millidarcy - unit of permeability.
MD Measured Depth.
MMbbls Million barrels of oil or condensate.
MMBO Million standard barrels of oil or condensate.
MMscfd Million standard cubic feet (of gas) per day.
MOPNG Ministry of Petroleum and Natural Gas, Government of India.
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
Peter Schwarz AIM Nominated Adviser
(B Sc (Geology), M Sc (Petroleum Geology))
Strand Hanson Limited
Independent Non-Executive Director and Deputy Chairman)
26 Mount Row
Roland Wessel
London W1K 3SQ
Chief Executive Officer and Executive Director
United Kingdom
Colin Judd
Chief Financial Officer and Executive Director
AIM Joint Brokers
Mark Bolton (B Business)
Novum Securities Limited
Non-Executive Director
2nd Floor, 7-10 Chandos Street
Paul Haywood
London W1G 9DQ
Independent Non-Executive Director
United Kingdom
Ashish Khare (BE in Chemical Engineering)
Panmure Liberum
Head of India Assets and Executive Director
Ropemaker Place
Level 12
25 Ropemaker Street
London EC2Y 9LY
United Kingdom
Company Secretary Share Registries
Ms Anshu Raghuvanshi (FCS, FGIA, LLB) The Office of the Depositary
Computershare Investor Services PLC
Registered and Principal Office The Pavilions, Bridgwater Road
Level 24, 44 St Georges Terrace Bristol BS13 8AE
Perth, Western Australia 6000 United Kingdom
Australia Ph. +44 (0) 370 707 1210
Ph. +61 8 9485 3200 Website: www.computershare.com/uk (http://www.computershare.com/uk)
Fax +61 8 9485 3290 Computershare Investor Services Pty Limited
Level 17, 221 St Georges Terrace
Postal Address Perth, Western Australia 6000
PO Box 255, Australia
West Perth, Western Australia 6872 Ph: 1300 850 505 (within Australia)
Australia Ph: +61 (0)3 9415 4000
(https://www.synergiaenergy.com/investors/+61%203%209415%204000) (outside
Australia)
India Operations Website: www.computershare.com/au (http://www.computershare.com/au)
Gujarat Project Office
2nd Floor, Shreeji Complex
Auditors
Next to Rituraj Complex
PKF Perth
Vasna Road, Village Akota
Dynons Plaza, Level 8
Vadodara - 390015
905 Hay Street, Perth,
Gujarat, India.
Western Australia 6000
Australia
Synergia Energy Ltd Website
ACN 078 652 632 www.synergiaenergy.com
ABN 50 078 652 632
Email
synergiaenergy@synergiaenergy.com
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