REG - Tlou Energy Ltd - Final Results
29/09/2023 08:45
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RNS Number : 1578O Tlou Energy Ltd 29 September 2023
29 September 2023
Tlou Energy Limited
("Tlou" or "the Company")
Final Results
Tlou Energy Limited is pleased to announce its 2023 results. The Annual Report
and Consolidated Financial Statements for the year ended 30 June 2023 are
available on the Company's website: https://tlouenergy.com/reports
Highlights:
· Construction of the transmission line to connect Tlou's Lesedi
gas-to-power project to the electricity grid is 90% complete
· A new 3-well production pod (Lesedi 6) has been drilled and the
lateral wells of Lesedi 4 have been redrilled and are being put into the
production phase
· 4,000 hectares of land has been acquired for the Lesedi project which
will including the central gas processing facility, planned power generation
assets and further gas wells
· Significant funds were raised from ILC Investment Pty Ltd who is now
Tlou's largest shareholder with 34.86% of the Company
Tlou's Managing Director, Mr Tony Gilby commented, "The past year has seen the
Company make good progress toward the target of supplying electricity into the
power grid in Botswana. The transmission line work is nearing completion,
substations are in progress and new wells are being completed ahead of
expected gas flow.
It has not been easy and has taken a lot of time, effort and money to get to
this stage. There remain significant challenges ahead.
Nonetheless, I believe gas will continue to play a very important, if not
vital role for many years to come in order to meet increasing energy demand in
southern Africa. We look forward to moving Tlou Energy's Lesedi project into
production and are grateful to our shareholders for their continuing support."
By Authority of the Board of Directors
Mr. Anthony Gilby
Managing Director
****
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information regarding this announcement please contact:
Tlou Energy Limited +61 7 3040 9084
Tony Gilby, Managing Director
Solomon Rowland, General Manager
Grant Thornton (Nominated Adviser) +44 (0)20 7383 5100
Harrison Clarke, Colin Aaronson, Ciara Donnelly
Zeus Capital (UK Broker) +44 (0)20 3829 5000
Simon Johnson
Investor Relations
Ashley Seller (Australia) +61 418 556 875
FlowComms Ltd - Sasha Sethi (UK) +44 (0) 7891 677 441
About Tlou
Tlou is developing energy solutions in Sub-Saharan Africa through gas-fired
power and ancillary projects. The Company is listed on the ASX (Australia),
AIM (UK) and the BSE (Botswana). The Lesedi Gas-to-Power Project ("Lesedi") is
100% owned and is the Company's most advanced project. Tlou's competitive
advantages include the ability to drill cost effectively for gas, operational
experience and Lesedi's strategic location in relation to energy customers.
All major government approvals have been achieved.
Forward-Looking Statements
This announcement may contain certain forward-looking statements. Actual
results may differ materially from those projected or implied in any
forward-looking statements. Such forward-looking information involves risks
and uncertainties that could significantly affect expected results. No
representation is made that any of those statements or forecasts will come to
pass or that any forecast results will be achieved. You are cautioned not to
place any reliance on such statements or forecasts. Those forward-looking and
other statements speak only as at the date of this announcement. Save as
required by any applicable law or regulation, Tlou Energy Limited undertakes
no obligation to update any forward-looking statements.
Chairman's letter
Dear Shareholders,
We continue to make excellent progress towards establishing ourselves as a key
power player in Botswana and Southern Africa through the exploration and
evaluation of our gas to power project.
During the year Tlou progressed the construction of transmission lines to
connect the Lesedi project to the grid, acquired a 4,000-hectare farm for the
central processing facility, contracted the construction of the Lesedi
substations, and the next phase of the production drilling commenced.
One of the final stages in the evaluation of the Lesedi project is
commencement of the 10MW gas to electricity operation. To connect this
project to the Botswana power grid, Tlou engaged Zismo Engineering Pty Ltd to
construct a 100 km transmission line from the Lesedi project to Serowe.
Construction of the 66kV transmission line is over 90% complete and is
expected to be fully completed in the coming months. Tlou has also engaged
South African based Optipower, a division of Murray & Roberts Ltd to
undertake the construction of associated substations as part of the grid
connection.
Tlou has acquired a 4,000-hectare property within the Lesedi project area. The
property will be the location of the power generation assets, central
processing facility, mechanical workshops, stores, casing and core yards,
medical centre including helipad, and accommodation units.
Production drilling recommenced with the completion of the Lesedi 6 production
pod and the drilling of new lateral sections of the Lesedi 4 pod. Lesedi 6
is the first of a series of new pods, funds permitting, that the Company will
drill to supply gas for the initial 10MW project. While Lesedi 4 has
produced gas for several years, redrilling of the laterals is aimed at
providing straighter lateral sections to improve dewatering and gas flow.
Tlou's current 2P gas reserves stand at approximately 41 billion cubic feet
(~7.2m BOE).
The Company's Mamba and Boomslang project areas are located adjacent to the
Lesedi project. Tlou will continue to evaluate these projects and successful
results could allow the Company to progress these areas separately to Lesedi,
with the potential for gas-fired power.
We are privileged to have the continued support of the government of Botswana
and the inclusion of coal bed methane (CBM) as part of the country's forward
plan to combat power deficiency.
During the 12-month period ending 30 June 2023, the Company successfully
raised approximately AUD 14.8 million in equity and AUD 2.0 million loan
funding to support ongoing project development. The Company's major
shareholder ILC Investments Pty Ltd (ILC) now holds 34.86% of the Company's
ordinary shares.
This has been a highly active year for Tlou. We look forward to another
successful year ahead. I would like to take this opportunity to thank the Tlou
Board, management, field staff and advisers, and most importantly our
shareholders for their continued support during this exciting time for Tlou.
Yours faithfully,
Martin McIver
Chairman
Managing Director's Report
Dear Shareholders,
This year has been one characterised by significant activity in the field with
our primary focus being the advancement of the Lesedi project.
We have recently completed drilling of additional gas production wells, with
the Lesedi 4 and Lesedi 6 pods now dewatering ahead of expected gas flow.
Additional drilling is planned at the Lesedi project as well as in our
exploration tenements subject to available funding as we ready ourselves to
generate first electricity as part of the final evaluation stage for the
Lesedi project.
Tlou plans to have the Lesedi gas to power project producing electricity in
2024 and remains driven to ensuring the objective is met.
Southern Africa continues to operate under a severe energy deficit. This has
the potential to impose significant constraint on economic activities,
provision of public services, and quality of life, as well as on adoption of
new technologies in various sectors such as education, agriculture, and
finance.
Tlou Energy aims to be part of the solution to solve the regional energy
deficit beginning with integrating gas fired power into the grid in Botswana.
With gas expected to be a vital part of the regional power mix in the coming
years Tlou Energy is well positioned to become a significant power supplier.
We continue to monitor projects risks and opportunities and work towards
creating value for all stakeholders.
Yours faithfully,
Anthony (Tony) Gilby
Managing Director
Directors' report
The Directors present their report, together with the financial statements, on
the consolidated entity (referred to hereafter as the 'consolidated entity' or
the 'Group') consisting of Tlou Energy Limited (referred to hereafter as the
'Company' or 'parent entity') and the entities it controlled at 30 June 2023.
General Information
Directors
The following persons were directors of Tlou Energy Limited during the whole
of the financial year and up to the date of this report, unless otherwise
stated:
Martin McIver Non-Executive Chairman
Anthony Gilby Managing Director & Chief Executive Officer
Gabaake Gabaake Executive Director
Colm Cloonan Finance Director
Hugh Swire Non-Executive Director
Dividends
There were no dividends recommended or paid during the financial year.
Principal activities
The principal activity of the consolidated entity is to explore, evaluate and
develop power solutions in Sub-Saharan Africa through Coalbed Methane (CBM)
gas-fired power. No revenue from these activities has been earned to date, as
the consolidated entity is still in the exploration and evaluation or
pre-development stage.
Significant changes in the state of affairs
There were no other significant changes to the state of affairs of the
consolidated entity other than those disclosed in the financial report and
notes thereof.
Review and results of operations
The loss for the year after interest amounted to $4,241,208 (30 June 2022:
$4,329,116).
As a pre-revenue entity a loss for the year is expected and is in line with
expectations. The key focus for the Company continues to be the Lesedi project
area and specifically the work in relation to the planned 10MW gas-to-power
project. Payments for exploration and evaluation assets amounted to
$11,886,628 over the year which included $5,802,386 on construction of
transmission lines and substations that will connect the Lesedi project to the
electricity grid in Botswana. Payment to suppliers and employees over the year
was $3,164,020. Significant project funding was also acquired during the year,
totalling $14,853,721 in equity and $2,000,000 by way of a loan. Most of these
funds were received from ILC Investment Pty Ltd who is now the Company's
largest shareholder at 34.86%.
Gas to Power Project
The Lesedi power project ("Lesedi") is Tlou's most advanced project. The first
electricity to be generated at Lesedi is planned to go towards satisfying a
10MW Power Purchase Agreement (PPA) that has been signed with Botswana Power
Corporation (BPC), the national power utility in Botswana. The Lesedi project
currently has several components underway as part of the final evaluation
stage including the construction of transmission lines, substations, a field
operations facility and generation site as well as production well drilling.
Transmission Line and Substations
Lesedi is approximately 100km from the nearest BPC substation connection in
Serowe. To connect to the national grid, the Company is undertaking the
construction and installation of a 100km 66kV transmission line. This,
together with the ongoing drilling program should enable the Company to
connect and provide electricity into Botswana's power network.
The construction of the 66kV transmission line continued throughout the year
and is over 90% complete. Key items outstanding include a road crossing and
further stringing of the line. Transmission line work is on track to be
completed later this year and in advance of planned first power into the grid.
Substations are required at either end of the transmission line, one to tie
Tlou's generators to the transmission line at Lesedi and another to integrate
the line with the existing BPC substation at Serowe. The planned substation at
Lesedi is currently designed for an initial 5MW of power. The Company is now
assessing options that may allow the current substation design to be adapted
to facilitate expansion beyond 10MW. Based on the current timetable the
substations are expected to be completed around Q2 2024.
Drilling Operations
Coalbed Methane (CBM) gas is the feedstock for power generation at Lesedi. The
planned gas production wells to be used are referred to as Dual Lateral Pods
that consist of three wells in total, one vertical production well intersected
by two lateral wells drilled horizontally through the target reservoir section
for several hundred metres. The Company recently drilled a new pod (Lesedi 6)
and also redrilled the lateral sections of an existing pod, Lesedi 4. The aim
of redrilling the Lesedi 4 lateral wells is to provide straighter lateral
sections compared to the original lateral wells. The Lesedi 4 pod has flowed
gas for a number of years and these straighter laterals are expected to assist
with removing water from the reservoir to more efficiently dewater and flow
gas. Both Lesedi 4 and Lesedi 6 pods were flushed to clear the wells and now
have production equipment installed for dewatering ahead of gas production. In
addition to requiring sufficient gas form Lesedi 4 and Lesedi 6, the Company
will need to drill further wells that can supply sufficient gas for the
planned 10MW project.
Exploration and Evaluation
As well as the Lesedi project area, the Company also holds six other
prospecting licences (PL) at varying stages of exploration and evaluation.
These include the Mamba project which consists of five PL's covering an area
of approximately 4,500 Km2 and the Boomslang licence (approx. 1,000 Km2). The
Mamba and Boomslang licences are situated adjacent to Lesedi and could provide
the Company with flexibility and optionality subject to results.
Matters subsequent to the end of the financial year
There has not been any matter or circumstance, other than that referred to in
this report and disclosed in the financial statements or notes thereto, that
has arisen since the end of the period, that has significantly affected, or
may significantly affect, the operations of the consolidated entity, the
results of these operations, or the state of affairs of the consolidated
entity in future financial years.
Likely developments, risks and expected results of operations
The Company is drilling wells in the Lesedi project area to produce CBM gas.
These wells are designed to achieve sufficient gas flow rates for the
Company's initial project development. The gas flow rates from these wells are
vitally important to assess the viability and commerciality of the Lesedi
project. However, at the date of this report the level of gas that may be
produced from the project and if gas production rates will be at commercial
rates is not yet known. Further wells will also be required to produce
sufficient gas for the planned Lesedi project.
The Company is evaluating additional projects including solar power and
possibly hydrogen production, carbon black/graphite production and crypto
currencies in addition to the gas-fired power project. These projects may be
subject to regulatory approvals. No guarantee can be given in relation to the
results of the Company's operations, gas flow rates, regulatory approvals
being granted or the ability to secure the funds required to progress all or
any of the Company's existing or planned operations.
The Company is subject to risks which may have a material adverse effect on
operating and financial performance. Tlou's Risk Management Policy can be
found on the Company's website. It is not possible to identify every risk that
could affect the business or shareholders. Any actions taken to mitigate these
risks cannot provide complete assurance that a risk will not materialise or
have a material adverse effect on the business, strategies, assets or
performance of the Company. A list of risks currently considered material and
mitigation strategies are set out below. This is not an exhaustive list and
risks are outlined in no particular order.
Risk Description Mitigation
Funding The Company will need to raise additional debt and/or equity funds to support The Company has operated in Botswana for over a decade with extensive local
its ongoing operations or implement its planned activities and strategies. and international relationships with investors who have supported the Company.
This includes but is not limited to funding to complete the infrastructure
necessary to connect to the power grid and generate electricity at the Lesedi
project and funds to facilitate drilling of additional gas wells to deliver
sufficient gas for development of the proposed 10MW power project. There can The Company actively manages its capital requirements and maintains close
be no assurance that such funding will be available when required or on relationships with potential investors. The Company continues to explore
satisfactory terms or at all. Inability to find sufficient funds may result in sources of both equity and debt capital.
the delay or abandonment of certain activities which would likely have an
adverse effect on the Company's progress.
Health and Safety The project operations are in a remote location, in a sometimes-harsh The Company employs highly skilled and experienced personnel where possible.
environment and involves the use of heavy machinery and equipment. The Chief Operations Officer is supported by a dedicated Safety, Health and
Environment (SHE) officer and a paramedic is also on duty at all times at the
field operations. The Company has a training and safety management system and
external audits of the safety management system are conducted. All visitors to
site are given a safety briefing.
Freedom to Operate The Company has licences to operate over 8,000 square km and has had continued The Company continues to support regular and extensive Government engagement
access to key licence areas when required. Negative sentiment towards the activities to interest and educate lawmakers to the country's natural resource
project or industry may impair Tlou's freedom to operate. Changes to key opportunities as well as keep up to date with changing national power
Government personnel and/or national policy could also impact ability to strategies and requirements.
operate effectively.
Tlou supports and interacts with a wide network of local stakeholders
including farmers and landowners to try and ensure that the needs of the
community are being met and that the project can provide benefits for all
stakeholders including providing long term and sustainable employment
opportunities.
Environment Botswana's natural habitat, water and wildlife needs to be protected. Botswana Tlou has full environmental approval in place for development of the
rigorously enforces its environmental regulations so the risk of fines or gas-to-power project. The Company aims to not just meet environmental
other liabilities for noncompliance is commensurately high. requirements but exceed them.
The Company uses local specialists to support its ongoing permit renewals,
environmental assessments and licence applications. Continual monitoring of
actual and potential impacts on the environment is practiced to try and ensure
that any impact on the natural habitat is eliminated or minimised.
Climate Climate change initiatives could have an impact on Tlou's operations in the Tlou's Lesedi gas-to-power project aims to be part of a power market in
future. Climate initiatives could have a material impact on fossil fuel sub-Saharan Africa that will move away from carbon intensive coal and diesel
projects such as Tlou's Lesedi gas-to power project. fired power generation. While also a fossil fuel, gas is viewed as a
transitional fuel that can assist with providing base load power until such
time that sustainable and/or renewable power sources can provide reliable
24-hour base load power.
The Company is aware that it may need to adapt its process to meet future
climate needs and will continue to assess new information as it becomes
available.
Power Sales The Company has signed a 10MW Power Purchase Agreement (PPA) with Botswana The Company works closely with its contractors and engineers to progress
Power Corporation (BPC) with the aim for first power to be supplied into the infrastructure projects in a timely manner.
national grid in 2024. There is a risk that the grid connection infrastructure
could be delayed thereby postponing first power sales. No other agreements are
currently in place for sale of power or gas to other parties.
Management continues to explore opportunities with other potential customers
across the region, potentially via the Southern African Power Pool or within
Botswana. The Company also aims to diversify its products including
potentially producing solar power, hydrogen, carbon black/graphite and crypto
currencies.
Geological Risk The Company has over 8,000 square km of licence areas part of which has not Tlou has invested in seismic surveys and core hole drilling to identify areas
had significant CBM operations to date. There remains significant geological of lower risk prior to conducting further exploration and evaluation. This
risk in these areas and subject to operational results these areas may not be strategy is planned for undeveloped areas of the project. After a decade of
commercial. operating in the region and supported by external resource certifications, the
operations team have and continue to develop an excellent knowledge of the
geological area to help de-risk future exploration and evaluation operations.
Remote Operations The Company operates over 100km from established medical and engineering The Company has on-site paramedic support and has invested in its own stock of
support facilities in the closest urban area which increases costs and risks equipment so that it can operate as autonomously as possible over a greater
as well as requiring adequate insurance. range of activities. A purpose-built field operations camp is under
construction which will be suitable for full development of the initial 10MW
project and for further expansion.
People The Company may lose key executives and management. The Company operates in a The Company continues to search for skilled staff to grow the team to satisfy
competitive environment in relation to talented corporate and technical the Company's needs and ideally to have a lead person and back-up support
personnel. person for all key positions. In addition, implementation of appropriate staff
training and succession plans is a key target. The Company offers incentives
and development opportunities for key executives and management to attract the
best talent to the Company.
Environmental regulation
The Directors are satisfied that adequate systems are in place for the
management of its environmental responsibilities and compliance with its
various licence requirements and regulations. The Directors are not aware of
any breaches of these requirements and to the best of their knowledge, all
activities have been undertaken in compliance with environmental regulations.
Information on Directors
Martin McIver MBA
Special Responsibilities
Non-Executive Chairman
Member of the Audit Committee
Member of the Risk Committee
Chairman of the Nomination & Remuneration Committee
Interest in Shares and
options 1,097,816 Ordinary
Shares
750,000 Performance Rights
Experience
Martin holds an MBA (International) from the American Graduate School of
International Management, a Graduate Diploma in Applied Finance and Valuations
(FINSIA/Kaplan) and a Bachelor of Business (Marketing) from the Queensland
University of Technology.
Martin has over 15 years' experience as General Manager for mining services
companies including bulk and dangerous goods logistics, and drilling
services. Martin was the Executive General Manager of the Mitchell Group, a
vertically integrated coal and coal seam gas company with investments and
operations across Australia, Asia and Africa. Prior to joining the Mitchell
Group, Martin was a Director in Mergers and Acquisitions with
PricewaterhouseCoopers.
Martin was appointed Non-Executive Director in September 2010 and is currently
the Chief Financial Officer of PWR Holdings Limited (ASX:PWH). During the past
three years Martin has not served as a director of any other ASX listed
companies.
Anthony Gilby B.Sc. (First Class Honours)
Special
Responsibilities
Managing Director and Chief Executive Officer
Member of the Audit Committee
Member of the Nomination & Remuneration Committee
Interest in Shares and
options 50,000,000
Ordinary Shares
750,000 Performance Rights
Experience
Tony was appointed Managing Director and Chief Executive Officer in March 2012
and has over 30 years' experience in the oil and gas industry. He is a
founding director of Tlou Energy Limited.
Tony was awarded a Bachelor of Science (First Class Honours) degree in Geology
from the University of Adelaide in 1984, and also won the University Medal in
Geology (Tate Memorial Medal). Tony began his career working as a well-site
geologist for Delhi Petroleum in the Cooper Basin. He subsequently joined ESSO
Australia. His roles with ESSO included exploration geology, geophysics,
petrophysics and a period of time working in the Exxon Production Research
Centre in Houston studying the seismic application of sequence stratigraphy.
On his return to Australia, he continued to work with ESSO in a New Ventures
capacity working on a variety of projects prior to relocating to Brisbane
where he worked for MIM Petroleum and the Louisiana Land and Exploration
Company (LL&E). In 1996, he left LL&E to take on a consulting role as
well as the acquisition of prospective Queensland acreage in a private
capacity. This work culminated with the founding of Sunshine Gas Limited where
he remained Managing Director until its sale in late 2008. He is a former
Non-Executive director of ASX listed Comet Ridge Limited.
Gabaake Gabaake M.Sc.
Special Responsibilities
Executive Director
Member of the Risk Committee
Member of the Nomination & Remuneration Committee
Interest in Shares and
options 385,999 Ordinary
Shares
2,750,000 Performance Rights
Experience
Gabaake graduated with a Bachelor of Science degree in Geology from the
University of Botswana in 1986 followed by a Masters degree in groundwater
hydrology from the University College of London in 1989.
Gabaake is a Botswana citizen based in Gaborone. He is a former Botswana
Government senior public servant having worked as Permanent Secretary at the
Ministry of Minerals, Energy and Water Resources. Prior to that, he served at
the Ministry of Local Government.
Gabaake has served on various private company boards including De Beers Group,
Debswana Diamond Company (Pty) Limited and Diamond Trading Company Botswana.
During the past three years, Gabaake has not served as a director of any other
ASX listed companies.
Colm Cloonan FCCA
Special Responsibilities
Finance Director
Member of the Audit Committee
Member of the Nomination & Remuneration Committee
Interest in Shares and
options 4,581,387 Ordinary
Shares
4,750,000 Performance Rights
Experience
Colm is a Fellow of the Association of Chartered Certified Accountants (FCCA)
with 20 years' experience in various finance roles.
Colm joined Tlou in 2009 at the early stages of the Company's activities and
has been with the Company through all phases of its operations and development
to date. Colm has worked in Europe and Australia in a range of finance roles
including audit and business services, as well as providing financial and
management accounting services to clients in various industries including
power generation in Australia.
Colm studied accountancy at the Galway-Mayo Institute of Technology in
Ireland. During the past three years Colm has not served as a director of any
other ASX listed companies.
Hugh Swire BA (Hons)
Special Responsibilities
Non-Executive Director
Chair of the Risk Committee
Chair of the Audit Committee
Member of the Nomination & Remuneration Committee
Interest in Shares and
options 12,065,921
Ordinary Shares
500,000 Performance Rights
Experience
Hugh started his career working with Mahon China, an established investment
management and advisory partnership based in Beijing. Active in China since
1985, Mahon China have over 3 decades of experience advising foreign companies
with investments and corporate activities in China. Hugh has remained a
Partner of the firm and now supports UK / EU companies from London looking to
expand and find partners in China or increasingly support Chinese companies
looking to make investments internationally.
After leaving Mahon China, Hugh spent a decade working for Investment funds
and international banks in Hong Kong and Tokyo where he worked for Nomura as
well as in London for JP Morgan where he was Vice President.
Since 2010, Hugh has been focused on supporting fast growing UK companies in
the low carbon and technology sectors by investing growth capital in Water
Powered Technologies Ltd, a leading innovator in zero energy water management
systems as well as MWF Ltd, one of the largest suppliers of renewable heat in
the UK, which has since been sold to Aggregated Micro Power Holdings plc. Hugh
also helped found a leading technology education company Black Country Atelier
Ltd, which provides specialist training courses to students globally in 3D
printing (CAM) digital electronics and CAD.
Hugh still travels to China after studying Chinese at Oxford University
graduating with a BA Hons. During the past three years Hugh has not served
as a director of any other ASX listed companies.
Company secretary
Mr Solomon Rowland was appointed Company Secretary on 19 August 2015 and
continues in office at the date of this report. Mr Rowland is a commercial
lawyer with over 20 years' experience in various private, government and
in-house legal roles. Solomon holds a Juris Doctor from the University of
Queensland.
Prior to joining Tlou Energy Limited as Legal Counsel in February 2013,
Solomon worked for Crown Law representing various Queensland government
departments in a range of legal matters. During his time in government,
Solomon was involved in advising government departments on commercial,
corporate governance and policy matters as well as representing the state in
various courts, tribunals, and commissions of inquiry. Solomon brings many
years of experience in commercial, advocacy, administrative and planning and
environment law.
Meetings of directors
The number of meetings of the consolidated entity's Board of Directors and
committees held during the year ended 30 June 2023, and the number of meetings
attended by each Director are listed below. The Nomination & Remuneration
committee comprises the full board.
Board / Nomination & Remuneration Committee Audit Committee Risk Committee
Attended Held Attended Held Attended Held
M McIver 7 8 1 2 4 4
A Gilby 8 8 2 2 - -
G Gabaake 6 8 - - 4 4
C Cloonan 8 8 2 2 - -
H Swire 8 8 2 2 4 4
Held: represents the number of meetings held during the time the director held
office or was a member of the relevant committee.
Remuneration Report - audited
This report outlines the remuneration arrangements in place for the key
management personnel of the consolidated entity.
Remuneration policy
Ensuring that the level of Director and Executive remuneration is sufficient
and reasonable is dealt with by the full Board. The Remuneration Policy of
Tlou Energy Limited has been designed to align the objectives of key
management personnel with shareholder and business objectives. The Board of
Tlou Energy Limited believes the remuneration policy to be appropriate and
effective in its ability to attract and retain the best key management
personnel to run and manage the consolidated entity, as well as create shared
goals between key management personnel and shareholders.
The Board's policy for determining the nature and amount of remuneration for
the executive Directors and senior executives of the consolidated entity is as
follows:
· The remuneration policy is developed by the Board after seeking,
if appropriate, professional advice from independent external consultants.
· Executives employed by the consolidated entity receive a base
salary (which is based on factors such as length of service and experience),
inclusive of superannuation, fringe benefits, options, and performance
incentives where appropriate. If performance incentives are put in place these
will generally only be paid once predetermined key performance indicators have
been met.
· Executives engaged through professional service entities are paid
fees based on an agreed market based hourly rate for the services provided and
may also be entitled to options and performance-based incentives.
· Incentives paid in the form of options or performance rights are
intended to align the interests of management, the Directors and Company with
those of the shareholders. In this regard, executives are prohibited from
limiting risk attached to those instruments by use of derivatives or other
means.
The Board reviews executive remuneration arrangements annually by reference to
the consolidated entity's performance, executive performance and comparable
information from industry sectors.
Key management personnel including Non-executive Directors located in
Australia and employed executives receive the superannuation guarantee
contribution required by the Commonwealth Government, which is currently 11%
and do not receive any other retirement benefits. Individuals, however, can
chose to sacrifice part of their salary to increase payments towards
superannuation.
Non-Executive Director Remuneration
The Board's policy is to remunerate Non-Executive Directors for time,
commitment, and responsibilities. The Board determines payments to the
Non-Executive Directors and reviews their remuneration annually, based on
market practice, duties, and accountability. Independent external advice is
sought when required.
The maximum aggregate amount of fees that can be paid to Non-Executive
Directors is $500,000 per year. This was approved by shareholders at a general
meeting held on 10 July 2012.
Fees for Non-Executive Directors are not linked to the performance of the
consolidated entity, however, to align Directors interests with shareholder
interests, where possible the Directors are encouraged to hold shares in the
Company. There is no minimum holding prescribed in the Constitution.
Performance conditions linked to remuneration
The Board provides advice on remuneration and incentive policies and practices
and specific recommendations on remuneration packages and other terms of
employment for executive Directors, other senior executives, and Non-Executive
Directors. The aim is to ensure that reward for performance is competitive and
appropriate for the results delivered.
Remuneration and the terms and conditions of employment for executive
Directors and Company executives are reviewed annually having regard to
performance and relative comparative information and are approved by the Board
following independent professional advice, as required. In this respect,
consideration is given to normal commercial rates of remuneration for similar
levels of responsibility.
Key management personnel during the financial year ended 30 June 2023
Directors
Martin
McIver
Non-Executive Chairman
Anthony
Gilby
Managing Director and Chief Executive Officer
Gabaake Gabaake
Executive Director
Colm
Cloonan
Finance Director
Hugh
Swire
Non-Executive Director
Executives
Solomon Rowland
Company Secretary
There were no other key management personnel of the consolidated entity during
the financial year ended 30 June 2023.
Details of remuneration
Details of remuneration of each of the Directors and executives of the
consolidated entity during the financial year are set out in the table below.
Benefits and Payments for the year ended 30 June 2023
Short-term Post Long Share
benefits Employment term based
benefits benefits payments
Salary & Fees Cash Bonus Superannuation Leave Benefits Total Cash Remuneration Performance Rights Equity Compensation Total
Directors $ $ $ $ $ $ $
M McIver 60,000 - 6,300 - 66,300 - 0.0% 66,300
A Gilby 323,318 - 13,087 - 336,405 - 0.0% 336,405
G Gabaake 127,547 - 13,392 - 140,939 25,456 15.3% 166,395
C Cloonan 236,356 - 24,817 - 261,173 50,913 16.3% 312,086
H Swire 67,448 - - - 67,448 - 0.0% 67,448
Total Directors 814,669 - 57,596 - 872,265 76,369 948,634
Executives
S Rowland 176,963 - 18,581 - 195,544 - 0.0% 195,544
Total Executives 176,963 - 18,581 - 195,544 - 195,544
Total 991,632 - 76,177 - 1,067,809 76,369 1,144,178
During the 2023 year, no proportion of the remuneration of any key management
personnel was performance based. No key management personnel received cash
bonuses, performance related bonuses, termination benefits or non-cash
benefits during the year. The share-based payments amount included in the
table above relate to performance rights granted in the 2022. These amounts
were not paid to staff. The figures represent an accounting valuation
attributed to the performance rights. This valuation has been spread across
2022 and 2023.
Benefits and Payments for the year ended 30 June 2022
Short-term Post Long Share
benefits Employment term based
benefits benefits payments
Salary & Fees Cash Bonus Superannuation Leave Benefits Total Cash Remuneration Performance Rights Equity Compensation Total
Directors $ $ $ $ $ $ $
M McIver 44,000 - 4,400 - 48,400 - 0.0% 48,400
A Gilby 152,365 - 6,545 - 158,910 - 0.0% 158,910
G Gabaake 106,210 - 10,621 - 116,831 77,400 39.8% 194,231
C Cloonan 119,367 - 34,256 - 153,623 154,800 50.2% 308,423
H Swire 44,000 - - - 44,000 - 0.0% 44,000
Total Directors 465,942 - 55,822 - 521,764 232,200 753,964
Executives
S Rowland 160,254 - 16,025 - 176,279 - 0.0% 176,279
Total Executives 160,254 - 16,025 - 176,279 - 176,279
Total 626,196 - 71,847 - 698,043 232,200 930,243
During the 2022-year, performance rights were issued to key management
personnel as outlined in the 2022 annual report under the heading Performance
Rights. No key management personnel received other performance related
bonuses, cash bonuses, termination benefits or non-cash benefits during the
year.
Service agreements
The following outlines the remuneration and other terms of employment for the
following personnel during the reporting period which are formalised in
employment contracts for services.
Anthony
Gilby
Managing Director and Chief Executive Officer
Term of Agreement: Mr
Gilby's services are provided in a personal capacity. The agreement has no
fixed term.
Base
Fee:
Mr Gilby has waived 50% of his contracted rate up to the end of the reporting
period. The amount waived will not be payable by the Company at a future date.
The annual cost to the Company excluding share-based payments (if any), after
taking account of the 50% deduction, adjustments for industry standards and
CPI was approximately $336,000.
Termination Benefit: No
termination benefit is payable if terminated for cause.
Termination Notice: The
Company may give Mr Gilby three months' notice or pay 1.5 times his contracted
salary in lieu of notice to terminate the Agreement.
Solomon Rowland
Company Secretary
Term of Agreement: Mr
Rowland's services are provided in a personal capacity. The agreement has no
fixed term.
Base Fee:
Mr Rowland has agreed to waive up to 25% of his current contracted rate up to
the end of the reporting period. The amount waived will not be payable by the
Company at a future date. The annual cost to the Company excluding share-based
payments (if any), after taking account of the 25% deduction, adjustments for
industry standards and CPI was approximately $196,000.
Termination Benefit: No
termination benefit is payable if terminated for cause.
Termination Notice: The
Company may give the Company Secretary six months' notice of its intention to
terminate the Agreement.
Gabaake Gabaake
Executive Director
Term of Agreement: Mr
Gabaake's services are provided in a personal capacity. The agreement has no
fixed term.
Base Fee:
The annual cost to the Company excluding share-based payments (if any),
adjustments for industry standards and CPI was approximately $141,000.
Termination Benefit: No
termination benefit is payable if terminated for cause.
Termination Notice: The
Company may give the Executive Director six months' notice of its intention to
terminate the Agreement.
Colm Cloonan
Finance
Director
Term of Agreement: Mr
Cloonan's services are provided in a personal capacity. The agreement has no
fixed term.
Base
Fee:
The annual cost to the Company excluding share-based payments (if any),
adjustments for industry standards and CPI was approximately $261,000.
Termination Benefit: No
termination benefit is payable if terminated for cause.
Termination Notice: The
Company may give the Finance Director six months' notice of its intention to
terminate the Agreement.
Key management personnel shareholdings
The number of ordinary shares in Tlou Energy Limited held by each key
management person of the consolidated entity during the financial year is set
out below. These figures do not include any shares issued post year end.
30 June 2023 Balance at beginning of year Granted as remuneration during the year Additions Disposals Balance at date of resignation / appointment Balance at end of year
M McIver 812,102 - 285,714 - - 1,097,816
A Gilby 34,489,580 - 15,510,420 - - 50,000,000
G Gabaake 385,999 - - - - 385,999
C Cloonan 1,931,112 - 2,650,275 - - 4,581,387
H Swire 10,065,921 - 2,000,000 - - 12,065,921
S Rowland 475,000 - 571,429 - - 1,046,429
48,159,714 - 21,017,838 - - 69,177,552
Key management personnel Options
The number of options in Tlou Energy Limited held by each key management
person of the consolidated entity during the financial year is set out below.
These figures do not include any options issued post year end. The options in
this table are attaching options to shares that were issued.
30 June 2023 Balance at beginning of year Granted as remuneration during the year Additions Expired Balance at date of resignation / appointment Balance at end of year
M McIver - - - - - -
A Gilby 6,249,999 - - (6,249,999) - -
G Gabaake 27,571 - - (27,571) - -
C Cloonan 375,000 - - (375,000) - -
H Swire 2,750,415 - - (2,750,415) - -
S Rowland 87,500 - - (87,500) - -
9,490,485 - - (9,490,485) - -
Performance rights
Performance Rights are linked to the share price performance of the Company,
ensuring alignment with the interests of the Company's shareholders. For the
Performance Rights to vest and, therefore, become exercisable by a
participant, certain performance conditions are required to be met as set out
below. On vesting, holders of Performance Rights will be entitled to acquire
Tlou Energy Limited ordinary shares at nil cost.
Performance rights held by key management personnel at 30 June 2023 are as set
out below:
Tranche Issue Date Opening Balance Issued Exercised Lapsed Balance at Year End Unvested Value
M McIver (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
-
A Gilby (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
-
G Gabaake (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
(iv) 15-Dec-21 1,000,000 - - - 1,000,000 1,000,000 41,800
(v) 15-Dec-21 1,000,000 - - - 1,000,000 1,000,000 35,600
-
C Cloonan (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
(iv) 15-Dec-21 2,000,000 - - - 2,000,000 2,000,000 83,600
(v) 15-Dec-21 2,000,000 - - - 2,000,000 2,000,000 71,200
-
H Swire (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
-
S Rowland (i) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(ii) 19-Oct-18 250,000 - - - 250,000 250,000 21,575
(iii) 31-Jan-17 250,000 - - - 250,000 250,000 34,000
Total 10,250,000 - - - 10,250,000 10,250,000 661,100
Tranche Performance conditions and expiry date
(i) To vest the share price needs to be AUD $0.165 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
(ii) To vest the share price needs to be AUD $0.22 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
(iii) To vest the share price needs to be AUD $0.28 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2024.
(iv) To vest the share price needs to be AUD $0.10 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
(v) To vest the share price needs to be AUD $0.165 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
Shares issued on exercise of performance rights
Other than as shown in the table above, no other shares were issued on
exercise of performance rights up to the date of this report.
Relationship between remuneration and Company performance
The factors that are considered to affect shareholder return during the last
five years is summarised below:
2023 2022 2021 2020 2019
Share price at end of financial year ($) 0.034 0.028 0.039 0.040 0.12
Market capitalisation at end of financial year ($M) 35 17 23 18 52
Loss for the financial year ($) (4,241,208) (4,329,116) (2,054,237) (12,950,601) (3,216,695)
Cash spend on exploration programs ($) (11,886,628) (2,639,000) (797,340) (1,766,761) (6,942,758)
Director and Key Management Personnel remuneration ($) 1,144,178 930,243 637,521 1,033,623 1,560,338
Given that the remuneration is commercially reasonable, the link between
remuneration, Company performance and shareholder wealth generation is
tenuous, particularly in the exploration and development and pre-development
stage. Share prices are subject to market sentiment towards the sector and
increases or decreases may occur independently of executive performance or
remuneration.
The Company may issue options or performance rights to provide an incentive
for key management personnel which, it is believed, is in line with industry
standards and practice and is also believed to align the interests of key
management personnel with those of the Company's shareholders.
No remuneration consultants were used in the 2023 financial year.
Other transactions with key management personnel and their related parties
2023 2022
$ $
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a 15,600 12,900
director-related entity of Anthony Gilby.
Terms and conditions: Transactions between related parties are on normal
commercial terms and conditions no more favourable than those available to
other parties unless otherwise stated. There were no amounts payable as at 30
June 2023 (2022: Nil).
(End of Remuneration Report)
Shares under option
There were no unissued ordinary shares of Tlou Energy Limited under option at
the date of this report.
Performance rights
Issued performance rights at the date of this report are as follows:
Issue Date Hurdle Price Expiry date Total
31/01/2017 $0.28 31/01/2024 2,275,000
19/10/2018 $0.165 31/01/2025 2,175,000
19/10/2018 $0.22 31/01/2025 2,175,000
15/12/2021 $0.10 31/01/2025 3,000,000
15/12/2021 $0.165 31/01/2025 3,000,000
1/02/2023 $0.165 31/01/2025 2,000,000
1/02/2023 $0.22 31/01/2025 2,000,000
1/02/2023 $0.28 31/01/2025 2,000,000
18,625,000
Shares issued on the exercise of options and performance rights
Other than those disclosed in the tables above there were no ordinary shares
of Tlou Energy Limited issued during or since the year ended 30 June 2023 on
the exercise of options or performance rights granted or up to the date of
this report.
Indemnity and insurance of officers
The consolidated entity has indemnified the Directors and executives of the
consolidated entity for costs incurred, in their capacity as a director or
executive, for which they may be held personally liable, except where there is
a lack of good faith.
During the financial year, the consolidated entity paid a premium in respect
of a contract to insure the Directors and executives of the consolidated
entity against a liability to the extent permitted by the Corporations Act
2001. The contract of insurance prohibits disclosure of the nature of
liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year,
indemnified or agreed to indemnify the auditor of the company or any related
entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a
contract to insure the auditor of the company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act
2001 for leave to bring proceedings on behalf of the Company, or to intervene
in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Currency and rounding
The financial report is presented in Australian dollars and amounts are
rounded to the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section
307C of the Corporations Act 2001 can be found on page 24.
Auditor
BDO Audit Pty Ltd continues in office in accordance with section 327 of the
Corporations Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional to
their statutory audit duties where the auditor's expertise and experience with
the Company and/or the consolidated entity are important.
The Board of Directors has considered the position and, in accordance with
advice received from the Audit Committee, is satisfied that the provision of
the non-audit services is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001. The Directors are satisfied
that the provision of non-audit services by the auditor, as set out below, did
not compromise the auditor independence requirements of the Corporations Act
2001 for the following reasons:
· all non-audit services have been reviewed to ensure they do not
impact the impartiality and objectivity of the auditor; and
· none of the services undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for Professional
Accountants.
Details of the amounts paid or payable to the auditor for non-audit services
provided during the year are set out below.
2023 2022
$ $
Non-audit services - BDO Australia:
Tax consulting and compliance services 10,000 9,575
Total 10,000 9,575
This report is made in accordance with a resolution of Directors, pursuant to
section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
Anthony Gilby
Director
Brisbane, 29 September 2023
2023 Annual Reserves Statement
Tlou Energy Limited is pleased to present its Annual Reserves Statement for
the period ending 30 June 2023. There has been no adjustment to the net gas
reserves and contingent resources of the Company since the last upgraded
reserves were announced on 20 February 2018. Please refer to the ASX
announcement on 20 February 2018 for full details of the consolidated entity's
gas reserves and contingent resources.
An independent review of the Company's gas reserves and contingent resources
is planned which may result in an upgrade or downgrade of the current gas
reserves and contingent resources. Having conducted an internal review of its
gas reserves and resources position during the reporting period and satisfying
itself that there was no new data available that might materially increase or
decrease the reserves or resources estimates reported during the reporting
period, the Company hereby presents the net gas reserves and contingent
resources on a combined basis as well as for each of its individual tenements
as at 30 June 2023.
This information was prepared and first disclosed under the SPE-PRMS 2007. It
has not been updated since to comply with the SPE-PRMS 2018 on the basis that
the information has not materially changed since it was last reported.
Karoo Basin Botswana Lesedi CBM 100% 0.34 0.34 25.2 25.2 252 252
(all coal seams)
PL001/2004,
ML 2017/18L
Karoo Basin Botswana Mamba CBM 100% 0.01 0.01 15.5 15.5 175 175
(Lower Morupule coal)
PL238/2014 -
PL241/2014
Karoo Basin Botswana PL003/2004, 100% - - - - - -
PL035/2000,
PL037/2000
Total 0.35 0.35 40.7 40.7 427 427
Karoo Basin Botswana Lesedi CBM 100% 4.6 4.6 214 214 3,043 3,043
(all coal seams)
PL001/2004,
ML 2017/18L
Karoo Basin Botswana Mamba CBM 100% - - - - - -
(Lower Morupule coal)
PL238/2014 -
PL241/2014
Karoo Basin Botswana PL003/2004, 100% - - - - - -
PL035/2000,
PL037/2000
Total 4.6 4.6 214 214 3,043 3,043
ASX Listing Rules Annual Report Requirements
*Listing Rule 5.39.1:
· All 1P and 2P petroleum reserves recorded in the table are
undeveloped and are attributable to unconventional gas.
· 100% of all 1P and 2P petroleum reserves are located in the Karoo
Basin in Botswana.
*Listing Rule 5.39.2:
· All 1P and 2P petroleum reserves reported are based on unconventional
petroleum resources.
Listing Rule 5.39.3:
· The table shows the 2P and 3P petroleum reserves as at 30 June 2023
and comparative petroleum reserves certified at 30 June 2022.
Governance Arrangements and Internal Controls Listing Rule 5.39.5:
· Tlou Energy has obtained all its gas reserves and resources reported
as at 30 June 2023 from external independent consultants who are qualified
petroleum reserves and resource evaluators as prescribed by the ASX Listing
Rules.
· Tlou Energy estimates and reports its petroleum reserves and
resources in accordance with the definitions and guidelines of the Petroleum
Resources Management System 2007, published by the Society of Petroleum
Engineers (SPE PRMS).
· To ensure the integrity and reliability of data used in the reserves
estimation process, the raw data is reviewed by senior reservoir and
geological staff and consultants at Tlou Energy before being provided to the
independent reserve certifiers. Tlou Energy has not and does not currently
intend to conduct internal reviews of petroleum reserves preferring to appoint
independent external experts prior to reporting any updated estimates of
reserves or resources to ensure an independent and rigorous review of its
data.
· Tlou Energy reviews and updates its gas reserves and resources
position on an annual basis to ensure that if there is any new data that might
affect the reserves or resources estimates of the Company steps can be taken
to ensure that the estimates are adjusted accordingly.
** Listing Rule 5.40.1:
· All 2C contingent resources recorded in the table are
undeveloped. 100% of the reported 2C contingent resource is attributable to
unconventional gas.
· The geographical areas where the 2C contingent resources are
located is the Karoo Basin in Botswana.
Listing Rule 5.40.2:
· The table shows the 2C and 3C contingent resources as at 30 June
2023 as against the previous year. The net 2C and 3C contingent resources did
not increase from the 2022 year to the 2023 year.
· There were no other changes to the 2C and 3C contingent resources
since the announcement on 20 February 2018.
Listing Rule 5.44:
· The estimates of Reserves and Contingent Resources appearing in
the 2023 Annual Reserves Statement for Tlou Energy Limited and its
subsidiaries are based on, and fairly represent, information and supporting
documentation determined by the various qualified petroleum reserves and
resource evaluators listed below.
· The gas reserves and resource estimates for the Lesedi CBM
Project provided in this report were released to the Market on 20 February
2018 ('Announcement'). Tlou Energy confirms that it is not aware of any new
information or data that materially affects the information included in the
Announcement and that all the material assumptions and technical parameters
underpinning the estimates in the Announcement continue to apply and have not
materially changed. The gas reserve and resource estimates are based on and
fairly represents, information and supporting documentation and were
determined by Dr. Bruce Alan McConachie of SRK Consulting (Australasia) Pty
Ltd, in accordance with Petroleum Resource Management System guidelines which
were issued in 2007 and were in use in February 2018. The most recent changes
to these guidelines, which revised those 2007 guidelines, was issued in June
2018. These revised guidelines will form the basis of any future assessments.
The guidelines were re-affirmed by Mr Carl D'Silva of SRK. Mr D'Silva is
considered to be a qualified person as defined under the ASX Listing Rule 5.42
and has given his consent to the use of the resource figures in the form and
context in which they appear in this report.
Notes to Net Reserves and Resources Table:
1) Gas Reserve and Resource numbers have been rounded to the nearest
whole number.
2) Gas Resource numbers have been rounded to the nearest tenth for
amounts less than 100 BCF, otherwise to the nearest whole number.
3) Tlou's Gas Reserves have not been adjusted for fuel or shrinkage and
have been calculated at the wellhead (which is the reference point for the
purposes of Listing Rule 5.26.5).
4) Contingent Gas Resources are (100%) Unrisked Gross and are derived
from the SRK certification at 31 March 2015 for all coal seams (as previously
announced by Tlou on 9 April 2015) with adjustment for the gas volumes which
have now been certified by SRK in the Gas Reserves category.
5) ASX Listing Rule 5.28.2 Statement relating to Prospective Resources:
The estimated quantities of petroleum gas that may potentially be recovered by
the application of a future development project(s) relate to undiscovered
accumulations. These estimates have both an associated risk of discovery and a
risk of development. Further exploration appraisal and evaluation is required
to determine the existence of a significant quantity of potentially moveable
hydrocarbons.
6) Prospective Gas Resources are (100%) Unrisked Gross and are derived
from a report to Tlou from Netherland, Sewell and Associates Inc (NSAI) dated
16th February 2012 regarding certification for all coal seams located in the
remaining prospecting licences (as previously announced by Tlou in its
prospectus dated 20 February 2013).
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2023
Consolidated
Note June 2023 June 2022
$ $
Interest income 21,747 9
Expenses
Employee benefits expense 3 (1,104,063) (683,630)
Depreciation expense 11 (209,320) (547,217)
Impairment - exploration and evaluation assets 9 - (166,054)
Foreign exchange gain/(loss) 140,528 (153,643)
Interest expense 14/15 (647,457) (241,917)
Share based payment expense 3/19 (99,651) (232,200)
Professional fees (440,509) (284,451)
Occupancy costs 3 (15,600) (18,048)
Other expenses 3 (1,790,078) (1,311,694)
Fair value gain/(loss) on financial instruments 16 (96,805) (690,271)
LOSS BEFORE INCOME TAX (4,241,208) (4,329,116)
Income tax 4 - -
LOSS FOR THE PERIOD (4,241,208) (4,329,116)
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (2,728,403) (1,717,869)
Tax effect - -
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) (2,728,403) (1,717,869)
TOTAL COMPREHENSIVE INCOME/(LOSS) (6,969,611) (6,046,985)
Earnings per share
Cents Cents
Basic loss per share 5 (0.5) (0.7)
Diluted loss per share 5 (0.5) (0.7)
The above consolidated statement of comprehensive income should be read in
conjunction with the accompanying notes.
Consolidated Statement of Financial Position
as at 30 June 2023
Consolidated
Note June 2023 June 2022
$ $
CURRENT ASSETS
Cash and cash equivalents 6 6,848,717 7,875,025
Trade and other receivables 7 1,311,444 424,220
Other current assets 8 1,140,791 178,887
TOTAL CURRENT ASSETS 9,300,952 8,478,132
NON-CURRENT ASSETS
Exploration and evaluation assets 9 60,442,961 50,180,613
Other non-current assets 10 483,775 602,112
Property, plant and equipment 11 1,399,531 366,492
TOTAL NON-CURRENT ASSETS 62,326,267 51,149,217
TOTAL ASSETS 71,627,219 59,627,349
CURRENT LIABILITIES
Trade and other payables 12 2,405,713 563,599
Derivatives 16 - 696,153
Lease liabilities 15,968 13,792
Provisions 13 417,158 319,903
TOTAL CURRENT LIABILITIES 2,838,839 1,593,447
NON-CURRENT LIABILITIES
Convertible notes 14 8,086,011 7,263,643
Long term loan 15 2,000,000 -
Derivatives 16 122,005 67,600
Lease liabilities 37,797 56,530
Provisions 13 134,000 113,000
TOTAL NON-CURRENT LIABILITIES 10,379,813 7,500,773
TOTAL LIABILITIES 13,218,652 9,094,220
NET ASSETS 58,408,567 50,533,129
EQUITY
Contributed equity 17 121,509,325 106,763,927
Reserves (9,344,768) (6,716,016)
Accumulated losses (53,755,990) (49,514,782)
TOTAL EQUITY 58,408,567 50,533,129
The above consolidated statement of financial position should be read in
conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2023
Contributed Equity Share Based Payments Reserve Foreign Currency Translation Reserve Accumulated Losses Total
$ $ $ $ $
Consolidated
Balance at 1 July 2021 106,763,927 925,604 (6,155,951) (45,185,666) 56,347,914
Loss for the period - - - (4,329,116) (4,329,116)
Other comprehensive income, net of tax - - (1,717,869) - (1,717,869)
Total comprehensive income - - (1,717,869) (4,329,116) (6,046,985)
Transactions with owners in their capacity as owners
Share based payments - 232,200 - - 232,200
- 232,200 - - 232,200
Balance at 30 June 2022 106,763,927 1,157,804 (7,873,820) (49,514,782) 50,533,129
Balance at 1 July 2022 106,763,927 1,157,804 (7,873,820) (49,514,782) 50,533,129
Loss for the period - - - (4,241,208) (4,241,208)
Other comprehensive income, net of tax - - (2,728,403) - (2,728,403)
Total comprehensive income - - (2,728,403) (4,241,208) (6,969,611)
Transactions with owners in their capacity as owners
Share based payments - 99,651 - - 99,651
Shares issued, net of costs 14,745,398 - - - 14,745,398
14,745,398 99,651 - - 14,845,049
Balance at 30 June 2023 121,509,325 1,257,455 (10,602,223) (53,755,990) 58,408,567
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
for the year ended 30 June 2023
Consolidated
Note June 2023 June 2022
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST and VAT) (3,164,020) (2,461,808)
Interest received 21,747 9
Interest paid (16,438) -
GST and VAT received 422,234 93,187
NET CASH USED IN OPERATING ACTIVITIES 27 (2,736,477) (2,368,612)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets (11,886,628) (2,639,000)
Payment for property, plant and equipment (1,883,994) (274,654)
NET CASH USED IN INVESTING ACTIVITIES (13,770,622) (2,913,654)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 17 14,853,721 -
Proceeds from borrowings 2,000,000 7,036,000
Issue costs 17 (108,323) (167,973)
Payments of lease liabilities (13,336) (15,997)
NET CASH PROVIDED BY FINANCING ACTIVITIES 16,732,062 6,852,030
Net (decrease)/increase in cash held 224,963 1,569,764
Cash at the beginning of the period 7,875,025 6,385,384
Effects of exchange rate changes on cash (1,251,271) (80,123)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 6 6,848,717 7,875,025
The above consolidated statement of cash flows should be read in conjunction
with the accompanying notes.
Notes to the financial statements
Note 1. Significant accounting policies
Introduction
This financial report includes the consolidated financial statements of Tlou
Energy Limited (the "Company") and its controlled entities (together referred
to as the "consolidated entity" or the "group").
The separate financial statements of the parent entity, Tlou Energy Limited,
have not been presented within this financial report as permitted by the
Corporations Act 2001. Supplementary information about the parent entity is
disclosed in note 30.
Tlou Energy Limited is a public company, incorporated and domiciled in
Australia. Its registered office and principal place of business is 210 Alice
St, Brisbane, QLD 4000, Australia.
The following is a summary of the material and principal accounting policies
adopted by the consolidated entity in the preparation of the financial
report. The accounting policies have been consistently applied to all the
years presented, unless otherwise stated.
Operations and principal activities
The principal activity of the consolidated entity is to explore, evaluate and
develop power solutions in Sub-Saharan Africa through Coalbed Methane (CBM)
gas-fired power. No revenue from these activities has been earned to date, as
the consolidated entity is still in the exploration and evaluation or
pre-development stage.
Currency
The financial report is presented in Australian dollars, rounded to the
nearest dollar, which is the functional and presentation currency of the
parent entity.
Authorisation of financial report
The financial report was authorised for issue on 29 September 2023.
Basis of preparation
These general purpose financial statements have been prepared in accordance
with Australian Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board and the Corporations Act 2001. Tlou
Energy Limited is a for-profit entity for the purposes of preparing the
financial statements.
Compliance with IFRS
The consolidated financial statements of Tlou Energy Limited also comply with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Historical cost convention
The consolidated financial statements have been prepared on an accruals basis
and are based on historical costs except for derivative financial instruments
which are measured at fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain
critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the consolidated entity's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements are disclosed in note 2.
Foreign currency transactions
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at financial year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in
profit or loss. Refer to Note 18 for accounting policy on translation of
foreign operations.
Going Concern
The consolidated financial statements have been prepared on a going concern
basis which contemplates that the consolidated entity will continue to meet
its commitments and can therefore continue normal business activities and the
realisation of assets and settlement of liabilities in the ordinary course of
business.
Because of the nature of the operations, exploration or pre-development
companies, such as Tlou Energy Limited, find it necessary on a regular basis
to raise additional cash funds for future exploration and development activity
and meet other necessary corporate expenditure. The Company is currently
discussing potential equity investments with interested parties. These funds
will be needed to fund ongoing operations and working capital requirements for
the next 12 months. In addition, the consolidated entity may need to raise
further capital to expand and develop its projects. Accordingly, the
consolidated entity is in the process of investigating various options for the
raising of additional funds which may include but is not limited to an issue
of shares or the sale of exploration assets where increased value has been
created through previous exploration activity.
At the date of this financial report, none of the above fund-raising options
have been concluded and no guarantee can be given that a successful outcome
will eventuate. The directors have concluded that as a result of the current
circumstances there exists a material uncertainty that may cast significant
doubt regarding the consolidated entity's and the Company's ability to
continue as a going concern and therefore the consolidated entity and Company
may be unable to realise their assets and discharge their liabilities in the
normal course of business. Nevertheless, after taking into account the current
status of the various funding options currently being investigated and making
other enquiries regarding other sources of funding, the directors have a
reasonable expectation that the consolidated entity and the Company will have
adequate resources to fund its future operational requirements and for these
reasons they continue to adopt the going concern basis in preparing the
financial report.
The financial report does not include adjustments relating to the
recoverability or classification of recorded assets amounts or to the amounts
or classification of liabilities that might be necessary should the
consolidated entity not be able to continue as a going concern.
Accounting Policies
(a) Principles of consolidation
Subsidiaries are all entities (including structured entities) over which the
consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the
consolidated entity. They are deconsolidated from the date that control
ceases.
The acquisition method of accounting is used to account for business
combinations by the consolidated entity.
Intercompany transactions, balances, and unrealised gains on transactions
between consolidated entity companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of
the transferred asset. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the
consolidated entity.
(b) Income recognition
Interest
Interest income is recognised as interest accrues using the effective interest
method. This is a method of calculating the amortised cost of a financial
asset and allocating the interest income over the relevant period using the
effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other income
Other income is recognised when it is received or when the right to receive
payment is established.
(c) Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs to sell
and value-in-use. The value-in-use is the present value of the estimated
future cash flows relating to the asset using a pre-tax discount rate specific
to the asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped together to form a
cash-generating unit.
(d) Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses, and assets are recognised net of the amount of associated
GST, unless the GST incurred is not recoverable from the tax authority. In
this case it is recognised as part of the cost of the acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable
or payable. The net amount of GST recoverable from, or payable to, the tax
authority is included in other receivables or other payables in the
consolidated statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows
arising from investing or financing activities which are recoverable from, or
payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the tax authority.
(e) Comparative figures
When required by accounting standards comparative figures have been adjusted
to conform to changes in presentation for the current financial year.
(f) Financial Instruments
Classification
The group classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at fair value (either through
OCI, or through profit or loss); and
· those to be measured at amortised cost.
The classification depends on the group's business model for managing the
financial assets and the contractual terms of the cash flows.
Measurement
At initial recognition, the group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets
carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety
when determining whether their cash flows are solely payment of principal and
interest.
Impairment
The group assesses on a forward-looking basis the expected credit losses
associated with its debt instruments carried at amortised cost. The impairment
methodology applied depends on whether there has been a significant increase
in credit risk.
For trade receivables, the group applies the simplified approach permitted by
AASB 9, which requires expected lifetime losses to be recognised from initial
recognition of the receivables.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured to their fair value
at each reporting date. The fair value adjustment is through profit or loss.
(g) Leases
The Group leases office space and a leasehold property. Office contracts are
typically made for fixed periods of 1 to 5 years but may have extension
options. Lease terms are negotiated on an individual basis and contain a wide
range of different terms and conditions. Leasehold property is for periods up
to 50 years.
Leases are recognised as a right-of-use asset and a corresponding liability at
the date at which the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a
present value basis.
Lease Liabilities
Lease liabilities include the net present value of the following lease
payments:
Ø fixed payments (including in-substance fixed payments), less any lease
incentives receivable;
Ø variable lease payment that are based on an index or a rate, initially
measured using the index or rate as at the commencement date;
Ø amounts expected to be payable by the Group under residual value
guarantees;
Ø the exercise price of a purchase option if the group is reasonably certain
to exercise that option; and
Ø payments of penalties for terminating the lease, if the lease term reflects
the group exercising that option.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability. The lease payments are
discounted using the interest rate implicit in the lease. If that rate cannot
be readily determined, which is generally the case for leases that relate to
building premises, the entity's incremental borrowing rate is used, being the
rate that the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security, and conditions.
To determine the incremental borrowing rate, the Group uses recent third-party
financing received by the individual lessee as a starting point, adjusted to
reflect changes in financing conditions since third party financing was
received, making adjustments specific to the lease (e.g., term, country,
currency, and security).
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period to produce a constant
periodic rate of interest on the remaining balance of the liability for each
period.
Right-of-use Assets
Right-of-use assets are measured at cost comprising the following:
Ø the amount of the initial measurement of lease liability;
Ø any lease payments made at or before the commencement date less any lease
incentives received;
Ø any initial direct costs; and
Ø restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset's useful life.
Low Value Assets
Payments associated with leases of low value assets are recognised on a
straight-line basis as an expense in profit or loss. Low value assets comprise
small items of office equipment.
(h) Borrowings
Financial liabilities
Non-derivative financial liabilities other than financial guarantees are
subsequently measured at amortised cost using the effective interest method.
The Consolidated entity's financial liabilities measured at amortised cost
include trade and other payables and the host liability of convertible notes.
Convertible notes
The conversion feature included in convertible notes is assessed to determine
if it satisfies or fails the fixed-for-fixed requirement to be classified as a
compound financial instrument containing an equity component. If this
requirement is failed the notes are separated into the host liability and the
derivative liability component of the notes.
Subsequent to initial recognition any changes in fair value of the derivative
liability at each balance date are recognised in profit or loss.
The host liability is subsequently recognised on an amortised cost basis until
extinguished on conversion or maturity of the notes.
(i) Revenue
The consolidated entity currently does not recognise any revenue from the sale
of goods or services but may do in future.
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which
the consolidated entity is expected to be entitled in exchange for
transferring goods or services to a customer. For each contract with a
customer, the consolidated entity: identifies the contract with a customer;
identifies the performance obligations in the contract; determines the
transaction price which takes into account estimates of variable consideration
and the time value of money; allocates the transaction price to the separate
performance obligations on the basis of the relative stand-alone selling price
of each distinct good or service to be delivered; and recognises revenue when
or as each performance obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services promised.
The consolidated entity recognises an impairment loss in profit or loss to the
extent that the carrying amount of an asset recognised exceeds: the remaining
amount of consideration that the consolidated entity expects to receive in
exchange for the goods or services to which the asset relates; less the costs
that relate directly to providing those goods or services and that have not
been recognised as expenses.
The consolidated entity recognises in profit or loss a reversal of some or all
of an impairment loss previously recognised when the impairment conditions no
longer exist or have improved. The increased carrying amount of the asset will
not exceed the amount that would have been determined (net of amortisation) if
no impairment loss had been recognised previously.
(j) New Accounting Standards and Interpretations
There were no new or revised accounting standards adopted that had any impact
on the Group's accounting policies and required retrospective adjustments.
(k) New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for 30 June 2023 reporting periods. The consolidated entity
has decided against early adoption of these standards. The consolidated entity
has assessed the impact of these new standards that are not yet effective and
determined that they are not expected to have a material impact on the
consolidated entity in the current or future reporting periods and on
foreseeable future transactions.
Note 2. Critical accounting
judgements, estimates and assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts in the
financial statements. Management continually evaluates its judgements and
estimates in relation to assets and liabilities. Management bases its
judgements, estimates and assumptions on historical experience and on other
various factors, including expectations of future events, management believes
to be reasonable under the circumstances. The resulting accounting judgements
and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Exploration & evaluation assets
The consolidated entity performs regular reviews on each area of interest to
determine the appropriateness of continuing to carry forward costs in relation
to that area of interest. These reviews are based on detailed surveys and
analysis of drilling results performed to reporting date.
Management has considered whether Tlou is still in the E&E phase or has
moved into development. The projects should still be classified as E&E as
the technical and commercial feasibility has not been established. In
particular:
· whilst there has been independently certified gas reserves and
contingent resources whether or not these reserve gas flow rates will be of a
commercial quantity has not been established;
· funding for the commercialisation of reserves and for a
commercial level of production has not been confirmed; and
· a final investment decision has not been made.
At the date of this report the Directors consider that Tlou is still in the
E&E phase. While the Company has made significant strides during 2023, the
three points above are still relevant, i.e. (i) commercial gas flow rates are
yet to be established, (ii) agreed funding to commercialise the project is not
yet in place, (iii) we have not reached a final investment decision. Based on
these facts and despite the progress this year the project remains in the
E&E stage.
Deferred Tax assets
The Company is subject to income taxes in Australia and jurisdictions where it
has foreign operations. Significant judgement is required in determining the
worldwide provision for income taxes. There are certain transactions and
calculations undertaken during the ordinary course of business for which the
ultimate tax determination is uncertain. The consolidated entity estimates its
tax liabilities based on the consolidated entity's understanding of the tax
law. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the current
and deferred income tax assets and liabilities in the period in which such
determination is made.
In addition, the consolidated entity has recognised deferred tax assets
relating to carried forward tax losses to the extent there are sufficient
taxable temporary differences (deferred tax liabilities) relating to the same
taxation authority and the same subsidiary against which the unused tax losses
can be utilised. However, utilisation of the tax losses also depends on the
ability of the entity, which is not part of the tax consolidated group, to
satisfy certain tests at the time the losses are recouped. Due to the parent
entity acquiring the entity that holds the losses it is expected that the
entity will fail to satisfy the continuity of ownership test and therefore
must rely on the same business test. As at 30 June 2023 the consolidated
entity has not received advice that the losses are unavailable, however should
this change in the future the consolidated entity may be required to
derecognise these losses.
Note 3. Expenses
Consolidated
June 2023 June 2022
Loss before income tax includes the following specific expenses: $ $
Employee benefits expense
● Defined contribution superannuation expense 86,731 64,637
● Performance rights 99,651 232,200
● Other employee benefits expense 1,017,332 618,993
1,203,714 915,830
Occupancy costs
● Rental expense relating to short-term leases ‑ minimum lease rentals 15,600 12,900
● Other occupancy costs - 5,148
15,600 18,048
Other expenses include the following specific items:
● Travel and accommodation costs 216,403 75,695
● Consultants 174,488 443,082
● Stock exchange, advisory, secretarial fees 400,602 258,001
● Investor relations 634,999 314,250
Note 4. Income Tax
The income tax expense or benefit for the period is the tax payable on that
period's taxable income based on the applicable income tax rate for each
jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and unused tax losses and under and over
provision in prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences
at the tax rates expected to apply when the assets are recovered or
liabilities are settled, based on those tax rates that are enacted or
substantively enacted, except for:
· When the deferred income tax asset or liability arises from the
initial recognition of goodwill or an asset or liability in a transaction that
is not a business combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
· When the taxable temporary difference is associated with
investments in subsidiaries, associates or interests in joint ventures, and
the timing of the reversal can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are
reviewed each reporting date. Deferred tax assets recognised are reduced to
the extent that it is no longer probable that future taxable profits will be
available for the carrying amount to be recovered. Previously unrecognised
deferred tax assets are recognised to the extent that it is probable that
there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally
enforceable right to offset current tax assets against current tax
liabilities; and they relate to the same taxable authority on either the same
taxable entity or different taxable entities which intend to settle
simultaneously.
Consolidated
June 2023 June 2022
$ $
Loss before income tax (4,241,208) (4,329,116)
Tax at the domestic tax rates applicable to profits in the country concerned (1,272,362) (1,298,735)
at 30% (2022: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating
taxable income:
Other non-deductible items (844,141) 1,142,896
Difference in overseas tax rates (38,637) (97,877)
Deferred tax asset not recognised 2,155,140 253,716
Income tax benefit - -
Recognised deferred tax assets
Unused tax losses 6,701,070 6,327,074
6,701,070 6,327,074
Recognised deferred tax liabilities
Assessable temporary differences 6,701,070 6,327,074
6,701,070 6,327,074
Net deferred tax liability recognised - -
Unrecognised temporary differences and tax losses
Unused tax losses and temporary differences for which no deferred tax asset 47,594,215 45,777,185
has been recognised
The deductible temporary differences and tax losses do not expire under
current tax legislation. Deferred tax assets have not been recognised in
respect of these items because it is not probable that future taxable profit
will be available against which the consolidated entity can utilise these
benefits.
Note 5. Earnings per share
Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
the owners of Tlou Energy Limited, excluding any costs of servicing equity
other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account the after income tax effect of
interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued
for no consideration in relation to dilutive potential ordinary shares.
Consolidated
June 2023 June 2022
$ $
Reconciliation of earnings used in calculating basic and diluted loss per
share:
Loss for the year attributable to owners of Tlou Energy Limited (4,241,208) (4,329,116)
Loss used in the calculation of the basic and dilutive loss per share (4,241,208) (4,329,116)
Weighted average number of ordinary shares used as the denominator
Number Number
Number used in calculating basic and diluted loss per share 803,547,703 600,199,039
Options and performance rights are considered to be "potential ordinary
shares" but were anti-dilutive in nature and therefore the diluted loss per
share is the same as the basic loss per share.
Note 6. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of
changes in value.
Consolidated
June 2023 June 2022
$ $
Cash at bank 6,848,717 7,875,025
6,848,717 7,875,025
Note 7. Trade and Other
Receivables
Consolidated
June 2023 June 2022
$ $
Current
Other receivables 23,443 34,448
GST/VAT receivable 1,288,001 389,772
1,311,444 424,220
Note 8. Other Current Assets
Consolidated
June 2023 June 2022
$ $
Prepayments 1,140,791 178,887
1,140,791 178,887
Note 9. Exploration and Evaluation
Assets
Exploration and evaluation expenditure incurred is accumulated in respect of
each identifiable area of interest or project. Such expenditures comprise
net direct costs and an appropriate portion of related overhead expenditure
but do not include overheads or administration expenditure not having a
specific nexus with a particular area of interest. These costs are only
carried forward to the extent that they are expected to be recouped through
the successful development of the area or where activities in the area have
not yet reached a stage which permits reasonable assessment of the existence
of economically recoverable reserves and active or significant operations in
relation to the area are continuing.
Accumulated costs in relation to an area or project no longer considered
viable are written off in full in the year the decision is made. Regular
reviews are undertaken on each area of interest and project to determine the
appropriateness of continuing to carry forward related costs.
Consolidated
June 2023 June 2022
$ $
Exploration and evaluation assets 60,442,961 50,180,613
60,442,961 50,180,613
Movements in exploration and evaluation assets
Balance at the beginning of period 50,180,613 48,855,466
Exploration and evaluation expenditure during the year 12,281,203 2,874,610
Impairment expense - (166,054)
Foreign currency translation (2,018,855) (1,383,409)
Balance at the end of period 60,442,961 50,180,613
Included in exploration and evaluation assets is expenditure incurred on
contracts for the construction of a transmission line and associated
substations to connect the Company's Lesedi Power Project to the existing
power grid in Botswana. At 30 June 2023 total costs on these items amounted to
$7,265,668 (2022: $948,446). In the prior year financial statement these
assets were itemised separately under non-current assets.
The recoupment of costs carried forward in relation to projects or areas of
interest in the exploration and evaluation phase is dependent on successful
development and commercial exploitation, or alternatively, sale of the
respective areas of interest.
There is a risk that one or more of the exploration licences will not be
extended, or that the terms of the extension are not favourable to Tlou. This
could have an adverse impact on the performance of Tlou. The consolidated
entity is not aware of any reasons why the licences will not be renewed.
Note 10. Other non-current assets
Inventory and well consumables are valued at lower of cost and net realisable
value. Inventory and well consumables are allocated to exploration and
evaluation expenditure when the assets are used in operations.
Consolidated
June 2023 June 2022
$ $
Inventory and well consumables - at cost 483,775 602,112
483,775 602,112
Note 11. Property, Plant and Equipment
Plant and equipment is stated at historical cost less accumulated depreciation
and impairment. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Depreciation and amortisation is calculated on a straight-line basis to write
off the net cost of each item of plant and equipment and right of use assets
over their expected useful lives as follows:
Plant and equipment 3-7 years
Right-of-use assets over the actual or expected term
of the lease
The residual values, useful lives and depreciation methods are reviewed, and
adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when
there is no future economic benefit to the consolidated entity. Gains and
losses between the carrying amount and the disposal proceeds are taken to
profit or loss.
Consolidated
June 2023 June 2022
$ $
Right-of-use assets, plant and equipment at cost 5,221,832 4,186,262
Accumulated depreciation (3,822,301) (3,819,770)
1,399,531 366,492
Movements in Carrying Amounts
Movement in the carrying amounts between the beginning and the end of the
current financial year:
Land and Buildings Site Equipment Motor Vehicles Office Equipment Furniture and Fittings Total
Balance at the beginning of year 130,354 150,964 33,509 51,665 - 366,492
Additions 1,058,057 116,821 14,443 133,373 1,322,694
Disposals (3,307) (15,758) (2,374) (21,439)
Depreciation and amortisation (16,342) (129,261) (26,484) (4,555) (11,671) (188,313)
Foreign exchange movements (58,159) (12,943) (1,640) (777) (6,384) (79,903)
Carrying amount at the end of year 1,113,910 122,274 5,385 45,018 112,944 1,399,531
Included in property, plant and equipment are right-of-use assets with a
carrying value of $60,059 (2022: $70,323).
Note 12. Trade and Other Payables
These amounts represent liabilities for goods and services provided to the
consolidated entity prior to the end of the financial year and which are
unpaid. Due to their short-term nature, they are measured at amortised cost
and not discounted. The amounts are unsecured and are usually paid within 30
days of recognition.
Consolidated
June 2023 June 2022
$ $
Current
Trade payables 1,828,818 445,994
Accruals 533,379 95,337
Other payables 43,516 22,268
2,405,713 563,599
The carrying values of trade and other payables approximate fair values due to
short-term nature of the amounts. These are non-interest bearing.
Note 13. Provisions
Provisions are recognised when the consolidated entity has a present (legal or
constructive) obligation as a result of a past event, it is probable the
consolidated entity will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. The amount recognised as
a provision is the best estimate of the consideration required to settle the
present obligation at the reporting date, taking into account the risks and
uncertainties surrounding the obligation. If the time value of money is
material, provisions are discounted using a current pre-tax rate specific to
the liability. The increase in the provision resulting from the passage of
time is recognised as a finance cost.
Rehabilitation
The provision represents the estimated costs to rehabilitate wells in licences
held by the consolidated entity. This provision has been calculated based on
the number of wells which require rehabilitation and the expected costs to
rehabilitate each well, taking into consideration the type of well and its
location.
Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and
annual leave expected to be settled within 12 months of the reporting date are
recognised in current liabilities in respect of employees' services up to the
reporting date and are measured at the amounts expected to be paid when the
liabilities are settled.
Long service leave
The liability for long service leave is recognised in current and non-current
liabilities, depending on the unconditional right to defer settlement of the
liability for at least 12 months after the reporting date. The liability is
measured as the present value of expected future payments to be made in
respect of services provided by employees up to the reporting date.
Consideration is given to expected future wage and salary levels, experience
of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on national corporate
bonds with terms to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
Employee benefits - Botswana Severance
A provision has been recognised for employee benefits relating to severance
pay payable in Botswana.
Severance pay
As per the Botswana Labour a provision is calculated for each Botswana based
employee of one day per month of service, which can be paid out after 60
months or when employment ends. The benefit rises to two days per month after
the first 60 months.
Consolidated
June 2023 June 2022
Current $ $
Employee benefits 243,590 189,912
Employee benefits - Botswana severance 173,568 129,991
417,158 319,903
Non-current
Rehabilitation 134,000 113,000
134,000 113,000
Movements in rehabilitation provision during the year
Balance at the beginning of the year 113,000 114,000
Rehabilitation required on wells drilled during the year 21,000 -
Completed during the year - (1,000)
Carrying amount at the end of the year 134,000 113,000
Note 14. Convertible notes
The parent entity issued convertible notes totalling US$5,000,000 on 24
January 2022. The notes are convertible into ordinary shares of the parent
entity, at the option of the holder at the higher of:
(a) A 10% discount to the weighted average traded price of the Company's
shares on the ASX over the 90 days prior to the Conversion Date; and
(b) A$0.06
The notes incur interest at 7.75% and the Company may capitalise interest for
the first 18 months, thereafter, interest must be paid at each six-month
anniversary of issue date. The notes expire on 24 January 2027, being 5 years
after issue.
The notes fail the fixed-for-fixed requirement to be classified as a compound
financial instrument containing an equity component. As a result, the notes
have been separated into the host liability and the derivative liability
component of the notes.
On initial recognition the fair value of the embedded derivative has been
calculated first with the residual value being assigned to the host liability,
as shown below:
Consolidated
June 2023 June 2022
$ $
Face value of notes issued - 7,036,000
Derivative - refer note 17 - (73,482)
Issue costs - (167,673)
Host liability on initial recognition - 6,794,845
Opening Balance/Host liability on initial recognition 7,263,643 6,794,845
Interest expense 614,581 241,917
Interest paid - -
Effect of foreign exchange movement 207,787 226,881
Non-current host liability 8,086,011 7,263,643
Total Borrowings 8,086,011 7,263,643
Interest expense is calculated by applying the effective interest rate of
8.08% to the host liability component.
The initial fair value of the derivative portion of the note was determined
using a binomial option model on issue date.
The host liability is subsequently recognised on an amortised cost basis until
extinguished on conversion or maturity of the notes.
The derivative is subsequently recognised at fair value at each reporting date
- refer note 16 for further details.
Note 15. Long Term Loan
Consolidated
June 2023 June 2022
Non-current Liabilities $ $
Loan from ILC Investments Pty Ltd 2,000,000 -
Interest expense 32,876 -
Interest paid/accrued (32,876) -
2,000,000 -
ILC Investments Pty Ltd ("ILC") provided a $2m loan to the Company. ILC is
Tlou's largest shareholder. The Loan has a three-year term, commencing on 1
May 2023 and there are no arrangement fees. Interest will be charged at 10%
per annum and payable each quarter. The Loan is unsecured and is scheduled to
be repaid at the end of the term (30 April 2026). However, the Loan can be
repaid in advance at any time without penalty should funds be available to do
so.
Note 16. Derivatives
Consolidated
June 2023 June 2022
Current $ $
Opening balance 696,153 -
Fair value movement recognised in profit or loss 42,400 696,153
Settlement of forward contracts (738,553) -
Closing balance - 696,153
Consolidated
June 2023 June 2022
Non-current $ $
Opening balance 67,600 -
On initial recognition - 73,482
Fair value movement recognised in profit or loss 54,405 (5,882)
Closing balance 122,005 67,600
Non-current derivatives relate to the conversion feature included in the
convertible notes issued on 24 January 2022. The initial fair value and the
value as at 30 June 2023 of the derivative portion of the note was determined
using a binomial option model.
Fair value measurements
The fair value of financial assets and financial liabilities must be estimated
for recognition and measurement or for disclosure purposes.
AASB 13 Fair Value Measurement requires disclosure of fair value measurements
by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1)
(b) inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices) (level 2), and
(c) inputs for the asset or liability that are not based on observable
market data (unobservable inputs) (level 3).
The fair value of the consolidated entity's derivatives is determined using
valuation techniques as they are not traded in an active market. These
valuation techniques maximise the use of observable market data where it is
available and rely as little as possible on entity specific estimates. The
conversion feature derivative is considered to be a level 3 measurement as the
binomial pricing model includes unobservable inputs.
Foreign currency forward contracts have been valued using the present value of
future cash flows based on the forward exchange rates at balance date. The
foreign currency forward contract is considered to be a level 3 measurement as
the valuation model includes unobservable inputs.
Changes in the value of the derivatives that have been recognised are included
in the tables above.
Note 17. Contributed equity
Issued and paid-up capital is recognised at the fair value of the
consideration received by the consolidated entity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Consolidated
June 2023 June 2022 June 2023 June 2022
Shares Shares $ $
Opening balance 600,199,039 600,199,039 106,763,927 106,763,927
Issue of ordinary shares during the year 424,383,986 - 14,853,721 -
Share issue costs - - (108,323) -
Ordinary shares ‑ fully paid 1,024,583,025 600,199,039 121,509,325 106,763,927
Ordinary shares issued during the year
Issue Date No. of Shares Issue Price (AUD)
Exercise of Options 18-Jul-22 6,250 $0.08
Placement 9-Nov-22 57,142,857 $0.035
Placement 16-Nov-22 85,714,286 $0.035
Placement 27-Jan-23 87,653,278 $0.035
Placement 27-Mar-23 5,714,284 $0.035
Entitlement Offer 22-Jun-23 188,153,031 $0.035
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the
proceeds on the winding up of the Company in proportion to the number of, and
amounts paid on, the shares held. The fully paid ordinary shares have no par
value. On a show of hands every member present at a meeting, in person or by
proxy, shall have one vote and upon a poll, each share shall have one vote.
The Company does not have authorised capital or par value in respect of its
issued shares.
Capital risk management
The capital structure of the consolidated entity consists of equity
attributable to equity holders of the parent entity, comprising issued capital
and reserves as disclosed in the Consolidated Statement of Changes in Equity.
When managing capital, management's objective is to ensure the parent entity
continues as a going concern and to maintain a structure that ensures the
lowest cost of capital available and to ensure adequate capital is available
for exploration and evaluation of tenements. In order to maintain or adjust
the capital structure, the consolidated entity may seek to issue new shares.
Consistent with other exploration companies, the consolidated entity,
including the parent entity monitors capital on the basis of forecast
exploration and development expenditure required to reach a stage which
permits a reasonable assessment of the existence or otherwise of an
economically recoverable reserve.
Note 18. Reserves
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising
on translation of foreign controlled entities.
The financial report is presented in Australian dollars rounded to the nearest
dollar, which is Tlou Energy Limited's functional and presentation currency.
Foreign operations
The assets and liabilities of foreign operations are translated into
functional currency using the exchange rates at the reporting date. The
revenues and expenses of foreign operations are translated into functional
currency using the average exchange rates, which approximate the rate at the
date of the transaction, for the period. All resulting foreign exchange
differences are recognised in the foreign currency translation reserve in
equity. The foreign currency reserve is recognised in profit or loss when the
foreign operation or net investment is disposed of.
Share Based Payments Reserve
The share-based payments reserve is used to record the share-based payment
associated with options and performance rights granted to employees and others
under equity-settled share-based payment arrangements.
Note 19. Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided
to employees and other service providers.
Equity-settled transactions are awards of shares, options or performance
rights over shares that are provided to employees or other service providers
in exchange for the rendering of services. Cash-settled transactions are
awards of cash for the exchange of services, where the amount of cash is
determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant
date. Fair value is independently determined using either the Binomial or
Black-Scholes option pricing model that takes into account the exercise price,
the term of the option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together
with non-vesting conditions that do not determine whether the consolidated
entity receives the services that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a
corresponding increase in equity over the vesting period. The cumulative
charge to profit or loss is calculated based on the grant date fair value of
the award, the best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting
date less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value.
Therefore, any awards subject to market conditions are considered to vest
irrespective of whether or not that market condition has been met provided all
other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised
as if the modification has not been made. An additional expense is recognised,
over the remaining vesting period, for any modification that increases the
total fair value of the share-based compensation benefit as at the date of
modification.
If the non-vesting condition is within the control of the consolidated entity
or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the consolidated
entity or employee and is not satisfied during the vesting period, any
remaining expense for the award is recognised over the remaining vesting
period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on
the date of cancellation, and any remaining expense is recognised immediately.
If a new replacement award is substituted for the cancelled award, the
cancelled and new award is treated as if they were a modification.
Employee Share Options and Performance Rights
Share Options and Performance Rights may be granted to certain personnel of
the Company on terms determined by the directors or otherwise approved by the
Company at a general meeting.
Share options are granted for no consideration. Options and entitlements to
the options are vested on a time basis and/or on specific performance-based
criteria such as share price increases or reserves certification. Options
granted as described above carry no dividend or voting rights. When
exercisable, each option is convertible to one ordinary share.
Performance Rights are linked to the share price performance of the Company,
ensuring alignment with the interests of the Company's shareholders. For the
Performance Rights that are issued but not yet exercised at the date of this
report to vest and, therefore, become exercisable by a participant, certain
performance conditions are required to be met as set out below. On vesting,
holders of Performance Rights will be entitled to acquire Tlou Energy Limited
ordinary shares at nil cost.
Options
At 30 June 2023, the were no outstanding options for ordinary shares in Tlou
Energy Limited.
Issued to: Grant Date Exercise Price Expiry date 1/07/2022 Issued Exercised Expired 30/06/2023
Shareholders 20-Jul-20 $0.08 20-Jul-22 37,509,400 - (6,250) (37,503,150) -
Service providers 20-Jul-20 $0.08 20-Jul-22 20,000,000 - - (20,000,000) -
57,509,400 - (6,250) (57,503,150) -
At 30 June 2022, the following options for ordinary shares in Tlou Energy
Limited were on issue.
Issued to: Grant Date Exercise Price Expiry date 1/07/2021 Issued Exercised Expired 30/06/2022
Shareholders 20-Jul-20 $0.08 20-Jul-22 37,509,400 - - - 37,509,400
Service providers 20-Jul-20 $0.08 20-Jul-22 20,000,000 - - - 20,000,000
57,509,400 - - - 57,509,400
Options may be granted on terms determined by the directors or otherwise
approved by the company at a general meeting. The options are granted for no
consideration. Options and entitlements to the options are vested on a time
basis and/or for services provided or on specific performance-based criteria.
Options granted as described above carry no dividend or voting rights. When
exercisable, each option is convertible to one ordinary share.
The fair value of options at grant date is determined using generally accepted
valuation techniques that take into account exercise price, the term of the
option, the impact of dilution, the share price at grant date, the expected
price volatility of the underlying share, the expected dividend yield and the
risk-free rate for the term of the option/performance right and an appropriate
probability weighting to factor the likelihood of the satisfaction of
non-vesting conditions. The expected volatility is based on historic
volatility, adjusted for any expected changes to future volatility due to
publicly available information.
Performance Rights
At 30 June 2023, the following performance rights were on issue.
Issue Date Hurdle Price Expiry date 1/07/2022 Issued Exercised Lapsed 30/06/2023
31/01/2017 $0.28 31/01/2024 2,275,000 - - - 2,275,000
19/10/2018 $0.165 31/01/2025 2,225,000 - - (50,000) 2,175,000
19/10/2018 $0.22 31/01/2025 2,225,000 - - (50,000) 2,175,000
15/12/2021 $0.10 31/01/2025 3,000,000 - - - 3,000,000
15/12/2021 $0.165 31/01/2025 3,000,000 - - - 3,000,000
1/02/2023 $0.165 31/01/2025 - 2,000,000 - - 2,000,000
1/02/2023 $0.22 31/01/2025 - 2,000,000 - - 2,000,000
1/02/2023 $0.28 31/01/2025 - 2,000,000 - - 2,000,000
12,725,000 6,000,000 - (100,000) 18,625,000
Performance Condition
(i) To vest the share price needs to be AUD $0.28 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2024.
(ii) To vest the share price needs to be AUD $0.165 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
(iii) To vest the share price needs to be AUD $0.22 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
(iv) To vest the share price needs to be AUD $0.10 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
(v) To vest the share price needs to be AUD $0.28 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
Each performance right provides the right to receive one share, subject to the
satisfaction of any applicable performance conditions. Unless the Board
exercises its discretion, performance rights are forfeited on the occurrence
of certain specified events, including, but not limited to, ceasing to be an
employee or contractor of the Company or its associated entities for any
reason, including, but not limited to death, illness, permanent disability,
redundancy or otherwise.
Fair value of performance rights granted
The fair value at grant date is determined using a binomial option pricing
model that takes into account the exercise price, the term of the performance
rights, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the
risk free interest rate for the term of the performance rights.
The model inputs for performance rights granted during the year ended 30 June
2023 included:
(a) Performance rights are granted for no consideration and vest based on
the conditions noted above
(b) exercise price: $nil
(c) grant date: 1 February 2023
(d) expiry date: 31 January 2025
(e) share price at grant date: $0.04
(f) expected price volatility: 100%
(g) expected dividend yield: 0%
(h) risk-free interest rate: 3.16%
The expected price volatility is based on the historic volatility (based on
the remaining life of the options), adjusted for any expected changes to
future volatility due to publicly available information.
The following table shows the number, movements and vesting price of
performance rights for the 2022 year.
Date of Approval Vesting Price 1/07/2021 Issued Exercised Expired 30/06/2022
17 October 2018 $0.165 2,225,000 - - - 2,225,000
17 October 2018 $0.22 2,225,000 - - - 2,225,000
10 November 2016 $0.28 2,275,000 - - - 2,275,000
24 November 2021 $0.10 - 3,000,000 - - 3,000,000
24 November 2021 $0.165 - 3,000,000 - - 3,000,000
6,725,000 6,000,000 - - 12,725,000
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transaction recognised during
the year were as follows:
Consolidated
June 2023 June 2022
$ $
Performance rights 99,651 232,200
99,651 232,200
The weighted average remaining contractual life of performance rights
outstanding at the end of the period is 1.47
years (2022: 2.41 years).
Note 20. Commitments
Exploration and evaluation expenditure:
To maintain an interest in the exploration tenements in which it is involved,
the consolidated entity is required to meet certain conditions imposed by the
various statutory authorities granting the exploration tenements or that are
imposed by the joint venture agreements entered into by the consolidated
entity. These conditions can include proposed expenditure commitments. The
timing and amount of exploration expenditure obligations of the consolidated
entity may vary significantly from the forecast based on the results of the
work performed, which will determine the prospectivity of the relevant area of
interest. Subject to renewal of all prospecting licences, the consolidated
entity's proposed expenditure obligations along with obligations under
contracts related to the construction of transmission lines and associated
infrastructure which are not provided for in the financial statements are as
follows:
Consolidated
June 2023 June 2022
Minimum expenditure requirements $ $
● not later than 12 months 5,630,270 6,257,100
● between 12 months and 5 years 263,181 1,769,692
5,893,451 8,026,792
Note 21. Financial instruments
Overview
The consolidated entity's principal financial instruments comprise
receivables, payables, cash and term deposits, convertible notes, derivatives
and long-term loans. The main risks arising from the consolidated entity's
financial assets are interest rate risk, foreign currency risk, credit risk
and liquidity risk.
This note presents information about the consolidated entity's exposure to
each of the above risks, its objectives, policies, and processes for measuring
and managing risk. Other than as disclosed, there have been no significant
changes since the previous financial year to the exposure or management of
these risks.
The consolidated entity holds the following financial instruments:
Consolidated
June 2023 June 2022
Financial Assets $ $
Cash and cash equivalents 6,848,717 7,875,025
Trade and other receivables 1,311,444 424,220
8,160,161 8,299,245
Financial Liabilities
Trade and other payables 2,459,478 633,921
Convertible notes 8,086,011 7,263,643
Derivatives 122,005 763,753
Long-term loan 2,000,000 -
12,667,494 8,661,317
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial
risks: market risk (including foreign currency risk, price risk and interest
rate risk), credit risk and liquidity risk. The consolidated entity's overall
risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance
of the consolidated entity. The consolidated entity uses different methods to
measure different types of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate, foreign exchange and other
price risks and ageing analysis for credit risk.
Key risks are monitored and reviewed as circumstances change (e.g.,
acquisition of new entity or project) and policies are created or revised as
required. The overall objective of the consolidated entity's financial risk
management policy is to support the delivery of the consolidated entity's
financial targets whilst protecting future financial security. During the
current year the consolidated entity has entered into a foreign exchange
forward contract to mitigate its foreign exchange risk. Given the nature and
size of the business and uncertainty as to the timing and amount of cash
inflows and outflows, the consolidated entity does not enter into any other
derivative transactions (apart from its foreign exchange forward contract) to
mitigate the financial risks. In addition, the consolidated entity's policy is
that no trading in financial instruments shall be undertaken for the purpose
of making speculative gains. As the consolidated entity's operations change,
the Directors will review this policy periodically going forward.
The Board of Directors has overall responsibility for the establishment and
oversight of the risk management framework. The Board reviews and agrees
policies for managing the consolidated entity's financial risks as summarised
below. These policies include identification and analysis of the risk exposure
of the consolidated entity and appropriate procedures, controls, and risk
limits.
Risk management is carried out by senior finance executives (finance) under
policies approved by the Board of Directors. Finance identifies, evaluates,
and hedges financial risks within the consolidated entity's operating units
where appropriate.
(a) Interest rate risk
Exposure to interest rate risk arises on financial assets and financial
liabilities recognised at reporting date whereby a future change in interest
rates will affect future cash flows or the fair value of fixed rate financial
instruments. The consolidated entity is also exposed to earnings volatility on
floating rate instruments.
A forward business cash requirement estimate is made, identifying cash
requirements for the following period (generally up to one year) and interest
rate term deposit information is obtained from a variety of banks over a
variety of periods (usually one month up to six-month term deposits)
accordingly. The funds to invest are then scheduled in an optimised fashion to
maximise interest returns.
Interest rate sensitivity
A sensitivity of 1% interest rate has been selected as this is considered
reasonable given the current market conditions. A 1% movement in interest
rates at the reporting date would have increased (decreased) equity and profit
or loss by the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant.
Profit or loss Equity
1% increase 1% decrease 1% increase 1% decrease
$ $ $ $
Consolidated - 30 June 2023
Cash and cash equivalents 68,487 (68,487) 68,487 (68,487)
Consolidated - 30 June 2022
Cash and cash equivalents 78,750 (78,750) 78,750 (78,750)
Interest rate risk on other financial instruments is immaterial.
(b) Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to
meet its financial obligations as they fall due. The Board's approach to
managing liquidity is to ensure, as far as possible, that the consolidated
entity will always have sufficient liquidity to meet its obligations when due.
Ultimate responsibility for liquidity risk management rests with the Board of
Directors. The consolidated entity manages liquidity risk by maintaining
adequate reserves and by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and
liabilities. This is based on the undiscounted cash flows of the financial
liabilities based on the earliest date on which they are required to be paid.
At the end of the reporting period the consolidated entity held cash of
$6,848,717 (2022: $7,875,025).
The following table details the remaining contractual maturity for
non-derivative financial liabilities.
Within Between Total Contractual Carrying
1 Year 1 - 5 years Cash Flows Amount
Consolidated - 30 June 2023 $ $ $ $
Trade and other payables 2,421,681 37,797 2,459,478 2,459,478
Long term loan 198,356 2,378,630 2,576,986 2,000,000
Convertible notes & derivatives - 10,727,761 10,727,761 8,208,016
Consolidated - 30 June 2022
Trade and other payables 577,391 56,530 633,921 633,921
Convertible notes & derivatives 696,153 10,341,158 11,037,311 8,027,396
(c) Foreign exchange risk
As a result of activities overseas, the consolidated entity's consolidated
statement of financial position can be affected by movements in exchange
rates. The consolidated entity also has transactional currency exposures. Such
exposures arise from transactions denominated in currencies other than the
functional currency of the relevant entity.
The consolidated entity's exposure to foreign currency risk primarily arises
from the consolidated entity's operations overseas. Foreign exchange risk
arises from future commercial transactions and recognised financial assets and
financial liabilities denominated in a currency that is not the entity's
functional currency. The risk is measured using sensitivity analysis and cash
flow forecasting.
During the prior year the consolidated entity entered into a foreign exchange
forward contract to mitigate its foreign exchange risk. Apart from this
contract the consolidated entity's policy is to generally convert its local
currency to Pula, Rand, or US dollars at the time of transaction. The
consolidated entity, has on rare occasions, taken the opportunity to move
Australian dollars into foreign currency (ahead of a planned requirement for
those foreign funds) when exchange rate movements have moved significantly in
favour of the Australian dollar, and management considers that the currency
movement is extremely likely to move back in subsequent weeks or months.
Therefore, the opportunity has been taken to lock in currency at a favourable
rate to the consolidated entity. This practice is expected to be the
exception, rather than the normal practice.
The consolidated entity's exposure to foreign currency risk at the reporting
date, expressed in Australian dollars, was as follows:
2023 2023 2023 2023 2022 2022 2022 2022
USD BWP ZAR GBP USD BWP ZAR GBP
A$ A$ A$ A$ A$ A$ A$ A$
Financial Assets
Cash and cash equivalents 37,301 142,007 1,023 965,200 6,143,514 339,500 20,969 1,188,501
Trade and other receivables - 1,284,732 - - - 389,727 - -
Financial Liabilities
Trade and other payables - (1,739,096) - - - (443,622) - -
Net Financial Instruments 37,301 (312,357) 1,023 965,200 6,143,514 285,605 20,969 1,188,501
Foreign currency rate sensitivity
Based on financial instruments held at 30 June 2023, had the Australian dollar
strengthened/weakened by 10% the consolidated entity's profit or loss and
equity would be impacted as follows:
Profit or loss Equity
10% 10% 10% 10%
Increase Decrease Increase Decrease
2023 $ $ $ $
Dollar (US) (3,730) 3,730 (3,730) 3,730
Pula (Botswana) 31,236 (31,236) 31,236 (31,236)
Rand (South Africa) (102) 102 (102) 102
Pound (UK) (96,520) 96,520 (96,520) 96,520
2022
Dollar (US) (614,351) 614,351 (614,351) 614,351
Pula (Botswana) (28,561) 28,561 (28,561) 28,561
Rand (South Africa) (2,097) 2,097 (2,097) 2,097
Pound (UK) (118,850) 118,850 (118,850) 118,850
Forward foreign exchange rates
The consolidated entity had entered into foreign exchange forward contracts to
mitigate its foreign exchange risk. There were no outstanding forward
contracts at the end of the reporting period.
Sell US Dollars
2023 2022
Buy Pula (BWP) USD$ USD$
Maturity:
0 - 3 months - 679,488
3 - 6 months - 2,652,635
6 - 12 months - 1,632,602
The valuation of the forward exchange contract was based on a market reference
rate of 12.43BWP compared to a strike price of 11.6BWP. Based on the financial
instruments held as at 30 June 2022, had the Pula weakened/ strengthened by
10% against the US dollar with all other variables held constant, the movement
in the value of the forward foreign exchange contract would not have been
material to the consolidated entity's financial statements.
(c) Credit risk
Credit risk is the risk of financial loss to the consolidated entity if a
customer or counterparty to a financial instrument fails to meet its
contractual obligations. This arises principally from cash and cash
equivalents and trade and other receivables. The consolidated entity's
exposure and the credit ratings of its counterparties are continuously
monitored by the Board of Directors.
The maximum exposure to credit risk at the reporting date is the carrying
amount of the financial assets as summarised in the table above.
Credit Risk Exposures
Trade and other receivables
Trade and other receivables comprise primarily of VAT and GST refunds due.
Where possible the consolidated entity trades with recognised, creditworthy
third parties. The receivable balances are monitored on an ongoing basis. The
consolidated entity's exposure to expected credit losses is not significant.
Cash and cash equivalents
The consolidated entity has a significant concentration of credit risk with
respect to cash deposits with Westpac Banking Corporation, First National Bank
Botswana, and First National Bank South Africa. However, significant cash
deposits are invested across banks to mitigate credit risk exposure to a
particular bank. AAA rated banks are used where possible and non-AAA banks are
utilised where commercially attractive returns are available.
Note 22. Key Management Personnel
Key management personnel comprise directors and other persons having authority
and responsibility for planning, directing and controlling the activities of
the consolidated entity.
Key management personnel compensation
The aggregate compensation made to directors and other members of key
management personnel of the consolidated entity is set out below:
Consolidated
June 2023 June 2022
$ $
Short-term employee benefits 991,632 626,196
Post-employment benefits 76,177 71,847
1,067,809 698,043
Share based payments 76,369 232,200
1,144,178 930,243
Note 23. Auditors' Remuneration
During the year the following fees were paid or payable for services provided
by the auditor of the consolidated entity:
Consolidated
June 2023 June 2022
$ $
Audit services
Auditing or reviewing the financial statements - BDO Australia 76,000 48,675
Auditing or reviewing the financial statements - BDO Botswana 34,580 34,580
Non-audit services - BDO Australia
Tax consulting and compliance services 10,000 9,575
Total 120,580 92,830
Note 24. Contingent Liabilities
The Directors are not aware of any contingent liabilities (2022: nil).
Note 25. Related Party Transactions
Parent entity
The legal parent entity is Tlou Energy Limited.
Subsidiaries
Interests in subsidiaries are set out in note 28.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2023 2022
$ $
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a 15,600 12,900
director-related entity of Anthony Gilby.
Loans to/from related parties
Loan from ILC Investment Pty Ltd, a significant shareholder of the Company 2,000,000 -
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to
transactions with related parties:
Current payables:
Interest accrued on the loan to ILC Investments Pty Ltd, a significant 16,438 -
shareholder of the Company
The loan from ILC Investments Pty Ltd has a three-year term, commencing on 1
May 2023 and there are no arrangement fees. Interest will be charged at 10%
per annum and payable each quarter.
Note 26. Segment Reporting
Reportable Segments
Operating segments are identified based on internal reports that are regularly
reviewed by the executive team to allocate resources to the segment and assess
its performance.
The Company currently operates in one segment, being the exploration,
evaluation and development of Coalbed Methane resources in Southern Africa.
Segment revenue
As at 30 June 2023 no revenue has been derived from its operations (2022:
nil).
Segment assets
Segment non-current assets are allocated to countries based on where the
assets are located as outlined below:
June 2023 June 2022
$ $
Botswana 61,802,339 51,147,251
Australia 31,726 1,966
61,834,065 51,149,217
Note 27. Cash Flow Information
Consolidated
June 2023 June 2022
$ $
Reconciliation of cash flow from operations
Loss for the period (4,241,208) (4,329,116)
Depreciation 209,320 547,217
Share-based payments 99,651 232,200
Impairment charge - exploration and evaluation assets - 166,054
Fair value gain/(loss) on financial instruments 96,805 690,272
Capitalised interest 614,581 241,917
Net exchange differences 59,424 43,997
Changes in operating assets and liabilities, net of the effects of purchase
and disposal of subsidiaries:
Decrease/(increase) in trade and other receivables 82,907 (56,631)
Increase/(decrease) in trade payables and accruals 259,723 113,596
Increase/(decrease) in other payables (13,118) (15,997)
Decrease/(increase) in prepayments 49,515 (5,053)
Increase/(decrease) in provisions 45,923 2,932
(2,736,477) (2,368,612)
Refer to Notes 14-16 for non-cash investing or financing activities during the
year.
Note 28. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and
results of the following subsidiaries in accordance with the accounting policy
described in note 1.
Name of entity Country of incorporation Class of shares Equity holding %
June 2023 June 2022
Tlou Energy Botswana (Proprietary) Ltd Botswana Ordinary 100 100
Technoleads International Inc Barbados Ordinary 100 100
Tlou Energy Exploration (Proprietary) Limited Botswana Ordinary 100 100
Sable Energy Holdings (Barbados) Inc Barbados Ordinary 100 100
Tlou Energy Resources (Proprietary) Limited Botswana Ordinary 100 100
Copia Resources Inc Barbados Ordinary 100 100
Tlou Energy Corp Services Botswana (Proprietary) Limited Botswana Ordinary 100 100
Madra Holdings (Barbados) Inc Barbados Ordinary 100 100
Tlou Energy Solutions (Proprietary) Limited Botswana Ordinary 100 100
Pula Holdings Inc Barbados Ordinary 100 100
Tlou Energy Generation Proprietary Limited Botswana Ordinary 100 100
Note 29. Matters subsequent to the end of the financial year
There has not been any matter or circumstance, other than that referred to in
this report and disclosed in the financial statements or notes thereto, that
has arisen since the end of the period, that has significantly affected, or
may significantly affect, the operations of the consolidated entity, the
results of these operations, or the state of affairs of the consolidated
entity in future financial years.
Note 30. Parent entity disclosures
Parent
June 2023 June 2022
$ $
Current assets 6,806,589 7,650,332
Non-current assets 30,245,477 30,255,800
Total assets 37,052,066 37,906,131
Current liabilities 877,221 1,000,468
Non-current liabilities 10,208,015 7,331,243
Total liabilities 11,085,236 8,331,711
Net assets 25,966,830 29,574,420
Contributed equity 121,509,323 106,763,925
Share based payment 1,257,455 1,157,804
Accumulated losses (96,799,948) (78,347,309)
Total equity 25,966,830 29,574,420
Loss for the period (18,452,639) (6,993,237)
Total comprehensive income (18,452,639) (6,993,237)
Commitments, Contingencies and Guarantees of the Parent Entity
The Parent Entity has no commitments for the acquisition of property, plant
and equipment, no contingent assets, contingent liabilities or guarantees at
reporting date.
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