REG - Tlou Energy Ltd - Final Results
26/09/2024 07:00
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RNS Number : 7096F Tlou Energy Ltd 26 September 2024
26 September 2024
Tlou Energy Limited
("Tlou" or "the Company")
Final Results
Tlou Energy Limited is pleased to announce its 2024 results. The Annual Report
and Consolidated Financial Statements for the year ended 30 June 2024 are
available on the Company's website: https://tlouenergy.com/reports
Highlights:
· The transmission line connecting Tlou's Lesedi project directly to
both Botswana's power grid and the Southern African Power Pool is effectively
complete
· Connection to Serowe substation achieved - Tlou's power project is no
longer isolated from primary Botswana electricity market
· The Lesedi substation is about 75% complete and due for completion
later this year
· Lesedi production wells continue to produce gas with a focus now on
stabilising surging gas flows
· Advanced discussions are being held with a Tier 1 generator supplier
· Additional drilling planned to provide sufficient gas for the first
megawatt of power
· The power station is anticipated to be commissioned in 2025
· The Company is waiting on the funding to complete grid connection,
drill additional wells and commence sale of electricity
Tlou's Managing Director, Mr Tony Gilby commented, "The past year has been
highly productive. We focused on development of the upstream process including
substations, transmission line and generation, bringing us closer to our
target of grid connection.
The coming months we will refocus on downstream production, including drilling
and dewatering wells aimed at providing sustained gas flow rates ahead of
first power generation. Selling electricity into the grid can serve as a
catalyst for significant near-term growth, unlocking the potential for further
development and expansion.
I would like to extend my thanks to everyone who has contributed to our
progress, and especially to our shareholders, whose support has been
instrumental in reaching this stage."
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.
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, Elliot Peters
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,
The past year has marked another period of significant progress and growing
momentum for Tlou Energy. As our flagship gas-to-power project nears its
long-awaited grid connection, the much-anticipated milestone of selling power
for the first time is coming within reach. We are positioned to make a
transformative leap forward.
A standout accomplishment this year is the 100km transmission line connecting
the Lesedi project to Botswana's national power grid. This vital piece of
infrastructure provides a pathway for us to monetise the Company's vast gas
Reserves. This infrastructure is the foundation of our future growth, and I
would like to extend my deepest gratitude to all our dedicated staff and
contractors who helped make this possible and position us for success.
Additionally, we made excellent progress on the Lesedi electrical substation,
which is already over 75% complete and on track for commissioning. The
substation design upgrade to accommodate up to 25MW of power, ensures that we
have the capacity to scale quickly as we grow, driving further value for
shareholders. Our highly experienced group of technical and engineering staff,
along with our dedicated consultants and advisors, are all crucial to
developing this world class power facility at Lesedi.
Our drilling and gas production team have also been exceptionally busy this
year. The Lesedi 6 production well was brought online and achieved first gas
flow in record time. The Lesedi 4 production well had two additional lateral
wells added to enhance gas flow and provide valuable information on water
rates and well permeability. Our operations team are already preparing for the
next round of drilling which we aim to commence as soon as possible.
Under the leadership our Chief Operations Officer, the operations team also
completed construction of a new state of the art operations facility at
Lesedi. This facility, which includes workshops, stores, accommodation units,
casing yard, medical unit, and a helipad, represents a major achievement,
especially given the project is located in a remote area. The facility is
located on our own 40 square kilometre property and allows a level of
self-sufficiency and operational control that will serve us well as we enter
this new phase of growth.
None of these achievements would be possible without the ongoing support of
our shareholders. This is your company and your belief in our vision has been
instrumental in driving our progress to date. I want to thank you sincerely
for your continued backing both in the market and outside it.
While the past year has seen great progress, I look forward to an exciting 12
months ahead. Grid connection and first power sales will mark a historic
milestone and the start of a new chapter in our journey - not only for Tlou
Energy, but for Botswana's energy landscape. This achievement will be proof
that Botswana's own natural resources can power homes, businesses, and
industries, providing cleaner, more reliable energy.
Years of meticulous work - from geological assessments, exploratory drilling,
gas production to infrastructure development - have brought us to the brink of
achieving our goal of the first gas-to-power sales. Our success in this goal
will demonstrate that Tlou's gas is a viable solution to the country's energy
needs, creating jobs, stimulating economic growth, and contributing to
Botswana's energy security.
This is just the beginning, once connected we aim to expand rapidly to produce
as much power as possible, delivering upside for our shareholders and making a
meaningful, lasting impact on Botswana's future.
Yours faithfully,
Martin McIver
Chairman
Managing Director's Report
Dear Shareholders,
Project status
· Lesedi 4 and Lesedi 6 production pods continue to flow gas
· Additional drilling planned to provide sufficient gas for the
first megawatt of power
· Advanced discussions are being held with a Tier 1 generator
supplier
· The Lesedi substation is about 75% complete
· The power line connecting Lesedi to the grid is effectively
complete
· The power station is anticipated to be commissioned in 2025
· The Company is waiting on the funding to complete grid
connection, drill additional wells and commence sale of electricity
Lesedi Power Project
The Lesedi Gas-to-Power Project ("Lesedi") is located on Tlou's 100% owned
40km(2) farm in Botswana's Central District - approximately 100km from the
town of Serowe.
The project will utilise gas from Tlou's gas field to generate electricity
onsite and sell it into the power grid under an agreement with Botswana Power
Corporation ("BPC"). With the power line connection to the regional power grid
effectively complete, we are progressing with completion of supporting
infrastructure, acquiring generation assets and achieving sustained gas flow
rates to facilitate power generation and revenue from electricity sales from
the first stage of a 10MW project.
Gas Production
This year has seen significant progress at our drilling operations. Lesedi 4
and Lesedi 6 production pods have both been developed further, with additional
wells drilled to enhance output. Over the course of the year, we added two
more lateral wells to Lesedi 4, making it a four-well production pod, and
completed Lesedi 6 as a dual-lateral pod.
Both Lesedi 4 and Lesedi 6 pods continue to flow gas with Lesedi 4 being the
most advanced in terms of dewatering and surging gas. Gas flows from Lesedi 4
have achieved significant levels occasionally, however, it is crucial that
stabilised, consistent gas flow rates are in place for power generation. We
expect rates to stabilise with further dewatering and additional drilling.
Dewatering involves gradually lowering the water level to just above the coal
seam, a delicate process that can produce coal fines (particles), which must
be carefully managed. Clean-out operations as recently conducted at Lesedi 4,
are occasionally necessary to maintain production.
Lesedi 6 is in an earlier state of dewatering and producing at a lower rate
than Lesedi 4 and is expected to undergo a similar clean-out operation soon.
Our team is currently designing the next drilling phase. Additional production
wells are expected to help manage water flow and enhance gas production. We
believe there is considerable upside potential as dewatering expands the
depressurised coal zone, liberating more gas from the reservoir over time.
To achieve sustained gas flow rates for the first megawatt of power, Tlou
plans to drill an additional production pod (Lesedi 7) between the existing
Lesedi 4 and Lesedi 6 pods in advance of first power sales.
Gas Gathering
A gas gathering pipeline is being constructed to connect the Lesedi production
pods to the power station. This line is expected to be completed prior to
installation of generators. The line will be upgraded as additional wells are
added and if necessary additional infrastructure may be added to assist with
cleaning of gas and providing consistent gas flow to the generators.
Substation
The Lesedi substation is now approximately 75% complete, with final completion
anticipated later this year. The substation is designed for expansion,
enabling us to scale from 10MW to 25MW as gas production increases, and
subject to additional power purchase agreements.
Botswana Power Corporation is supplying the first 5MVA transformer to Tlou.
Future expansions will require Tlou to procure and install larger
transformers, such as two 20MVA transformers, which would allow us to produce
up to 25MW of power with some system redundancy.
Generation
Tlou is in advanced discussions with a Tier 1 power generation provider to
install a 10MW power generation facility using reciprocating 1,375 kW Cummins
branded generators. It is envisaged that these units will be delivered,
installed and commissioned by the provider, who will also handle ongoing
operations and maintenance. It is envisaged that power generators will be
supplied and installed in phases, in line with gas production capacity.
As Lesedi 4 and Lesedi 6 gas flow rates continue to fluctuate, we plan to
drill an additional well pod (Lesedi 7) in advance of commencing first power
generation. This work will commence as soon as possible subject to available
funds. While this will push back first power sales into 2025 it makes more
financial sense to commit capital to additional drilling rather than
purchasing, installing and commissioning a smaller generation unit on a
short-term basis simply to provide initial power into the grid.
Transmission Line
The 66kV power line connecting Lesedi to the Serowe substation is virtually
complete and is designed to take up to 25MW of power. Some minor finishing
works, such as the addition of switchgear at the Serowe substation, will be
carried out prior to the line being energized. The power line is effectively
under care and maintenance until we are ready to bring it online and it
provides us with access to both the Botswana power market as well as the
Southern African Power Pool.
First Power Sales
The power station is anticipated to be commissioned and tested ready for
approval by BPC ahead of first generation in 2025. This is subject to
receiving sufficient funds and flowing adequate consistent gas from the
existing and proposed new production wells.
Corporate
We have carefully managed our expenditure this year, maintaining it in line
with the previous period and reporting a loss after tax of ~$4.25m. The
company had a cash balance of ~$2.5m at 30 June 2024.
As a pre-revenue entity, much of the focus during the year was on fundraising
to support operations. This included ~$8.48m in equity raisings and $3.48m in
debt funding.
Post financial year-end we signed an indicative term sheet for a proposed
mezzanine debt facility with a Botswana based investment management firm. Due
diligence is yet to be completed and subject to no issues arising from the due
diligence process, the legal papers can be completed and funds received by
Tlou. We are also in discussions with other funding groups and will update the
market should further developments occur. These funds would facilitate adding
more production wells to increase the pace of dewatering and additional gas.
Receiving additional funding is critical for us to continue operations, drill
additional wells and achieve first electricity generation.
The Lesedi development, which includes the generation site, substation, gas
production wells and operations camp is located on Tlou's 40km(2) property.
This property forms part of Tlou's 800km(2) mining (production) licence, which
remains valid until 2042. Additionally, all prospecting licences due for
renewal in the past year were successfully renewed. Tlou's prospecting
licences span ~8,000km(2), ensuring our continuing exploration and development
potential across a vast area.
Outlook
The past 12 months has been highly productive, bringing us closer to our
initial target of grid connection and first power sales. While timelines have
been pushed out, we remain confident in our ability to meet this goal, however
we must acknowledge that unforeseen challenges, such as delays in funding or
issues with contractors, could further affect our plans. Nonetheless, subject
to receipt of adequate funding, we are well-positioned to move forward and
capitalise on the opportunities ahead.
First power generation can serve as a catalyst for significant near-term
growth, unlocking the potential for further development and expansion. I would
like to extend my thanks to everyone who has contributed to our progress, and
especially to our shareholders, whose support has been instrumental in
reaching this stage.
We remain fully committed to executing our plans, delivering value for our
shareholders, and building a world-class power project in Botswana.
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 2024.
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 amounted to $4,251,607 (30 June 2023: $4,241,208).
The consolidated entity is currently pre-revenue and the loss for the year is
in line with expectations. The focus during the year has continued to be
development of the Lesedi project area and the targeted connection of the
project to the power grid to allow sale of electricity.
Payments for exploration and evaluation assets amounted to $12,605,710 over
the year which included work on transmission lines, electrical substations and
related infrastructure. Payment to suppliers and employees over the year was
$2,996,421. Along with funds at the beginning of the year, the project was
funded through equity raisings totalling $8,480,258 and borrowings of
$3,480,000.
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. Lesedi remains at
the forefront of Botswana's gas to power sector, making substantial progress
in the development of the proposed 10MW project.
The Lesedi development involves the following key elements including gas
production, electricity generation, substation construction and transmission
line construction resulting in the sale of electricity.
Gas production
Coalbed methane gas from the Company's gas field in central Botswana will be
used for power generation.
To produce gas, the Company drills lateral production wells referred to as
"pods" which consist of a vertical production well and lateral wells that
intersect the production well. The Company currently has two production pods,
Lesedi 4 and Lesedi 6.
During the year, the new Lesedi 6 pod was drilled and put into production with
first gas production to surface occurring soon thereafter. The successful
redrill of both lateral wells of the Lesedi 4 production pod was also
completed during the year. The aim of redrilling the Lesedi 4 wells was to
provide straighter lateral sections compared to the original 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 the coal seam and flow gas consistently.
Lesedi 4 and Lesedi 6 will provide the initial gas for power generation with
further pods planned to be drilled. Preparatory work for this drilling
campaign is already underway. Additional pods will provide further gas
allowing the Company to scale up in a stepwise manner using gas production to
expand electricity generation and associated revenue.
Once drilled, a pod needs to be dewatered which involves removing water from
the target coal seam and thereafter gas flow increases. As more and more pods
are drilled the coal will get progressively dewatered which should aid future
gas production.
Electricity Generation
Electricity will be generated on site and sold into the national power grid in
Botswana under the 10MW PPA with BPC.
The project is planned to grow incrementally to satisfy the 10MW PPA and then
expand further. First generation will be from gas produced at Lesedi 4, Lesedi
6 and planned additional production pods. Generation units are proposed to be
added as sufficient gas is produced.
During the year the Company has been working with suppliers in relation to the
final design, site setup and delivery options for the initial generators. Gas
produced from each pod is gathered and piped to the power generators. Work on
the gas gathering network also began during the year.
Substation Construction
Electricity produced by the generators will be fed into the electrical
substation which is under construction at the Lesedi site. The substation has
been designed to support expansion up to 25MW of power. The substation is
scheduled for completion later this year.
Transmission Line Construction
To connect to the national grid, the Company constructed a 100km 66kV
transmission line that will tie into the substation at Lesedi and join the
existing power grid at the town of Serowe. Construction of the transmission
line is virtually complete with minor finishing works and the addition of
switchgear at the Serowe end to be done prior to the line being energized. A
66kV line is capable of carrying ~25MW of power. This would allow the company
to rapidly expand beyond 10MW.
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 4,500km(2) and the Boomslang licence (approx. 1,000km(2)).
The Mamba and Boomslang licences are situated adjacent to Lesedi and could
provide the Company with flexibility and optionality subject to results.
Further work on these areas is proposed once the Lesedi project is in
production with initial work likely to include a seismic survey and the
drilling of core-holes.
Matters subsequent to the end of the financial year
The Company signed an indicative term sheet in July 2024 for a proposed
mezzanine debt facility for BWP 76.5m (~$8.5m). The proposed facility is
subject to satisfactory due diligence and other conditions and if received the
funds will go toward development of the Lesedi project. In August 2024, the
Company raised $995,787 pursuant to a placing of 28,451,068 new ordinary
shares. 12,252,655 of these shares (representing $428,843) are being issued to
Directors and are subject to shareholder approval at a general meeting on 26
September 2024. 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 has drilled wells in the Lesedi project area and plans to drill
further wells 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, if gas flow rates can
be sustained 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.
satisfactory terms or at all. Inability to find sufficient funds may result in
the delay or abandonment of certain activities which would likely have an
adverse effect on the Company's progress.
The Company continues to explore sources of equity capital as well as
long-term and short-term debt or mezzanine capital.
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 2025. There is a risk that the grid connection
infrastructure, sustainable gas flows, or availability of generators 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. With time, the Company 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 in place which
is 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 1,240,673 Ordinary
Shares
500,000 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 75,000,000 Ordinary
Shares (including 9,000,000 Ordinary Shares that are subject to shareholder
approval at a general meeting on 26 September 2024)
500,000 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
2,500,000 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 8,000,000 Ordinary
Shares (including 1,752,655 Ordinary Shares that are subject to shareholder
approval at a general meeting on 26 September 2024)
4,500,000 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 14,994,492
Ordinary Shares (including 1,500,000 Ordinary Shares that are subject to
shareholder approval at a general meeting on 26 September 2024)
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 2024, 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 9 9 2 2 4 4
A Gilby 9 9 2 2 - -
G Gabaake 9 9 - - 4 4
C Cloonan 9 9 2 2 - -
H Swire 8 9 1 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 11.5%
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 2024
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 2024.
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 2024
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 - 6,600 - 66,600 - 0.0% 66,600
A Gilby 323,318 - 13,087 - 336,405 - 0.0% 336,405
G Gabaake 140,200 - 13,319 - 153,519 - 0.0% 153,519
C Cloonan 301,967 - 49,794 - 351,761 - 0.0% 351,761
H Swire 66,600 - - - 66,600 - 0.0% 66,600
Total Directors 892,085 - 82,800 - 974,885 - 974,885
Executives
S Rowland 176,963 - 19,466 - 196,429 - 0.0% 196,429
Total Executives 176,963 - 19,466 - 196,429 - 196,429
Total 1,069,048 - 102,266 - 1,171,314 - 1,171,314
During the 2024 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.
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.
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 $153,000.
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 $351,000.
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 2024 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 1,097,816 - 142,857 - - 1,240,673
A Gilby 50,000,000 - 16,000,000 - - 66,000,000
G Gabaake 385,999 - - - - 385,999
C Cloonan 4,581,387 - 1,665,958 - - 6,247,345
H Swire 12,065,921 - 1,428,571 - - 13,494,492
S Rowland 1,046,429 - - - - 1,046,429
69,177,552 - 19,237,386 - - 88,414,938
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 2024 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 - - -
-
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 - - -
-
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 - - -
(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 - - -
(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 - - -
Total 10,250,000 - - 1,250,000 9,000,000 9,000,000 491,100
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 needed to be AUD $0.28 or greater for a period of 10
consecutive trading days. These performance rights expired 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 $0.165 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
Shares issued on exercise of performance rights
Other than as shown in the table above, no other shares were issued on
exercise of performance rights up to the date of this report.
Relationship between remuneration and Company performance
The factors that are considered to affect shareholder return during the last
five years is summarised below:
2024 2023 2022 2021 2020
Share price at end of financial year ($) 0.035 0.034 0.028 0.039 0.040
Market capitalisation at end of financial year ($M) 44 35 17 23 18
Loss for the financial year ($) (4,251,607) (4,241,208) (4,329,116) (2,054,237) (12,950,601)
Cash spend on exploration programs ($) (12,605,710) (11,866,628) (1,991,033) (797,340) (1,766,761)
Director and Key Management Personnel remuneration ($) 1,171,314 1,144,178 930,243 637,521 1,033,623
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 2024 financial year.
Other transactions with key management personnel and their related parties
2024 2023
$ $
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a 15,600 15,600
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 2024 (2023: 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
19-Oct-18 $0.17 31-Jan-25 2,175,000
19-Oct-18 $0.22 31-Jan-25 2,175,000
15-Dec-21 $0.10 31-Jan-25 3,000,000
15-Dec-21 $0.17 31-Jan-25 3,000,000
1-Feb-23 $0.17 31-Jan-25 2,000,000
1-Feb-23 $0.22 31-Jan-25 2,000,000
1-Feb-23 $0.28 31-Jan-25 2,000,000
16,350,000
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 2024 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 27.
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.
2024 2023
$ $
Non-audit services
Tax consulting and compliance services - BDO Australia 11,800 10,000
Tax consulting and compliance services - BDO Botswana 10,671 11,498
Total 22,471 21,498
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, 26 September 2024
2024 Annual Reserves Statement
Tlou Energy Limited is pleased to present its Annual Reserves Statement for
the period ending 30 June 2024. 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 2024.
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.
Location Project Tlou Interest Gas Reserves (BCF)
30/06/2024 30/06/2023 30/06/2024 30/06/2023 30/06/2024 30/06/2023
1P* 1P 2P* 2P 3P 3P
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
Location Project Tlou Interest Gas Contingent Resource (BCF)
30/06/2024 30/06/2023 30/06/2024 30/06/2023 30/06/2024 30/06/2023
1C 1C 2C** 2C** 3C 3C
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 2024
and comparative petroleum reserves certified at 30 June 2023.
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 2024 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
2024 as against the previous year. The net 2C and 3C contingent resources did
not increase from the 2023 year to the 2024 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 2024 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 2024
Consolidated
Note June 2024 June 2023
$ $
Interest income 13,339 21,747
Expenses
Employee benefits expense 3 (1,322,923) (1,104,063)
Depreciation expense 11 (108,850) (209,320)
Foreign exchange gain/(loss) (8,799) 140,528
Interest expense 14/15 (1,087,946) (647,457)
Share based payment expense 3/19 (45,821) (99,651)
Professional fees (326,358) (440,509)
Occupancy costs 3 (17,346) (15,600)
Other expenses 3 (1,329,453) (1,790,078)
Fair value gain/(loss) on financial instruments 16 (17,450) (96,805)
LOSS BEFORE INCOME TAX (4,251,607) (4,241,208)
Income tax 4 - -
LOSS FOR THE PERIOD (4,251,607) (4,241,208)
OTHER COMPREHENSIVE LOSS
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (1,422,107) (2,728,403)
TOTAL OTHER COMPREHENSIVE LOSS (1,422,107) (2,728,403)
TOTAL COMPREHENSIVE LOSS (5,673,714) (6,969,611)
Earnings per share
Cents Cents
Basic loss per share 5 (0.4) (0.5)
Diluted loss per share 5 (0.4) (0.5)
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 2024
Consolidated
Note June 2024 June 2023
$ $
CURRENT ASSETS
Cash and cash equivalents 6 2,517,135 6,848,717
Trade and other receivables 7 497,667 1,311,444
Other current assets 8 660,372 1,140,791
TOTAL CURRENT ASSETS 3,675,174 9,300,952
NON-CURRENT ASSETS
Exploration and evaluation assets 9 71,994,040 60,442,961
Other non-current assets 10 578,927 483,775
Property, plant and equipment 11 1,284,618 1,399,531
TOTAL NON-CURRENT ASSETS 73,857,585 62,326,267
TOTAL ASSETS 77,532,759 71,627,219
CURRENT LIABILITIES
Trade and other payables 12 1,434,675 2,405,713
Short term loan 480,000 -
Lease liabilities 18,822 15,968
Provisions 13 511,970 417,158
TOTAL CURRENT LIABILITIES 2,445,467 2,838,839
NON-CURRENT LIABILITIES
Convertible notes 14 12,203,202 8,086,011
Long term loan 15 - 2,000,000
Derivatives 16 139,455 122,005
Lease liabilities 18,654 37,797
Provisions 13 134,000 134,000
TOTAL NON-CURRENT LIABILITIES 12,495,311 10,379,813
TOTAL LIABILITIES 14,940,778 13,218,652
NET ASSETS 62,591,981 58,408,567
EQUITY
Contributed equity 17 130,015,701 121,509,325
Reserves (9,416,123) (9,344,768)
Accumulated losses (58,007,597) (53,755,990)
TOTAL EQUITY 62,591,981 58,408,567
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 2024
Contributed Equity Share Based Payments Reserve Foreign Currency Translation Reserve Convertible Equity Reserve Accumulated Losses Total
$ $ $ $ $
Consolidated
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
Balance at 1 July 2023 121,509,325 1,257,455 (10,602,223) - (53,755,990) 58,408,567
Loss for the period - - - - (4,251,607) (4,251,607)
Other comprehensive income, net of tax - - (1,422,107) - - (1,422,107)
Total comprehensive income - - (1,422,107) - (4,251,607) (5,673,714)
Transactions with owners in their capacity as owners
Share based payments - 45,821 - - 45,821
Conversion feature of the convertible loans - - - 1,304,931 1,304,931
Shares issued, net of costs 8,506,376 - - - 8,506,376
8,506,376 45,821 - 1,304,931 - 9,857,128
Balance at 30 June 2024 130,015,701 1,303,276 (12,024,330) 1,304,931 (58,007,597) 62,591,981
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 2024
Consolidated
Note June 2024 June 2023
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST and VAT) (2,996,421) (3,164,020)
Interest received 13,343 21,747
Interest paid - (16,438)
GST and VAT received 129,483 422,234
NET CASH USED IN OPERATING ACTIVITIES 27 (2,853,595) (2,736,477)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets 9 (12,605,710) (11,886,628)
Payment for property, plant and equipment 11 (5,552) (1,883,994)
Deposits for purchase of property, plant and equipment (703,240) -
NET CASH USED IN INVESTING ACTIVITIES (13,314,502) (13,770,622)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 8,480,258 14,853,721
Proceeds from borrowings 3,480,000 2,000,000
Issue costs (87,882) (108,323)
Payments of lease liabilities (18,860) (13,336)
NET CASH PROVIDED BY FINANCING ACTIVITIES 11,853,516 16,732,062
Net (decrease)/increase in cash held (4,314,581) 224,963
Cash at the beginning of the period 6,848,717 7,875,025
Effects of exchange rate changes on cash (17,001) (1,251,271)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 6 2,517,135 6,848,717
The above consolidated statement of cash flows should be read in conjunction
with the accompanying notes.
Notes to the financial statements
Note 1. Material 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 26 September 2024.
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.
For the period ended 30 June 2024, the Group incurred a loss of $4,251,607
after income tax and net cash used in operating activities was $2,853,595 and
net cash used in investing activities was $13,314,502. At 30 June 2024 the
Group had net current assets of $1,229,707 and commitments due in the next 12
months of $1,832,405. Subsequent to balance date the Group announced an equity
raising of $995,787 of which $428,843 is subject to shareholder approval at a
general meeting on 26 September 2024.
The ability of the Group to continue as a going concern is dependent upon
completing a capital raise or securing other forms of financing within the
next two months. This is in addition to amounts already raised subsequent to
balance date. These funds are required to continue development of planned
power projects and to meet the consolidated Group's working capital
requirements. The ability of the Group to continue as a going concern is also
dependent upon future capital raises.
These conditions give rise to material uncertainty which may cast significant
doubt over the Group's ability to continue as a going concern. Whilst
acknowledging these uncertainties, the Directors have concluded that the going
concern basis of preparation of the financial statements is appropriate
considering the following circumstances:
· The Company has signed an indicative term sheet for a proposed
mezzanine debt facility of BWP76.5m (~A$8.5m, ~£4.4m) with a Botswana based
investment management firm. This facility remains subject to legal counsel
review, satisfactory due diligence, final documentation, investment committee
approval and fulfilment of certain conditions;
· Management is in discussions with a number of parties to provide
further funding for completion of work to connect the Group's power project to
the electricity grid and expand its power project;
· The Company's largest shareholder continues to support the
company and has provided a $1m loan facility that can be drawn down as
required. $520,000 of this facility remains available at the date of this
report. This facility may also be increased in future subject to agreement
with the shareholder; and
· Funds could possibly be raised through the equity markets.
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. Should the Group be unable to continue as a going
concern, it may be required to realise its assets and extinguish its
liabilities other than in the ordinary course of business, and at amounts that
differ from those stated in the financial report. This financial report does
not include any adjustments related to the recoverability and classification
of recorded asset amounts or classification of liabilities and appropriate
disclosures that may be necessary should the Group be unable 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) 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.
(c) 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.
(d) Comparative figures
When required by accounting standards comparative figures have been adjusted
to conform to changes in presentation for the current financial year.
(e) 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.
(f) 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.
(g) 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.
(h) New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for 30 June 2024 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 2024, 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 2024 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 2024 June 2023
Loss before income tax includes the following specific expenses: $ $
Employee benefits expense
● Defined contribution superannuation expense 92,919 86,731
● Performance rights 45,821 99,651
● Other employee benefits expense 1,230,004 1,017,332
1,368,744 1,203,714
Occupancy costs
● Rental expense relating to short-term leases ‑ minimum lease rentals 17,346 15,600
Other expenses include the following specific items:
● Travel and accommodation costs 324,475 216,403
● Consultants 192,991 174,488
● Stock exchange, advisory, secretarial fees 388,848 400,602
● Investor relations 247,360 634,999
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 2024 June 2023
$ $
Loss before income tax (4,251,607) (4,241,208)
Tax at the domestic tax rates applicable to profits in the country concerned (1,275,482) (1,272,362)
at 30% (2023: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating
taxable income:
Other non-temporary items 159,606 (844,141)
Difference in overseas tax rates (244,165) (38,637)
Deferred tax asset not recognised 1,360,041 2,155,140
Income tax benefit - -
Recognised deferred tax assets
Unused tax losses 10,072,038 6,701,070
10,072,038 6,701,070
Recognised deferred tax liabilities
Assessable temporary differences 10,072,038 6,701,070
10,072,038 6,701,070
Net deferred tax liability recognised - -
Unrecognised temporary differences and tax losses
Unused tax losses and temporary differences for which no deferred tax asset 79,533,747 74,246,232
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 2024 June 2023
$ $
Reconciliation of earnings used in calculating basic and diluted loss per
share:
Loss for the year attributable to owners of Tlou Energy Limited (4,251,607) (4,241,208)
Loss used in the calculation of the basic and dilutive loss per share (4,251,607) (4,241,208)
Weighted average number of ordinary shares used as the denominator
Number Number
Number used in calculating basic and diluted loss per share 1,097,174,676 803,547,703
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 2024 June 2023
$ $
Cash at bank 2,517,135 6,848,717
2,517,135 6,848,717
Note 7. Trade and Other
Receivables
Consolidated
June 2024 June 2023
$ $
Current
Other receivables 220 23,443
GST/VAT receivable 497,447 1,288,001
497,667 1,311,444
Note 8. Other Current Assets
Consolidated
June 2024 June 2023
$ $
Deposits 660,372 1,140,791
660,372 1,140,791
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 2024 June 2023
$ $
Exploration and evaluation assets 71,994,040 60,442,961
71,994,040 60,442,961
June 2024 June 2023
Movements in exploration and evaluation assets $ $
Balance at the beginning of period 60,442,961 50,180,613
Exploration and evaluation expenditure during the year 12,986,071 12,281,203
Foreign currency translation (1,434,992) (2,018,855)
Balance at the end of period 71,994,040 60,442,961
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 2024 June 2023
$ $
Inventory and well consumables - at cost 578,927 483,775
578,927 483,775
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 2024 June 2023
$ $
Right-of-use assets, plant and equipment at cost 5,110,937 5,221,832
Accumulated depreciation (3,826,319) (3,822,301)
1,284,618 1,399,531
Movements in Carrying Amounts
Movement in the carrying amounts between the beginning and the end of the
current financial year:
Leasehold Land and Buildings Site Equipment Motor Vehicles Office Equipment Furniture and Fittings Total
Balance at the beginning of year 1,113,910 122,274 5,385 45,018 112,944 1,399,531
Additions - 1,508 - 4,044 - 5,552
Disposals - - - (587) - (587)
Depreciation and amortisation (16,203) (38,844) (5,339) (16,410) (31,467) (108,263)
Foreign exchange movements (9,438) (1,050) (46) (125) (956) (11,615)
Carrying amount at the end of year 1,088,269 83,888 - 31,940 80,521 1,284,618
Included in property, plant and equipment are right-of-use assets with a
carrying value of $30,117 (2023: $60,059).
2023 Leasehold 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 2024 June 2023
$ $
Current
Trade payables 462,071 1,828,817
Accruals 955,981 533,380
Other payables 16,623 43,516
1,434,675 2,405,713
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 2024 June 2023
Current $ $
Employee benefits 357,269 243,590
Employee benefits - Botswana severance 154,701 173,568
511,970 417,158
Non-current
Rehabilitation 134,000 134,000
134,000 134,000
Note 14. Convertible notes
The parent entity has convertible notes and loans as follows:
Consolidated
June 2024 June 2023
$ $
Convertible notes 8,417,722 8,086,011
Convertible loans 3,785,480 -
12,203,202 8,086,011
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 has capitalised interest for
the first 24 months with interest payments due at six-month intervals
thereafter. The notes expire on 24 January 2027, being 5 years after issue.
Consolidated
June 2024 June 2023
$ $
Opening Balance 8,086,011 7,263,643
Interest capitalised 369,246 614,581
Effect of foreign exchange movement (37,535) 207,787
Non-current host liability 8,417,722 8,086,011
Convertible Loans
ILC Investments Pty Ltd ("ILC") and ILC BC Pty Ltd ("ILCB") have provided
loans to the Company, made up of a converted ILC term loan along with an
additional $2m loan from ILC and a separate $1m loan from ILCB. ILC is Tlou's
largest shareholder. Interest on the loans is charged at 10% per annum. The
convertible loans are repayable at the earlier of 30 April 2026 or 60 days
after the date the Company first generates and supplies electricity into the
grid from its Lesedi project. At any time during the term, ILC and ILCB may
elect to convert the whole or part of the loan into shares in the Company at
$0.035 per share.
Consolidated
June 2024 June 2023
$ $
Opening balance - -
Loans advanced 3,000,000 -
Transferred from long term loan 2,090,411 -
Conversion component on initial recognition (1,304,931) -
Interest expense 352,026 -
Interest accrued (352,026) -
3,785,480 -
With the inclusion of the convertible option on the loans, the company
undertook a valuation of the loans to include the financial liability and the
conversion feature of the loan.
The convertible loans comprise: (a) a debt instrument; and (b) a conversion
feature to exchange the loans for a fixed number of equity instruments. In
valuing the convertible loans it was necessary to determine the fair value of
the liability component and subtract this value from the face value of the
convertible loans to determine the equity component.
$ $ $
ILC Loan ILCB Loan Total
Valuation Date 08-Nov-23 03-Nov-23
Face Value 4,090,411 1,000,000 5,090,411
Financial Liability Component 3,043,980 741,500 3,785,480
Conversion Feature Component 1,046,431 258,500 1,304,931
Total 4,090,411 1,000,000 5,090,411
The financial liability is classified as a non-current liability and the
conversion feature is classified as an equity reserve.
Note 15. Long Term Loan
Consolidated
June 2024 June 2023
$ $
Opening balance 2,000,000 -
Loans advanced - 2,000,000
Interest capitalised 90,411 32,876
Interest accrued - (32,876)
Transferred to convertible loan (2,090,411) -
- 2,000,000
ILC Investments Pty Ltd ("ILC") provided a loan to the Company during the year
ended 30 June 2023. In November 2023 the terms of the loan were amended with a
conversion option added. The balance at the date of amendment and accrued
interest up to date of amendment were then reclassified as a convertible loan
as outlined in Note 14. above
Note 16. Derivatives
Consolidated
June 2024 June 2023
Non-current $ $
Opening balance 122,005 67,600
Fair value movement recognised in profit or loss 17,450 54,405
Closing balance 139,455 122,005
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 2024 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.
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 2024 June 2023 June 2024 June 2023
Shares Shares $ $
Opening balance 1,024,583,025 600,199,039 121,509,325 106,763,927
Issue of ordinary shares during the year 245,550,226 424,383,986 8,594,258 14,853,721
Share issue costs - - (87,882) (108,323)
Ordinary shares ‑ fully paid 1,270,133,251 1,024,583,025 130,015,701 121,509,325
Ordinary shares issued during the year
Issue Date No. of Shares Issue Price (AUD)
Placement 12-Oct-23 19,399,332 $0.035
Placement 7-Feb-24 32,554,360 $0.035
Placement 2-Apr-24 177,596,534 $0.035
Placement 29-Apr-24 16,000,000 $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.
Convertible Equity Reserve
The convertible equity reserve is used to record the equity component of
convertible loans. The convertible loans are classified as a financial
instrument containing a debt component and an equity component. The equity
component relates to the conversion feature to exchange the loans for a fixed
number of equity instruments.
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 2024, the were no outstanding options for ordinary shares in Tlou
Energy Limited (2023: Nil).
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 2024, the following performance rights were on issue.
Issue Date Hurdle Price Expiry date 1/07/2023 Issued Exercised Lapsed 30/06/2024
31/01/2017 $0.28 31/01/2024 2,275,000 - - (2,275,000) -
19/10/2018 $0.165 31/01/2025 2,175,000 - - - 2,175,000
19/10/2018 $0.22 31/01/2025 2,175,000 - - - 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
18,625,000 - - (2,275,000) 16,350,000
Performance Condition
To vest and become exercisable the share price needs to be at or greater than
the hurdle price for a period of 10 consecutive trading days.
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 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.
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transaction recognised during
the year were as follows:
Consolidated
June 2024 June 2023
$ $
Performance rights 45,821 99,651
45,821 99,651
The weighted average remaining contractual life of performance rights
outstanding at the end of the period is 7 months (2023: 1.47 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 electrical substations and associated
infrastructure which are not provided for in the financial statements are as
follows:
Consolidated
June 2024 June 2023
Minimum expenditure requirements $ $
● not later than 12 months 1,381,936 5,630,270
● between 12 months and 5 years 450,469 263,181
1,832,405 5,893,451
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 2024 June 2023
Financial Assets $ $
Cash and cash equivalents 2,517,135 6,848,717
Trade and other receivables 497,667 1,311,444
3,014,802 8,160,161
Financial Liabilities
Trade and other payables (including lease liabilities) 1,472,151 2,459,478
Convertible notes 12,203,202 8,086,011
Derivatives 139,455 122,005
Long-term loan - 2,000,000
Short-term loan 480,000 -
14,294,808 12,667,494
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 2024
Cash and cash equivalents 25,171 (25,171) 25,171 (25,171)
Consolidated - 30 June 2023
Cash and cash equivalents 68,487 (68,487) 68,487 (68,487)
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
$2,517,135 (2023: $6,848,717).
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 2024 $ $ $ $
Trade and other payables (including lease liabilities) 1,453,497 18,654 1,472,151 1,472,151
Short term loan 480,000 - 480,000 480,000
Convertible instruments & derivatives 1,662,037 15,280,643 16,942,680 12,342,657
Consolidated - 30 June 2023
Trade and other payables (including lease liabilities) 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 instruments & derivatives - 10,727,761 10,727,761 8,208,016
(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:
2024 2024 2024 2024 2023 2023 2023 2023
USD BWP ZAR GBP USD BWP ZAR GBP
A$ A$ A$ A$ A$ A$ A$ A$
Financial Assets
Cash and cash equivalents 34,331 1,923,839 43,996 9,056 37,301 142,007 1,023 965,200
Trade and other receivables - 475,709 - - - 1,284,732 - -
Financial Liabilities
Trade and other payables - (378,394) - - - (1,739,096) - -
Convertible instruments (8,417,722) (8,086,011)
Net Financial Instruments (8,383,391) 2,021,154 43,996 9,056 (8,048,710) (312,357) 1,023 965,200
Foreign currency rate sensitivity
Based on financial instruments held at 30 June 2024, 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
2024 $ $ $ $
Dollar (US) (3,433) 3,433 (3,433) 3,433
Pula (Botswana) (202,115) 202,115 (202,115) 202,115
Rand (South Africa) (4,400) 4,400 (4,400) 4,400
Pound (UK) (906) 906 (906) 906
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
(d) 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 2024 June 2023
$ $
Short-term employee benefits 1,069,048 991,632
Post-employment benefits 102,266 76,177
1,171,314 1,067,809
Share based payments - 76,369
1,171,314 1,144,178
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 2024 June 2023
$ $
Audit services
Auditing or reviewing the financial statements - BDO Australia 90,000 76,000
Auditing or reviewing the financial statements - BDO Botswana 41,391 34,580
Non-audit services - BDO Australia
Tax consulting and compliance services - BDO Australia 11,800 10,000
Tax consulting and compliance services - BDO Botswana 10,671 11,498
Total 153,862 132,078
Note 24. Contingent Liabilities
The Directors are not aware of any contingent liabilities (2023: 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
2024 2023
$ $
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a 15,600 15,600
director-related entity of Anthony Gilby.
Loans to/from related parties
Convertible loan from ILC Investment Pty Ltd, a significant shareholder of the 2,090,411 2,000,000
Company
Convertible loan from ILC BC Pty Ltd, a related party of ILC Investments Pty 1,000,000 -
Ltd, a significant shareholder of the Company
Loan from ILC BC Pty Ltd, a related party of ILC Investments Pty Ltd, a 480,000 -
significant shareholder of the Company
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 loans with ILC Investments Pty Ltd, a significant 352,026 16,438
shareholder of the Company, and ILC BC Pty Ltd a related party of ILC
Investments Pty Ltd
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 2024 no revenue has been derived from its operations (2023:
nil).
Segment assets
Segment non-current assets are allocated to countries based on where the
assets are located as outlined below:
June 2024 June 2023
$ $
Botswana 73,834,868 62,294,541
Australia 22,717 31,726
73,857,585 62,326,267
Note 27. Cash Flow Information
Consolidated
June 2024 June 2023
$ $
Reconciliation of cash flow from operations
Loss for the period (4,251,607) (4,241,208)
Depreciation 108,263 209,320
Share-based payments 45,821 99,651
Salaries and fees paid in equity 114,000 -
Fair value gain/(loss) on financial instruments 17,450 96,805
Loss on disposal of fixed asset 587 -
Capitalised interest 459,657 614,581
Net exchange differences (26,857) 59,424
Changes in operating assets and liabilities:
Decrease/(increase) in trade and other receivables (75,549) 82,907
Increase/(decrease) in trade payables and accruals 663,456 259,723
Increase/(decrease) in other payables (15,832) (13,118)
Decrease/(increase) in prepayments 3,956 49,515
Increase/(decrease) in provisions 103,059 45,924
(2,853,595) (2,736,477)
(b) Non-cash financing and investing activities
Issue of shares in settlement of amounts owed to staff, directors and 114,000 -
consultants
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 2024 June 2023
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
The Company signed an indicative term sheet in July 2024 for a proposed
mezzanine debt facility for BWP 76.5m (~$8.5m). The proposed facility is
subject to satisfactory due diligence and other conditions and if received the
funds will go toward development of the Lesedi project. In August 2024, the
Company raised $995,787 pursuant to a placing of 28,451,068 new ordinary
shares. 12,252,655 of these shares (representing $428,843) are being issued to
Directors and are subject to shareholder approval at a general meeting on 26
September 2024. 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 2024 June 2023
$ $
Current assets 658,649 6,806,589
Non-current assets 30,236,468 30,245,477
Total assets 30,895,117 37,052,066
Current liabilities 1,444,611 877,221
Non-current liabilities 14,037,177 10,208,015
Total liabilities 15,481,788 11,085,236
Net assets 15,413,329 25,966,830
Contributed equity 130,015,699 121,509,323
Share based payment 1,303,276 1,257,455
Accumulated losses (115,905,646) (96,799,948)
Total equity 15,413,329 25,966,830
Loss for the period (19,105,698) (18,452,639)
Total comprehensive income (19,105,698) (18,452,639)
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.
Consolidated entity disclosure statement
Name of entity Type % of share Capital Country of incorporation Australian tax resident or foreign tax resident Foreign
jurisdiction
of foreign
residents
Tlou Energy Limited Body Corporate - Australia Australian -
Tlou Energy Botswana (Proprietary) Ltd Body Corporate 100 Botswana Foreign Botswana
Technoleads International Inc Body Corporate 100 Barbados Australian N/A
Tlou Energy Exploration (Proprietary) Limited Body Corporate 100 Botswana Foreign Botswana
Sable Energy Holdings (Barbados) Inc Body Corporate 100 Barbados Australian N/A
Tlou Energy Resources (Proprietary) Limited Body Corporate 100 Botswana Foreign Botswana
Copia Resources Inc Body Corporate 100 Barbados Australian N/A
Tlou Energy Corp Services Botswana (Proprietary) Limited Body Corporate 100 Botswana Foreign Botswana
Madra Holdings (Barbados) Inc Body Corporate 100 Barbados Australian N/A
Tlou Energy Solutions (Proprietary) Limited Body Corporate 100 Botswana Foreign Botswana
Pula Holdings Inc Body Corporate 100 Barbados Australian N/A
Tlou Energy Generation Proprietary Limited Body Corporate 100 Botswana Foreign Botswana
Basis of Preparation
This Consolidated Entity Disclosure Statement (CEDS) has been prepared in
accordance with the Corporations Act 2001. It includes certain information for
each entity that was part of the consolidated entity at the end of the
financial year.
Determination of Tax Residency
Section 295 (3A) of the Corporations Acts 2001 defines tax residency as having
the meaning in the Income Tax Assessment Act 1997. The determination of tax
residency involves judgment as there are currently several different
interpretations that could be adopted, and which could give rise to a
different conclusion on residency.
In determining tax residency, the consolidated entity has applied the
following interpretations:
Australian tax residency:
The consolidated entity has applied current legislation and judicial
precedent, including having regard to the Tax Commissioner's public guidance
in Tax Ruling TR 2018/5.
Foreign tax residency:
Where necessary, the consolidated entity has used independent tax advisers in
foreign jurisdictions to assist in determining tax residency and ensure
compliance with applicable foreign tax legislation
Directors' declaration
In the Directors' opinion:
· the attached financial statements and notes thereto comply with
the Corporations Act 2001, the Australian Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting
requirements;
· the attached financial statements and notes thereto comply with
International Financial Reporting Standards as issued by the International
Accounting Standards Board as described in note 1 to the financial statements;
· the attached financial statements and notes thereto give a true
and fair view of the consolidated entity's financial position as at 30 June
2024 and of its performance for the financial year ended on that date;
· the information disclosed in the Consolidated Entity Disclosure
Statement is true and correct;
· there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable;
· the remuneration report as set out in the directors' report for
the year ended 30 June 2024 comply with section 300A of the Corporations Act
2001; and
The directors have been given the declarations by the chief executive officer
and chief financial officer required by section 295A of the Corporations Act
2001.
Signed in accordance with a resolution of Directors made pursuant to section
295(5) of the Corporations Act 2001.
On behalf of the Directors
Anthony Gilby
Director
Brisbane
26 September 2024
Corporate Governance Statement
The Directors (the "Board") of Tlou Energy Limited ("Tlou Energy" or "the
Company") are committed to the implementation of the highest standards of
corporate governance. In determining what these standards should be, the Board
references guidance and supports, where appropriate, the 4(th) edition of the
Corporate Governance Principles and Recommendations ("4(th) Edition
Recommendations or ASX Recommendations") established by the ASX Corporate
Governance Council (the "Council").
The Company complies with the corporate governance regime of Australia, being
its country of incorporation. In addition, the Directors acknowledge the
importance of the guidelines set out in the QCA Guidelines for Smaller Quoted
Companies. They therefore intend to comply with the QCA Guidelines so far as
is appropriate having regard to the size and nature of the Company and taking
into account that it is an Australian company listed on the ASX which complies
with existing ASX Recommendations.
This statement outlines the key aspects of Tlou Energy's governance framework
and practices. The charters, policies and procedures are reviewed regularly
and updated to comply with the law and best practice. This statement contains
specific information and discloses the extent to which the Company intends to
or is able to follow the 4(th) Edition Recommendations. The charters and
policies of the Company can be viewed on Tlou Energy's website at
www.tlouenergy.com (http://www.tlouenergy.com) ("website").
The Council's recommendations are not prescriptive and, if certain
recommendations are not appropriate for the Company given its circumstances,
it may elect not to adopt that particular practice in limited circumstances.
The Company believes that during the reporting period ending 30 June 2024 its
practices are taking into account the size and makeup of the Company is
largely consistent with those of the 4(th) Edition Recommendations and where
they do not follow a recommendation this statement identifies those that have
not been followed and details reasons for non-adherence. Even where there is a
deviation from the recommendations the Company continues to review and update
its policies and practices in order that it keeps abreast of the growth of the
Company, the broadening of its activities, current legislation and good
practice.
This Corporate Governance statement reports on the main practices of Tlou
Energy and is current as at 26 September 2024 and has been approved by the
Board of Directors.
Role of the Board (Lay solid foundations for management and oversight)
The Board is responsible for ensuring that the Company is managed effectively
as well as demonstrating leadership and defining the Company's strategic
objectives. Given the size of the Company and the Board, the Board undertakes
an active role in the management of the Company.
The Board's role and the Company's Corporate Governance practices are
continually being reviewed and updated to reflect the Company's circumstances
and growth. The Board has adopted a Charter which sets out the
responsibilities of the Board, its structure and governance, responsibility
for approving the Company's statement of values and ensuring that the code of
conduct to underpin the desired culture within the entity, as well as the
matters expressly reserved to the Board and those delegated to management. A
copy of the Charter is available on the Company's website.
The Board is responsible for determining the strategic direction and
objectives of the Company and overseeing management's implementation of this
strategy and the achievements against these.
(ASX Recommendation 1.1)
The Board of Directors
The Board is currently comprised of five (5) Directors. Details of the
Directors who held office during the year under review are namely:
Name of Director Board Membership Date of Appointment
Martin McIver Non-Executive Chairman 16 September 2010
Anthony Gilby Managing Director 23 April 2009
Gabaake Gabaake Executive Director 11 March 2015
Colm Cloonan Finance Director 11 February 2016
Hugh Swire Non-Executive Director 22 June 2017
The skills, experience and expertise relevant to the position of each Director
are set out in the Directors' Report of this Annual Report. Prior to the
appointment of a person, or putting forward to shareholders a candidate for
election, as a director, the Company undertakes checks which it believes are
appropriate to verify a director's character, experience, educations, criminal
record and bankruptcy history. The Company will ensure that all material
information in its possession relevant to a shareholder's decision to elect or
re-elect a director is provided to shareholder in the Company's Notice of
Annual General Meeting.
(ASX Recommendation 1.2)
Each executive director and senior executive of Tlou Energy has an agreement
in writing with the Company which sets out the key terms and conditions of
their appointment including their duties, rights and responsibilities. There
are also Letters of Appointment between the Company and all of the
non-executive directors. Each of these letters of appointment are with the
director personally to ensure that the director or senior executive is
personally accountable to the listed entity for any breach of the agreement.
These agreements contain provisions that amongst other matters include:
· An obligation on the director to disclose his/her interests and any
matters which could affect the director's independence;
· a requirement to comply with key corporate policies, including the
entity's code of conduct, its anti-bribery and corruption policy and its
trading policy;
· the requirement to notify the Company of, or to seek its approval
before accepting, any new role that could impact upon the time commitment
expected of the director or give rise to a conflict of interest;
· details of the Company's policy on when directors may seek
independent professional advice at the expense of the entity;
· indemnity and insurance arrangements;
· ongoing rights of access to corporate information; and
· ongoing confidentiality obligations
(ASX Recommendation 1.3)
Company Secretary
The Company Secretary is directly accountable to the Board through the
Chairman who the Company Secretary has a direct line of reporting to. The
Company Secretary is responsible for advising the Chairman and the Board to
manage the day-to-day governance framework of the Company. The
responsibilities of the Company Secretary are contained in the Board Charter a
copy of which is available on the Company's website. The decision to appoint
or remove the Company Secretary must be made or approved by the Board.
(ASX Recommendation 1.4)
Diversity Policy
The Company is committed to creating a fair and inclusive work environment
that embraces diversity and recognises its contribution to the Company's
commercial success. Where possible it endeavours to recruit staff from
within Botswana. As the Company has a relatively small staff at present, the
Board does not believe that any benefit would be obtained setting measurable
objectives for achieving gender diversity and has not done so. Neither is the
Company a 'relevant employer' under the Workplace Gender Equality Act 2012.
A copy of the Company's Diversity Policy can be found on the Company's
website.
(ASX Recommendation 1.5)
Improvement in Board processes and effectiveness is a continuing objective,
and the purpose of the annual Board evaluation is to identify ways to improve
performance and effectiveness of the Board and its committees. The Board has
appointed the Chairman, which it believes is the most suitably qualified to
carry out the task, as the person responsible for conducting an annual
internal review of the Board's performance.
This process involves the Chairman circulating to members of the Board a
detailed questionnaire on performance indicators and collating the data from
the same before discussing with each member of the Board and reviewing
performance indicators such as time engaged on Company business, knowledge of
Company business and other skills so as to assess the effectiveness of
processes structure and contributions made by individual directors.
The Managing Director assesses, annually or as necessary, the performance of
all key executives. Both qualitative and quantitative measures will be used
consistent with performance targets set annually by the Managing Director in
consultation with those executives. The Managing Director reports to the
Remuneration and Nomination Committee on the key executive's performance and
the Remuneration and Nomination Committee will then consider any changes to
remuneration and the establishment of new performance targets.
During the reporting period, a review of the Boards performance was carried
out by the Chairman.
(ASX Recommendation 1.6)
The Board assesses annually or as necessary the performance of the Chief
Executive Officer/Managing Director benchmarking his performance against the
role description in the employment contract and general industry standards
expected of a Managing Director carrying on that role. The Board regularly
evaluates management's performance against various criteria and requires
senior executives to address the Board on execution of strategy and associated
issues. The Chief Executive Officer/Managing Director reviews the performance
of the senior executives annually. Theses evaluations take into account
matters such as the achieving of the Company's objectives and reaching of
performance criteria.
An executive management review has been carried out for the current reporting
period.
(ASX Recommendation 1.7)
Structure of Board to be Effective and Add Value
The Board comprises two non-executive Directors, including the Chairman, and
three executive Directors including the Managing Director. The names of the
Directors of the Company in office at the date of this report or through the
year under review and their qualifications are set out in the section of the
Annual Report headed "Directors' Report".
The composition and size of the Board is determined so as to provide the
Company with a broad base of industry, business, technical, administrative,
financial and corporate skills and experience considered necessary to achieve
the strategic objectives of the Company taking into consideration the size of
the Company and the nature of its current operations.
The Board has established a Remuneration and Nomination Committee which
reviews Board membership. This includes considering what other skills that
might be necessary for the Company to reach its strategic objectives. The
Committee is now constituted with two independent non-executive directors and
is chaired by an independent director which satisfies ASX Recommendation 2.1
in those respects but does not meet the minimum 3 member criteria due to the
board not having a third independent non-executive director. If and when a
replacement director is appointed, the Board envisages that the person
appointed will be an independent non-executive director, who will be able to
fill this vacancy.
The Board is however of the view that the Committee as it currently exists
adequately and successfully fulfills this role, obviating any urgent need to
fill the role.
A copy of the Remuneration and Nominations Committee Charter is located on the
Company's website.
The current Committee's members, and the number of times that they have met
throughout the reporting period and the member's attendance at those meetings
is recorded in the section of the 2024 Annual Report headed "Directors
Report".
(ASX Recommendation 2.1)
Independence
The Board considers that, fundamentally, the independence of Directors is
based on their capacity to put the best interests of the Company and its
shareholders ahead of all other interests, so that Directors are capable of
exercising objective independent judgment.
When evaluating candidates, the Board has regard to the potential for
conflicts of interest, whether actual or perceived, and the extent or
materiality of these in the ongoing assessment of director independence. In
this regard the Board has regard to the definition of "independence" in the
4(th) Edition Recommendations. The Board is of the view that the existence of
one or more of the relationships in the definition will necessarily result in
the relevant Director not being able to be treated as independent,
particularly given the criteria outlined above, and in those cases the Company
will seek to implement additional safeguards to ensure independence. An
overall review of these considerations is conducted by the Board to determine
whether individual Directors are independent.
Additional policies and practices, such as Directors not being present during
discussions or decision making on matters in which they have or could be seen
to potentially have a material conflict of interest, as well as Directors
being excluded from taking part in the appointment of third-party service
providers where the Director has an interest, provide further separation and
safeguards to independence. The Board has adopted materiality thresholds in
relation to independence, which are contained in the Board Charter and
summarised below.
ASX Recommendation 2.4 requires that a majority of the Board to be independent
Directors. Additionally, ASX Recommendation 2.5 requires the Chairman of the
Company to be independent. The Council defines 'independence' as being a
non-executive director who is not a member of management and who is free from
any business or other relationship that could materially interfere with or
could reasonably be perceived to materially interfere with the independent
exercise of their judgment. Based on this definition, three of the Directors
could not be considered independent by virtue of them being either executives,
substantial shareholders of the Company or Directors or Officers of Companies
that are substantial shareholders of the Company.
The Chairman (Martin McIver) and High Swire are both considered as independent
non-executive directors as they both fall within the Council's definition of
'independence' as being non-executive directors who are not members of
management and who are free from any business or other relationship that could
materially interfere with or could reasonably be perceived to materially
interfere with the independent exercise of their judgment.
Notwithstanding that the 4(th) Edition Recommendations in respect to the
composition of the Board are not strictly able to be followed (that being the
majority of the Board should be independent and non-executives) the Company
believes that it has achieved a sufficient balance, when taking into account
the other safeguards that are used, to ensure that an independent lens is
brought to play when decisions are being made which might give rise to
situations of conflict. The Company will continue to restore that balance of
board members when the opportunity to do so arises, but it has proved
impractical at this juncture to restore the equilibrium or have a majority of
independent Directors.
While this is the desire of the Board, it takes the view that the interests of
the Shareholders are at this time best served with the Board's present
composition and remains committed to monitoring the situation as the
operations and size of the Company evolves and appoint at the relevant time an
appropriately qualified independent director/s as the opportunities and
necessity arise.
(ASX Recommendation 2.4 and 2.5)
If a Board vacancy becomes available it will be the responsibility of the
Remuneration and Nomination Committee to identify the skills, experience and
diversity that will best complement the Board and will then embark on a
process to identify a candidate who can best meet those criteria. A skills
matrix has been developed and adopted by the Board to help assess the relevant
criteria of candidates. The Directors believe the skill base of the current
Directors is appropriate for the Company given its size and stage of
development.
Detailed below are the professional skills and experience that that Company
will and has used to assess the relevant criteria for candidates for
appointment to the Board.
Board Skills Matrix
• • Accounting & Audit.
• • ASX Board Membership Experience.
• • Business Management.
• • Strategic Planning.
• • Subsurface Knowledge.
• • Drilling & Completions Construction
& Project Mgmt.
• • Human Resources.
• • Operational Experience and HSE
• • Corporate Governance & Ethics.
• • Corporate Finance.
• • Government & Gov Relations (Botswana).
• • Legal Public Affairs & Communications.
• • Management Systems & Risk Management
• • Merger & Acquisitions & Corporate.
• • External Shareholder Engagement Political
Acumen.
• • Industry Stakeholder Engagement.
• • Social Licence to Operate.
• • Foreign Country Operating Experience
(ASX Recommendation 2.2)
Given the size of the Company there is no formal induction process for new
Directors, nor does it have a formal professional development program for
existing Directors. The Board does not consider that a formal induction
program is necessary given the current size and scope of the Company's
operations.
Rather any new Director will be provided with a personalised induction which
will be dependent upon the skills and experience that any new Director might
possess. Any new Director induction will include comprehensive meetings with
senior management and the provision of relevant materials such as all the
Company's policies and procedures as well as instruction in relation to these.
All Directors are expected to maintain the skills required to effectively
discharge their obligations and are encouraged to undertake continuing
professional education such as industry seminars and approved education
courses.
(ASX Recommendation 2.6)
Board Charter
The Board operates in accordance with the broad principles set out in its
Charter which is regularly reviewed and updated by the Board. It has also
adopted a written Code of Conduct which establishes guidelines for its
conduct. The purpose of the Code is to ensure that Directors and Executives
act honestly, responsibly, legally and ethically and in the best interests of
the Company. A copy of the Board Charter can be viewed in the Company's
website.
Conflicts of Interest
In accordance with the Corporations Act 2001 and the Company's Constitution,
Directors must keep the Board advised on an ongoing basis, of any interest
that may lead to a conflict with the interests of the Company. Where the Board
believes that there is a significant or material conflict, the Director
concerned shall be excluded from all discussions and access to Board papers
and the like and shall not be present at any Directors meeting during the
consideration or vote on such a matter.
Independence of Professional Advice
The Board has determined that individual Directors have the right to seek
independent professional advice in connection with any of their duties and
obligations as Directors of the Company. Before a Director may obtain that
advice at the Company's expense, the Director must obtain the approval of the
Chairman who will not unreasonably withhold that consent. If appropriate any
advice received will be made available to the full Board. No member of the
Board availed him or herself of this entitlement during the year under review.
Committees
Audit Committee, Risk Committee and Remuneration & Nomination Committee
The Board delegates specific responsibilities to various Board Sub-Committees.
The Board has established the following standing committees:
· An Audit Committee, which is responsible for overseeing the
external and internal auditing functions of the Company's activities;
· A Risk Committee, which comprises representatives of the Board
and staff to advise and assist the Board in assessing risk factors associated
with the operation of the Company; and
· A Remuneration & Nomination Committee, which is responsible
for making recommendations to the Board on recruitment and remuneration
packages for executives.
The Board has again this year delegated the specific responsibility of
overseeing the Company's audit obligations to the Audit Committee. The Audit
Committee is currently made up of the following members:
· Hugh Swire - Independent Chair
· Martin McIver - Independent Committee Member
· Colm Cloonan - Committee Member
· Anthony Gilby - Committee Member
Instil a Culture of Acting Lawfully, Ethically and Responsibly
The Board maintains high standards of ethical conduct and the CEO/MD is
responsible for ensuring that high standards of conduct are maintained by all
staff. The Company's reputation as an ethical business organisation is
critical to its ongoing success. The Board has adopted a Code of Conduct
covering the practices necessary to maintain confidence in the Company's
integrity, the practices necessary to take into account the Company's legal
obligations and reasonable expectations of its stakeholders, and the
responsibility and accountability of individuals for reporting and
investigating reports of unethical practices. It is not a prescriptive set of
rules but rather a practical set of principles giving direction and reflecting
the Company's approach to business conduct.
The Company in recognition of the importance of ethical and responsible
decision making has adopted a Corporate Code of Conduct which sets out ethical
standards and a Code of Conduct to which all Directors, and Senior Executives
will adhere whilst conducting their duties. The CEO/MD is responsible for
bringing to the attention of the Board any material breaches of the code.
(ASX Recommendation 3.1)
The Code of Conduct for Director and Senior Executives forms part of this
Corporate Code of Conduct. It provides as follows: -
All Directors and Senior Executives will: -
1. Actively promote the highest standards of ethics and integrity in
carrying out their duties for the Company;
2. Disclose any actual or perceived conflicts of interest of a direct
or indirect nature of which they become aware and which they believe could
compromise in any way the reputation or performance of the Company;
3. Respect confidentiality of all information of a confidential nature
which is acquired in the course of the Company's business and not disclose or
make improper use of such confidential information to any person unless
specific authorisation is given for disclosure or disclosure is legally
mandated;
4. Deal with the Company's suppliers, contractors, competitors and
each other with the highest level of honesty, fairness and integrity and to
observe the rule and spirit of the legal and regulatory environment in which
the Company operates;
5. Report any breach of this code of conduct or other inappropriate or
unethical conduct to the appropriate authority within the Group; and
6. This Code of Conduct is in addition to the Code of Conduct for all
employees which has been adopted by the Board of the Company.
The Company is committed to increasing shareholder value and aims to ensure
its shareholders are fully informed as to the true financial position and
performance of the Group through timely and accurate disclosure of information
and risk management practices and exemplary compliance with the continuous
disclosure regime. A copy of the Code of Conduct is available at the
Company's website.
(ASX Recommendation 3.1 and 3.2)
The Company has adopted in compliance of ASX Listing Rule 12.12 a Policy for
Trading in Company Securities which is binding on all Directors, senior
management, officers, employees and consultants of the Company. The purpose of
this policy is to provide a brief summary of the law on insider trading and
other relevant laws, set out the restrictions on dealing in the Company's
securities by people who work for or are associated with Company and assist in
maintaining market confidence in the integrity of dealings in Tlou Energy
securities. The Policy is posted on the Company's website to ensure that there
is public confidence and understanding of the Company's policies governing
trading by "potential insiders".
All persons covered by the Policy may not deal in the securities of the
Company without first seeking and obtaining a written acknowledgement from the
Chairman (or in his absence the Company Secretary) or the Company Secretary
(or in his absence the Managing Director) prior to any trade, at which time
they must confirm that they are not in possession of any unpublished
price-sensitive information. The Company Secretary maintains a register of
notifications and acknowledgements given in relation to trading in the
Company's securities. The policy was reviewed during the year to ensure that
it aligns with the requirements of the ASX Listing Rules and the requirements
of other regulatory regimes under which the Company operates (including in
respect of its AIM quotation, the AIM Rules for Companies and the Market Abuse
Regulations).
The Company has adopted both a Whistleblower Policy and Anti-Bribery and
Corruption Policy copies of which are available on the Company's website.
These provide inter-alia that any material incidents that are reported under
it are referred to the Board for its consideration and if necessary, action.
(ASX Recommendations 3.3 and 3.4)
Safeguard the Integrity of Corporate Reports
In accordance with ASX Recommendation 4.1 the Board has had established for
all of the financial year under review an Audit Committee with a Charter that
sets out the roles, responsibilities, composition, structure and membership
requirements.
The primary objective of the Committee is to assist the Board to discharge its
responsibilities with regard to:
· Monitoring the integrity of the financial statements of the
Company, reviewing significant financial reporting judgements;
· Reviewing the Company's internal financial control system;
· Monitoring and reviewing the effectiveness of the Company's
internal audit function (if any);
· Monitoring and reviewing the external audit function including
matters concerning appointment and remuneration, independence and non-audit
services; and
· Performing such other functions as assigned by law, the Company's
constitution, or the Board.
Structure of the Audit Committee and Charter
ASX Recommendation 4.1 states that the audit committee should have at least 3
members consisting only of non-executive directors, a majority of which should
be independent with the Chair of the Committee being one of the independent
directors who is not the chair of the Company.
During the reporting period, the Committee appointed by the Board did not
comply with this recommendation as it comprised then and now of two
non-executive Directors and two executive Directors, with the chair of the
Committee being an independent Director as prescribed by the ASX
Recommendations. Not all of the members of the Audit Committee were
non-executive, but those that were non-executives are considered independent.
Colm Cloonan and Anthony Gilby are members of the Committee who are executive
directors. Hugh Swire, who is an independent non-executive director, is the
current Chair of the Committee. Martin McIver is the other Committee member
who is an independent non-executive director.
Each member of the Audit Committee has an appropriate knowledge of the
Company's affairs and has the financial and business expertise to effectively
discharge the duties of the Committee. The members of the Audit Committee by
virtue of their professional background experience and personal qualities are
well qualified to carry out the functions of the Audit Committee.
The members of the Committee have direct access to any employee, the auditors
and financial and legal advisers without management present. The Committee
meets as often as is required but no less than twice a year.
The Committee Chair is obliged to report any significant issues arising from
the Committee Meetings at the next meeting of the Board and a copy of the
minutes of the Audit Committee meetings are provided to the Board.
The Directors report contained in the Company's annual report to shareholders
is to contain a dedicated section that describes the role of the Audit
Committee and what action it has taken.
The role of the Audit Committee is to: -
(a) monitor the integrity of the financial statements of the
Company, by reviewing significant financial reporting judgements;
(b) review the effectiveness of the Company's internal financial
control system and, unless expressly addressed by a separate Risk Committee or
by the Board itself, risk management systems;
(c) monitor and review the effectiveness of the Company's
internal audit function;
(d) monitor and review the external audit function including
matters concerning appointment and remuneration, independence and non-audit
services;
(e) perform such other functions as assigned by law, the
Company's constitution, or the Board;
(f) approve the corporate governance section of the Company's
Annual Report relating to the Committee and its responsibilities; and
(g) review compliance with legal and regulatory requirements.
The Audit Committee keeps minutes of its meetings and includes them for review
at the following Board Meeting. The Audit Committee members' attendance at
meetings as compared to total meetings held is set out in the Directors'
Report contained in the Annual Report.
As a matter of practice the Chief Executive Officer/MD and the Chief Financial
Officer are required to make declarations in accordance with section 295A of
the Corporations Act that the Company's financial reports present a true and
fair view in all material respects of the Company's financial condition and
operational results and are in accordance with relevant accounting standards,
and to provide assurance that the declaration is founded on a sound system of
risk management and internal control, and that the system is operating
effectively in all material respects.
(ASX Recommendation 4.2)
The external auditors attend the committee meetings at least twice a year and
on other occasions where circumstances warrant as well as being available at
the Company's AGM to answer shareholders questions about the conduct of the
audit and the preparation and content of the audit report.
The only periodic finance-based reports that the Company releases each year
are the Full Year and Half Year accounts along with the quarterly Appendix
5B's. The full year accounts are audited, and the Halt Year account reviewed
by the Auditors. Both are signed off by the Company's independent external
Auditors. While the quarterly Appendix 5B's are prepared internally, they are
done so utilising the same accounting principles and accounts on which the
audited half year and full year accounts are prepared and released. Copies
of the Quarterly reports are also reviewed by the Auditors as part of the half
year and full year audits.
Additionally, the Quarterly reports are circulated to the Board as a whole
before their release at which time the Board as a whole are invited to comment
or raise any questions in respect to the same. These reports are released with
the authority of the Board.
(ASX Recommendation 4.3)
Make Timely and Balanced Disclosure
The Company appreciates the considerable importance of communications with
Shareholders and the market as a whole. The Company's communication strategy
requires communication with shareholders and investors in an open regular and
timely manner so that the shareholders and investors have sufficient
information to make informed investment decisions on the operations and
results of the Company.
The strategy provides for the use of systems that ensure regular and timely
release of information about the Company to shareholders.
Methods of communication currently employed include:
· Shareholder Updates
· ASX Announcements
· Quarterly Reports
· Half Yearly Reports
· Annual Reports; and
· Shareholder presentations
Continuous Disclosure
The Company is a "disclosing entity" pursuant to section 111AR of the
Corporations Act and, as such, complies with the continuous disclosure
requirements of Chapter 3 of the ASX Listing Rules and section 674 of the
Corporations Act. In addition, the Company is subject to disclosure
obligations in respect of the other markets to which it is admitted to trading
which includes inter alia the AIM Rules for Companies and the Market Abuse
Regulations. Subject to the applicable exceptions contained in these
regulations, the Company is required to disclose to the ASX, BSE and via a
regulatory news service in the United Kingdom any information concerning the
Company which is not generally available and which a reasonable person would
expect to have a material effect on the price or value of the Shares.
The Company has adopted an updated Continuous Disclosure Policy in compliance
with ASX Recommendation 5.1 and ASX Guidance Note 8: Continuous Disclosure. A
copy of the policy can be found on the Company's website. Each director,
employee and consultant engaged by the Company is provided with a copy of the
policy while impressing upon them during their onboarding and induction the
importance of the principles behind the policy and its application to them in
that role.
The Company Secretary has primary responsibility for discharging the Company's
continuous disclosure obligations to the ASX. All officers and employees
must immediately notify the Company Secretary of any material information
which may need to be disclosed under Listing Rule 3.1- 3.1B. Where uncertainty
arises as to the meeting of continuous disclosure obligations, the Company
Secretary may seek external legal and professional advice.
Under the Company's policy the Board receives a copy of all material market
announcement immediately after they have been made if not beforehand.
(ASX Recommendation 5.2)
The Officers of the Company are committed to:
· Encouraging prompt disclosure of any material information
which may need to be disclosed under Listing Rule 3.1-3.1B; and
· Promoting an understanding of the importance of the
continuous disclosure regime throughout the Company.
The Company uses its website www.tlouenergy.com as its primary communication
tool for distribution of the annual report, market announcements and media
disclosures. External communication which may have a material effect on the
price or value of the Company's securities will not be released unless it has
been announced previously to the ASX, BSE and via a regulatory news service in
the United Kingdom.
Effective participation by Shareholders is encouraged at general meetings and
procedures have been designed to facilitate this including online proxy voting
and the ability of stakeholders to subscribe to receive copies of
announcements and reports that are released by the Company.
The Policy is also designed to ensure that equality of information among
investors is maintained and applies regardless of whether the presentation
contains material new information required to be disclosed under listing rule
3.1 through ensuring that copies of all substantive presentations are released
to the Market on the ASX Platform.
(ASX Recommendations 5.1 and 5.3)
Respect the Rights of Security Holders
The Company keeps shareholders and other interested parties informed of
performance and major developments via communications through its website.
This includes details of the Governance framework adopted by the Company
including copies of the Corporate Governance Polices and Charters, which is
available at: https://tlouenergy.com/corporate-governance/
(https://tlouenergy.com/corporate-governance/) (ASX Recommendation 6.1)
The Company has a Shareholder Communications and Engagement Policy that
outlines the processes followed to ensure communication with shareholders and
the investment community is effective, consistent and adheres to the
principles of continuous disclosure. This is one of the policies available on
the Governance page of the Company's website.
(ASX Recommendation 6.2)
The policy regarding shareholder communication and engagement sets out the
processes the Company has in place to facilitate and encourage the
participation of shareholders and other investors at meetings and to engage
with management. These include encouraging shareholders to attend the AGM and
allowing them to lodge a proxy vote online if they are unable to attend the
meeting.
(ASX Recommendation 6.3)
The Company considers that communicating with shareholders by electronic means
is an efficient way to distribute information in a timely and convenient
manner. Therefore, its website contains a function to allow interested parties
to subscribe to receive electronic notification of public releases and other
relevant material concerning the Company and its activities. Where
appropriate and considered by the Board to be substantive, material or
contentious, Resolutions at the Company's general meeting will be conducted by
Poll rather than a show of hands. The Board considers that it is not
necessary, or the cost justified to conduct all resolutions in this manner.
(ASX Recommendations 6.4 and 6.5)
Recognise and Manage Risk
The Board is responsible for the oversight of the Company's risk management.
The responsibility and control of risk management is overseen by the Managing
Director, with matters delegated to the appropriate level of management within
the Company with the Managing Director being responsible for assuring the
systems are maintained and complied with.
The Company has established a Risk Committee that is focused on ensuring that
the Company maintains an effective system of internal control and risk
management. The Committee's structure, roles and responsibilities are detailed
in the Risk Committee Charter.
Flowing from this, the Company has adopted a Risk Management Policy that
governs the Company's approach to managing financial and non-financial risks.
The members of the Risk Committee are appointed by the Board, two of which are
to be Board Members. Company personnel are required to attend Risk Committee
meetings as and when requested.
Specific functions of the Risk Committee are to: -
(a) review and oversee the Company's risk profiles as
developed and reported by management;
(b) identify material business risks and monitor emerging
risks and changes in the Company's risk profile;
(c) monitor and review the risk management performance of the
Company, including conducting specific investigations where deemed necessary;
(d) review any legal matters which could significantly impact
the Company's risk management and internal control systems, and any
significant compliance and reporting issues, including any recent internal
regulatory compliance reviews and reports;
(e) review the effectiveness of the compliance function at
least annually, including the system for monitoring compliance with laws and
regulations and the results of management's investigations and follow-ups
(including disciplinary action) of any fraudulent acts or non-compliance;
(f) be satisfied that all regulatory compliance matters have
been considered in the preparation of the Company's official documents;
(g) review the findings of any examinations by regulatory
agencies and oversee all liaison activities with regulators;
(h) review and discuss media releases, ASX announcements and
any other information provided to analysts;
(i) review corporate legal reports of evidence of a material
violation of the Corporations Act, the ASX Listing Rules or breaches of
fiduciary duties;
(j) review the Company's insurance strategy, including the
coverage and limits of the insurance policies, in order to, if thought fit,
recommend to the Board for approval; and
(k) promote an awareness of a risk based culture in the
balance of pursuit of business objectives whilst managing risks.
(ASX Recommendation 7.1)
The Risk Committee meets whenever necessary, but no less than three times per
year, and keeps minutes of its meetings which are included for review at the
following Board Meeting.
The Company has a qualified Compliance and Risk Manager who has been engaged
to oversee the design and implementation of the risk control programme. The
Company's Risk Management Policy requires the Board, being guided by the Risk
Committee to at least annually undertake a risk review to determine if the
existing risk framework is satisfactory considering the material risks faced
by the Company.
The Board with the assistance of the Risk Committee has completed a review of
the Company's risk management framework during the year under review and
determined that the risk management framework that was in place was
satisfactory for the present needs of the Company and that it continues to be
sound and that the Company is operating with due regard to the risk appetite
set by the board.
(ASX Recommendation 7.2)
The Company does not have a formal internal audit function. However, it has
adopted a number of internal controls such as identifying key risks in a Risk
Register and managing activities within a budget and operational plan.
Management led by the Chief Financial Officer periodically undertakes an
internal review of financial systems and processes and where systems are
considered to require improvement these systems are developed. Delegations of
Authority are reviewed annually by the Audit Committee.
The ongoing mitigation and management of financial and operational risks are
standing agenda items of the Audit and Risk Committees. The Chief Executive
Officer and the Chair of the Audit Committee are responsible for reporting to
the Board on a regular basis in relation to whether the Company's material
business risks are being managed effectively by the existing management and
internal controls systems.
(ASX Recommendation 7.3)
The Company undertakes gas exploration activities and as such faces inherent
risks to its business, including economic, environmental and social
sustainability risks which may materially impact the Company's ability to
create or preserve value for shareholders over the short, medium or long term.
The Board is regularly briefed by management as well as keeping itself abreast
of possible material exposure to risks that the Company may face. The Company
considers that its activities are focused in Botswana on the generation of
energy, which in turn will help drive economic growth in the low carbon
economy through displacement of carbon intensive coal and diesel with power
generation using gas, solar and hydrogen having an enormous potential role to
play as the country develops.
Of core importance to the Company is safety, which it considers a priority not
only in respect to its employees and contractors but also to the community and
environment in which it operates. The Company believes that if these matters
are priorities then they will act as drivers for value to shareholders. The
Company has in place policies and procedures, including a risk management
framework, to help manage these risks.
(ASX Recommendation 7.4)
Remunerate Fairly and Responsibly
The Board has established a Remuneration & Nomination Committee. There is
no separate Remuneration Committee.
Given the size of the Board, the Directors have previously determined that the
non-executive Directors would execute the functions of a Remuneration &
Nomination Committee and have adopted a Remuneration and Nomination Charter.
The Board has agreed that the function of the Remuneration & Nomination
Committee will be constituted by a majority of independent non-executive
directors.
The Board does not believe that any advantage would be achieved at this
juncture taking into account the size of the Company and the Board to have a
separately constituted Remuneration Committee to carry out this function.
The non-executive members of the Board acting in their capacity as a Committee
is tasked with ensuring that the Company has remuneration policies and
practices which enable it to attract and retain Directors and executives who
will best contribute towards achieving positive outcomes for Shareholders.
The Company complies with the guidelines for executive remuneration packages
and non-executive Director Remuneration as recommended in the ASX
Recommendations.
The ASX Listing Rules and the Constitution require that the maximum aggregate
amount of remuneration to be allocated among the non-executive Directors be
approved by the shareholders in a general meeting. In proposing the maximum
amount of consideration by shareholders, and in determining the allocation,
the Remuneration Committee will take into account the time demands made on
Directors and such factors as fees paid to non-executive Directors in
comparable Australian companies. A meeting of shareholders held 10 July 2012
saw a resolution passed approving a pool of no more than $500,000 for this
purpose.
The names of the members of the Remuneration & Nomination Committee and
their attendances at the meetings of the Committee (if held) are set out in
the Directors Report which forms a part of the Company's Annual Report. The
remuneration paid to Directors and senior executives is shown in the
Remuneration Report contained in the Directors' Report, which includes details
on the Company's remuneration policies. There are no termination and
retirement benefits for non-executive Directors other than statutory
superannuation entitlements.
(ASX Recommendation 8.1)
The Company's policies and practices regarding the remuneration of
non-executive Directors, executive Directors and senior executives is set out
in the Remuneration & Nominations Committee Charter and in the
Remuneration Report contained in the 2024 Annual Report.
A copy of the Remuneration & Nomination Committee Charter is available on
the Company's website.
(ASX Recommendation 8.2)
The Company has an equity-based remuneration scheme. The Company's Policy for
Trading in the Company's Securities does not specifically prohibit Directors
entering into transactions or arrangements which would limit the economic risk
of unvested entitlements.
However, all dealings in the Company's Securities do need to be first approved
by the Company.The Securities Trading Policy is available on the Company's
website.
(ASX Recommendation 8.3)
Approved by the Board
26 September 2024
Additional Information
1. Shareholder Information
The shareholder information set out below was applicable at 20 September 2024
and relates to shares held on the ASX, AIM and BSE.
2. Ordinary Share Capital
1,286,331,664 fully paid ordinary shares.
3. Number of Equity Holders
Ordinary Share Capital held by 745 shareholders.
4. Voting Rights
In accordance with the Company's Constitution, for a show of hands, every
shareholder present in person or by a proxy, attorney or representative of a
shareholder has one vote and for a poll, every shareholder present in person
or by a proxy, attorney or representative has in respect of fully paid shares,
one vote for every share held. No class of option holder or performance rights
holder has a right to vote, however the shares issued upon exercise of options
or performance rights will rank pari passu with the then existing issued fully
paid ordinary shares.
5. Distribution of Shareholdings
Holdings No. of Holders Units % of Issued Ordinary Capital
1 - 1,000 42 6,384 0.0%
1,001 - 5,000 36 106,173 0.0%
5,001 - 10,000 76 613,667 0.0%
10,001 - 50,000 180 4,559,826 0.4%
50,001 - 100,000 84 6,550,545 0.5%
100,001 - maximum 327 1,274,495,069 99.1%
745 1,286,331,664 100.0%
6. Substantial Shareholders
The following information is extracted from the Company's Register of
Substantial Shareholders:
Ordinary Fully Paid Shares Held % of Issued Ordinary Capital
ILC Investments Pty Ltd 357,142,856 27.76%
BPOPF Group 208,521,092 16.21%
Investor Group - Anthony Gilby 66,000,000 5.13%
7. The 20 Largest Holders of Ordinary Shares
Ordinary Fully Paid Shares Held % of Issued Ordinary Capital
ILC Investments Pty Ltd 357,142,856 27.76%
Stanbic Noms Bw Re 5th Quarter BPOPF 172,253,169 13.39%
Hargreaves Lansdown (Nominees) Limited 15942 42,852,257 3.33%
Interactive Investor Services Nominees Limited Smktisas 38,493,304 2.99%
Gilby Super Pty Ltd 32,200,430 2.50%
Hargreaves Lansdown (Nominees) Limited Vra 30,373,077 2.36%
Dr Kirk Antony Lovric 26,623,377 2.07%
Citicorp Nominees Pty Limited 24,427,942 1.90%
The Bank Of New York (Nominees) Limited 672938 19,418,577 1.51%
Hargreaves Lansdown (Nominees) Limited Hlnom 19,079,299 1.48%
Botswana Public Pension Fund Vunani - BPOPF 18,133,962 1.41%
FNB Botswana Nominees Re: Morula - BPOPF 18,133,961 1.41%
HSDL Nominees Limited Maxi 17,476,084 1.36%
Barclays Direct Investing Nominees Limited Client1 17,033,776 1.32%
Lawshare Nominees Limited Sipp 16,382,987 1.27%
Vidacos Nominees Limited Igukclt 15,455,662 1.20%
Gilby Super Pty Ltd 15,299,570 1.19%
Mitchell Family Investments (Qld) Pty Ltd 14,050,014 1.09%
Kabila Investments Pty Limited 12,953,399 1.01%
Sixth Erra Pty Ltd 12,117,872 0.94%
Total 919,901,575 71.51%
Balance Of Register 366,430,089 28.49%
Grand Total 1,286,331,664 100%
8. Restricted Securities
There are no restricted securities at the date of this report.
9. Interests in Prospecting Licences (PL) and Mining Licence
(ML)
As at the date of this Report, Tlou Energy Limited had an interest in or is
awaiting renewal of the following licences:
Licence Region interest % * Operator
PL 1/2004 Lesedi Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
PL 3/2004 Lesedi Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
PL 35/2000 Lesedi Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
PL 37/2000 Lesedi Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
PL 237/2014 Mamba Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
PL 238/2014 Mamba Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
PL 239/2014 Mamba Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
PL 240/2014 Mamba Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
PL 241/2014 Mamba Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
PL 011/2019 Boomslang Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
ML 2017/18L Lesedi Project (Botswana) 100% Tlou Energy Botswana Pty Ltd
* The interest shown in each of the licences represents the percentage that
Tlou Energy Limited holds in the corporate holder of the licence.
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