ABN 47 149 490 353
Annual Report - 30 June 2016
Corporate Directory
Directors
Malcolm Carson - Chairman
David Deitz
Jonathan Reynolds
Company secretary
David Deitz
Registered office
Suite 1, Level 2
49-51 York Street
Sydney NSW 2000
Telephone: +61 2 9397 7555
Facsimile: +61 2 9397 7575
Principal place of business Suite 1, Level 2
49-51 York Street
Sydney NSW 2000
Share register
Auditor
Solicitors
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Telephone: 1300 787 272
Facsimile: +61 3 9473 2500
SCS Audit & Corporate Services Pty Ltd
Level 11 309 Pitt Street
Sydney 2000
Cardinals
Ground Floor
57 Havelock Street
West Perth WA 6872
Stock exchange listing
Allegiance Coal Limited shares are listed on the Australian Securities Exchange
(ASX code: AHQ)
Website
www.allegiancecoal.com.au
Contents
Corporate Directory
Contents
Directors’ Report
Auditor’s independence declaration
Contents
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
DIRECTOR’S DECLARATION
Independent auditor's report to the members of Allegiance Coal Limited
Shareholder information
2
3
1
11
13
14
15
16
17
44
45
47
Directors’ Report
30 June 2016
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity') consisting of Allegiance Coal Limited (referred to hereafter as the 'company' or 'parent entity') and
the entities it controlled at the end of, or during, the year ended 30 June 2016.
Directors
The following persons were directors of Allegiance Coal Limited during the whole of the financial year and up to the date of
this report, unless otherwise stated:
Malcolm Carson (Chairman) – Appointed on 11 August 2016
David Deitz
Jonathan Reynolds – Appointed on 11 August 2016
Anthony Howland-Rose – Ceased on 25 August 2016
Colin Randall – Ceased on 7 August 2015
Peter Donkin – Ceased on 25 August 2016
Principal activities
The continuing principal activity of the consolidated entity during the financial year was the acquisition and exploration of
coal tenements.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $3,263,070 (30 June 2015: $594,564).
Joint Exploration for Kilmain Project with JOGMEC
Japan Oil, Gas and Metals National Corporation (JOGMEC) withdrew from the Joint Exploration Agreement with the
consolidated entity after spending over $2 Million on the Kilmain Project.
Back Creek
The Back Creek project in the Surat Basin is well situated to benefit from development of Surat Basin infrastructure.
However, under current market conditions, the potential rate of development of the required infrastructure is still unknown
and thus the future for the project is under review.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the consolidated entity during the financial year other than the
withdrawal of JOGMEC from the Kilmain Project.
Matters subsequent to the end of the financial year
The following matters or circumstances have arisen since 30 June 2016 that have significantly affected, or may significantly
affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in
future financial years.
Loan repayment
C. Randall & Associates Pty Limited was paid $220,000 on 14th July 2016 in full discharge of its loan of $370,535.
Gullewa Limited was paid $1,104,000 on 4th August 2016 in partial satisfaction of the amount owed to it. The balance
outstanding of $659,000 may be satisfied by the issue and allotment of shares in Allegiance at a price of $0.005 per share
(subject to any share reconstruction and shareholders’ approval) or by repayment in cash, subject to Gullewa’s agreement.
The loan will be interest free for a period of three years, after which interest will again accrue on any unpaid balance. The
loan must be repaid in full, whether in cash or by the issue and allotment of shares in accordance with the agreement
reached between the parties, within five years.
Annual Report | 30 June 2016 | Page 1 of 48
Acquisition
The company has agreed to acquire all of the shares in Telkwa Coal Limited in consideration for 50 million ordinary shares
(on a 1 for 5 post consolidation basis) in Allegiance with a nominal issue price of $0.025 with a representative value of $1.25
million. The issue of the shares is to be subject to shareholder approval with the following Terms and Conditions of the
Acquisition:
1. Allegiance
completing
which condition has now been satisfied;
due
diligence
on
Telkwa
Coal
Limited
and
the
Telkwa
Project
2. Allegiance raising at least $1 million by issue of shares;
3. Allegiance’s shareholders passing all necessary resolutions to enable the acquisition to proceed, including approving
the consolidation, the issue of shares as consideration, and the issue of further securities to raise at least $1 million;
4. Completion of the consolidation; and
5. Allegiance satisfying whatever requirements ASX imposes.
Placement
A placement of 26,400,000 shares issued at the price of $0.005 per share to raise $132,000 before costs was completed on
16th September 2016.
No other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Likely developments and expected results of operations
The consolidated entity will be seeking joint venture opportunities for its Kilmain and Back Creek Projects so as to enable
exploration to continue, but in the meantime, will be limiting all exploration until the market price for thermal coal recovers to
a level where exploration becomes viable again. Subject to satisfaction of conditions, including shareholder approval, the
company intends progressing development of the Telkwa Project.
Environmental regulation
The consolidated entity is subject to and compliant with all aspects of environmental regulations of its exploration activities.
Management are not aware of any environmental law that has not been complied with.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Malcolm Carson
Non-Executive Chairman
MSc, BSc, Mem AUSIIM, AIG
Malcolm has over 40 years’ experience in the resource sector including field
exploration geologist and commercial evaluation of resources and project finance. He
has held senior positions in exploration and mining companies, the West Australian
Government, investment banks and executive roles in ASX and TSX publicly listed
companies. He was appointed to the Board on 11 August 2016.
Chairman of Dampier Gold Limited, Director Pacific Wildcat Corp (TSX), Director
Compass Gold Corporation (TSX)
None
None
Nil
Nil
Jonathan Reynolds
Executive director
B.Com (Hons), CA, F Fin
Jonathan is a chartered accountant with more than 25 years’ experience across many
sectors spent mostly in financial management roles. Most recently, he has been
finance director of a resource investment house, managing investments across a
range of commodities, including coal. Prior to that he held the position of chief
financial officer with a number of listed entities and before that was a senior manager
Annual Report | 30 June 2016 | Page 2 of 48
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
with an international firm of chartered accountants. He is a member of Chartered
Accountants Australia and New Zealand, a fellow of Financial Services Institute of
Australia and holds a Bachelor of Commerce (Honours) degree. He was appointed to
the Board on 11 August 2016.
None
None
None
Nil
Nil
David Deitz
Executive Director and Company Secretary
B.Com, MAusIMM, CPA
David joined Allegiance Mining NL in 1996 and became a Director in August 2000. As
Chief Financial Officer he was part of the team with Anthony Howland-Rose that
discovered and brought into production the Avebury Nickel Mine in Tasmania.
Allegiance Mining NL was taken over in 2008 for approximately $860 million.
Director of Gullewa Limited (ASX: GUL)
None
None
No ordinary shares held directly (686,667 ordinary shares held indirectly)
500,000 options over ordinary shares held directly
Anthony Howland-Rose – Ceased on 25 August 2016
Non-Executive Chairman
MSc, DIC, FGS, FIMMM, FAusIMM, FAIG, CEng
Anthony has over 50 years' experience in exploration, discovery, development and
corporate activity worldwide in the junior exploration sector. He has been involved in a
number of mineral discoveries, the most recent of which was the Avebury Nickel
Project for which he was co-recipient of the Association of Mining and Exploration
Companies Prospector of the Year Award in 2007. Anthony, for the years 1996 to
2008 as a Director and Chairman of Allegiance Mining NL, together with David Deitz,
presided over the discovery, drill out, financing and building of the $180 million
Avebury Nickel Mine and processing facility. Allegiance Mining NL was acquired by a
hostile takeover by Zinifex Limited in 2008 for approximately $860 million.
Executive Chairman of Gullewa Limited (ASX: GUL) and Director of Central Iron Ore
Limited, listed on the Toronto Stock Exchange - Venture
None
None
500,000 ordinary shares held directly (756,667 ordinary shares held indirectly)
500,000 options over ordinary shares held directly
Colin Randall – Ceased on 7 August 2015
Executive Managing Director
BEng (Mining), FAusIMM
Colin is a mining engineer with over 40 years' experience in most facets of the coal
mining industries of New South Wales and Queensland. He has been involved in the
operating, exploring, developing and financing of coalmines in both states. He was
involved in the management of the Ravensworth No. 2, Warkworth and Bayswater
open cut coalmines in the Hunter Valley. He was General Manager of the Bayswater
Colliery Co Pty Ltd and was Chief Executive of Wambo Mining Corporation Pty
Limited, at which time he undertook the marketing of coal into Japan and other parts
of Asia. In mine development, he was the Project Manager for the exploration,
planning, design and construction of the Warkworth Mine and was its first Mine
Manager. Involvement in coal exploration includes Chairman of Curlewis Coal & Coke
Pty Limited, Booyan Coal Pty Limited, Comet Coal & Coke Pty Limited (sold to
Stanmore Coal Pty Limited) and then Director of Hydro-Mining Australia Pty Limited
and Mineral and Coal Investments Pty Limited, with coal exploration activities in New
Annual Report | 30 June 2016 | Page 3 of 48
Other current directorships
Former directorships (last 3
years):
Special responsibilities
Interests in shares:
Interests in options
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
South Wales and Queensland.
None
None
None
Nil
2,600,000
Peter Donkin – Ceased on 25 August 2016
Independent Non-Executive Director
BEc, LLB, FFIN, MAICD
Peter has 29 years’ experience in investment banking, the majority of which involved
a primary focus on the mining and resources sector. He completed his career in
investment banking as the Managing Director of the Mining Finance Division of
Societe Generale in Australia, having worked for that bank for 21 years in both their
Sydney and London offices. Prior to joining Societe Generale he was with the
corporate and international banking division of the Royal Bank of Canada. He
currently works as a financial consultant to the minerals sector. Peter’s experience in
investment banking involved structuring and executing transactions for mining
companies, both in Australia and internationally. This included advising on and
arranging transactions in a wide variety of financial products covering mining project
finance, corporate finance, acquisition finance, pre-export finance, and early stage
investment capital.
Director of Paladin Energy Ltd (ASX: PDN)
None
None
10,000 ordinary shares held directly (333,334 ordinary shares held indirectly)
500,000 options over ordinary shares held directly
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships in all other types of entities, unless
otherwise stated.
'Former directorships (in the last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships in all
other types of entities, unless otherwise stated.
Company secretary David Deitz
Information on David Deitz is included in 'Information on directors' above.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2016, and
the number of meetings attended by each director were:
David Deitz
Anthony Howland-Rose
Peter Donkin
Colin Randall
Malcolm Carson
Jonathan Reynolds
Full Board
Attended
7
7
7
-
-
-
Held
7
7
7
2
-
-
Held: represents the number of meetings held during the time the director held office.
The roles of the Nomination Committee, Audit Committee and Remuneration Committee are performed by the full Board.
Remuneration report (audited)
The remuneration report, which has been audited, outlines the director and executive remuneration arrangements for the
consolidated entity and the company, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Annual Report | 30 June 2016 | Page 4 of 48
The remuneration report is set out under the following main headings:
Principles used to determine the nature and amount of remuneration
Details of remuneration
Share-based compensation
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's and company's executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of
strategic objectives and the creation of value for shareholders, and conforms with the market best practice for delivery of
reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good
reward governance practices:
acceptability to shareholders
performance linkage / alignment of executive compensation
competitiveness and reasonableness
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the consolidated entity and company depends on the quality of its directors and executives. The
remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
Alignment to shareholders' interests:
has economic profit as a core component of plan design
attracts and retains high calibre executives
focuses on sustained growth in shareholder wealth and delivering constant or increasing return on assets
Alignment to program participants' interests:
rewards capability and experience
reflects competitive reward for contribution to growth in shareholder wealth
provides a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive directors and executive
remunerations are separate.
Non-executive directors’ remuneration
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the
directors. Non-executive directors receive a fixed fee for time, commitment and responsibilities and may be paid
remuneration as the directors determine where the director performs services outside the scope of the ordinary duties of the
director. Non-executive directors may also be paid expenses properly incurred in attending meetings or otherwise in
connection with the company’s business.
The company’s constitution provides that the non-executive directors as a whole may be paid or provided fees or other
remuneration for their services as a director of the company, the total amount or value of which must not exceed $500,000
(excluding mandatory superannuation) per annum or such other maximum amount periodically determined by the company
in a general meeting.
Fees for non-executive directors are not linked to individual performance. Given the company is at an early stage of
development and the financial restrictions placed on it, the company may consider it appropriate to issue individual options
to non-executive directors, subject to obtaining relevant shareholder approvals.
Executive remuneration
The consolidated entity and company aims to reward executives with a level and mix of remuneration based on their
position and responsibility, which is both fixed and variable.
The executive remuneration and reward framework has four components:
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
Annual Report | 30 June 2016 | Page 5 of 48
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits are reviewed annually by the
Board, based on individual and business unit performance, the overall performance of the consolidated entity and
comparable market remuneration.
Executives can receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and adds additional value to the executive.
There are no short-term incentives ('STI').
The long-term incentives ('LTI') includes long service leave and share-based payments.
Consolidated entity performance and link to remuneration
There is no link between the consolidated entity's performance and remuneration.
Use of remuneration consultants
During the financial year ended 30 June 2016, the company did not engage remuneration consultants to review its existing
remuneration policies and provide recommendations on how to improve both the short-term incentives ('STI') and long-term
incentives ('LTI') programs of the company and consolidated entity.
Voting and comments made at the company's 2015 Annual General Meeting ('AGM')
At the last AGM, the shareholders voted to adopt the remuneration report for the year ended 30 June 2015. The company
did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of the directors and key management personnel are set out in the following tables. Key
management personnel are defined as those who have the authority and responsibility for planning, directing and controlling
the major activities of the consolidated entity.
Short-term benefits
Post-
employment
benefits
2016
Non-Executive Directors:
Cash salary
and fees
$
Bonus
$
Non-
monetary
$
Super-
annuation
$
Long-term
benefits
Long
service
leave
$
Share-
based
payments
Equity-
settled
$
Total
$
Anthony Howland-
Rose
David Deitz
Peter Donkin
Malcolm Carson
Executive Directors:
Jonathan Reynolds
Colin Randall
26,667
24,465
24,465
-
-
-
75,597
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,324
2,324
-
-
-
4,648
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,667
26,789
26,789
-
-
-
80,245
Annual Report | 30 June 2016 | Page 6 of 48
Short-term benefits
Post-
employment
benefits
Cash salary
and fees
$
Bonus
$
Non-
monetary
$
Super-
annuation
$
Long-term
benefits
Long
service
leave
$
Share-
based
payments
Equity-
settled
$
15,000
13,761
13,761
197,283
239,805
-
-
-
-
-
-
-
-
-
-
-
1,307
1,307
12,239
14,853
-
-
-
-
-
-
-
-
-
-
2015
Non-Executive Directors:
Anthony Howland-
Rose
David Deitz
Peter Donkin
Executive Directors:
Colin Randall
Total
$
15,000
15,068
15,068
209,522
254,658
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Anthony Howland-Rose
David Deitz
Peter Donkin
Malcolm Carson
Executive Directors:
Jonathan Reynolds
Colin Randall
Share-based compensation
Fixed remuneration
2016
2015
At risk - STI
2016
2015
At risk - LTI
2016
2015
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
100%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-
-
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-
-
-%
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2016.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price
Fair value per option at
grant date
27 November 2013
27 November 2013
27 November 2018
$0.0495
$0.015
Options granted carry no dividend or voting rights.
There were no options granted to directors and other key management personnel as part of compensation during the year
ended 30 June 2016 or 30 June 2015.
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel as
part of compensation during the year ended 30 June 2016 are set out below:
Annual Report | 30 June 2016 | Page 7 of 48
Name
Anthony Howland-Rose
Colin Randall
David Deitz
Peter Donkin
Malcolm Carson
Jonathan Reynolds
Value of
options
granted during
the year
$
-
-
-
-
-
-
Value of options
granted during
the year
$
-
-
-
-
-
-
Value of
options lapsed
during the year
$
-
-
-
-
-
-
Remuneration
consisting of
options for the
year
%
-
-
-
-
-
-
Details of options over ordinary shares granted, vested and lapsed for directors and other key management personnel as
part of compensation during the year ended 30 June 2015 are set out below:
Name
Anthony Howland-Rose
Colin Randall
David Deitz
Peter Donkin
Value of
options
granted during
the year
$
-
-
-
-
Value of options
granted during
the year
$
-
-
-
-
Value of
options lapsed
during the year
$
-
-
-
-
Remuneration
consisting of
options for the
year
%
-
-
-
-
Service agreements
Key management personnel have no entitlements to termination payments in the event of removal for misconduct.
Additional disclosures relating to key management personnel
In accordance with Class Order 14/632, issued by the Australian Securities and Investments Commission, relating to 'Key
management personnel equity instrument disclosures', the following disclosure relates only to equity instruments in the
company or its subsidiaries.
Name
Anthony
Howland-Rose
Colin Randall
David Deitz
Peter Donkin
Grant date Vesting date
Number of
options
granted
Value of
options granted
$
Value of
options vested
$
Number of
options
lapsed
Value of
options lapsed
$
27 Nov 2013 27 Nov 2013
27 Nov 2013 27 Nov 2013
27 Nov 2013 27 Nov 2013
27 Nov 2013 27 Nov 2013
500,000
2,600,000
500,000
500,000
7,500
39,000
7,500
7,500
7,500
39,000
7,500
7,500
-
-
-
-
-
-
-
-
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Ordinary shares
Anthony Howland-Rose
Colin Randall – ceased
David Deitz
Peter Donkin
Malcolm Carson
Jonathan Reynolds
Option holding
Balance at the
start of the year
Received as part
of remuneration
Additions
Disposals/
other
Balance at the end
of the year
1,256,667
28,032,165
686,667
343,334
-
-
30,318,833
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,032,165
-
-
-
-
1,256,667
-
686,667
343,334
-
-
28.032.165
2,286,668
Annual Report | 30 June 2016 | Page 8 of 48
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/other
Balance at the end
of the year
Options over ordinary shares
Anthony Howland-Rose
Colin Randall – ceased
David Deitz
Peter Donkin
Malcolm Carson
Jonathan Reynolds
Options over ordinary shares
Anthony Howland-Rose
Colin Randall – ceased
David Deitz
Peter Donkin
1,700,000
4,300,000
1,500,000
1,500,000
-
-
9,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
1,700,000
1,000,000
1,000,000
-
-
500,000
2,600,000
500,000
500,000
-
-
4,900,000
4,100,000
Vested and
exercisable
Vested and
unexercisable
Balance at the end
of the year
500,000
2,600,000
500,000
500,000
4,100,000
-
-
-
-
-
500,000
2,600,000
500,000
500,000
4,100,000
Loans to key management personnel and their related parties
There were no loans made to key management personnel and their related parties during the financial year ended 30 June
2016.
Other transactions with key management personnel and their related parties
Service, administration fees and reimbursements paid to former ultimate parent entity, Gullewa Limited totalling $75,021.
Administration fees and reimbursements paid to other related party, C. Randall & Associates Pty. Limited totalling $Nil
Loan from former ultimate parent entity, Gullewa Limited totalling $1,774,313, Loan from other related party, C. Randall &
Associates Pty Limited totalling $220,000.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Allegiance Coal Limited under option at the date of this report are as follows:
Grant date
Expiry date
Exercise price
Number under option
27 November 2013
27 November 2018
$0.0495
4,100,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Allegiance Coal Limited issued on the exercise of options during the year ended 30 June
2016 and up to the date of this report.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company 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 company paid a premium in respect of a contract to insure the directors and executives of the
company 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.
Annual Report | 30 June 2016 | Page 9 of 48
Indemnity and insurance of auditor
The company has not, during or since 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.
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
Officers of the company who are former audit directors of SCS Audit & Corporate Services Pty Ltd
There are no officers of the company who are former audit directors of SCS Audit & Corporate Services Pty Ltd.
Annual Report | 30 June 2016 | Page 10 of 48
Auditor’s independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page [13].
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
David Deitz
Director
30 September 2016
Sydney
Annual Report | 30 June 2016 | Page 11 of 48
Annual Report | 30 June 2016 | Page 12 of 48
Contents
30 June 2016
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of Allegiance Coal Limited
Shareholder information
14
15
16
17
18
44
45
47
General information
The financial statements cover Allegiance Coal Limited as a consolidated entity consisting of Allegiance Coal Limited and its
subsidiaries. The financial statements are presented in Australian dollars, which is Allegiance Coal Limited's functional and
presentation currency.
Allegiance Coal Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Suite 1, Level 2
49-51 York Street
Sydney NSW 2000
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 September 2016. The
directors have the power to amend and reissue the financial statements.
Annual Report | 30 June 2016 | Page 13 of 48
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2016
Revenue
Expenses
Employee benefits expense
Depreciation and amortisation expense
Impairment of assets
Administrative expenses
Listing expense
Finance costs credit / (expense)
Loss before income tax benefit
Income tax benefit
Note
4
5
5
5
6
Consolidated
2016
$
67,945
(97,919)
(5,626)
(3,032,858)
(204,002)
(25,388)
34,778
2015
$
114,782
(59,737)
(23,094)
(252,071)
(410,738)
(29,038)
(133,557)
(3,263,070)
(793,453)
-
198,889
Loss after income tax benefit for the year attributable to the owners of
Allegiance Coal Limited
(3,263,070)
(594,564)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss for the year attributable to the owners of
Allegiance Coal Limited
Basic loss per share
Diluted loss per share
(3,263,070)
(594,564)
31
31
Cents
(1.85)
(1.85)
Cents
(0.34)
(0.34)
* The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
Annual Report | 30 June 2016 | Page 14 of 48
Statement of financial position
As at 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Employee benefits
Total current liabilities
Total liabilities
Net (liabilities) / assets
Equity
Issued capital
Reserves
Accumulated losses
Total (deficit) / equity
Consolidated
Note
2016
$
2015
$
7
8
9
10
12
13
14
15
1,418,192
5,536
5,373
1,429,101
1,602,759
134,786
47,137
1,784,682
-
250,000
5,626
3,279,425
250,000
3,285,051
1,679,101
5,069,733
64,561
1,994,631
3,823
169,935
2,020,022
620
2,063,015
2,190,577
2,063,015
2,190,577
(383,914)
2,879,156
16
17
18
9,137,801
376,786
(9,898,501)
9,137,801
376,786
(6,635,431)
(383,914)
2,879,156
* The above statement of financial position should be read in conjunction with the accompanying notes.
Annual Report | 30 June 2016 | Page 15 of 48
Statement of changes in equity
For the year ended 30 June 2016
Consolidated
Issued capital
$
Reserves Accumulated losses Total equity
$
$
$
Balance at 1 July 2014
9,137,801
376,786
(6,040,867)
3,473,720
Loss after income tax benefit for the year
Other comprehensive income for the year, net of
tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments
Balance at 30 June 2015
-
-
-
-
-
-
(594,564)
(594,564))
-
-
(594,564)
(594,564))
-
9,137,801
-
376,786
-
(6,635,431)
-
2,879,156
Consolidated
Issued capital
$
Reserves Accumulated losses Total equity
$
$
$
Balance at 1 July 2015
9,137,801
376,786
(6,635,431)
2,879,156
Loss after income tax benefit for the year
Other comprehensive income for the year, net of
tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments
Balance at 30 June 2016
-
-
-
-
-
-
(3,263,070)
(3,263,070))
-
-
(3,263,070)
(3,263,070))
-
9,137,801
-
376,786
-
(9,898,501)
-
(383,914)
* The above statement of changes in equity should be read in conjunction with the accompanying notes.
Annual Report | 30 June 2016 | Page 16 of 48
Statement of cash flows
For the year ended 30 June 2016
Cash used in operating activities
Payments to suppliers (inclusive of GST)
Other receipts
Interest received
Interest and other finance costs paid
R & D Grants Received
Consolidated
Note
2016
$
2015
$
(314,733)
214,173
(100,560)
(504,609)
82,747
(421,862)
28,860
(34,778)
-
32,035
-
125,795
Net cash used in operating activities
30
(106.478)
(264,032)
Cash used in investing activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration and evaluation
Payments for security deposits
Contribution from Joint Venture
Net cash used in investing activities
Cash used in financing activities
Cash flows from financing activities
Repayments of borrowings
Net used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
-
(603,104)
-
550,406
(1,404)
(126,393)
14,100
(4,840)
(52,698)
(118,537)
(25,391)
(1,199,566)
(25,391)
(1,199,566)
(184,567)
1,602,759
(1,582,135)
3,184,894
Cash and cash equivalents at the end of the financial year
1,418,192
1,602,759
* The above statement of cash flows should be read in conjunction with the accompanying notes.
Annual Report | 30 June 2016 | Page 17 of 48
Notes to the financial statements
30 June 2016
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and interpretations and complies with
other requirements of the law.
The accounting policies detailed below have been consistently applied to all of the years presented unless
otherwise stated. The financial statements are for the Group consisting of Allegiance Coal Limited and its
subsidiaries.
The financial report is presented in Australian dollars.
Allegiance Coal Limited is a company limited by shares, incorporated in Australia whose shares are publicly traded
on the Australian Securities Exchange. The nature of the operations and principal activities of the Group are mineral
exploration and investment.
Adoption of new and revised standards
In the year ended 30 June 2016, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Group’s operations and effective for the current annual
reporting period.
It has been determined by the Directors that there is no impact, material or otherwise, of the new and revised
Standards and Interpretations on the Group’s business and, therefore, no change is necessary to Group accounting
policies.
The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet
effective for the year ended 30 June 2016, As a result of this review the Directors have determined that there is no
impact, material or otherwise, of the new and revised Standards and Interpretations on the Group’s business and,
therefore, no change necessary to Group accounting policies.
Statement of Compliance
The financial report was authorised for issue on 30th September 2016.
The financial report complies with Australian Accounting Standards, which include Australian equivalents to
International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report
comprising the financial statements and notes thereto, complies with International Financial Reporting Standards
(IFRS).
Going concern
During the reporting period the consolidated entity incurred a loss from continuing operations after tax of $3,263,070 (2015:
$594,564). During the reporting period the consolidated entity had operating cash outflows of $106,478 (2015:$ 264,032).
The Directors have concluded that it is appropriate to prepare the accounts on a Going Concern basis as the shareholders
continue to provide the necessary support to enable the consolidated entity to meet its obligations to creditors.
Ongoing commitments and further exploration and development of the entity’s leases may be dependent upon the entity’s
ability to obtain further financing through equity, debt financing or other means of capital raising.
A cash flow forecast has indicated that the consolidated entity will have sufficient cash assets to meet its obligations to
creditors for the ensuing 12 months from the date of this report.
Annual Report | 30 June 2016 | Page 18 of 48
Notes to the financial statements
30 June 2016
The commitments for exploration and evaluation for the next three years have been disclosed in note 25 to the financial
statements. The company has impaired tenements that it will no longer commit to the minimum expenditure for the next
three years and intends to keep exploring the other remaining tenements.
No adjustments have been made relating to recoverability and classification of other asset amounts and classification of
liabilities that might be necessary should the consolidated entity not continue as a going concern.
Basis of preparation and statement of compliance
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
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.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 28.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Allegiance Coal Limited
('company' or 'parent entity') as at 30 June 2016 and the results of all subsidiaries for the year then ended. Allegiance Coal
Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those 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 de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Annual Report | 30 June 2016 | Page 19 of 48
Notes to the financial statements
30 June 2016
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can
be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to
the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
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, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to 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 interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
The R&D Tax Incentive is a government run program which helps to offset some of the costs of R&D. The consolidated
entity claimed a refundable tax offset and has disclosed this as income tax benefit in the statement of profit or loss and other
comprehensive income.
Allegiance Coal Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group
continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate
taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the
tax consolidated group.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
Annual Report | 30 June 2016 | Page 20 of 48
Notes to the financial statements
30 June 2016
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is
held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset
is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the
reporting period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading;
it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of
the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Other receivables are recognised at amortised cost, less any provision for impairment.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. They are subsequently measured at either
amortised cost or fair value depending on their classification. Classification is determined based on the purpose of the
acquisition and subsequent reclassification to other categories is restricted.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised
in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The consolidated entity assesses at the end of each reporting period whether there is any objective evidence that a financial
asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or
obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due
to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter
bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable
data indicating that there is a measurable decrease in estimated future cash flows.
The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference between the
asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been recognised
had the impairment not been made and is reversed to profit or loss.
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 is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Annual Report | 30 June 2016 | Page 21 of 48
Notes to the financial statements
30 June 2016
Leasehold improvements
Plant and equipment
Motor vehicles
Computer equipment
Office equipment
4 years
4 years
4 years
4 years
4 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
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.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end
of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 5 years.
Exploration and evaluation assets
Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is
carried forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered
through the successful development and exploitation of an area of interest, or by its sale; or exploration activities are
continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or
otherwise of economically recoverable reserves. Where a project or an area of interest has been abandoned, the
expenditure incurred thereon is written off in the year in which the decision is made.
Annual Report | 30 June 2016 | Page 22 of 48
Notes to the financial statements
30 June 2016
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of
assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement
of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying
amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation asset (or the cash-generating unit(s) to which it has been allocated, being no larger than the
relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss
subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount but
only to the extent that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in previous years.
Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration
and evaluation asset is tested for impairment and the balance is then reclassified to development.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other 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 of disposal 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.
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 are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred, including interest on short-term and long-term borrowings.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service 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.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. 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 using the projected unit credit method. 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
Annual Report | 30 June 2016 | Page 23 of 48
Notes to the financial statements
30 June 2016
the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees 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.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
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.
Annual Report | 30 June 2016 | Page 24 of 48
Notes to the financial statements
30 June 2016
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated
entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount
is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in
the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain
directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Annual Report | 30 June 2016 | Page 25 of 48
Notes to the financial statements
30 June 2016
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Allegiance Coal Limited, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
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.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
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, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-
Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts
of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may
lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair
value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Exploration and evaluation costs
The consolidated entity capitalises expenditure relating to exploration and evaluation where it is considered likely to be
recoverable or where the activities have not reached a stage that permits reasonable assessment of the existence of
reserves. The Killmain and Back Creek Projects have yet to reach a stage of development where a determination of the
technical feasibility or commercial viability can be assessed. In these circumstances, whether there is any indication that the
assets have been impaired is a matter of judgment, as is the determination of the quantum of any required impairment
Annual Report | 30 June 2016 | Page 26 of 48
Notes to the financial statements
30 June 2016
adjustment. The Directors have resolved that it is not appropriate to capitalise any further exploration expenditure in relation
to the Killmain and Back Creek Projects. In addition they have, in the current period, resolved to impair exploration
expenditure incurred in respect of these permit areas in an amount of $3,032,858. The Directors have used their experience
to conclude that no further impairment adjustment is required for the year ended 30 June 2016 (refer to note 12).
Note 3. Operating segments
Identification of reportable operating segments
The consolidated entity is organised into one operating segment being the acquisition and exploration of coal tenements.
The operating segment information is as disclosed in the statements and notes to the financial statements throughout the
report.
The Chief Operating Decision Maker ('CODM') is the Board of Directors.
Major customers
During the year ended 30 June 2016 there were no major customers who derive more than 10% of the consolidated entity's
revenue (30 June 2016: none derived from major customers). Interest from cash deposits in banking institutions account for
$28,680 (2015: $32,035).
Note 4. Revenue
Interest
Other revenue
Revenue
Consolidated
2016
$
28,680
39,265
67,945
2015
$
32,035
82,747
114,782
Annual Report | 30 June 2016 | Page 27 of 48
Notes to the financial statements
30 June 2016
Note 5. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Computer equipment
Office equipment
Total depreciation
Amortisation
Software
Total depreciation and amortisation
Impairment
Exploration, evaluation and development
Finance costs
Interest and finance charges (credit) expense
Rental expense relating to operating leases
Minimum lease payments
Employee benefits expense
Defined contribution superannuation expense
Employee benefits expense
Total employee benefits expense
Consolidated
2016
$
2015
$
1,189
3,553
-
-
4,742
480
4,808
12,320
1,690
19,298
884
3,796
5,626
23,094
3,032,858
252,071
(34,778)
133,557
8,235
8,235
4,562
93,357
97,919
5,183
54,554
59,737
The weighted average interest rate on the company’s borrowings is 6.14%.
As per Note 14, during the reporting period an agreement for cash settlement was made with a borrowing party. The
balance of the borrowing, being the non cash settlement portion, is shown as a credit to financing costs.
Annual Report | 30 June 2016 | Page 28 of 48
Notes to the financial statements
30 June 2016
Note 6. Income tax benefit
Income tax benefit
Current Tax
Aggregate income tax benefit
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible in calculating taxable income:
Impairment of assets
Current year tax losses not recognised
Research and development refund received
Income tax benefit
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
Consolidated
2016
$
2015
$
-
-
(198,889)
(198,889)
(3,263,070)
(793,453)
(978,921)
(238,036)
909,857
75,621
(69,064)
(162,415)
69,064
162,415
-
-
(198,889)
(198,889)
Consolidated
2016
$
2015
$
8,340,587
2,502,176
8,110,375
2,433,113
The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax
losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is
passed.
Note 7. Current assets - cash and cash equivalents
Cash at bank
Cash on deposit
Consolidated
2016
$
418,192
1,000,000
1,418,192
2015
$
602,759
1,000,000
1,602,759
Annual Report | 30 June 2016 | Page 29 of 48
Notes to the financial statements
30 June 2016
Note 8. Current assets - trade and other receivables
Other Receivable
Receivables are neither past due nor impaired.
Note 9. Current assets - other
Prepayments
Security deposits
Note 10. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Additions
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
Consolidated
2016
$
5,536
2015
$
134,786
5,536
134,786
Consolidated
2016
$
-
5,373
5,373
2015
$
17,237
29,900
47,137
Consolidated
2016
$
1,188
(1,188)
-
2015
$
1,668
(480)
1,188
3,299
(3,299)
-
884
-
(884)
-
255
(255)
-
8,106
(4,807)
3,299
14,164
2,835
(16,115)
884
1,946
(1,691)
255
Total
-
5,626
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Annual Report | 30 June 2016 | Page 30 of 48
Notes to the financial statements
30 June 2016
Consolidated
Balance at 1 July 2014
Additions
Depreciation expense
Balance at 30 June 2015
Additions
Disposals
Depreciation expense
Balance at 30 June 2016
Leasehold
improvements
$
Plant and
equipment
$
Motor
vehicles
$
Computer
equipment
$
Office
equipment
$
1,668
-
(480)
1,188
-
-
(1,188)
-
8,106
-
(4,807)
3,299
-
-
(3,299)
-
-
-
-
-
-
-
-
-
14,164
2,835
(16,115)
884
-
-
(884)
-
1,946
-
(1,691)
255
-
-
(255)
-
Total
$
25,884
2,835
(23,093)
5,626
-
-
(5,626)
-
Note 11. Non-current assets - intangibles
Software - at cost
Less: Accumulated amortisation
Note 12. Non-current assets - exploration and evaluation
Exploration and evaluation - at cost
Less: Impairment
Consolidated
2016
$
10,200
(10,200)
2015
$
10,200
(10,200)
-
-
Consolidated
2016
$
3,570,706
(3,320,706)
250,000
2015
$
3,567,273
(287,848)
3,279,425
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2014
Additions
Impairment of assets
Balance at 30 June 2015
Additions – Kilmain Project
Additions - Other
Tenement fees refund
Impairment of assets
Joint Venture – JOGMEC
Balance at 30 June 2016
Exploration and
evaluation
$
3,327,550
239,723
(287,848)
3,279,425
Total
$
3,327,550
239,723
(287,848)
3,279,425
598,850
6,305
-
(3,032,858)
(601,722)
598,850
6,305
-
(3,032,858)
(601,722)
250,000
250,000
Annual Report | 30 June 2016 | Page 31 of 48
Notes to the financial statements
30 June 2016
Impairment
The consolidated entity has stopped mining certain tenements and impaired these tenements’ exploration and evaluation
expenditure to reflect the fact that they are no longer meeting minimum expenditure requirements.
The Killmain and Back Creek projects have yet to reach a stage of development where a determination of the technical
feasibility or commercial viability can be assessed. In these circumstances, whether there is any indication that the assets
have been impaired is a matter of judgment, as is the determination of the quantum of any required impairment adjustment.
The Directors have resolved that it is not appropriate to capitalise any further exploration expenditure in relation to the
Killmain and Back Creek Projects. In addition they have, in the current period, resolved to impair exploration expenditure
incurred in respect of these permit areas in an amount of $3,032,858. The Directors have used their experience to conclude
that no further impairment adjustment is required for the year ended 30 June 2016.
Note 13. Current liabilities - trade and other payables
Trade payables – former ultimate parent entity
Trade payables - other entities
Other payables
Refer to note 20 for further information on financial instruments.
Note 14. Current liabilities - borrowings
Loan - Gullewa Limited
Loan - C. Randall & Associates Pty. Limited
Loan - HCA
Consolidated
2016
$
62,470
2,091
-
64,561
2015
$
67,146
48,269
54,520
169,935
Consolidated
2016
$
1,775,240
220,000
(609)
1,994,631
2015
$
1,661,455
359,176
(609)
2,020,022
Refer to note 20 for further information on financial instruments.
Loan repayment
C. Randall & Associates Pty Limited was paid $220,000 on 14th July 2016 in full discharge of its loan of $370,535.
Gullewa Limited was paid $1,104,000 on 4th August 2016 in partial satisfaction of the amount owed to it. The balance
outstanding of $659,000 may be satisfied by the issue and allotment of shares in Allegiance at a price of $0.005 per share
(subject to any share reconstruction and shareholders’ approval) or by repayment in cash, subject to Gullewa’s agreement.
The loan will be interest free for a period of three years, after which interest will again accrue on any unpaid balance. The
loan must be repaid in full, whether in cash or by the issue and allotment of shares in accordance with the agreement
reached between the parties, within five years.
Annual Report | 30 June 2016 | Page 32 of 48
Notes to the financial statements
30 June 2016
Note 15. Current liabilities - employee benefits
Employee benefits
Note 16. Equity – Issued Capital
Consolidated
Ordinary Shares – fully paid
Consolidated
2016
$
3,823
2015
$
620
Consolidated
2016
Shares
176,666,674
2015
Shares
176,666,674
2016
$
9,137,801
2015
$
9,137,801
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 and the
company does not have a limited amount of authorised capital.
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.
Share buy-back
There is no current on-market share buy-back.
Options
Unissued ordinary shares of Allegiance Coal Limited under option at 30 June 2016 are 4,100,000 (2015: 9,750,000 ).
Capital risk management
The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a going concern so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure
to reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current parent entity's share price at the time of the investment.
There are no externally imposed capital requests. The capital risk management policy remains unchanged from the 30 June
2015 Annual Report.
Note 17. Equity - reserves
General reserve
Share-based payments reserve
Consolidated
2016
$
16
376,770
376,786
2015
$
16
376,770
376,786
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Annual Report | 30 June 2016 | Page 33 of 48
Notes to the financial statements
30 June 2016
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2014
Shareholder loan reserve adjustment
Balance at 30 June 2015
Share-based payments
Balance at 30 June 2016
Note 18. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Accumulated losses at the end of the financial year
General
$
Share-based payments
$
Total
$
376,786
-
376,770
-
16
-
16
-
16
376,770
-
376,786
-
376,770
376,786
Consolidated
2016
$
(6,635,431)
(3,263,070)
(9,898,501)
2015
$
(6,040,867)
(594,564)
(6,635,431)
Note 19. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 20. Financial instruments
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 may use derivative financial instruments such as forward foreign exchange
contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other
speculative instruments. 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,
ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.
Risk management is carried out by senior finance executives ('Finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and
appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the
consolidated entity's operating units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency
risk through foreign exchange rate fluctuations.
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.
Annual Report | 30 June 2016 | Page 34 of 48
Notes to the financial statements
30 June 2016
Commodity price risk
The consolidated entity’s main commodity price risk is an adverse movement in the price of coal.
Interest rate risk
The consolidated entity's main interest rate risk arises from cash and cash equivalents and related party loans.
The sensitivity analyses have been determined based on the exposure to interest rates and the stipulated change taking
place at the beginning of the financial year and held constant throughout the reporting period.
As at the reporting date, the consolidated entity had the following variable rate borrowings and cash and cash equivalents:
Consolidated
Cash and cash equivalents
Loans
2016
2015
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
Balance
$
2.80%
5.64%
1,418,192
(1,994,631)
2.97%
6.70%
1,602,759
(2,020,022)
Net exposure to cash flow interest rate risk
(576,439)
(417,263)
Consolidated - 2016
Basis points
change
Basis points increase
Effect on profit
before tax
Effect on
equity
Basis points
change
Basis points decrease
Effect on profit
before tax
Effect on
equity
Cash and cash equivalents
Loans
200
200
28,364
(43,128)
(14,764)
28,364
(43,128)
(14,764)
200
200
(28,364)
43,128
14,764
(28,364)
43,128
14,764
Consolidated - 2015
Basis points
change
Basis points increase
Effect on profit
before tax
Effect on
equity
Basis points
change
Basis points decrease
Effect on profit
before tax
Effect on
equity
Cash and cash equivalents
Loans
200
200
32,055
(40,400)
(8,345)
32,055
(40,400)
(8,3450
200
200
(32,055)
40,400
8,345
(32,055)
40,400
8,345
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information,
confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to
mitigate credit risk.
The consolidated entity's maximum exposure to credit risk at the reporting date in relation to each class of recognised
financial assets is the carrying amount as disclosed in the statement of financial position and notes to the financial
statements. The consolidated entity does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Annual Report | 30 June 2016 | Page 35 of 48
Notes to the financial statements
30 June 2016
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as
remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial
position.
Consolidated - 2016
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Loans
Total non-derivatives
Consolidated - 2015
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Loans
Total non-derivatives
Weighted average
interest rate
%
1 year or
less
$
Between 1 and
2 years
$
Between 2 and
5 years
$
Over 5
years
$
-%
-%
62,470
2,091
5.64% 1,994,631
2,059,192
-
-
-
-
-
-
-
-
Weighted average
interest rate
%
1 year or
less
$
Between 1 and
2 years
$
Between 2 and
5 years
$
Over 5
years
$
-%
-%
67,146
48,269
6.70% 2,020,022
2,135,437
-
-
-
-
-
-
-
-
Remaining
contractual
maturities
$
62,470
2,091
1,994,631
2,059,192
Remaining
contractual
maturities
$
67,146
48,269
2,020,022
2,135,437
-
-
-
-
-
-
-
-
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 21. Fair value measurement
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities.
Annual Report | 30 June 2016 | Page 36 of 48
Notes to the financial statements
30 June 2016
Note 22. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 23. Remuneration of auditors
Consolidated
2016
$
80,245
-
-
80,245
2015
$
239,805
14,853
-
254,658
During the financial year the following fees were paid or payable for services provided by SCS Audit & Corporate Services
Pty Ltd, the auditor of the company, and unrelated firms:
Audit review of the financial statement – SCS Audit & Corporate Services Pty Ltd
Note 24. Contingent liabilities
The consolidated entity has no contingent liabilities as at 30 June 2016 and 30 June 2015.
Note 25. Commitments
Capital commitments - exploration and evaluation
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2016
$
20,000
-
20,000
2015
$
15,000
-
15,000
Consolidated
2016
$
2015
$
50,000
500,000
550,000
415,115
880,745
1,295,860
Operating lease commitments includes contracted amounts for offices under non-cancellable operating leases which are on
a month by month expiry basis.
Note 26. Related party transactions
Parent entity
Allegiance Coal Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 28.
Annual Report | 30 June 2016 | Page 37 of 48
Notes to the financial statements
30 June 2016
Key management personnel
Disclosures relating to key management personnel are set out in note 22 and the remuneration report in the directors'
report.
Transactions with related parties
The following transactions occurred with related parties:
Payment for other expenses:
Service, administration fees and reimbursements paid to former ultimate parent entity,
Gullewa Limited
Administration fees and reimbursements paid to other related party, C. Randall & Associates
Pty. Limited
Consolidated
2016
$
2015
$
79,888
134,923
-
86,746
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Trade receivables from other related party
Consolidated
2016
$
2015
$
-
2,884
Current payables:
Service, administration fees and reimbursements payable to former ultimate parent entity,
Gullewa Limited
62,470
67,146
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Current borrowings:
Loan from Gullewa Limited
Loan from C. Randall & Associates Pty. Limited
Loan to HCA
Refer to Note 14
Borrowings include capitalised interest.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Consolidated
2016
$
2015
$
1,775,240
220,000
(609)
1,994,631
1,661,455
359,176
(609)
2,020,022
Annual Report | 30 June 2016 | Page 38 of 48
Notes to the financial statements
30 June 2016
Note 27. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive loss
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Parent
2016
$
(232,045)
(232,045)
2015
$
(6,914)
(6,914)
Parent
2016
$
1,512,290
2015
$
3,740,330
1,512,290
3,744,512
67,335
171,473
67,335
171,472
1,444,955
3,573,039
9,137,801
376,770
(8,069,616)
9,137,801
376,770
(5,941,532)
1,444,955
3,573,039
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2016 and 30 June 2015 aside
from the loans to Gullewa Limited of $1,775,240 and to C Randall & Associated Pty Limited of $220,000. The parent entity
had guaranteed the performance of Mineral & Coal Investments Pty Limited in the Joint Venture with JOGMEC
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2016 and 30 June 2015.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment at as 30 June 2016 and 30 June 2015.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1,
except for the following:
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
indicator of an impairment of the investment.
Annual Report | 30 June 2016 | Page 39 of 48
Notes to the financial statements
30 June 2016
Note 28. Interests in 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
Mineral & Coal Investments Pty Limited
Echidna Coal Pty Limited
Moreton Coal Pty Limited
Note 29. Events after the reporting period
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Ownership interest
2016
%
100.00%
100.00%
100.00%
2015
%
100.00%
100.00%
100.00%
The following matters or circumstances have arisen since 30 June 2016 that have significantly affected, or may significantly
affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in
future financial years.
Loan repayment
C. Randall & Associates Pty Limited was paid $220,000 on 14th July 2016 in full discharge of its loan of $370,535.
23
Gullewa Limited was paid $1,104,000 on 4th August 2016 in partial satisfaction of the amount owed to it. The balance
outstanding of $659,000 may be satisfied by the issue and allotment of shares in Allegiance at a price of $0.005 per share
(subject to any share reconstruction and shareholders’ approval) or by repayment in cash, subject to Gullewa’s agreement.
The loan will be interest free for a period of three years, after which interest will again accrue on any unpaid balance. The
loan must be repaid in full, whether in cash or by the issue and allotment of shares in accordance with the agreement
reached between the parties, within five years.
Acquisition
Allegiance has agreed to acquire all of the shares in Telkwa Coal Limited in consideration for 50 million ordinary shares (on
a 1 for 5 post consolidation basis) in Allegiance with a nominal issue price of $0.025 with a representative value of A$1.25
million. The issue of the shares is to be subject to shareholder approval with the following Terms and Conditions of the
Acquisition:
1. Allegiance completing due diligence on Telkwa Coal Limited and the Telkwa Project which condition has now been
satisfied;
2. Allegiance raising at least $1 million by issue of shares;
3. Allegiance’s shareholders passing all necessary resolutions to enable the acquisition to proceed, including approving
the consolidation, the issue of shares as consideration, and the issue of further securities to raise at least $1 million;
4. Completion of the consolidation; and
5. Allegiance satisfying whatever requirements ASX imposes.
Placement
A placement of 26,400,000 shares issued at the price of $0.005 per share to raise $132,000 before costs was completed on
16th September 2016.
No other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial
years.
Annual Report | 30 June 2016 | Page 40 of 48
Notes to the financial statements
30 June 2016
Note 30. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Write off of property, plant and equipment
Impairment of exploration and evaluation assets
Non-cash interest expense
Change in operating assets and liabilities:
Decrease / (increase) in trade and other receivables
Decrease / (increase) in prepayments
Increase / (decrease) in trade and other payables
Decrease in other operating liabilities
Joint Venture Net Cash Outflow Shown as cash used in
Investing activites
Net cash used in operating activities
Note 31. Loss per share
Loss after income tax attributable to the owners of Allegiance Coal Limited
Weighted average number of ordinary shares used in calculating basic loss per share
Weighted average number of ordinary shares used in calculating diluted loss per share
Basic loss per share
Diluted loss per share
Consolidated
2016
$
2015
$
(3,263,070)
(594,564)
5,626
-
-
3,029,425
-
129,250
41,764
(52,676)
3,203
23,094
-
-
252,071
-
(56,157)
(17,236)
128,760
-
52,697
(106,478)
-
(264,032)
Consolidated
2016
$
(3,263,070)
2015
$
(594,564)
Number
176,666,674
176,666,674
Number
176,666,674
176,666,674
Cents
(1.85)
(1.85)
Cents
(0.34)
(0.34)
Options have been excluded from the above calculation as their inclusion would be anti-dilutive.
Note 32. Share-based payments
Employee Option Scheme
An Employee Option Scheme ('EOS') was established on 9 May 2011 by the company, in accordance with a resolution of
the Board. The purpose of the EOS is to attract, motivate and retain directors and employees ('Eligible Employees') of the
consolidated entity through ownership of shares.
Under the EOS the Board may in its discretion offer employee options to Eligible Employees. Offers must be made under an
offer document, which complies with applicable laws. Eligible Employees may accept such offers by completing and
returning to the company an application form within the timeframe specified in the offer document.
Each employee option held by an employee or director entitles them to subscribe for and be allotted one fully paid ordinary
share. Employee options are personal to the participant and may not be exercised by another person, or transferred,
Annual Report | 30 June 2016 | Page 41 of 48
Notes to the financial statements
30 June 2016
disposed of or otherwise dealt with, except in certain limited circumstances. A participant has no rights to participate in new
issues of capital offered to shareholders. However, the company will ensure that for the purposes of determining
entitlements to such an issue, the record date will be at least seven business days after the issue is announced. The rights
of a participant may be changed to the extent necessary to comply with the ASX listing rules in respect of a reorganisation of
capital. Employee options are issued under the EOS for no consideration.
Employee options will lapse if:
i)
the conditions of exercise of the employee options have not been met, or where the participant ceases to render
services to the consolidated entity;
the conditions of exercise of the employee options are unable to be met;
ii)
iii) five years, or any other lapsing period specified in the offer document, has passed after the grant of the employee
options; or
iv) the conditions of exercise of the employee options have been met, and the participant does not exercise his or her
employee options within 28 days after ceasing to render services to the consolidated entity.
All of a participant’s rights in respect of employee options are immediately lost if the employee options lapse.
Consultant Option Scheme
A Consultant Option Scheme ('COS') was established on 9 May 2011 by the company, in accordance with a resolution of
the Board. The purpose of the COS is to attract and motivate consultants or contractors that provide goods or services to
the consolidated entity through ownership of shares.
Under the COS the Board may in its discretion offer options to eligible consultants. Offers must be made under an offer
document, which complies with applicable laws. Eligible consultants may accept such offers by completing and returning to
the company an application form within the timeframe specified in the offer document.
Each consultant option held by a consultant or contractor entitles them to subscribe for and be allotted one fully paid
ordinary share. Consultant options are personal to the participant and may not be exercised by another person, or
transferred, disposed of or otherwise dealt with, except in certain limited circumstances. A participant has no rights to
participate in new issues of capital offered to shareholders. However, the company will ensure that for the purposes of
determining entitlements to such an issue, the record date will be at least seven business days after the issue is announced.
The rights of a participant may be changed to the extent necessary to comply with the ASX listing rules in respect of a
reorganisation of capital. Consultant options are issued under the COS for no consideration.
Consultant options will lapse if:
i)
the conditions of exercise of the consultant options have not been met, or where the participant ceases to render
services to the consolidated entity;
the conditions of exercise of the consultant options are unable to be met;
ii)
iii) five years, or any other lapsing period specified in the offer document, has passed after the grant of the consultant
options; or
iv) the conditions of exercise of the consultant options have been met, and the participant does not exercise his or her
consultant options within 28 days after ceasing to render services to the consolidated entity.
All of a participant’s rights in respect of consultant options are immediately lost if the consultant options lapse.
Set out below are summaries of options granted under the plan:
Annual Report | 30 June 2016 | Page 42 of 48
Notes to the financial statements
30 June 2016
2016
Grant date
09/05/2011
09/05/2011
27/11/2013
Expiry date
09/05/2016 *
09/05/2016 **
27/11/2018 *
Exercise
price
$0.2500
$0.2500
$0.0495
Weighted average exercise price
*
**
Employee Option Scheme
Consultant Option Scheme
2015
Grant date
09/05/2011
09/05/2011
27/11/2013
Expiry date
09/05/2016 *
09/05/2016 **
27/11/2018 *
Exercise
price
$0.2500
$0.2500
$0.0495
Weighted average exercise price
*
**
Employee Option Scheme
Consultant Option Scheme
Balance at the
start of the year Granted Exercised
-
-
-
-
4,900,000
750,000
4.100.000
9,750,000
-
-
-
-
Balance at the
start of the year Granted Exercised
-
-
-
-
4,900,000
750,000
4.100.000
9,750,000
-
-
-
-
Set out below are the options exercisable at the end of the financial year:
Grant date
09/05/2011
09/05/2011
27/11/2013
Expiry date
09/05/2016 *
09/05/2016 **
27/11/2018 *
*
**
Employee Option Scheme
Consultant Option Scheme
Expired/
forfeited/ other
4,900,000
750,000
-
5,650,000
Balance at the
end of the year
-
-
4,100,000
4,100,000
$0.0495
Expired/
forfeited/ other
-
-
-
-
Balance at the
end of the year
4,900,000
750,000
4,100,000
9,750,000
$0.1657
2016
Number
-
-
4,100,000
4,100,000
2015
Number
4,900,000
750,000
4,100,000
9,750,000
The weighted average share price during the financial year was $0.007 $ (2015: $0.011).
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.5 years (2015:
1.7 years).
Annual Report | 30 June 2016 | Page 43 of 48
DIRECTOR’S DECLARATION
30 June 2016
1.
In the opinion of the directors of Allegiance Coal Limited (the ‘Company’):
a)
the accompanying financial statements and notes are in accordance with the Corporations Act 2001, including:
i) giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance
for the year ended on that date; and
ii) complying with Australian Accounting Standards the Corporations Regulations 2001, professional
reporting requirements and other mandatory requirements,
b)
c)
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 financial statements and notes thereto are in accordance with International Financial Reporting Standards
issued by the International Accounting Standards Board.
2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with
Section 295A of Corporations Act 2001 for the financial year ended 30 June 2016.
This declaration is signed in accordance with a resolution of the Board of Directors.
David Deitz
Director
30 September 2016
Sydney
Annual Report | 30 June 2016 | Page 44 of 48
Independent auditor's report to the members of Allegiance Coal Limited
Annual Report | 30 June 2016 | Page 45 of 48
Annual Report | 30 June 2016 | Page 46 of 48
Shareholder information
30 June 2016
The shareholder information set out below was applicable as at 15 September 2016.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 – 99
100 – 999
1,000 – 9,999
10,000 – 99,999
100,000 – 999,000
1,000,000 – 9,999,999
10,000,000 – 9,999,999,999
Rounding
Total
Equity security holders
Number of holders of
ordinary shares
80
605
41,250
5,790,060
14,608,999
26,156,679
130,069,001
176,666,674
% of Iissued
Capital
0.00
0.00
0.02
3.28
8.27
14.81
73.62
0.00
100.00
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Name
GFT NOMINEES (QLD) PTY LTD
JA ASHTON NOMINEES (QLD) PTY LTD
MR MICHAEL FRANK WHITE
GREGORY PATRICK MCDONNELL
CUSHNIE PTY LTD
REGENT PACIFIC GROUP LIMITED
CAPE COAL PTY LTD
GULLEWA LIMITED
MR IAN INGRAM
GA & AM LEAVER INVESTMENTS PTY LTD
TALFRESH PTY LTD
THE LAUNCH COMPANY PTY LTD
MR WOUTER CODEE
MR BENJAMIN HARKHAM
MR IANAKI SEMERDZIEV
MRS KERRY MARIE BISHOP
MRS STELLA KIOUSSIS
KURRABA INVESTMENTS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
WOLSELEY GROUP PTY LTD
Unquoted equity securities
There are no unquoted equity securities, other than employee / consultant options.
Units
35,000,000
35,000,000
18,602,334
15,300,000
14,500,000
11,666,667
7,346,419
5,200,000
2,097,060
2,000,000
2,000,000
1,250,000
1,150,000
1,086,200
1,027,000
1,000,000
1,000,000
1,000,000
856,348
711,000
% of Units
19.81
19.81
10.53
8.66
8.21
6.60
4.16
2.94
1.19
1.13
1.13
0.71
0.65
0.61
0.58
0.57
0.57
0.57
0.48
0.40
Annual Report | 30 June 2016 | Page 47 of 48
Substantial Holders
Substantial holders in the company are set out below:
Rank
1.
2.
3.
4.
5.
6.
Name
GFT NOMINEES (QLD) PTY
LTD
JA ASHTON NOMINEES
(QLD) PTY LTD
MR MICHAEL FRANK
WHITE
GREGORY PATRICK
MCDONNELL
CUSHNIE PTY LTD
REGENT PACIFIC GROUP
LIMITED
Address
40 SLACK DRIVE, EMERALD QLD, 4720
Units
35,000,000
62 LONG STREET, EMERALD QLD, 4720
35,000,000
3236 HUON HIGHWAY, FRANKLIN TAS, 7113
18,602,334
PO BOX 787, EMERALD QLD, 4720
15,300,000
130 FULLERS ROAD, CHATSWOOD NSW,
2067
8TH FLOOR HENLEY BUILDING, 5 QUEENS
ROAD CENTRAL, HONG KONG
14,500,000
11,666,667
% of Units
19.81
19.81
10.53
8.66
8.21
6.60
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
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.
There are no other classes of equity securities.
Tenements
Description
Mineral and Coal Investments Pty Limited
Back Creek - Surat Basin
Kilmain - Bowen Basin
Kilmain – Bowen Basin
Tenement number
Interest owned %
EPC 1297
EPC 1917
EPC 1298
100.00
100.00
100.00
Annual Report | 30 June 2016 | Page 48 of 48