Morella Corporation Limited
ABN 39 093 391 774
ANNUAL FINANCIAL REPORT
30 JUNE 2022
Morella Corporation Limited and Controlled Entities
2
CONTENTS
PAGE
Corporate Directory ....................................................................... 3
Directors’ Report ............................................................................ 4
Auditors’ Independence Declaration ........................................... 18
Consolidated Statement of Profit and Loss .................................. 19
Consolidated Statement of Other Comprehensive Income ......... 20
Consolidated Balance Sheet ......................................................... 21
Consolidated Statement of Changes in Equity ............................. 22
Consolidated Statement of Cash Flows ........................................ 23
Notes to the Financial Statements ............................................... 24
Directors' Declaration................................................................... 75
Independent Auditor’s Report to the Members .......................... 76
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022
3
Corporate Directory
DIRECTORS
James Brown – Managing Director
Allan Buckler – Non‐Executive Director
Dan O’Neill – Non‐Executive Director
Beng Teik Kuan – Non‐Executive Director
COMPANY SECRETARY
John Lewis
REGISTERED OFFICE
During the reporting period and up to 9 November 2021
Level 9, 863 Hay Street
Perth WA 6000
Telephone: +61 8 9488 5100
Facsimile: +61 8 9488 5199
Email: cosec@morellacorp.com
Since 10 November 2021
Suite 5, 68 Murray Street
West Perth WA 6005
Email: info@morellacorp.com
Website: www.morellacorp.com
AUDITORS
PKF Perth
Level 5, 35 Havelock Street
Perth WA 6005
SHARE REGISTRY
Link Market Services Limited
Level 12, QV1 Building
250 St George’s Terrace
Perth WA 6000
AUSTRALIAN SECURITIES EXCHANGE
Code: 1MC 1MCOB
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
4
Your directors have pleasure in presenting the annual financial report of Morella Corporation Limited ("Morella" or "the Company")
and its controlled entities (“the Group”) for the financial year ended 30 June 2022.
DIRECTORS
The names of the directors in office during the financial year and up to the date of this report are as follows:
Mr James Brown
Mr Allan Buckler
Mr Dan O’Neill
Mr Beng Teik Kuan
COMPANY SECRETARY
The name of the secretary in office during the financial year and up to the date of this report is as follows:
Mr John Lewis
PRINCIPAL ACTIVITIES
The principal activity of the Group during the year was conclusion of all matters to enable the Company’s securities to be re‐quoted
on the ASX. This milestone was achieved on 14 December 2021. Subsequent activities have been centered around the Groups
acquisition of exploration tenements and conducting exploration programs on these tenements.
OPERATING AND FINANCIAL REVIEW
Overview
Morella Corporation Limited (“1MC” or “the Company”) is an ASX listed entity. During the year Morella completed a range of
corporate matters to enable the Company’s securities to be re‐quoted on the ASX. Subsequent to re‐quotation, Morella focussed
operational efforts on exploration and development activities across Morella’s suite of lithium projects both in the Pilbara region of
Western Australia, and Nevada in the USA.
Review of Operations
Corporate
During the year the Group achieved re‐quotation on the ASX, in part by raising $8.599 million in cash, the proceeds to fund medium‐
term exploration and operational activities. Following shareholder consent at the Annual General Meeting in November 2021, the
Group was renamed to Morella Corporation Limited (ASX code: 1MC).
Project Development
Fish Lake Valley Lithium Project
On 12 October 2021 Morella executed the formal Earn‐in Option Agreement with US‐based Lithium Corporation for a 60% interest
of the Fish Lake Valley project, with rights to acquire 100% of the project. Morella’s immediate efforts were centred on geophysics
in order to develop an understanding of the subsurface geological and hydrogeological nature of the project. Following an extensive
review of all available historical information and drilling results (which were relatively shallow or surface focussed), the Company
formed the opinion that Fish Lake Valley is highly prospective with economic size and scale.
Morella has undertaken passive seismic and magnetotelluric surveys, with field work completed by US‐based contractors. Field data
collection began in December 2021 and continued through to early April 2022. In late April 2022 the Company released confirmed
drilling targets in Fish Lake Valley, at the end of the year, the Company was continuing efforts to secure drilling contractors to conduct
its maiden drill program at Fish Lake Valley, additional geophysics efforts to support resource modelling were also being advanced.
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
5
Western Australia Lithium Exploration
Morella formalised an earn‐in agreement for 51% of the lithium rights across a suite of Western Australian tenements with Sayona
Mining Limited on 11 November 2021. The immediate focus was tenement E47/2983 (“Mallina”), a detailed review of historical
exploration work conducted at Mallina was completed. On 20 October 2021, the Western Australian Department of Mines, Industry
Regulation and Safety formally notified the Morella of its successful Round 24 submission as part of the WA Government’s Exploration
Incentive Scheme (EIS). Morella was granted co‐funding up to a maximum offer of $150,000 against the direct drilling costs for the
Mallina exploration program. A targeted, three‐hole stratigraphic drill program was planned and undertaken between March‐May
2022. At the end of the year, all site works (including ground rehabilitation) had been completed, core and chips samples from the
drilling program had been delivered to an independent laboratory and the Company was awaiting assay results.
Towards the end of the year, Morella also undertook initial exploration and site reconnaissance activities on a number of additional
tenements subject to the Sayona earn‐in agreement. Morella has identified the Mt Edon tenement (including Mt Edon West) and
Tabba Tabba East tenement (and adjacent/nearby tenements) as priorities for early‐stage exploration efforts.
Operating results
The Group’s operating loss after providing for income tax and non‐controlling interests for the year ended 30 June 2022 was $682,994
(2021: loss $73,000,216). The Group’s operating loss after providing for income tax from continuing operations for the year ended
30 June 2022 was $99,846 (2021: loss $13,233,440). The loss in 2022 includes non‐cash costs as follows:
Depreciation and amortisation of $44,068
and includes further financial costs as follows:
Interest on funding facility of $245,405
Net foreign exchange gain of $5,295,823
Excluding the above items, the Group loss after tax was due to the Groups restructure post the disposal of its lithium operation.
The Groups revenue from continuing operations for the year ended 30 June 2022 was $788,937 (2021: $133,382). The revenue in
2022 was derived from its exploration services and royalty.
Financial position
The Group cash and cash equivalents balance as at 30 June 2022 was $4,253,365 (2021: $372,419). The Group’s cash flow from
operating activities was negative $2,958,237 (2021: $5,262,935) predominantly due to costs of administration and restructuring the
Group. The Group’s cash flow from investing activities was negative $1,276,491 (2021: positive $201,423,333) predominantly due to
the exploration expenditure on its tenements. The Group’s net cash flow from financing activities provided was $8,018,205 (2021:
used in $198,144,728) predominantly due the capital raised during the relisting process and the repayment of a short‐term facility.
The net assets of the Group increased by $4,637,187 from $737,316 to $5,374,503 due predominantly to the investment in its
exploration projects and retirement of liabilities from the deed of company arrangements.
Please refer to Note 16.
Other Assets
Lithium Assets ‐ Lithium Corporation
Morella acquired an interest in US‐based, OTC listed Lithium Corporation in November 2012. Lithium Corporation is a junior
exploration and mining company focused on creating shareholder value through the discovery and development of lithium and other
energy related mineral resources. At the end of the reporting period Morella held 9.21% of the issued capital of Lithium Corporation.
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
6
Coal Assets ‐Tabalong Coal
The Tabalong Coal Project is a premium grade thermal coal deposit located in South Kalimantan, Indonesia. The project consists of
five (5) Mining Licences (IUPs), with all five (5) IUPs granted for Operation Production. Morella holds 70% of three IUPs and 56% of
the remaining two. The Company has previously stated its intention to divest its interests in Tabalong coal assets. It is pursuing a
number of options for sale of the coal assets and information has been made available to a number of parties under confidentiality
deed arrangements. The Board has considered the current climate and the ability to complete the sale of the project in the near term
and determined it prudent to make an impairment to present a value of Nil in the financial statements whilst continuing to actively
seek an appropriate sale counterparty.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Subsequent to the end of the financial year the following events occurred:
15 July 2022 – Morella meets the first‐year expenditure requirements for the Fish Lake Valley earn in option agreement
11 August 2022 ‐ Morella completes negotiations for a 60% interest in the North Big Smokey project. The earn‐in agreement is with
US‐based, OTC listed Lithium Corporation (“Lithium Corp.”) to immediately commence an earn‐in for the North Big Smoky (“NBS”)
Project in central‐west Nevada, USA.
18 August 2022 ‐ Morella completes a $7.5 million placement to new and existing institutional and sophisticated investors in Australia
and internationally at an issue price of $0.015. The Placement process was managed by Canaccord Genuity (Australia) Limited and
Jett Capital Advisors acting as Joint Lead Managers.
18 August 2022 ‐ Lithium Royalty Corporation (LRC), Morella and Sayona Mining Limited have agreed to binding terms for a royalty
on lithium products produced from both the Mt Edon lithium project, tenements E59/2092 and E59/2055 (“Mt Edon”) and the Tabba
Tabba lithium project, tenement E45/4703 (“Tabba Tabba”). The consideration of US$ 1,100,000 consists of the grant of a 1.25%
Gross Overriding Revenue royalty both project areas.
18 August 2022 – Morella issues 258,266,458 performance rights under its executive incentive programme to it executive
management team. The performance rights will immediately vest for non‐directors with the Directors requiring shareholder approval.
To accommodate AGM approval the performance rights will expire on 31 December 2022.
10 September 2022 – Mr Alex Cheeseman has resigned effective 7 October 2022
16 September 2022 ‐ 19,812,140 warrants at an exercise price of $0.1260 per warrant with an expiry date 4 August 2022 have expired
and were cancelled on 16 September 2022.
The impact of the Coronavirus (COVID‐19) is ongoing and while it has not been financially positive for the consolidated entity up to
30 June 2022, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The impact on the
Group is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
No further events have occurred since 23 September 2022, which would require disclosure in the financial report.
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
7
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Group’s objective is to create shareholder value through acquisition and development of lithium‐based exploration tenements
and other supplementary mining activities that deliver positive cash flows for the Group, and resultant value for shareholders.
Key Business Strategies
Morella’s strategic focus comprises:
Exploration and resource development across the suite of tenements and claims with which Morella has a right to lithium raw
materials.
Acquisition and exploration of additional tenements and project opportunities focussed on lithium and battery raw materials.
Conducting its exploration operations sustainably and in consideration of the environment, health and safety, people and
community relations.
Divestment of the Tabalong coal project.
Future Prospects and Material Business Risks
The Company’s future financial performance and financial outcomes are dependent upon a range of risk factors typically encountered
by lithium exploration and mining companies. These include:
Identify and successfully explore tenements suitable for resource development.
Cost and access to funds for working capital, refinancing or project expansion purposes.
Movements in the Australian Dollar / US Dollar exchange rate can impact on revenue and debt.
DIVIDENDS
There were no dividends paid or declared during the year ended 30 June 2022 (2021: Nil).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than this and matters outlined in the Review of Operations, there has not arisen any item, transaction or event of a material
and unusual nature likely, in the opinion of the Directors of the Company, to affect substantially the operations or results of the
consolidated entity in subsequent financial years.
ENVIRONMENTAL PERFORMANCE
The Group is committed to achieving a high standard of environmental performance and is subject to significant environmental
regulation form both Commonwealth and State legislation in Australia to its mining, development and exploration activities. The
Board of Directors is responsible for regular monitoring of environmental exposures and compliance with these environmental
regulations. The Group complied with its environmental performance obligations during the year.
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
8
INFORMATION ON DIRECTORS
Mr James Brown (Managing Director)
Qualifications
Graduate Diploma in Mining from University of Ballarat
Experience
Mr Brown is an experienced mining company executive with over 40 years' experience in the mining industry in Australia,
United States, Africa and Indonesia, including the last 14 years in the Managing Director role at Morella. Mr Brown has
successfully sourced, developed and operated numerous key global projects with a focus on lithium and battery materials.
He has an extensive global network which has delivered key projects to Morella such as Fish Lake Valley, Mallina and more
recently North Big Smoky project. Aside from securing key projects Mr Brown led the successful re‐establishment of Morella
via delivery of capital from his established network of global institutions and high net worth investors.
Other current directorships in listed entities
Sayona Mining Limited
Greenwing Resources Limited
Former directorships in last 3 years
None
Special responsibilities
None
Interests in shares and options
59,153,791 ordinary shares in Morella Corporation Limited
INFORMATION ON DIRECTORS (continued)
Mr Allan Buckler (Non‐Executive Director)
Qualifications
Certificates in Mine Surveying and Mining, First Class Mine Managers Certificate and a Mine Surveyor Certificate issued by
the Queensland Government’s Department of Mines.
Experience
Mr Buckler has over 45 years’ experience in the mining industry and has taken lead roles in the establishment of several
leading mining and port operations in both Australia and Indonesia. Mr Buckler was appointed a director in December 2008.
Other current directorships in listed entities
Sayona Mining Limited
Former directorships in last 3 years
None
Special responsibilities
Member of the Audit & Risk Committee
Member of the Remuneration & Nomination Committee
Interests in shares and options
807,533,512 ordinary shares in Morella Corporation Limited
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
9
Mr Dennis O’Neill (Independent Non‐Executive Director)
Qualifications
Bachelor of Science in geology from the University of Western Australia
Experience
Mr O’Neill was appointed a director in December 2008. He has held positions with a number of Australian and multinational
exploration companies and has managed exploration programs in a diverse range of environments and locations including
Botswana, North America, Southeast Asia, North Africa and Australasia. During his 36 years’ experience, he has held
executive management positions with ASX listed companies and has worked on a range of commodities including
diamonds, gold, base metals, coal, oil and gas.
Other current directorships in listed entities
None
Former directorships in last 3 years
Sayona Mining Limited
Special responsibilities
Chairman of the Remuneration & Nomination Committee
Member of the Audit & Risk Committee
Interests in shares
27,876,863 ordinary shares in Morella Corporation Limited
Mr Beng Teik Kuan (Independent Non‐Executive Director)
Qualifications
Bachelor of Engineering (University of Malaya)
Experience
Mr Kuan is an engineer with considerable experience in bulk handling and terminal operations, including responsibility for
the development and management of the Pulau Laut Coal Terminal in South Kalimantan, Indonesia. He also has experience
in Indonesia, Malaysia and Singapore with tin dredging operations, managing rubber, palm oil and cocoa processing
factories, and managing palm oil bulk terminals. He was appointed a director in November 2007.
Other current directorships in listed entities
None
Former directorships in last 3 years
None
Special responsibilities
Chairman of the Audit & Risk Committee
Member of the Remuneration & Nomination Committee
Interests in shares and options
36,570,786 ordinary shares in Morella Corporation Limited
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
10
COMPANY SECRETARY
Mr John Lewis ‐ Mr Lewis has a Bachelor of Business Degree and is a Chartered Accountant with more than 25 years post qualification
experience. Mr Lewis has extensive corporate governance and company reorganisation experience. Since 2007, Mr Lewis has worked
predominantly in the resource development and mining sector in Australia and overseas as a Company Director, CFO and Company
Secretary.
REMUNERATION REPORT (Audited)
This report details the nature and amount of remuneration for directors and other key management personnel. It does not detail
information on the remuneration of key management post this date.
Remuneration Policy and link to performance
The Company’s policy is to remunerate fairly and in line with companies of similar size, operations and in the same industry. Individual
remuneration decisions are made by the Remuneration & Nomination Committee taking into account the following factors:
The responsibility of the role;
Experience of the employee;
Past performance and future expectations; and
Industry conditions and trends.
In order to retain and attract key management personnel of sufficient calibre to facilitate the efficient and effective management of
the Company’s operations, the Remuneration & Nomination Committee may seek the advice of external advisors in connection with
the structure of remuneration packages.
Remuneration packages may contain the following key elements:
a)
Primary benefits ‐ salary/fees, bonuses and non‐monetary benefits;
b)
Post‐employment benefits ‐ including superannuation and prescribed retirement benefits; and
c)
Equity ‐ performance rights granted under the Long‐Term Incentive Plan as disclosed in Note 24 to the financial statements.
None of the Company’s personnel remuneration packages are linked directly to the Company’s profitability or other measure of
performance. The Company maintains a Long‐term Incentive Plan under which employees may be granted performance rights and
share options which vest subject to service conditions being met. Directors may also be allocated performance rights and/or options
as an incentive. During the 2022 year, no executive directors were issued with shares on the vesting of previously issued performance
rights.
Performance‐based remuneration
The Company currently has performance‐based remuneration in place as disclosed in Note 24.
Group performance, shareholder wealth and director and executive remuneration
The Group has recorded the following earnings from continuing operations over the last five years:
2022
2021
2020
2019
2018
Revenue and sundry income
1,529,313
142,203
107,023,428
39,571,130
1,675,168
EBITDA *
219,080
(13,088,123)
(16,047,598)
(3,967,691)
(13,279,929)
NPBT *
(99,846)
(13,232,440)
(89,615,963)
(26,283,568)
(13,120,803)
NPAT *
(99,846)
(13,232,440)
(89,637,031)
(26,571,019)
(12,712,487)
Dividends paid
‐
‐
‐
‐
‐
* Definitions:
EBITDA = Earnings before interest, tax, depreciation, and amortisation
NPBT = Net profit before tax
NPAT = Net profit after tax & minority interest
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
11
REMUNERATION REPORT (Audited) (continued)
Key Management Personnel Remuneration Policy
The Remuneration & Nomination Committee reviews the remuneration packages of all directors and key management personnel on
an annual basis. Remuneration packages are reviewed and determined with due regard to relevant market conditions and individual’s
experience and qualification and are benchmarked against comparable industry salaries.
Payment of bonuses and share based compensation benefits is discretionary.
Employment Contracts of Key Management Personnel
Contracts of employment are given to key management personnel at time of employment. Details are as follows:
James Brown, Managing Director ‐ the agreement is of no fixed term and allows for payment of a monthly cash salary in US dollars,
reviewed each year, plus allowances. Three months’ notice of termination by either party is required, with a separation allowance
equivalent to one year’s salary and entitlements to be paid if employment is terminated by the Company.
Alex Cheeseman, Chief Executive Officer the agreement is of no fixed term and allows for payment of an annual cash salary, reviewed
each year, and superannuation. Six months’ notice of termination by either party is required, with a separation allowance equivalent
to six month’s gross salary to be paid if employment was terminated by the Company.
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
12
REMUNERATION REPORT (Audited) (continued)
Key Management Personnel Remuneration
* Mr A Cheeseman has resigned effective 7 October 2022
No long service leave payments were made during the year (2021: 26,091)
Short‐term benefits
Post employment
Share based
payments
Total
Share based
payments as a
percentage
of total
%
Name
Cash salary
and fees
$
Cash
bonus
$
Bonus
Shares
$
Non‐
monetary
benefits
$
Super‐
Annuation
$
Termination
payments
$
EIP and
Performance
rights
$
$
2022
Non‐executive directors
A Buckler
72,000
‐
‐
‐
‐
‐
‐
72,000
‐
D O’Neill
72,000
‐
‐
‐
7,200
‐
‐
79,200
‐
B Kuan
72,000
‐
‐
‐
7,200
‐
‐
79,200
‐
Sub total
non‐executive directors
216,000
‐
‐
‐
14,400
‐
‐
230,400
Executive directors
J Brown
357,558
‐
‐
‐
‐
‐
‐
357,588
‐
Other key management
personnel
A Cheeseman *
270,000
‐
‐
‐
27,000
‐
56,000
353,000
15.9%
Total for key management
personnel compensation
627,558
‐
‐
‐
27,000
‐
56,000
710,558
Total compensation
843,558
‐
‐
‐
41,400
‐
56,000
940,958
2021
Non‐executive directors
A Buckler
18,000
‐
‐
‐
1,710
‐
‐
19,710
‐
D O’Neill
21,000
‐
‐
‐
1,995
‐
‐
22,995
‐
B Kuan
21,000
‐
‐
‐
1,995
‐
‐
22,995
‐
X Dai
18,000
‐
‐
‐
‐
‐
‐
18,000
‐
Sub total
non‐executive directors
78,000
‐
‐
‐
5,700
‐
‐
83,700
Executive directors
J Brown
213,032
‐
‐
34,774
‐
‐
‐
247,806
‐
P Mantell
108,342
‐
‐
3,689
9,342
153,543
‐
274,916
‐
Other key management
personnel
R Wheatley
134,053
‐
‐
‐
11,524
270,000
‐
415,577
D Cox
135,459
‐
‐
‐
5,684
100,000
‐
241,143
‐
A Cheeseman
63,749
‐
‐
‐
6,056
‐
‐
69,805
‐
Total for key management
personnel compensation
654,635
‐
‐
38,463
32,606
523,543
‐
1,249,247
Total compensation
732,635
‐
‐
38,463
38,306
523,543
‐
1,332,947
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
13
REMUNERATION REPORT (Audited) (continued)
a)
Performance Rights
Number of performance rights held by key management personnel
The number of performance rights in the Company held during the financial year by each director of Morella Corporation
Limited and other key management personnel of the Group, including their personally related parties, are set out below.
2022
Balance at the
start of the
year
Granted as
compensation
Shares issued/
rights lapsed
Balance at the
end of the year
Vesting
31 Jan 2022
J Brown
‐
‐
‐
‐
‐
A Buckler
‐
‐
‐
‐
‐
D O’Neill
‐
‐
‐
‐
‐
B Kuan
‐
‐
‐
‐
‐
A Cheeseman *
‐
‐
‐
‐
‐
2021
Balance at the
start of the
year
Granted as
compensation
Shares issued/
rights lapsed
Balance at the
end of the year
Vesting
31 Jan 2021
J Brown
‐
‐
‐
‐
‐
P Mantell
‐
‐
‐
‐
‐
A Buckler
‐
‐
‐
‐
‐
D O’Neill
‐
‐
‐
‐
‐
B Kuan
‐
‐
‐
‐
‐
X Dai
‐
‐
‐
‐
‐
A Cheeseman
‐
‐
‐
‐
‐
R Wheatley
1,000,000
‐
(1,000,000)
‐
‐
D Cox
‐
‐
‐
‐
‐
* Mr A Cheeseman has resigned effective 7 October 2022
b)
Share holdings
Number of shares held by key management personnel
The number of shares in the Company held during the financial year by each director of Morella Corporation Limited and
other key management personnel (KMP) of the Group, including their personally related parties, are set out below.
Balance at
start of the
year
Purchased /
(sold)
Vesting of
performanc
e rights
Placement
& Securities
Purchase
Plan
Other
Balance at
the end of
the year
2022
J Brown
31,788,301
‐
‐
27,365,490
‐
59,153,791
A Buckler
459,738,506
‐
‐
352,110,391
(4,315,385)
807,533,512
D O’Neill
13,633,336
‐
‐
14,243,527
‐
27,876,863
B Kuan
26,600,000
‐
‐
9,970,786
‐
36,570,786
A Cheeseman *
100,000
(500,000)
‐
3,999,931
‐
3,599,931
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
14
REMUNERATION REPORT (Audited) (continued)
b)
Share holdings (continued)
Balance at
start of the
year
Purchased /
(sold)
Vesting of
performance
rights
Placement
& Securities
Purchase
Plan
Other
Balance at
the end of
the year
2021
J Brown
31,788,301
‐
‐
‐
‐
31,788,301
P Mantell
36,899,238
‐
‐
‐
(36,899,238)
‐
A Buckler
459,738,506
‐
‐
‐
‐
459,738,506
D O’Neill
13,633,336
‐
‐
‐
‐
13,633,336
B Kuan
26,600,000
‐
‐
‐
‐
26,600,000
X Dai
‐
‐
‐
‐
‐
‐
A Cheeseman
‐
‐
‐
‐
100,000
100,000
R Wheatley
‐
‐
‐
‐
‐
‐
D Cox
1,875,000
‐
‐
‐
(1,875,000)
‐
* Mr A Cheeseman has resigned effective 7 October 2022
c)
Option holdings
Number of listed options held by key management personnel
The number of listed options in the Company held during the financial year by each director of Morella Corporation
Limited and other key management personnel (KMP) of the Group, including their personally related parties, are set out
below.
Balance at
start of the
year
Purchased /
(sold)
Placement &
Securities
Purchase
Plan
Other
Balance at
the end of
the year
2022
J Brown
385,000
‐
‐
(385,000)
‐
A Buckler
58,466,808
‐
‐
(58,466,808)
‐
D O’Neill
‐
‐
‐
‐
‐
B Kuan
1,000,000
‐
‐
(1,000,000)
‐
A Cheeseman *
‐
‐
‐
‐
‐
2021
J Brown
385,000
‐
‐
‐
385,000
P Mantell
385,000
‐
‐
(385,000)
‐
A Buckler
58,466,808
‐
‐
‐
58,466,808
D O’Neill
‐
‐
‐
‐
‐
B Kuan
1,000,000
‐
‐
‐
1,000,000
X Dai
‐
‐
‐
‐
‐
R Wheatley
‐
‐
‐
‐
‐
D Cox
‐
‐
‐
‐
‐
* Mr A Cheeseman has resigned effective 7 October 2022
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
15
REMUNERATION REPORT (Audited) (continued)
Performance Rights
In 2021 the Company established a new Long‐Term Incentive Plan (LTIP) to assist in the reward and retention of directors and
employees. There were no performance rights on issue as at 30 June 2022.
No shares were issued to directors and key management personnel on the vesting of performance rights during the year ended 30
June 2022.
Loan from Directors
The company has a total balance of loans from various directors totalling $3,313,550 (2021: $3,539,458) as at reporting date. Details
relating to these loans are in Note 18 to the financial report.
End of remuneration report.
MEETINGS OF DIRECTORS
The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the
financial year and the number of meetings attended by each director (while they were a director or committee member). During the
financial year there were 4 Directors’ meetings, 2 Audit & Risk Committee meetings and 3 Remuneration & Nomination Committee
meetings held.
Directors’ Meetings
Audit & Risk Committee
Remuneration & Nomination
Committee
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
J Brown
4
4
2
2
‐
‐
A Buckler
4
4
2
2
3
3
D O’Neill
4
4
2
2
3
3
B Kuan
4
4
2
2
3
3
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has entered into Deeds of Indemnity with all of its directors in accordance with the Company’s Constitution. During
the financial year the Company paid a premium to insure the directors, officers and managers of the Company and its controlled
entities. The insurance contract requires that the amount of the premium paid is kept confidential.
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
16
OPTIONS
LDA Options
74,400,000 unlisted options over ordinary shares of Morella Corporation Limited outstanding. These unlisted options were issued to
LDA Capital on 1 May 2020 (following approval at a general meeting held on 30 April 2020) under the terms of an equity standby
facility provided by LDA Capital. The options have an exercise price of $0.0586 cents per option and have an expiry date of 1 May
2023.
Canaccord Options
150,000,000 unlisted options over ordinary shares of Morella Corporation Limited outstanding. These unlisted options were issued
to Canaccord Genuity (Australia) Limited on 25 January 2022. The options have an expiry of 3 years from the date of issue and are
exercisable in the following manner
50,000,000 with an exercise price of price of $0.006 cents per option.
50,000,000 with an exercise price of price of $0.007 cents per option.
50,000,000 with an exercise price of price of $0.008 cents per option.
At 30 June 2022, there were also 224,400,000 unlisted options over ordinary shares of Morella Corporation Limited outstanding.
These unlisted options expire on conditions stated.
WARRANTS
Under the terms of the US$110,000,000 debt facility announced on 28 July 2017, the lenders received a total of 72,644,513 warrants.
These were approved on 22 November 2017 at the Company’s annual general meeting and issued on 27 November 2017 at an
exercise price of $0.1260 per warrant with an expiry date 4 August 2022. These Warrants have expired and were cancelled on 16
September 2022.
NON‐AUDIT SERVICES
The Company’s auditor PKF Perth, did not provide any non‐audit services to the Company during the year ended 30 June 2022.
Details of the amounts paid or payable to the auditor for services provided during the financial year by the auditor are outlined in
Note 31 to the financial statements.
The directors are satisfied that the provision of non‐audit services during the financial year, by the auditor (or by another person or
firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001.
The directors are of the opinion that the services as disclosed in Note 31 to the financial statements do not compromise the external
auditor's independence requirements of the Corporations Act 2001 for the following reasons:
all non‐audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision‐making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and reward.
Morella Corporation Limited and Controlled Entities
Directors’ Report
FOR THE YEAR ENDED 30 JUNE 2022 (CONTINUED)
17
ROUNDING OF AMOUNTS
The company is of a kind referred in Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the directors’ report
and financial report. Amounts in the directors’ report and financial report have been rounded off to the nearest dollar, unless
otherwise stated.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 30 June 2022 has been received and is included on page 18 of the annual
report.
Signed in accordance with a resolution of the Directors made pursuant to Section 298(2) of the Corporations Act 2001.
On behalf of the Directors,
James Brown
Director
Brisbane, 23 September 2022
Level 4, 35 Havelock Street, West Perth, WA 6005
PO Box 609, West Perth, WA 6872
T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au
PKF Perth is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or
inactions of any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
18
PKF Perth
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF MORELLA CORPORATION LIMITED
In relation to our audit of the financial report of Morella Corporation Limited for the year ended 30 June 2022, to
the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements
of the Corporations Act 2001 or any applicable code of professional conduct.
PKF PERTH
SHANE CROSS
PARTNER
23 SEPTEMBER 2022
WEST PERTH,
WESTERN AUSTRALIA
Morella Corporation Limited and Controlled Entities
Consolidated Statement of Profit or Loss
FOR THE YEAR ENDED 30 JUNE 2022
19
Note
2022
$
2021
$
Continuing operations
Revenue
5(a)
788,937
133,382
Cost of sales
5(c)
(496,886)
(457,565)
Gross profit / (loss)
292,051
(324,183)
Other income
Sundry income
5(b)
740,376
8,821
Expenses
Administration costs
(4,444,414)
(4,427,189)
Employee benefits expense
5(f)
(1,632,335)
(2,456,126)
Exploration expenditure written off
(46,281)
‐
Other expenses
5(d)
(30,208)
(33,835)
Profit / (loss) before foreign exchange and finance costs
(5,120,810)
(7,232,512)
Net foreign exchange gain/(loss)
5(e)
5,295,823
(5,922,920)
Profit / (loss) before finance costs
175,013
(13,155,432)
Finance costs
Interest on funding facility
(274,859)
(77,008)
Profit / (loss) before income tax
(99,846)
(13,232,440)
Income tax (expense) / benefit
7(a)
‐
‐
Profit / (loss) after income tax from continuing operations
(99,846)
(13,232,440)
Discontinued operations
Loss from discontinued operations after tax
3
(583,148)
(59,767,776)
Net profit / (loss) for the year
(682,994)
(73,000,216)
Profit / (loss) attributable to:
Owners of Morella Corporation Limited – Continuing Operations
(97,886)
(13,034,710)
Owners of Morella Corporation Limited – Discontinued Operations
(583,148)
(59,767,776)
Non‐controlling interest
(1,980)
(197,730)
(682,994)
(73,000,216)
(Loss) per share from continuing and discontinued operations
attributable to the ordinary equity holders of the Company:
Basic and diluted (loss) per share from continuing and discontinuing
operations
6
(0.02)
(2.44)
Basic and diluted (loss) per share from continuing operations
6
(0.00)
(0.44)
Basic and diluted (loss) per share from discontinued operations
6
(0.02)
(2.00)
The above Consolidated Statement of Profit and Loss should be read in conjunction with the accompanying Notes.
Morella Corporation Limited and Controlled Entities
Consolidated Statement of Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2022
20
Note
2022
$
2021
$
Profit / (loss) for the year
(682,994)
(73,000,216)
Other comprehensive income / (loss) for the year
Items that may be reclassified to profit and loss
Changes in the fair value of financial assets
13
(2,354,653)
3,768,316
Exchange differences on translation of foreign controlled entities
(4,601,015)
5,183,696
Other comprehensive income / (loss) for the year, net of tax
(6,955,668)
8,952,012
Total comprehensive income / (loss) for the year
(7,638,662)
(64,048,204)
Total comprehensive income / (loss) attributable to:
Members of the parent entity
(7,667,442)
(64,068,267)
Non‐controlling interest
28,780
20,063
(7,638,662)
(64,048,204)
Total comprehensive income / (loss) attributable to members
of the parent entity arises from:
Continuing operations
(6,829,485)
(64,944,846)
Discontinued operations
(809,177)
876,642
(7,638,662)
(64,048,204)
The above Consolidated Statement of Other Comprehensive Income should be read in conjunction with the accompanying Notes.
Morella Corporation Limited and Controlled Entities
Consolidated Balance Sheet
AS AT 30 JUNE 2022
21
Note
2022
$
2021
$
Current assets
Cash and cash equivalents
8
4,253,365
372,419
Trade and other receivables
9
251,613
799,358
Held to maturity investments
11
29,295
‐
Inventories
10
‐
‐
Current tax prepaid
74,816
63,817
Other current assets
12
86,490
202,493
Derivative financial instruments
14
329,789
‐
Financial assets
13
2,900,008
5,691,673
Total current assets
7,925,379
7,129,760
Non‐current assets
Property, plant, equipment and mine properties
15
36,519
29,074
Exploration and evaluation
16
2,192,888
79,946
Right‐of‐use assets
22
37,196
‐
Total non‐current assets
2,266,603
109,020
Total assets
10,191,982
7,238,780
Current liabilities
Trade and other payables
17
747,947
2,472,473
Borrowings
18
3,313,550
3,539,458
Short term provisions
19
716,587
489,533
Lease liabilities
22
27,621
‐
Liabilities classified as held for sale
3c
‐
‐
Total current liabilities
4,805,705
6,501,464
Non‐current liabilities
Borrowings
18
‐
‐
Lease liabilities
22
11,775
‐
Rehabilitation provision
21
‐
‐
Total non‐current liabilities
11,775
‐
Total liabilities
4,817,480
6,501,464
Net assets
5,374,502
737,316
Equity
Contributed equity
23
302,776,147
290,860,299
Reserves
23
(451,487)
6,174,940
Accumulated losses
(297,224,882)
(296,543,867)
Capital and reserves attributable to owners of Morella Corporation Limited
5,099,778
491,372
Non‐controlling interest
274,724
245,944
Total equity
5,374,502
737,316
The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes.
.
Morella Corporation Limited and Controlled Entities
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2022
22
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
Contributed
equity
$
Accumulated
losses
$
Option &
performance
rights reserve
$
Change in fair
value ‐ market
valuation
$
Foreign
currency
translation
reserve
$
Non‐
controlling
interests
$
Total
$
Balance as at 30 June 2020
290,860,299 (223,741,381)
1,802,346
1,393,186
(5,553,782)
225,881
64,986,549
Net Loss
‐
(72,802,486)
‐
‐
‐
(197,730)
(73,000,216)
Other Comprehensive income Fair Value
‐
‐
‐
3,768,316
‐
‐
3,768,316
Other Comprehensive income Foreign
Exchange
‐
‐
‐
‐
4,965,903
217,793
5,183,696
Total comprehensive income for the year
‐
(72,802,486)
‐
3,768,316
4,965,903
20,063
(64,048,204)
Transactions with owners in their capacity
as owners:
Contributions of equity, net of
transaction costs
‐
‐
‐
‐
‐
‐
Share based payments transactions
‐
‐
(201,028)
‐
‐
‐
(201,028)
Sub‐total
‐
‐
(201,028)
‐
‐
‐
(201,028)
Balance as at 30 June 2021
290,860,299 (296,543,867)
1,601,318
5,161,501
(587,879)
245,944
737,316
Balance as at 30 June 2021
290,860,299
(296,543,867)
1,601,318
5,161,501
(587,879)
245,944
737,316
Net Loss
‐
(681,014)
‐
‐
‐
(1,980)
(682,994)
Other Comprehensive income Fair Value
‐
‐
‐
(2,354,653)
‐
‐
(2,354,653)
Other Comprehensive income Foreign
Exchange
‐
‐
‐
‐
(4,631,774)
30,760
(4,601,015)
Total comprehensive income for the
year
‐
(681,014)
‐
(2,354,653)
(4,631,774)
28,780
(7,638,662)
Transactions with owners in their
capacity as owners:
Contributions of equity, net of
transaction costs
8,598,963
‐
‐
‐
‐
‐
8,598,963
Share based payments transactions –
Security Shares
2,000,000
‐
‐
‐
‐
‐
2,000,000
Employee share schemes – value of
employee services
56,000
‐
‐
‐
‐
‐
56,000
Option based payments transactions
‐
‐
360,000
‐
‐
‐
360,000
Share based payments transactions
1,260,885
‐
‐
‐
‐
‐
1,260,885
Sub‐total
11,915,848
‐
360,000
‐
‐
‐
12,275,848
Balance as at 30 June 2022
302,776,147 (297,224,882)
1,961,318
2,806,848
(5,219,653)
274,724
5,374,502
Morella Corporation Limited and Controlled Entities
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2022
23
Note
2022
$
2021
$
Cash flows from operating activities
Receipts from customers
1,539,163
49,004,866
Payments to suppliers and employees
(4,241,907)
(54,993,396)
Sundry income
6,549
2,403
Interest received
‐
192
Interest paid
(262,042)
‐
Proceeds from jobkeeper
‐
723,000
Net cash provided by / (used in) in operating activities
29(b)
(2,958,237)
(5,262,935)
Cash flows from investing activities
Expenditure on exploration and evaluation activities
(1,741,827)
(299,784)
Purchase of property, plant, equipment and mine properties
(29,561)
(696,271)
Proceeds from disposal of subsidiaries
‐
202,419,388
Purchase of held to maturity investments
(29,295)
‐
Proceeds from available for sale investments
437,380
‐
Proceeds from sale of property, plant and equipment
86,812
‐
Net cash (used in) / provided by investing activities
(1,276,491)
201,423,333
Cash flows from financing activities
Proceeds from the issue of shares
8,524,747
‐
Proceeds from borrowings
28/29(c)
200,000
7,163,881
Repayment of borrowings
28/29 (c)
(700,000)
(204,436,487)
Payment of lease liabilities
(6,542)
(132,760)
Transaction costs related to borrowing
‐
(739,362)
Net cash provided by / (used in) financing activities
8,018,205
(198,144,728)
Net increase / (decrease) in cash and cash equivalents held
3,783,477
(1,984,330)
Cash and cash equivalents at the beginning of year
29(a)
380,845
2,308,386
Effect of exchange rate changes on cash holdings in foreign currencies
98,006
56,789
Cash and cash equivalents at the end of year
29(a)
4,262,328
380,845
Non‐cash investing and financing activities
Share based payments
24
(3,676,885)
201,028
Interest on loan facility capitalised
‐
(10,952,587)
Transaction fees ‐ borrowings
‐
(7,690,621)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
24
This financial report includes the consolidated financial statements and notes of Morella Corporation Limited (the Company) and
controlled entities (‘Consolidated Group’ or ‘Group’). Morella Corporation Limited is a company limited by shares, incorporated and
domiciled in Australia, whose shares are publicly traded on the Australian Securities Exchange.
The separate financial statements of the parent entity, Morella Corporation Limited, have not been presented within this financial
report as permitted by amendments made to the Corporations Act 2001.
The Group is a for‐profit entity for financial reporting purposes under Australian Accounting Standards. The financial statements were
authorised for issue on 23 September 2022 by the directors of the Company.
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
a)
Basis of preparation
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The following is a summary of the material accounting policies adopted by the Consolidated Group in the preparation of
the financial report. The financial report has been prepared on an accruals basis. The accounting policies have been
consistently applied, unless otherwise stated.
i)
Going concern principle of accounting
The Directors believe it is appropriate to prepare the consolidated financial statements on a going concern basis, which
contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the
ordinary course of business.
The Group has incurred a loss of $682,994 (2021: $73,000,216), had cash outflows from operating activities of $ 2,958,237
(2021: $ 5,262,935), concluded the year with cash and cash equivalents of $ 4,253,365 (2021: $372,419) and loans
outstanding at year‐end of $ 3,313,550 (2021: 3,539,458).
The Group has raised capital of $8,598,963 during the current period and $7,500,000 subsequently to the reporting date.
The Directors believe that the Group has sufficient cash and will be able to meet its requirements to continue as a going
concern.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
25
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ii)
New accounting standards for application in the current period
New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards
and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early
adopted by the consolidated entity for the annual reporting period ended 30 June 2022. The consolidated entity
has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
iii) Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through
other comprehensive income, investment properties, certain classes of property, plant and equipment and
derivative financial instruments.
iv) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas
including a high degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements are disclosed in Note 1(m).
b)
Carrying value of exploration and evaluation expenditure
The Group has capitalised exploration and evaluation expenditure of $2,192,888 as at 30 June 2022 (2021: $79,946).
This amount includes additions of $2,159,223 for administration and exploration costs and tenement costs written
off of $46,281 (2021: $nil) for the lithium project areas during the year. Exploration and evaluation expenditure is
capitalised until the Company has completed its assessment of the existence or otherwise of recoverable resources.
The ultimate recovery of the carrying value of exploration expenditure is dependent upon the successful
development and commercial exploitation or, alternatively, sale of the interest in the tenements.
Until exploration and evaluation activities have reached a stage where the assessment is complete, including the
forecasting of cash flows to assess the fair value of the expenditure, there is an uncertainty as to the carrying value
of the expenditure.
The Directors are of the opinion that the exploration expenditure is recoverable for the amount stated in the
financial report.
c)
Principles of consolidation
i)
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Morella Corporation
Limited (‘Company’ or ‘Parent Entity’) as at 30 June 2022 and the results of the subsidiaries for the year then ended.
Morella Corporation Limited and its subsidiaries together are referred to in this financial report as the Group or
Consolidated Entity.
The Group controls an entity when the Group is exposed to or has rights to variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity.
A list of controlled entities is contained in Note 27 to the financial statements. All Australian controlled entities have
a June financial year‐end and all other controlled entities have a December financial year end.
All inter‐company balances and transactions between entities in the Group, including any unrealised profits or
losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where
necessary to ensure consistencies with those policies applied by the Group.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
26
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Where controlled entities have entered or left the Group during the year, their operating results have been included
from the date control was obtained or until the date control ceased.
Non‐controlling interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity
interests held by persons outside the Group, are shown separately within the equity section of the Consolidated
Balance Sheet and in the Consolidated Statement of Profit and Loss. Losses applicable to the non‐controlling interest
in a consolidated subsidiary are allocated against the controlling interest except to the extent that the non‐
controlling interest has a binding obligation and is able to make additional investment to cover the losses. If in future
years the subsidiary reports profits, such profits are allocated to the controlling interest until the non‐controlling
interest’s share of losses previously absorbed by the controlling interest have been recovered.
The acquisition method of accounting is used to account for business combinations by the Group.
ii)
Associates
Associates are all entities over which the Group has significant influence but not control or joint control, generally
accompanying a shareholding between 20% and 50% of voting rights. Investments in associates are accounted for
using the equity method of accounting, after initially being recognised at cost. The Group’s investments in associates
includes goodwill identified on acquisition.
The Group’s share of its associates post‐acquisition profit or losses is recognised in profit or loss, and its share of
post‐acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post‐
acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from
associates are recognised as a reduction in the carrying amount of the investment.
iii)
Changes in ownership interests
The Group treats transactions with non‐controlling interests that do not result in a loss of control as transactions
with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non‐controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non‐controlling interests and any consideration paid or
received is recognised in a separate reserve within equity attributable to the owners of Morella Corporation Limited.
When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is
remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes
the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate,
jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive
income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or
liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to
profit or loss.
If the ownership interest in a jointly controlled entity or an associate is reduced but joint control or significant
influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive
income are reclassified to profit or loss where appropriate.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
27
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
d)
Income tax
The charge for current income tax expense is based on the result for the year adjusted for any non‐assessable or
disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance
date for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
and to unused tax losses.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will
be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no
effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates (and laws) that have been enacted, or substantially enacted by the end of the
reporting period and are expected to apply to the period when the asset is realised, or liability is settled. Deferred tax is
credited in the income statement except where it relates to items that may be credited directly to equity, in which case
the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against
which deductible temporary differences and unused tax losses can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no
adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient
future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by
the law.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities
are offset where the Group has a legally enforceable right to offset and intends to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Morella Corporation Limited and some of its wholly‐owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. Each entity in the Group recognises its own current and deferred
tax amounts, except for any deferred tax liabilities (or assets) resulting from unused tax losses and tax credits, which are
immediately assumed by the parent entity. The current tax liability of each Group entity is then subsequently assumed by
the parent entity. The Group notified the Australian Tax Office that it had formed an income tax consolidated group to
apply from 1 July 2005. The tax consolidated group has entered a tax sharing agreement under which the wholly‐owned
entities fully compensate Morella Corporation Limited for any current tax payable assumed and are compensated by
Morella Corporation Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused
tax credits that are transferred to Morella Corporation Limited under the tax consolidated legislation.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the
head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require
payment of interim funding amounts to assist with its obligations to pay tax instalments.
Assets or liabilities arising under tax funding agreements within the tax consolidated entities are recognised as current
amounts receivable from or payable to other entities in the Group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly‐owned tax consolidated entities.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
28
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
e)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments has been identified as the Board of Directors.
f)
Property, plant, equipment and mine properties
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated
depreciation and impairment losses.
Property
Freehold land and buildings are measured on the cost basis.
The carrying amount of land and buildings is reviewed annually by directors to ensure it is not in excess of the recoverable
amount from these assets.
Plant and equipment
Plant and equipment are measured on the cost basis. Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to the income statement during the financial period in which they are incurred.
The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of the recoverable amount
from these assets.
Mine Properties
Mine properties consist of two categories being mine properties in production and mine development.
Mine development expenditure relates to costs incurred to access a mineral resource. It represents those costs incurred
after the technical and commercial viability of extracting the mineral resource has been demonstrated and an identified
mineral reserve is being prepared for production (but is not yet in production). Development expenditure is capitalised as
either a tangible or intangible asset depending on the nature of the costs incurred. Capitalisation of development
expenditure ceases once the mining property is capable of commercial production, at which point it is transferred into
the relevant category of property, plant, equipment and mine properties depending on the nature of the asset and
depreciated over the useful life of the asset. Development expenditure includes the direct costs of construction, pre‐
production costs, borrowing costs incurred during the construction phase, reclassified exploration and evaluation assets
(acquisition costs) and subsequent development expenditure on the reclassified areas of interest. These costs are not
amortised, the carrying value is assessed for impairment whenever the facts and circumstances suggest that the carrying
amount of the asset may exceed the recoverable amount.
Mine properties in production includes all development expenditure incurred once a mine property is in commercial
production and is immediately expensed to the Statement of Profit and Loss except where it is probable that future
economic benefits will flow to the Group, in which case it is capitalised as mine properties in production. Amortisation is
provided on a unit of production basis which results in an amortisation charge proportional to the depletion of the
economically recoverable mineral resources (comprising proven and probable mineral reserves). A regular review is
undertaken to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. An
impairment exists when the carrying value of mine properties exceeds its estimated recoverable amount. The asset is
then written down to its recoverable amount and the impairment losses are recognised in profit or loss. These assets
include all operating mine related assets that are not included under land, buildings and plant and equipment.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
29
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
f)
Property, plant, equipment and mine properties
Depreciation
The depreciable amount of all property plant and equipment assets excluding freehold land, is depreciated on a straight‐
line basis over their useful lives to the Group commencing from the time the asset is held ready for use. Assets classified
as mine properties in production are depreciated using the units of production method for the life of the mine. Leased
assets are depreciated over the asset’s useful life or over the shorter of the assets useful life and the lease term if there
is no reasonable certainty that the Group will obtain ownership at the end of the lease term.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Plant and equipment
10% ‐ 50%
Leased plant and equipment
25%
Mine properties
units of production
The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses
are included in profit or loss.
g)
Exploration and evaluation expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each separately identifiable
area of interest. These costs are only carried forward where the right of tenure for the area of interest is current and to
the extent that they are expected to be recouped through the successful development and commercial exploitation of
the area, or alternatively sale of the area, or where activities in the area have not yet reached a stage that permits
reasonable assessment of the existence of economically recoverable reserves.
Exploration and evaluation expenditure assets acquired in a business combination are recognised at their fair value at the
acquisition date.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable, the exploration and evaluation assets attributable to that area of interest are first tested for impairment
and then reclassified to mining development.
Accumulated costs in relation to an abandoned area are written off in full against the result in the year in which the
decision to abandon the area is made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
30
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
h)
Leases
The Group lease various offices and a warehouse. Rental contracts are typically made for fixed terms but may have
extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for
borrowing purposes.
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance or operating leases.
Payments made under operating leases (net of any incentive received from the lessor) were charged to the profit or loss
on a straight-line basis over the period of the lease.
From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and
the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments.
•
Fixed payments (including in-substance fixed payments), less any lease incentives receivable
•
Variable lease payment that are based on an index or a rate.
•
Amounts expected to be payable by the lessee under residual value guarantees.
•
The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
•
Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the
lessee’s incremental borrowing rate is used, being the rate that the lessees would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
•
The amount of the initial measurement of lease liability.
•
Any lease payments made at or before the commencement date less any lease incentives received.
•
Any initial direct costs, and
•
Restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short term leases are leases with a lease term of 12 months or less. Low-value assets comprise
IT equipment.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
31
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
i)
Impairment of non-financial assets
Goodwill and 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
assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised immediately in profit or loss for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash
generating units, “CGUs”). For the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated
are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for
internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is
allocated to CGUs that are expected to benefit from the synergies of the combination.
Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment
at the end of each reporting period.
j)
Financial assets 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. Such assets are subsequently measured
at either amortised cost or fair value depending on their classification. Classification is determined based on both the
business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless
an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as
financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where
they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii)
designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the consolidated
entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial
recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance
depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial
instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable
information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is
attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit
impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's
lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability
weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective
interest rate.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
32
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is
recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the
loss allowance reduces the asset's carrying value with a corresponding expense through profit or loss.
k)
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a
substantial period of time to prepare for their intended use or sale, are added to the cost of those assets and amortised
over the life of the asset, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised as an expense in the period in which they are incurred.
l)
Employee benefits
i)
Wages and salaries, annual leave and sick leave
Liabilities for employee benefits for wages, salaries, annual leave and accumulating sick leave that are expected to
be settled within 12 months of the reporting date represent present obligations resulting from employees’ services
provided to the reporting date and are calculated at undiscounted amounts based on wage and salary rates that the
Group expects to pay as at reporting date including related on costs, such as superannuation, workers
compensation, insurance and payroll tax and are included in trade and other payables. Non-accumulating, non-
monetary benefits such as housing and cars are expensed by the Group as the benefits are used by the employee.
Employee benefits payable later than 12 months have been measured at the present value of the estimated future
cash outflows to be made for those benefits. In determining the liability, consideration is given to employee salary
and wage increases and the probability that the employee may satisfy any vesting requirements. Those cash flows
are discounted using market yields with terms to maturity that match the expected timing of cash flows attributable
to employee benefits.
ii)
Long service leave
The Group’s net obligation in respect of long-term service benefits is the amount of future benefit that employees
have earned in return for their service to the reporting date. The obligation is calculated using expected future
increases in wages and salary rates including related on costs and expected settlement dates and is discounted using
an appropriate discount rate.
The current liability for long service leave represents all unconditional obligations where employees have fulfilled
the required criteria and also those where employees are entitled to a pro rata payment in certain circumstances
and is included in the current provisions. The non-current provision for long service leave includes the remaining
long service leave obligations.
iii)
Superannuation
Contributions made by the Group to defined contribution superannuation funds are recognised as an expense in
the period in which they are incurred.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
33
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
iv)
Equity‐settled compensation
The Group operates an employee share ownership plan. Share‐based payments to employees are measured at the
fair value of the instruments issued and amortised over the vesting periods. Share‐based payments to non‐
employees are measured at the fair value of goods or services received or the fair value of the equity instruments
issued, if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at
the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair
value of options is determined using the Black‐Scholes pricing model. The number of shares and options expected
to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services
received as consideration for the equity instruments granted is based on the number of equity instruments that
eventually vest.
m)
Significant accounting estimates and judgements
The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge
and best available current information. Estimates assume a reasonable expectation of future events and are based on
current trends and economic data, obtained both externally and within the Group. The resulting accounting estimates,
will, by definition, seldom equal the related actual results. Management has identified the following significant accounting
policies for which significant judgements, estimates and assumptions are made.
i)
Significant accounting estimates and assumptions
Critical accounting estimates and judgements
Following is a summary of the key assumptions concerning the future, and other key sources of estimation and
accounting judgements at reporting date that have not be disclosed elsewhere in these financial statements.
a.
Exploration and evaluation expenditure
The application of the Group’s accounting policy for exploration and evaluation expenditure requires
judgement in determining whether it is likely that future economic benefits are likely in that area of interest,
which may be based on assumptions about future events or circumstances. Estimates and assumptions may
change if new information becomes available. If after expenditure is capitalised information becomes
available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the
Consolidated Statement of Profit and Loss in the period when the new information becomes available.
b.
Impairment of non‐financial assets
The Group assesses at each reporting date, whether there are indications that an asset may be impaired. If
impairment indicators or triggers exist, or when annual impairment testing for an asset is required, the Group
estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an assets or cash
generating unit’s (CGU’s) fair value less costs of disposal and its value in use. It is not always necessary to
determine both an asset’s fair value less costs to sell and its value in use. If either of these amounts exceeds
the asset’s carrying amount, the asset is not impaired, and it is not necessary to estimate the other amount.
The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets. When the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
34
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n)
Significant accounting estimates and judgements (continued)
c.
Income taxes
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant
judgement is required in determining the provision for income taxes. There are transactions and calculations
undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The
Group estimates its tax liabilities based on the Group’s understanding of the tax law. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such differences will
impact the current and deferred income tax assets and liabilities in the period in which such determination is
made. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will
be available against which deductible temporary differences and unused tax losses can be utilised.
d.
Share‐based payment transactions
From time to time the Company has issued options to directors and employees. The Company measures fair
value of share‐based payments using the Black‐Scholes Pricing Model, using the assumptions detailed in Note
23. This formula takes into account the terms and conditions under which the instruments were granted.
e.
Coronavirus (COVID‐19)
Judgement has been exercised in considering the impacts of the COVID‐19 has had or may have on the
consolidated entity based on known information. This consideration extends to the nature of product sold,
customers, supply chains, staffing and geographical regions in which the consolidated entity operates. COVID‐
19 has impacted in the financial statements mainly in the ability to progress and complete the sale of the
Tabalong Group.
f.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is
based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate
an overall expected credit loss rate for each group. These assumptions include recent sales experience,
historical collection rates, the impact of the Coronavirus (COVID‐19) and forward‐looking information that is
available. The allowance for expected credit losses, as disclosed in Note 9, is calculated based on the
information available at the time of preparation. The actual credit losses in future years may be higher or
lower.
g.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation
charges for its property, plant and equipment and finite life intangible assets. The useful lives could change
significantly as a result of technical innovations or some other event. The depreciation and amortisation
charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or
non‐strategic assets that have been abandoned or sold will be written off or written down.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
35
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
.
n)
Non‐current assets (or disposal groups) held for sale and discontinued operations
Non‐current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured
at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets
arising from employee benefits, financial assets and investment property that are carried at fair value and contractual
rights under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write‐down of the asset (or disposal group) to fair value
less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised
by the date of the sale of the non‐current asset (or disposal group) is recognised at the date of derecognition.
Non‐current assets (including those that are part of a disposal group) are not depreciated or amortised while they are
classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held
for sale continue to be recognised.
Non‐current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented
separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are
presented separately from other liabilities in the balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single co‐ordinated plan to
dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately in the statement of profit or loss.
o)
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
p)
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short‐term highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value, net of bank overdrafts.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
36
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
q)
Revenue
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated
entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the
transaction price which takes into account estimates of variable consideration and the time value of money; allocates the
transaction price to the separate performance obligations on the basis of the relative stand‐alone selling price of each
distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a
manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events.
Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of
variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it
is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The
measurement constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.
The following is a summary of the revenue recognition for each revenue stream:
(a) Mining services revenue – revenue from mining services provided by the Group is recognised at a point in time upon
delivery of the service to the customer, in accordance with the terms of the contract to provide services.
(b) Royalty revenue – revenue from royalties are recognised at a point in time when entitlement to a royalty is
established in accordance with the terms of the agreement.
(c) Sales of product – revenue from the sale of product is recognised at a point in time, being when the Group delivers
the product to the buyer. In accordance with the contract, delivery is deemed to occur when the product passes the
ship’s rail in the port of shipment. At this point, the performance obligation per the off‐take agreement (contract) is
satisfied relating to the delivery of product. A variable consideration of 5% of the total invoice is recognised as
revenue to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue
recognised will not occur.
r)
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the relevant taxation authorities. In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown
inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
37
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
s)
Foreign operations
The financial performance and position of foreign operations whose functional currency is different from the Group’s
presentation currency are translated as follows:
assets and liabilities are translated at exchange rates prevailing at balance sheet date; and
income and expenses are translated at monthly average exchange rates for the period.
Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency
translation reserve as a separate component of equity. These differences are recognised in the income statement upon
disposal of the foreign operation.
t)
Foreign currency transactions and balances
The functional currency of each of the Group’s entities is measured using the currency of the primary economic
environment in which the entity operates. The consolidated financial statements are presented in Australian dollars which
is the parent entity’s functional and presentation currency.
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of
the transaction. Foreign currency monetary items are translated at the period end exchange rate. Non‐monetary items
measured at historical cost continue to be carried at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income statement, except where
deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non‐monetary items are recognised directly in equity to the extent that
the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.
u)
Goodwill and intangibles
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable
assets of the acquired subsidiary or associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is not
amortised; it is tested for impairment at each reporting date or more frequently if events or changes in circumstances
indicate that it might be impaired and is carried at cost less accumulated impairment losses. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units (“CGUs”) for the purpose of impairment testing. The allocation is made to
those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose.
v)
Financial liabilities
Non‐derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or
losses are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.
w)
Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
38
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
x)
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.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and
transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair
value measurement.
For recurring and non‐recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
y)
Current and non‐current classification
Assets and liabilities are presented in the statement of financial position based on current and non‐current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged
or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non‐current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or
there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All
other liabilities are classified as non‐current.
Deferred tax assets and liabilities are always classified as non‐current.
z) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days
overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
39
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
aa) 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.
bb) 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.
cc)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Morella Corporation 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.
dd) Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
Cash flow hedges
Cash flow hedges are used to cover the consolidated entity's exposure to variability in cash flows that is attributable to
particular risks associated with a recognised asset or liability or a firm commitment which could affect profit or loss. The
effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income through the
cash flow hedges reserve in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity
are transferred out of equity and included in the measurement of the hedged transaction when the forecast transaction
occurs.
Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that
each hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer
expected to occur, the amounts recognised in equity are transferred to profit or loss.
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes
ineffective and is no longer a designated hedge, the amounts previously recognised in equity remain in equity until the
forecast transaction occurs.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
40
2.
FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise receivables, payables, loans, finance leases, financial asset at fair value
through other comprehensive income, cash and short‐term deposits. These activities expose the Group to a variety of financial
risks: market risk (which includes currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group manages
these risks in accordance with the Group’s financial risk management policy. The Group uses different methods and assumptions
to measure and manage different types of risks to which it is exposed at each balance date.
The Board reviews and approves policies for managing each of the Group’s financial risk areas. The Group holds the following
financial instruments:
2022
$
2021
$
FINANCIAL ASSETS
Cash and cash equivalents
4,253,365
372,419
Trade and other receivables
251,613
799,358
Held to maturity investments
29,295
‐
Derivative financial instruments
329,789
‐
Other financial assets
2,900,008
5,691,673
7,764,070
6,863,450
FINANCIAL LIABILITIES
Trade and other payables (Note 17)
747,947
2,472,473
Lease liabilities
39,396
‐
Borrowings
3,313,550
3,539,458
4,100,893
6,011,931
a)
Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates, securities prices and coal prices will
affect the Group’s income or the value of its holdings of financial investments.
i)
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily in respect to the US dollar. The Group has a number of US dollar denominated bank accounts. Liabilities
for some loans are denominated in currencies other than the Australian dollar and a weakening of the Australian
dollar against other currencies has an adverse impact on earnings and cash flow settlement.
The Group’s overseas subsidiaries have a US dollar functional currency. This exposes the Group to foreign exchange
fluctuations upon conversion to AUD which is reflected within the foreign currency translation reserve.
At 30 June 2022, the Group held funds in foreign currency amounting to US$369,072 (2021: US$27,700).
The Group does not currently enter into any hedging arrangements.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
41
2.
FINANCIAL RISK MANAGEMENT (continued)
Foreign currency risk sensitivity analysis
At 30 June 2022, the effect on profit and equity as a result of changes in the value of the Australian dollar to the US
dollar that management considers to be reasonably possible, with all other variables remaining constant is as
follows:
2022
$
2021
$
Change in profit
—
Improvement in AUD to USD by 11%
104,744
52,162
—
Decline in AUD to USD by 11%
(104,744)
(52,162)
Change in equity
—
Improvement in AUD to USD by 11%
104,744
52,162
—
Decline in AUD to USD by 11%
(104,744)
(51,162)
ii)
Price risk
The Group is exposed to equity securities price risk. The Group currently does not have any hedges in place against
the movements in the spot price.
The Group's equity investments of $2,900,008 (2021: $5,691,673) are publicly traded on the United States of
America OTCBB and are not quoted on any market Index. The table below summarises the impact of
increases/decreases in the value on the Group's equity investments as at balance date. The analysis is based on the
assumption that the equity pricing had increased/decreased by 10% with all other variables held constant and all
the Group's equity instruments moved according to the historical correlation with the index.
2022
$
2021
$
Change in profit
—
Increase in equity value by 10%
‐
‐
—
Decrease in equity value by 10%
‐
‐
Change in equity
—
Increase in equity value by 10%
290,001
569,167
—
Decrease in equity value by 10%
(290,001)
(569,167)
iii)
Interest rate risk
At balance date the Group’s debt was held at a fixed rate. For further details on interest rate risk refer to Note 18.
Interest rate sensitivity analysis
At 30 June 2022, the effect on profit and equity as a result of changes in the interest rate that management considers
to be reasonably possible, with all other variables remaining constant would be as follows:
2022
$
2021
$
Change in profit
—
Increase in interest rate by 1%
(33,596)
(30,395)
—
Decrease in interest rate by 1%
33,596
30,395
Change in equity
—
Increase in interest rate by 1%
(33,596)
(30,395)
—
Decrease in interest rate by 1%
33,596
30,395
Term deposits have been treated as a floating rate due to the short‐term nature of the deposits.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
42
2.
FINANCIAL RISK MANAGEMENT (continued)
b)
Credit risk
Credit risk refers to the risk that a third party will default on its contractual obligations resulting in financial loss to the
Group. The Group has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient
collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults.
The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents
the Company's maximum exposure to credit risk.
c)
Liquidity risk
Liquidity risk includes the risk that the Group will not be able to meet its financial obligations as they fall due. The Group
will be impacted in the following ways:
i)
Will not have sufficient funds to settle transactions on the due date;
ii)
Will be forced to sell financial assets at a value which is less than what they are worth; or
iii)
May be unable to settle or recover a financial asset at all.
The Group manages liquidity risk by monitoring forecast cash flows.
d)
Financial instrument composition and maturity analysis
The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of
maturity, as well as management’s expectations for the settlement period for all other financial instruments. As such the
amounts may not reconcile to the balance sheet.
The Group
Weighted average
effective interest
rate
Floating
interest rate
Fixed interest rate maturing
Total
Within 1 year
1 to 5 years
Over 5 years
Non‐interest bearing
2022
%
2021
%
2022
$
2021
$
2022
$
2021
$
2022
$
2021
$
2022
$
2021
$
2022
$
2021
$
2022
$
2021
$
Financial assets:
Cash & cash
equivalents
‐
‐
4,253,365
372,419
‐
‐
‐
‐
‐
‐
‐
‐
4,253,365
372,419
Trade and other
receivables
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
251,613
799,358
251,613
799,358
Financial assets
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
2,900,008
5,691,673
2,900,008
5,691,673
Derivative
financial
instruments
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
329,789
‐
329,789
‐
Term deposit
.25%
.25%
‐
‐
29,295
‐
‐
‐
‐
‐
‐
‐
29,295
‐
Total financial
assets
4,253,365
372,419
29,295
‐
‐
‐
‐
‐
3,481,410
6,491,031
7,764,070
6,863,450
Financial
liabilities:
Trade & other
payables
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
747,947
2,472,473
747,947
2,472,473
Lease liabilities
‐
‐
‐
‐
27,621
‐
11,775
‐
‐
‐
‐
‐
39,396
‐
Borrowings
8%
8%
‐
‐
3,313,550
3,539,458
‐
‐
‐
‐
‐
‐
3,313,550
3,539,458
Total financial
liabilities
‐
‐
3,341,171
3,539,458
11,775
‐
‐
‐
747,947
2,472,473
4,100,893
6,011,931
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
43
2.
FINANCIAL RISK MANAGEMENT (continued)
2022
$
2021
$
Trade and other payables are expected to be paid as follows:
Less than 6 months (note 17)
747,947
2,472,473
More than 6 months (note 17)
‐
‐
747,947
2,472,473
e)
Fair value measurements
i)
Fair value hierarchy
The Group uses various methods in estimating the fair value of financial instruments. AASB 13 Fair Value Measurement
requires disclosure of fair value measurements by level in accordance with the following fair value measurement
hierarchy:
a)
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
b)
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices) (level 2); and
c)
Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(level 3)
The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at
30 June 2022 and 30 June 2021.
2022
Level 1
$
Level 2
$
Level 3
$
Total
$
Assets
Listed investments
2,900,008
‐
‐
2,900,008
Total assets
2,900,008
‐
‐
2,900,008
2021
Assets
Listed investments
5,691,673
‐
‐
5,691,673
Total assets
5,691,673
‐
‐
5,691,673
ii)
Valuation techniques
The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the
reporting period. The quoted market price used for financial assets and liabilities held by the Group is the closing
price. These instruments are included in level 1.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
44
3.
DISCONTINUED OPERATIONS
a)
Description
During the reporting period the board has made several information packages available to various groups for the purpose
of attracting offers for the sale of the Tabalong tenements in Kalimantan, Indonesia. The board considers that the
presentation of the Tabalong Group as held for sale confirms its intent to dispose of these assets.
The Group obtained an independent expert valuation of the Tabalong Group which included a range of valuation cases.
The Group adopted a middle range (preferred) valuation of US$2,750,000 a 100% equity basis.
At the end of the reporting period the Board considered the valuation of the Tabalong Group and the ability to progress
and complete the sale in the current transactional climate and attract a suitable counterparty in the near term. To present
a conservative position, the Board has impaired the value of the Tabalong Group to Nil whilst continuing to actively market
the project.
Financial information relating to the discontinued operation for the period to the date of disposal is set out below.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
45
3.
DISCONTINUED OPERATIONS (continued)
b)
Financial performance and cash flow information of discontinued operations
The financial performance and cash flow information presented are for the year ending 30 June 2022.
2022
2022
2021
2021
$
$
$
$
ALO
Tabalong
ALO
Tabalong
Revenue
Sale of Product
‐
‐
47,168,575
‐
Cost of sales
‐
‐
Mining and processing costs
‐
‐
(33,985,923)
‐
Royalty expenses
‐
‐
(2,310,755)
‐
Depreciation and amortisation
‐
‐
(4,426,124)
‐
Impairment Expense
‐
(601,530)
‐
(3,393,905)
Product inventory movement
‐
‐
(16,163,391)
‐
Total cost of sales
‐
(601,530)
(56,886,193)
(3,393,905)
Profit / (Loss)
‐
‐
(9,717,618)
‐
Other Income
‐
‐
513,000
‐
Expenses
Administration
‐
‐
(3,395,205)
‐
Expenses
‐
18,382
‐
12,649
(Loss) before foreign exchange and finance costs
‐
(583,148)
(12,599,823)
(3,381,256)
Foreign exchange gain
‐
‐
28,696,549
‐
Profit / (Loss) before Finance costs
‐
(583,148)
16,096,726
(3,381,256)
Finance costs
Interest on funding facility
‐
‐
(20,404,164)
‐
Amortisation of transaction costs
‐
‐
(28,859,442)
(32)
Net (Loss) before income tax
‐
(583,148)
(33,166,880)
(3,381,224)
Loss on disposal before income tax
Debt forgiveness
‐
‐
41,617,240
‐
Impairment expense
‐
‐
(64,836,912)
‐
Loss on disposal before income tax
‐
‐
(23,219,672)
‐
Income Tax expense
‐
‐
‐
‐
(Loss) from discontinued operations after income tax
‐
(583,148)
(56,386,552)
(3,381,224)
Net cash (outflow) from financing activities
‐
537
‐
(1,000)
Net decrease in cash generated by the division
‐
537
‐
(1,000)
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
46
3.
DISCONTINUED OPERATIONS (continued)
c)
Carrying amounts of assets and liabilities
2022
2022
2021
2021
$
$
$
$
ALO
Tabalong
ALO
Tabalong
Cash and cash equivalents
‐
8,963
‐
8,426
Exploration and evaluation
‐
3,404,508
‐
2,148,432
Total assets of disposal group held for sale
‐
3,413,471
‐
2,156,858
Trade and other payables
‐
1,684,282
‐
572,344
Borrowings
‐
1,729,189
‐
1,584,514
Total liabilities
‐
3,413,471
‐
2,156,858
Net Assets
‐
‐
‐
‐
2022
$
2021
$
Details of the disposal – ALO
Total sale consideration
‐
200,725,201
Carrying amount of net assets disposed
‐ (265,562,113)
Debt forgiven
‐
41,617,240
‐
(23,219,672)
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
47
4.
SEGMENT INFORMATION
The Group reports the following operating segments to the chief operating decision maker, being the Board of Directors of
Morella Corporation Limited, in assessing performance and determining the allocation of resources. Unless otherwise stated,
all amounts reported to the Board are determined in accordance with accounting policies that are consistent to those adopted
in the annual financial statements of the Group.
The exploration services segment provides a range of drilling services to its customers, predominately mining and exploration
companies. The mineral exploration segment revenue comprises royalties received, and interest earned on funds raised to carry
out the exploration activities.
An internally determined service rate is set for all intersegment transactions. All such transactions are eliminated on
consolidation of the Group’s financial statements.
Exploration
services
$
Mineral
exploration
$
Eliminations
$
Total
$
2022
Revenue
External sales
288,937
‐
‐
288,937
Other income
74,726
1,165,650
‐
1,240,376
Other segments
‐
‐
‐
‐
Total segment revenue
363,663
1,165,650
‐
1,529,313
Unallocated revenue
‐
Total consolidated revenue
1,529,313
Segment result
(29,501)
(5,091,309)
‐
(5,120,810)
Other segments
Unallocated expenses net of unallocated
revenue
‐
Profit / (loss) before income tax and finance
costs
(5,120,810)
Finance costs
Finance costs
(274,859)
Net foreign exchange gain/(loss)
5,295,823
Income tax revenue/(expense)
‐
Profit / (loss) after income tax
(99,846)
Profit / (loss) from discontinued
operations
(583,148)
Net profit / (loss) for the year
(682,994)
Assets and liabilities
Segment assets
276,694
9,915,288
‐
10,191,982
Unallocated assets
‐
Total assets
10,191,982
Segment liabilities
897,122
3,920,358
‐
4,817,480
Unallocated liabilities
‐
Total liabilities
4,817,480
Other segment information
Capital Expenditure
‐
29,651
‐
29,651
Exploration expenditure
‐
2,112,888
‐
2,112,888
Depreciation and amortisation
16,818
27,249
‐
44,067
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
48
4.
SEGMENT INFORMATION (continued)
Exploration
services
$
Mineral
exploration
$
Eliminations
$
Total
$
2021
Revenue
External sales
133,382
‐
‐
133,382
Other income
7,851
970
‐
8,821
Other segments
‐
‐
‐
‐
Total segment revenue
141,233
970
‐
142,203
Unallocated revenue
‐
Total consolidated revenue
142,203
Segment result
(235,626)
(4,226,833)
‐
(4,462,459)
Other segments
Unallocated expenses net of unallocated
revenue
‐
Profit / (loss) before income tax and finance
costs
(4,462,459)
Finance costs
(8,769,981)
Income tax revenue/(expense)
‐
Profit / (loss) after income tax
(13,232,440)
Profit / (loss) from discontinued
operations
(59,767,776)
Net profit / (loss) for the year
(73,000,216)
Assets and liabilities
Segment assets
369,080
6,869,699
‐
7,238,779
Unallocated assets
‐
Total assets
7,238,779
Segment liabilities
721,131
5,780,332
‐
6,501,463
Unallocated liabilities
‐
Total liabilities
6,501,463
Other segment information
Exploration expenditure
‐
79,946
‐
79,946
Depreciation and amortisation
36,296
31,014
‐
67,309
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
49
4.
SEGMENT INFORMATION (continued)
Geographical segments
The Group’s geographical segments are determined based on the location of the Group’s assets.
2022
Australia
$
Indonesia
$
USA
$
Other
$
Eliminations
$
Total
$
Revenue
External sales
‐
288,937
‐
‐
‐
288,937
Other income
1,165,650
74,729
‐
‐
‐
1,240,376
Other segments
‐
‐
‐
‐
‐
‐
Total segment revenue
1,165,650
363,663
‐
‐
‐
1,529,313
Unallocated revenue
‐
Total revenue
1,529,313
Segment assets
8,804,882
309,778
1,015,990
61,332
‐
10,191,982
Unallocated assets
‐
Total assets
10,191,982
Segment liabilities
3,735,241
958,552
‐
123,687
‐
4,817,480
Unallocated liabilities
‐
Total liabilities
4,817,480
Capital Expenditure
29,651
‐
‐
‐
‐
29,651
Exploration expenditure
1,096,898
‐
1,015,990
‐
‐
2,112,888
Depreciation and amortisation
27,249
16,818
‐
‐
‐
44,067
2021
Australia
$
Indonesia
$
USA
$
Other
$
Eliminations
$
Total
$
Revenue
External sales
‐
133,382
‐
‐
‐
133,382
Other income
970
7,851
‐
‐
‐
8,821
Other segments
‐
‐
‐
‐
‐
Total segment revenue
970
141,233
‐
‐
‐
142,203
Unallocated revenue
‐
Total revenue
142,203
Segment assets
6,145,217
927,679
‐
165,829
‐
7,238,779
Unallocated assets
‐
Total assets
7,238,779
Segment liabilities
5,087,510
1,272,405
‐
141,548
‐
6,501,463
Unallocated liabilities
‐
Total liabilities
6,501,463
Exploration expenditure
79,946
‐
‐
‐
‐
79,946
Depreciation and amortisation
31,014
36,296
‐
‐
‐
67,309
The Group has a number of customers to whom it provides exploration services. The exploration services group supplies three
external customers who account for 75% (US$157,000), 8% (US$16,000) and 6% (US$12,000) of external revenue (2021: 52%).
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
50
2022
$
2021
$
5.
PROFIT / (LOSS) FROM ORDINARY ACTIVITIES
(a)
Revenue
Revenue from exploration services
288,937
133,382
Revenue from royalties
500,000
‐
Total revenue from ordinary activities
788,937
133,382
(b)
Other income
Sale of royalty right
665,640
‐
Profit on sale of assets
74,726
‐
Other income
10
8,821
Total other revenues from ordinary activities
740,376
8,821
(c)
Cost of sales
Mining and processing costs
‐
‐
Royalty expenses
‐
‐
Depreciation and amortisation
13,860
33,474
Mining services drilling costs
483,026
424,091
Total cost of sales
496,886
457,565
(d)
Other expenses
Depreciation of plant & equipment
30,208
33,835
Total other expenses from ordinary activities
30,208
33,835
(e)
Net foreign exchange gain/(loss)
The net foreign exchange loss is unrealised and relates to the revaluation of
the US$ funding facility and other US$ denominated funds held by the
Group.
(f)
Employee benefits expense
Employee share scheme expense
56,000
(201,028)
Bonus paid by way of issue of shares to directors and staff
‐
‐
Salaries and on‐costs expense
1,576,335
2,657,154
Total employee benefits expense
1,632,335
2,456,126
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
51
6.
EARNINGS / (LOSS) PER SHARE
2022
cents per share
2021
cents per share
(a)
Basic earnings / (loss) per share
From continuing operations, attributable to the ordinary equity holders of the
Company
0.00
(0.44)
From discontinued operations
(0.02)
(2.00)
Total basic earnings per share attributable to the ordinary equity
holders of the Company
(0.02)
(2.44)
(b)
Diluted earnings / (loss) per share
From continuing operations, attributable to the ordinary equity holders of the
Company
0.00
(0.44)
From discontinued operations
(0.02)
(2.00)
Total basic earnings per share attributable to the ordinary equity
holders of the Company
(0.02)
(2.44)
2022
Number
2021
Number
(c)
Weighted average number of ordinary shares used as the denominator in
calculating the basic and diluted earnings per share.
4,265,017,616
2,986,243,275
2022
$
2021
$
(d)
Earnings used in the calculation of basic earnings per share reconciles to net
profit in the income statement as follows:
Net profit / (loss)
(99,846)
(13,232,440)
Less ‐ profit /(loss) from discontinued operations
(583,148)
(59,767,776)
Earnings / (loss) used in the calculation of basic EPS
(682,994)
(73,000,216)
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
52
2022
$
2021
$
7.
INCOME TAX EXPENSE
(a)
The components of tax expense comprise:
Current Tax
Current year
‐
‐
Adjustments in respect of prior periods
‐
‐
Deferred Tax
Current year deferred tax
‐
‐
Total income tax expense / (benefit) per income statement
‐
‐
(b)
Income tax expense / (benefit) is attributable to:
Profit / (loss) from continuing operations
‐
‐
Profit / (loss) from discontinued operations
‐
‐
‐
‐
(c)
The prima facie tax on profit / (loss) before income tax is reconciled to the
income tax as follows:
Profit / (loss) from continuing operations
(99,846)
(13,232,440)
Profit / (loss) from discontinued operations
(583,148)
(59,767,776)
Profit / (loss) before tax
(682,994)
(73,000,216)
Income tax calculated at the Australian rate of 25% (2021 ‐ 30%)
(170,749)
(21,900,065)
The applicable Australian tax rate has reduced to 25% on account of the
Company being considered a base rate entity for the current year for
Australian income tax purposes.
Increase in income tax due to:
Non‐deductible expenses
373,067
6,100,298
Share compensation costs
884,000
(60,308)
Change in tax rate
(9,225,353)
‐
Movement in deferred tax balances not recognised
8,139,035
‐
Effect of current year tax losses not recognised
‐
25,235,909
Under / (over) provision in prior year
‐
(9,375,834)
Income tax expense / (benefit)
‐
‐
Deferred tax assets arising from tax losses are only recognised to the extent
that there are equivalent deferred tax liabilities. The remaining tax losses have
not been recognised as an asset because recovery of the losses is not regarded
as probable:
Tax losses not recognised ‐ at 25% (2021 ‐ 30%)
45,040,448
55,352,119
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
53
7.
INCOME TAX EXPENSE (continued)
(d)
Tax consolidation system
Legislation to allow groups, comprising a parent entity and its Australian resident wholly‐owned entities, to elect to
consolidate and be treated as a single entity for income tax purposes was substantively enacted on 21 October 2002.
Morella Corporation Limited and certain of its wholly‐owned Australian subsidiaries are eligible to consolidate for tax
purposes and have elected to form an income tax group under the Tax Consolidation Regime effective 1 July 2005. The
implementation of the tax consolidation group was formally recognised by the ATO on 22 July 2005 with start date for
income tax consolidation 1 July 2005 and Morella Corporation Limited as the head entity of the group.
Entities within the tax‐consolidated group have entered into a tax‐sharing agreement with the head entity. Under the
terms of this agreement, Morella Corporation Limited and each of the entities in the tax consolidated group has agreed
to pay a tax equivalent payment to or from the head entity, based on standalone tax payer basis. Such amounts are
reflected in amounts receivable from or payable to other entities in the tax consolidated group.
2022
$
2021
$
8.
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
4,253,365
372,419
9.
TRADE AND OTHER RECEIVABLES
Current
Trade and other receivables
827,069
1,156,713
Provision for expected credit losses
(575,456)
(357,355)
251,613
799,358
Refer to Note 1 for more information on the risk management policy of the Group
and the credit quality of the Group's trade receivables. Management have
considered the impact of COVID‐19 on trade and other receivables and do not
anticipate a significant deterioration of recoverability beyond the level of current
provisioning.
0‐30
days
$0
31‐60
days
$0
61‐90
days
$0
90+
days
$0
Total
$0
2022 Consolidated
‐
‐
214,168
37,445
251,613
2021 Consolidated
‐
‐
796,576
2,782
799,358
As at 30 June 2022, $37,000 (2021 $233,000) trade receivables were past due but not impaired.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
54
2022
$
2021
$
10. INVENTORIES
Consumables stores – at cost
‐
6,910,299
Transfer to held for sale
‐
(6,910,299)
Product and processing stock – at lower of cost and net realisable value
‐
‐
‐
‐
11. HELD TO MATURITY INVESTMENTS
Term deposits
29,295
‐
29,295
‐
The term deposits are held to their maturity of less than one year and carry a
weighted average fixed interest rate of 0.25% (2021: 0.25%). Due to their short‐term
nature their carrying value is assumed to approximate their fair value. Information
about the Group’s exposure to credit risk is disclosed in Note 2.
2022
$
2021
$
12. OTHER CURRENT ASSETS
Financial assets (security deposits)
37,306
34,185
Prepayments
49,184
168,308
86,490
202,493
13. FINANCIAL ASSETS
Listed investments at fair value
Carried forward from previous year
5,691,673
1,923,357
Disposal
(437,012)
‐
Changes in fair value
(2,354,653)
3,768,316
Total listed investments at fair value
2,900,008
5,691,673
In November 2012 the Group acquired a 14.7% interest in Lithium Corporation,
Nevada USA by way of a non‐brokered private placement. Lithium Corporation is
quoted on the US OTCBB (Over The Counter Bulletin Board).
The Board of Directors has placed instructions with a US brokerage to divest its
investment in Lithium Corporation and determining this to be a current asset.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
55
14. DERIVATIVE FINANCIAL INSTRUMENTS
Financial risk management objectives
The consolidated entity uses 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.
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.
Weighted
average
interest
rate
1 year or
less
Between
1 and 2
years
Between
2 and 5
years
Over
5
years
Remaining
contractual
maturities
Consolidated ‐ 2022
%
$
$
$
$
$
Interest‐bearing ‐ fixed rate
Convertible notes payable
8.00%
3,313,550
‐
‐
‐
3,313,550
Total non‐derivatives
3,313,550
‐
‐
‐
3,313,550
Derivatives
Forward foreign exchange
contracts net settled
‐
329,789
‐
‐
‐
329,789
Total derivatives
329,789
‐
‐
‐
329,789
There were no derivative financial instruments in 2021
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
56
15. PROPERTY, PLANT, EQUIPMENT AND MINE PROPERTIES
Property plant and
equipment
$
Mine properties in
production
$
Total
$
2022
Gross carrying amount
Balance at 30 June 2021
864,222
‐
864,222
Additions
30,693
‐
30,693
Exchange difference
78,909
‐
78,909
Disposals
(119,396)
‐
(119,396)
Balance at 30 June 2022
854,428
‐
854,428
Accumulated depreciation
Balance at 30 June 2021
835,149
‐
835,149
Depreciation expense
21,750
‐
21,750
Exchange difference
77,216
‐
77,216
Disposals
(116,206)
(116,206)
Balance at 30 June 2022
817,909
‐
817,909
Net book value
as at 30 June 2022
36,519
‐
36,519
Property plant and
equipment
$
Mine properties in
production
$
Total
$
2021
Gross carrying amount
Balance at 30 June 2020
7,670,398
300,093,917
307,764,315
Additions
‐
3,856,343
3,856,343
Impairment
(1,385,250)
(62,618,285)
(64,003,535)
Transfer to held for sale **
(5,337,969)
(236,051,419)
(241,389,388)
Exchange difference
(82,957)
‐
(82,957)
Disposals
‐
(5,280,556)
(5,280,556)
Balance at 30 June 2021
864,222
‐
864,222
Accumulated depreciation
Balance at 30 June 2020
3,551,072
15,720,925
19,271,997
Depreciation expense
67,309
4,426,124
4,493,433
Impairment
(561,187)
(3,871,654)
(4,432,841)
Exchange difference
(42,715)
‐
(42,715)
Transfer to held for sale **
(2,179,331)
(16,275,395)
(18,454,726)
Balance at 30 June 2021
835,149
‐
835,149
Net book value
as at 30 June 2021
29,074
‐
29,074
** Property, Plant, Equipment and Mine Properties were transferred to Assets classified as held for sale.
Refer to Note 3 for further details on discontinued operations.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
57
2022
$
2021
$
16. EXPLORATION AND EVALUATION
Exploration and evaluation expenditure at cost:
Carried forward from previous year
79,946
3,311,790
Incurred during the year
2,159,223
79,946
Transferred to property, plant and equipment and mine properties
‐
(1,428,800)
Transferred to assets classified as held for sale
‐
(1,882,990)
2,239,169
79,946
Less : Written off during the year
(46,281)
‐
Total exploration and evaluation expenditure
2,192,888
79,946
The recovery of expenditure carried forward is dependent upon the discovery of
commercially viable mineral and other natural resource deposits, their development
and exploitation, or alternatively their sale.
The Company's title to certain mining tenements is subject to Ministerial approval and
may be subject to successful outcomes of native title issues.
17. TRADE AND OTHER PAYABLES
Trade payables and accruals
747,947
2,395,465
Accrued interest on loan note facility
‐
77,008
747,947
2,472,473
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
58
2022
$
2021
$
18. BORROWINGS
Current borrowings
Loan note facility
‐
‐
Director related facility ##
3,313,550
3,539,458
Other
‐
‐
Total current borrowings
3,313,550
3,539,458
Non‐current borrowings
Loan note facility
‐
‐
Total non‐current borrowings
‐
‐
Total borrowings
3,313,550
3,539,458
Reconciliation borrowings ‐ loan note facility
Opening balance
‐
207,742,486
Interest and fees capitalised
‐
15,926,109
Exchange rate differences
‐
(8,907,936)
Amortisation of transaction costs
‐
27,581,782
Adjustment on completion of facility
‐
(41,617,240)
Repayment
‐
(200,725,201)
Total borrowings – loan note facility
‐
‐
Reconciliation borrowings – Director related facility
Opening balance
3,539,458
‐
Loan funds received
200,000
3,452,551
Loan funds repaid
(700,000)
‐
Exchange rate differences
274,092
86,907
Total borrowings – Director related facility ##
3,313,550
3,539,458
## In February 2021 the Directors via ACN 647 358 987 Pty Ltd, a Director related entity provided the funds for a deed of
company arrangements to be entered into with the Group’s external manager. The facility comprises a US $ 2,000,000
component and the balance is denominated in Australian dollars. The facility attracts interest @ 8% pa and is due for repayment
in March 2023.
The parties entered into a sub loan agreement giving the facility’s term an effective fixed conversion rate from US dollars to
Australian dollars of $0.777185. This resulted in an embedded derivate asset as of 30 June 2022 of $329,789. Refer to note 14
for further details.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
59
2022
$
2021
$
19. CURRENT SHORT TERM PROVISIONS
Employee benefit
421,907
230,985
Post‐ employee benefits
294,792
258,548
716,587
489,533
Movements in provisions
Short term employee benefits
Opening balance
489,533
1,900,591
Provision increase / (decrease)
361,385
16,469
Expense incurred
(134,331)
(1,427,527)
Balance at year end
716,587
489,533
The aggregate employee entitlement liability recognised and included in the financial
statements is as follows:
Provision for employee entitlements:
Current
716,587
489,533
Total
716,587
489,533
The current portion of this liability includes all of the accrued annual leave, the unconditional entitlements to long service leave
where employees have completed the required period of service. The entire amount of the provision of $716,587 (2021 ‐
$489,533) is presented as current, since the group does not have an unconditional right to defer settlement for any of these
obligations.
The Group has a defined benefit post‐employment plan for an Indonesian subsidiary, the Group provides certain post‐
employment benefits to employees (unfunded). The Group's defined benefit plan is a final salary plan for Indonesian employees
providing for the liability estimation of severance pay, service pay, and compensation.
This plan is governed by the employment laws of Indonesia, it’s a defined benefit arrangement providing retirement
benefit, death, disability, voluntary resignation and other payments of severance due to change of ownership,
redundancy and receivership, using lump sum formula expressed in terms of a multiple of final wages depending on
the number years of service completed.
Annually the valuation is performed by an Indonesian independent registered Actuary valuing the benefits covering
death, disability, voluntary resignation, and retirement benefit.
Post‐employment benefits liabilities as at 30 June 2022 and 2021 are calculated by KKA Marcel Pryadarshi Soepeno,
independent actuaries, in actuarial reports issued in 2022.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
60
19. CURRENT SHORT TERM PROVISIONS (continued)
The principal assumptions used in determining the Group’s post‐employment benefits liabilities using the projected unit
credit method are as follows:
2022
2021
Discount rate
7.40%
7.00%
Salary growth rate
8%
8%
Normal retirement age Mortality
rate from the Indonesian
56
56
Mortality Table
Indonesian Mortality Table IV
Indonesian Mortality Table IV
Disability Rate
5% from Indonesian Mortality Table IV
5% from Indonesian Mortality Table IV
Voluntary resignation rate
2.5% up to age 40, then linearly
decrease down by 0.5% up to age
50, and assuming no voluntary
resignation occur beyond age 51
2.5% up to age 40, then linearly
decrease down by 0.5% up to age 50,
and assuming no voluntary
resignation occur beyond age 51
Through its defined benefit pension plans, the Group is exposed to a number of significant risks which are detailed
below:
1) Changes in discount rate
A decrease in the discount rate will increase plan liabilities.
2) Salary growth rate
The Group’s pension obligations are linked to salary growth rate, and higher salary growth rate will lead to
higher liabilities.
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions as at 30 June 2022 is
as follows:
Impact on defined benefits obligation
Change in
assumptions
Increase in
assumptions
Decrease in
assumptions
Discount rate
1%
273,955
318,798
Salary growth rate
1%
324,083
272,073
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
61
19. CURRENT SHORT TERM PROVISIONS (continued)
Post‐employment benefits liabilities recognised in the consolidated balance sheet as at 30 June 2022 and 2021 are
computed as follows:
2022
$
2021
$
Present value of obligation
304,588
266,487
Fair value of plan assets
304,588
266,487
Actuarial Gains or Losses for the period
(9,796)
(7,938)
Total liability
294,792
258,548
The movement in the Group’s post‐employment benefits liabilities is as follows:
At the beginning of the year
258,549
242,363
Current service cost
26,421
25,918
Past service cost Remeasurements: Gain from change in – actuarial
assumptions
(9,796)
(7,938)
Benefits paid
(14,883)
(1,794)
Foreign exchange difference
34,501
‐
At the end of the year
294,792
258,549
20. CURRENT TAXATION & DEFERRED TAX LIABILITIES & ASSETS
(a)
Liabilities
Current
Income tax paid / payable
‐
‐
Non‐Current
Deferred tax liability comprises:
Lease ROU asset
9,849
‐
Tax allowances relating to exploration
294,258
23,984
Unrealised foreign exchange gains
3,213,435
2,261,091
3,517,542
2,285,075
(b)
Assets
Non‐Current
Deferred assets comprise:
Provisions
162,577
205,853
Revenue losses
48,327,778
57,268,382
Revenue losses not recognised
(45,040,448)
(55,352,119)
Lease liabilities
9,299
‐
Other
58,336
162,959
3,517,542
2,285,075
Net deferred tax balance recognised in the Consolidated Balance Sheet
‐
‐
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
62
2022
$
2021
$
21. REHABILITATION PROVISION
Non‐current provision
Rehabilitation and demobilisation
‐
‐
‐
‐
Movements in provisions
Rehabilitation and demobilisation
Opening balance
‐
18,435,046
Provision increase/(decrease)
‐
‐
Transfer to held for sale
‐
(18,435,046)
Expense incurred
‐
‐
Balance at year end
‐
‐
The Group no longer has operations that require the Directors to review the
rehabilitation provision. Refer to Note 1 o i) for accounting policies in relation to the
rehabilitation provision.
22. LEASES
Set out below is a summary of the amounts disclosed in the Consolidated Balance Sheet:
Lease liability
Current
27,621
‐
Non‐current
11,775
‐
39,396
‐
Right of use assets
Properties
Opening Balance
‐
‐
Additions
59,514
‐
Depreciation
(22,318)
‐
Closing Balance
37,196
‐
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
63
23. CONTRIBUTED EQUITY
Issued capital
2022
$
2021
$
5,176,213,986 (2021: 2,986,243,275) ordinary shares issued and fully paid
302,776,147
290,860,299
2022
2021
Number
$
Number
$
Fully paid ordinary shares
Balance at the beginning of the financial year
2,986,243,275
290,860,299
2,986,243,275
290,860,299
Share issue ‐ Rights Offer (a
400,095,130
2,000,470
‐
‐
Share Issue – Security Shares (b
400,000,000
2,000,000
‐
‐
Share placement ‐ Sophisticated Investors (c
1,319,698,630
6,598,493
‐
‐
Shares issued in lieu of corporate fees (d
40,000,000
1,120,000
‐
‐
Share Issue – EIO Consideration (e
28,176,951
140,885
‐
‐
Share issue Employee incentive scheme
2,000,000
56,000
‐
‐
Balance at the end of the financial year
5,176,213,986
302,776,147
2,986,243,275
290,860,299
(a ‐ On 14 December 2021 Morella announced that it had completed a non‐renounceable Entitlement Offer raising a total of
$2,000,470. The offer comprised 1 new share for every 8.5 held at an offer price of $0.005 cents per share. A total of 400,095,130
shares were issued.
(b ‐ Issue DOCA loan facility security shares 400,000,000 shares on 14 December 2021 to (ACN 647 358 987 Pty Ltd., Limited at
an issue price of $0.005 cents per share.
(c ‐ Placement of 1,319,698,630 shares on 14 December 2021 to sophisticated investors at an issue price of $0.005 cents per
share.
(d – on 21 January 2022 40,000,000 shares were issued for US Strategic Advisory and Consulting Services. The services will be
delivered during 2022.
(e ‐ On 14 December 2021 28,176,951 shares were issued as part of the Earn‐In Option consideration.
Fully paid ordinary shares carry one vote per share and carry the rights to dividends. Ordinary shares have no par value.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
64
23. CONTRIBUTED EQUITY (continued)
Option and performance rights reserve
Movements in option and performance rights reserve
2022
$
2021
$
Opening balance
1,601,318
1,802,346
Share based payment expense
‐
(201,028)
Other share based options
360,000
‐
Performance rights exercised and transferred to contributed equity
‐
‐
Balance at year end
1,961,318
1,601,318
Foreign currency translation reserve
Movements in foreign currency translation reserve
Opening balance
(587,879)
(5,553,782)
Foreign currency translation differences
(4,631,774)
4,965,903
Balance at year end
(5,219,653)
(587,879)
The foreign currency translation reserve records exchange differences
arising on translation of a foreign controlled subsidiary.
Fair value reserve
Movements in fair value reserve
Opening balance
5,161,501
1,393,185
Change in fair value of financial assets
(2,354,653)
3,768,316
Balance at year end
2,806,848
5,161,501
The change in fair value reserve records valuation differences arising on the market
valuation of financial assets at fair value through other comprehensive income.
Refer to Note 13 for reconciliation of movements in the year.
Capital management
Capital consists of ordinary share capital, retained earnings, reserves and net debt. The Board's policy is to maintain a strong
capital base in order to maintain investor, creditor and market confidence and to sustain future development of the business.
With the repayment of the loan facility and the removal of consent from the loan note holders there were no other changes to
the consolidated entity's approach to capital management during the year. The Board effectively manages the Group’s capital
by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market.
These responses include the management of debt levels and by share issues.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
65
24. SHARE BASED PAYMENTS
During the year, the Company had the following share‐based payments expenses:
2022
$
2021
$
Performance rights
‐
(201,028)
Share options issued in leu of payment
360,000
‐
DOCA loan facility security shares (refer Note 23)
2,000,000
‐
Shares issued in leu of payment (refer Note 23)
1,260,885
‐
Employee Bonus shares (refer Note 23)
56,000
‐
3,676,885
(201,028)
a)
Performance Rights
In 2021 the Company approved a Long‐Term Incentive Plan (LTIP) under which employees and directors of the Group may
be issued on a discretionary basis with performance rights over ordinary shares of Morella Corporation Limited. The
purpose of this plan is to:
assist in the reward, retention and motivation of employees and directors;
align the interests of employees and directors more closely with the interests of shareholders by providing an
opportunity for employees and directors to receive an equity interest in the form of rewards; and
provide employees and directors with the opportunity to share in any future growth in value of the Company.
The Performance Rights lapse when employment ceases with Morella Corporation Limited. The Performance Rights have
been granted for no consideration, and no amount is payable on the vesting or exercising of the Performance Rights. All
rights subject to the LTIP carry no rights to dividends and no voting rights, until converted into ordinary shares.
The following table shows performance rights issued during the year ended 30 June 2022 and the value attributed:
The Performance Rights granted and outstanding under the LTIP as at 30 June 2022 are as follows:
Number of
performance
rights
Expiry
Date
Fair Value
($/right)
Total Value
$
‐
‐
‐
‐
Expiry
Date
Granted
Vested
Unvested
‐
‐
‐
‐
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
66
24. SHARE BASED PAYMENTS (continued)
b)
Share Options
The options granted and outstanding as at 30 June 2022 are as follows:
The valuation of the 150,000,000 Options granted 14 October 2021 was performed using a Hoadley Trading & Investment
Tools ESO2 model with the following assumptions resulting in a valuation of $360,000 (30 June 2021: $1,601,318):
Assumptions
Valuation key assumptions
Tranche 1
Tranche 2
Tranche 3
Tranche 1
Tranche 2
Tranche 3
Valuation Date
14‐Oct‐21
14‐Oct‐21
14‐Oct‐21
Spot Price
$0.005
$0.005
$0.005
Exercise Price
$0.006
$0.007
$0.008
Vesting Date
Immediately
Immediately
Immediately
Expiry Date
31‐Jan‐25
31‐Jan‐25
31‐Jan‐25
Expected Future Volatility
100%
100%
100%
Risk Free Rate
0.48%
0.48%
0.48%
Early Exercise Multiple
2.5x
2.5x
2.5x
Dividend Yield
Nil
Nil
Nil
Expiry Date
31‐Jan‐25
31‐Jan‐25
31‐Jan‐25
Fair Value per Option
$0.0025
$0.0024
$0.0023
Expiry Date
Options
Granted
Exercise Price
($)
Number of
options not
yet exercised
1 May 23
74,400,000
$0.0586
74,400,000
31 January 25
50,000,000
$0.006
50,000,000
31 January 25
50,000,000
$0.007
50,000,000
31 January 25
50,000,000
$0.008
50,000,000
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
67
25. KEY MANAGEMENT PERSONNEL COMPENSATION
a)
Names and positions held of key management personnel in office at any time
during the financial year are:
Directors
James Brown
Managing Director
Allan Buckler
Non‐Executive Director
Dan O’Neill
Non‐Executive Director
BT Kuan
Non‐Executive Director
Key Management Personnel
Alex Cheeseman
Chief Executive Officer (resigned 7 October 2022)
b)
Key management personnel remuneration
2022
$
2021
$
Short‐term employee benefits
843,558
771,098
Post‐employment benefits
41,400
38,306
Termination benefits
‐
523,543
Share based payments
56,000
‐
940,958
1,332,947
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
68
26. INVESTMENTS IN OTHER ENTITIES
a)
Joint operations
For the year ending 30 June 2022 Morella Corporation Limited holds no interests in any joint operations or ventures.
27. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly‐owned subsidiaries
in accordance with the accounting policy described in Note 1:
Country of
incorporation
Ownership interest
Name of entity
2022
%
2021
%
Altura Drilling Pty Ltd
Australia
100
100
Altura Minerals Pty Ltd
Australia
100
100
Minvest Australia Pty Ltd
Australia
100
100
Morella Minerals (US) Corp **
United States of America
100
‐
Minvest International Corporation
Mauritius
100
100
Altura Asia Pte Ltd
Singapore
100
100
Altura Mining Philippines Inc. *
Philippines
40
40
PT Altura Indonesia
Indonesia
100
100
PT Minvest Mitra Pembangunan
Indonesia
100
100
PT Cakrawala Jasa Pratama
Indonesia
100
100
PT Minvest Jasatama Teknik
Indonesia
100
100
PT Cybertek Global Utama
Indonesia
100
100
* Morella Corporation Limited through its wholly owned subsidiary, Altura Asia Pte Ltd holds 40% direct equity in Altura Mining
Philippines Inc. This entity is considered a subsidiary as the Group has full economic and management rights.
** Morella Minerals (US) Corp was incorporated in Nevada USA on 23 September 2021.
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries with non‐
controlling interests in accordance with the accounting policy described in Note 1:
Country of
incorporation
Principal activities
Parent ownership
interest
Non‐controlling
interest
Name of entity
2022
%
2021
%
2022
%
2021
%
PT Velseis Indonesia *
Indonesia
Mining services
50
50
50
50
PT Jasa Tambang Pratama #
Indonesia
Mining and exploration
70
70
30
30
PT Cahaya Permata Khatulistiwa #
Indonesia
Mining and exploration
70
70
30
30
PT Suryaraya Permata Cemerlang #
Indonesia
Mining and exploration
70
70
30
30
PT Suryaraya Cahaya Khatulistiwa #
Indonesia
Mining and exploration
70
70
30
30
PT Suryaraya Cahaya Cemerlang #
Indonesia
Mining and exploration
70
70
30
30
PT Suryaraya Permata Khatulistiwa #
Indonesia
Mining and exploration
70
70
30
30
PT Suryaraya Pusaka #
Indonesia
Mining and exploration
70
70
30
30
PT Kodio Multicom
Indonesia
Mining and exploration
56
56
44
44
PT Marangkayu Bara Makarti
Indonesia
Mining and exploration
56
56
44
44
Morella Corporation Limited and Altura Minerals Pty Ltd are included within the tax consolidation group.
# Morella Corporation Limited through its wholly owned subsidiary, Altura Asia Pte Ltd holds 70% direct equity in these seven
entities.
* Morella Corporation Limited through its wholly owned subsidiary, Minvest International Corporation holds 50% direct equity
in PT Velseis Indonesia. This entity is considered a subsidiary as the Group has full management rights.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
69
27. INTERESTS IN SUBSIDIARIES (continued)
Summarised financial information
Summarised financial information of the subsidiaries with non‐controlling interests that are material to the consolidated entity
are set out below:
PT Velseis
Indonesia
PT Velseis
Indonesia
$
$
2022
2021
Summarised statement of financial position
Current assets
354,432
262,555
Non‐current assets
502,670
274,704
Total assets
857,102
537,260
Current liabilities
306,099
272,175
Non‐current liabilities
‐
(226,802)
Total liabilities
306,099
45,373
Net assets
551,003
491,887
Summarised statement of profit or loss and other
comprehensive income
Revenue
363,663
141,233
Expenses
367,622
308,936
Profit / (loss) before income tax expense
(3,959)
(167,703)
Income tax expense / (benefit)
‐
‐
Profit / (loss) after income tax expense
(3,959)
(167,703)
Other comprehensive income
(179,197)
(50,339)
Total comprehensive income
(183,156)
(218,043)
Statement of cash flows
Net cash from operating activities
45,346
(17,129)
Net cash used in investing activities
‐
‐
Net cash used in financing activities
‐
‐
Net increase / (decrease) in cash and cash equivalents
45,346
(17,129)
Other financial information
Profit attributable to non‐controlling interests
(91,578)
(109,021)
Accumulated non‐controlling interest at the end of
reporting period
274,724
245,944
The subsidiaries summarised financial information (PT Suryaraya Pusaka, PT Kodio Multicom, & PT Marangkayu Bara Makarti)
have not been disclosed for the current reporting period as these companies are part of the Tabalong Group. The Tabalong
Group has been fully impaired as at 30 June 2022. Refer to Note 3 for details of discontinued operations.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
70
28. RELATED PARTIES
Transactions within the wholly‐owned Group
The wholly‐owned Group includes the ultimate parent entity in the wholly‐owned Group, and wholly‐owned controlled entities.
The ultimate parent entity in the wholly‐owned Group is Morella Corporation Limited.
During the year the parent entity provided financial assistance to its wholly owned and controlled entities by way of
intercompany loans. The loans are unsecured, interest free and have no fixed term of repayment. Sales and purchases between
related parties within the Group have been eliminated upon consolidation. There were no further sales or purchases from
wholly‐owned related parties during the financial year.
Transactions other related parties
a)
Morella announced in May 2022 that it had signed a Letter of Intent (LOI) with lithium project developer Lithium
Corporation over its Nevada, USA North Big Smokey lithium tenements. Lithium Corporation is a related party due a
common director. Under the LOI, Morella will spend US$65,000 on documentation and project due diligence for a 60‐day
extendable exclusivity period. During August 2022 Morella completed negotiations for a 60% interest in the North Big
Smokey project. The earn‐in agreement allows the Group to commence immediate activity for an earn‐in to the North Big
Smoky (“NBS”) Project in central‐west Nevada, USA.
b)
In February 2021, The Directors via a director related entity ACN 647 358 987 Pty Ltd provided an un‐secured loan facility
to fund the DOCA and the short‐term working capital requirements of the Group. The facility of $3,313,550. The facility
contains a US$2,000,000 component and is provided at 8%pa repayable in March 2023. Interest of $322,413 has been
incurred during the period. The US$ component of the facility uses a fixed translation rate of $0.777185 this gives rise to a
derivative asset of $329,789 when translated at period end.
c)
In September 2021, Mr Allan Buckler a director of the Group provided an unsecured loan via his controlled entity Shazo
Pty Ltd. The facility provided was for $700,000 and interest free. The facility was repaid in October 2021.
d)
During the period Mr Allan Buckler, a director of the Group provided corporate services via his controlled entity Shazo Pty
Ltd. These services are provided under a service agreement for director’s fees.
29. NOTES TO STATEMENT OF CASH FLOWS
a)
For the purpose of the statement of cash flows, cash includes cash on hand and in banks, and investments in money
market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statements
of cash flows is reconciled to the related items in the balance sheet as follows:
2022
$
2021
$
Cash at bank and on hand (Note 8)
4,253,365
372,419
Cash in assets classified as held for sale (Note 3c))
8,963
8,426
Cash per statement of cash flows
4,262,328
380,845
Reconciliation to Statement of Cash Flows
For the purposes of the Statement of Cash Flows, cash and cash equivalents
comprise the following at 30 June 2022:
Cash at bank and on hand
4,262,328
380,845
Short‐term deposits
‐
‐
Cash at bank and on hand
4,262,328
380,845
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
71
29. NOTES TO STATEMENT OF CASH FLOWS (continued)
b)
Reconciliation of operating profit / (loss) after income tax to net cash
used in operating activities
Operating loss after income tax
(682,745)
(73,000,216)
Adjustments for non‐cash income and expense items:
Share based payments
3,536,000
(201,028)
Loan facility fees
‐
28,859,442
Depreciation of property, plant and equipment
44,068
4,493,433
Interest on funding facility
‐
20,103,483
Foreign currency exchange rate movement
(5,337,043)
(620,984)
Transfer to exploration
(360,224)
‐
Exploration expenditure written off
46,281
‐
Profit on sale of assets
‐
‐
Impairment on assets held for sale
601,530
3,393,905
Loss on sale of subsidiary
‐
23,219,672
Changes in assets and liabilities:
(Increase) / decrease in receivables
547,745
8,595,561
(Decrease) / increase in other creditors and accruals
(1,724,527)
(40,483,849)
(Increase) / decrease in inventories
‐
22,515,268
(Increase) / decrease in deposits and prepayments
116,003
(202,493)
Increase / (decrease) in current lease liabilities
27,621
(524,071)
Increase / (decrease) in current provisions
227,054
(1,411,058)
Net cash used in operating activities
(2,958,237)
(5,262,935)
c)
Net debt reconciliation
Net debt
Cash and cash equivalents
4,262,328
380,845
Borrowings – repayable within one year
(3,313,550)
(3,539,458)
Borrowings – repayable after one year
‐
‐
Net debt
948,778
(3,158,613)
Cash and liquid investments
4,262,328
380,845
Gross debt ‐ fixed interest rate
(3,313,550)
(3,539,458)
Gross debt ‐ variable interest rate
‐
‐
Net debt
948,778
(3,158,613)
2022
$
2021
$
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
72
29.
NOTES TO STATEMENT OF CASH FLOWS (continued)
Cash and cash
equivalents
Borrowings
due within 1
year
Borrowings due
after 1 year
Total
Net debt as at 30 June 2021
380,845
(3,539,458)
‐
(3,158,613)
Cash flows
Foreign exchange adjustments
Other non‐cash movements
3,881,483
225,908
4,107,391
Net debt as at 30 June 2022
4,262,328
(3,313,550)
‐
948,778
d)
Acquisition of entities
The Group did not acquire any interest in entities during the year.
2022
$
Parent
2021
$
Parent
30. PARENT ENTITY DISCLOSURE
(a)
Summary of financial information
The individual financial statements for the parent entity show the
following aggregate amounts:
Balance sheet
Current assets
3,867,469
373,652
Total assets
8,486,262
(1,388,218)
Current liabilities
3,745,508
1,525,892
Total liabilities
7,593,293
1,525,892
Net assets
892,969
(2,914,110)
Equity
Contributed equity
302,776,147
290,860,299
Reserves
1,961,318
1,601,318
Retained profits / (accumulated losses)
(303,844,496)
(295,375,727)
Total shareholder equity
892,969
(2,914,110)
Profit / (Loss) for the year
(8,468,769)
(155,685,726)
Total comprehensive loss for the year
(8,468,769)
(155,685,726)
(b)
Contingent liabilities
Contingent liabilities are disclosed in Note 33.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
73
2022
$
2021
$
31.
AUDITORS’ REMUNERATION
a)
Auditors of the Group – PKF and related network firms
Audit of financial report
‐
Group (PKF Perth)
114,000
153,750
Total audit of financial reports
114,000
153,750
Other non‐audit services (PKF Brisbane)
‐
‐
Total services provided by PKF
114,000
153,750
b)
Other auditors and their related network firms
Audit of financial report
‐
Foreign Subsidiaries
11,768
‐
Total audit of financial reports
11,768
‐
Other non‐audit services
‐
‐
Total services provided by other auditors
11,768
‐
32.
SUBSEQUENT EVENTS
Subsequent to the end of the financial year the following events occurred:
15 July 2022 – Morella meets the first‐year expenditure requirements for the Fish Lake Valley earn in option agreement
11 August 2022 ‐ Morella completes negotiations for a 60% interest in the North Big Smokey project. The earn‐in agreement
is with US‐based, OTC listed Lithium Corporation (“Lithium Corp.”) to immediately commence an earn‐in for the North Big
Smoky (“NBS”) Project in central‐west Nevada, USA.
18 August 2022 ‐ Morella completes a $7.5 million placement to new and existing institutional and sophisticated investors
in Australia and internationally at an issue price of $0.015. The Placement process was managed by Canaccord Genuity
(Australia) Limited and Jett Capital Advisors acting as Joint Lead Managers.
18 August 2022 ‐ Lithium Royalty Corporation (LRC), Morella and Sayona Mining Limited have agreed to binding terms for a
royalty on lithium products produced from both the Mt Edon lithium project, tenements E59/2092 and E59/2055 (“Mt
Edon”) and the Tabba Tabba lithium project, tenement E45/4703 (“Tabba Tabba”). The consideration of US$ 1,100,000
consists of the grant of a 1.25% Gross Overriding Revenue royalty both project areas.
18 August 2022 – Morella issues 258,266,458 performance rights under its executive incentive programme to it executive
management team. The performance rights will immediately vest for non‐directors with the Directors requiring shareholder
approval. To accommodate AGM approval the performance rights will expire on 31 December 2022.
10 September 2022 – Mr Alex Cheeseman has resigned effective 7 October 2022
16 September 2022 ‐ 19,812,140 warrants at an exercise price of $0.1260 per warrant with an expiry date 4 August 2022
have expired and were cancelled on 16 September 2022.
The impact of the Coronavirus (COVID‐19) is ongoing and while it has not been financially positive for the consolidated
entity up to 30 June 2022, it is not practicable to estimate the potential impact, positive or negative, after the reporting
date. The impact on the Group is dependent on measures imposed by the Australian Government and other countries, such
as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be
provided.
Morella Corporation Limited and Controlled Entities
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2022
74
33.
CONTINGENT LIABILITIES
Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the financial statements
are as follows:
2022
$
2021
$
‐
‐
No losses are anticipated in respect of any of the above contingent liabilities.
34.
COMMITMENTS
In order to maintain an interest in the mining and exploration tenements in which the Group is involved, the Group is committed
to meeting the conditions under which the tenements were granted and the obligations of any joint venture agreements. The
timing and amount of exploration expenditure commitments and obligations of the Group are subject to the minimum
expenditure commitments required by the relevant State Departments of Minerals and Energy and may vary significantly from
the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of
interest.
Subsidiaries of the Group have contracted commitments to achieve minimum expenditure within the term of the tenement
earn in option agreements.
One of the Group's subsidiaries has contracted to provide up to a US$4 million facility to a minority party in the Tabalong coal
project. The provision of the facility is contingent on project milestones being achieved. The facility will be repaid in accordance
with the loan agreement between the parties. The likelihood of this proceeding is highly probable.
a)
Exploration work
The Company has certain obligations to perform minimum exploration work and expend minimum amounts on exploration
tenements to meet minimum expenditure requirements. This expenditure will only be incurred should the Group retain its
existing level of interest in its various exploration areas and provided access to mining tenements is not restricted. These
obligations will be fulfilled in the normal course of operations, which may include exploration and evaluation activities.
b)
Exploration
The Group has the following estimated exploration expenditure commitments at 30 June 2022.
2022
$
2021
$
No later than one year
1,517,405
110,832
Later than one year and not later than five years
6,165,264
332,496
Later than five years
‐
‐
7,682,669
443,328
Morella Corporation Limited and Controlled Entities
Directors’ Declaration
75
In the Directors’ opinion:
(a)
The financial statements and notes set out on pages 19 to 74 and the remunerations report designated as audited in the
Directors Report are in accordance with the Corporations Act 2001 and:
a.
comply with Accounting Standards and the Corporations Regulations 2001; and
b.
give a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and its performance for the
financial year ended on that date;
(b)
the financial statements and notes also comply with International Financial Reporting Standards as set out in Note 1;
(c)
there are reasonable grounds to believe that the Company will be able to pay its debt as and when they become due and
payable.
The Directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer required under section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
__________________________
James Brown
Director
Brisbane, 23 September 2022
Level 4, 35 Havelock Street, West Perth, WA 6005
PO Box 609, West Perth, WA 6872
T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au
PKF Perth is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions
or inactions of any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
76
PKF Perth
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
MORELLA CORPORATION LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Morella Corporation Limited (the “Company”), which
comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the Directors’ Declaration of the Company and the
consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time
during the financial year.
In our opinion the accompanying financial report of Morella Corporation Limited is in accordance with the
Corporations Act 2001, including:
i)
Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its
performance for the year ended on that date; and
ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the consolidated entity in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
77
PKF Perth
Key Audit Matter
A key audit matter is a matter that, in our professional judgement, was of most significance in our audit of the
financial report of the current year. This matter was addressed in the context of our audit of the financial report as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. For each
matter below, our description of how our audit addressed the matter is provided in that context
Carrying value of capitalised exploration expenditure
Why significant
How our audit addressed the key audit
matter
As at 30 June 2022, the carrying value of exploration
and evaluation assets was $2,192,888 (2021: $
79,946), as disclosed in Notes 1 and 16.
The consolidated entity’s accounting policy in
respect of exploration and evaluation expenditure is
outlined in Notes 1 and 16.
Significant judgement is required:
•
in determining whether facts and circumstances
indicate that the exploration and evaluation
assets should be tested for impairment in
accordance
with
Australian
Accounting
Standard
AASB
6
Exploration
for
and
Evaluation of Mineral Resources (“AASB 6”);
and
•
in determining the treatment of exploration and
evaluation expenditure in accordance with
AASB
6,
and
the
consolidated
entity’s
accounting policy. In particular:
o
whether the particular areas of interest
meet the recognition conditions for an
asset; and
o
which
elements
of
exploration
and
evaluation
expenditures
qualify
for
capitalisation for each area of interest.
Our work included, but was not limited to, the
following procedures:
•
Conducting a detailed review of management’s
assessment
of
impairment
trigger
events
prepared in accordance with AASB 6 including:
o
assessing whether the rights to the tenure of
the areas of interest remained current at
reporting date as well as confirming that
rights to tenure are expected to be renewed
for tenements that will expire in the near
future;
o
holding discussions with the Directors and
management as to the status of ongoing
exploration programmes for the areas of
interest, as well as assessing if there was
evidence that a decision had been made to
discontinue activities in any specific areas of
interest; and
o
obtaining and assessing evidence of the
consolidated entity’s future intention for the
areas of interest, including reviewing future
budgeted expenditure and related work
programmes;
•
considering whether exploration activities for the
areas of interest had reached a stage where a
reasonable
assessment
of
economically
recoverable reserves existed;
•
testing, on a sample basis, exploration and
evaluation expenditure incurred during the year
for compliance with AASB 6 – Exploration for and
Evaluation of Mineral Resources and the
consolidated entity’s accounting policy; and
•
assessing the appropriateness of the related
disclosures in Notes 1 and 16.
78
PKF Perth
Other Information
Those charged with governance are responsible for the other information. The other information comprises the
information included in the consolidated entity’s annual report for the year ended 30 June 2022 but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly, we do not express any
form of assurance conclusion thereon, with the exception of the Remuneration Report.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
consolidated entity’s internal control.
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PKF Perth
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the Director
•
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the consolidated entity to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the consolidated entity to express an opinion on the group financial report. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
Opinion
We have audited the Remuneration Report included in the Directors’ Report for the year ended 30 June 2022.
In our opinion, the Remuneration Report of Morella Corporation Limited for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
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PKF Perth
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
PKF PERTH
SHANE CROSS
PARTNER
23 September 2022
WEST PERTH,
WESTERN AUSTRALIA
Morella Corporation Limited and Controlled Entities
ADDITIONAL ASX INFORMATION
CORPORATE GOVERNANCE
Pursuant to the ASX Listing Rules, the Company’s Corporate Governance Statement will be released in conjunction with
this report. The Company’s Corporate Governance Statement is available on the Company’s website.
SCHEDULE OF MINERAL PROPERTIES
Location
Tenement Number
Interest
Tabalong, South Kalimantan
PT Suryaraya Permata Khatulistiwa
70%
PT Suryaraya Cahaya Cemerlang
70%
PT Suryaraya Pusaka
70%
PT Kodio Multicom
56%
PT Marangkayu Bara Makarti
56%
Catanduanes, Philippines
COC 182 (Area 3) – Catanduanes
100%
Albay Region, Philippines
COC 200 (Area 4) – Rapu‐Rapu
100%
Bislig Region, Philippines
COC 202 (Area 17) – Surigao del Sur
100%
ISSUED CAPITAL
The issued capital of the company as at 14 September 2022 consists of the following:
5,765,645,786 fully paid ordinary shares,
50,000,000 Options expiring 31 January 2025 exercisable at $0.006.
50,000,000 Options expiring 31 January 2025 exercisable at $0.007.
50,000,000 Options expiring 31 January 2025 exercisable at $0.008.
74,400,000 Options expiring 31 May 2023 exercisable at $0.0586, and
36,910,000 Performance Rights issued pursuant to an employee entitlement scheme.
SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders and the number of equity securities as disclosed in their most recent substantial
shareholder notices received by the Company are:
Holder name
Shares
AC Buckler (Calida Holdings Pty Ltd)
807,533,512
MT Smith
459,906,592
Shanshan Forever International Co., Ltd
451,361,249
Morella Corporation Limited and Controlled Entities
ADDITIONAL ASX INFORMATION continued
20 LARGEST SHAREHOLDERS – FULLY PAID ORDINARY SHARES 14 SEPTEMBER 2022
Rank
Holder name
Units
% of issued
1
CALIDA HOLDING PTY LTD
774,364,976
13.43
2
SHANSHAN FOREVER INTERNATIONAL CO LIMITED
451,361,249
7.83
3
MR MAXWELL TERRY SMITH
313,239,925
5.43
4
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
305,729,189
5.30
5
BNP PARIBAS NOMINEES PTY LTD
224,941,218
3.90
6
TERRYJOY PTY LTD
146,666,667
2.54
7
BNP PARIBAS NOMS PTY LTD
124,132,672
2.15
8
CITICORP NOMINEES PTY LIMITED
102,064,208
1.77
9
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
88,996,168
1.54
10
FARJOY PTY LTD
79,207,149
1.37
11
KANIMBLA SOLUTIONS PTY LTD
59,131,800
1.03
12
MR JAMES STUART BROWN & MRS MICHELE LILLIAN BROWN
55,064,404
0.96
13
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
51,295,352
0.89
14
NASDAQ SECURITIES AUSTRALIA PTY LTD
46,077,428
0.80
15
SEOK YIN CHUA
44,589,309
0.77
16
LITHIUM CORPORATION
42,276,951
0.73
17
CS FOURTH NOMINEES PTY LIMITED
35,345,661
0.61
18
MR ALLAN CHARLES BUCKLER
33,168,536
0.58
19
80 MILDRED REALTY LLC
30,000,000
0.52
20
E M ENTERPRISES (QLD) PTY LTD
27,876,863
0.48
Total
3,035,529,725
52.65%
DISTRIBUTION OF SHAREHOLDERS AS AT 14 SEPTEMBER 2022
Number of shareholders in the following distribution categories:
Fully paid ordinary shares
Holders
Shares
% of issued
1–1,000
407
62,355
0.00
1,001–5,000
2,452
7,108,458
0.12
5,001–10,000
1,566
12,532,392
0.22
10,001–100,000
7,230
303,721,593
5.27
100,001 and over
3,913
5,442,220,988
94.39
Total
15,547
5,765,645,786
100.00
Holders of less than a marketable parcel
5,808
Morella Corporation Limited and Controlled Entities
ADDITIONAL ASX INFORMATION
VOTING RIGHTS
ORDINARY SHARES
On a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one
vote. On a poll, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder has one vote for
each fully paid share held.
ON MARKET BUY BACK
There is no current on market buy back of Morella shares.
PERFORMANCE RIGHTS
The total number of performance rights on issue as at 14 September 2021 was 35,910,000. As at this date there were 2 holders of
these unquoted securities, which have been issued under an employee incentive scheme. There are no voting rights attaching to
the performance rights.
UNLISTED OPTIONS
The total number of unlisted options on issue as at 14 September 2022 was 224,400,000. The terms of the Options are as follows:
1.
74,400,000 options were issued to LDA Capital following shareholder approval at a general meeting held on 30 April 2020.
The options are exercisable at $0.0586 each and expire on 1 May 2023.
2.
50,000,000 options were issued to Canaccord Genuity pursuant to Listing Rule 7.1. The options are exercisable at $0.006
and expire on 31 January 2025.
3.
50,000,000 options were issued to Canaccord Genuity pursuant to Listing Rule 7.1. The options are exercisable at $0.007
and expire on 31 January 2025.
4.
50,000,000 options were issued to Canaccord Genuity pursuant to Listing Rule 7.1. The options are exercisable at $0.008
and expire on 31 January 2025.
There are no voting rights attaching to the unlisted options.
COMPETENT PERSONS STATEMENTS
The information in this statement is based on, and fairly represents, information and supporting documentation prepared by the
competent persons listed below.
The information in this report that relates to Exploration Results at the Mallina Lithium Project is based on information
compiled by Mr Stephen Barber, who is a Member of the Australasian Institute of Mining and Metallurgists and Exploration
Manager of Morella Corporation Limited. Mr Barber has sufficient experience which is relevant to the style of mineralisation
and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as
defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Mr Barber consents to the inclusion in the report of the matters based on his information in the form and context
in which it appears.
The information in this report that relates to Exploration Results at the Company’s Fish Lake Valley Project is based on
information compiled by Mr Duncan Storey, who is a Chartered Geologist with the Geological Society of London (an RPO
defined by JORC 2012). Mr Storey is an independent consultant engaged by Morella Corporation and has sufficient experience
with the exploration and development of mineralised brine deposits qualify as a Competent Person as defined in the 2012
Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Storey
consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.