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CEO’s Report
Information on Australian Pacific Coal
Review of Operations
Annual Financial Report
- Directors’ Report
- Remuneration Report
- Auditor’s Independence Declaration
-
Income Statement
- Statement of Comprehensive Income
- Statement of Financial Position
- Statement of Changes in Equity
- Statement of Cash Flow
- Notes to the Financial Statements
- Directors’ Declaration
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Independent Audit Report
Corporate Governance Statement
ASX Additional Information
Corporate Directory
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
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TOC
CHIEF EXECUTIVE OFFICER’S REPORT
Bowen Basin explorer focused on
acquiring developing and value
adding metallurgical coal prospects.
Australian Pacific Coal Limited (AQC) holds a number of tier one projects. The 2014 financial year saw AQC
maintain its focus on value adding those projects.
Shareholders should be aware that AQC owns two metallurgical coal projects, Cooroorah and Dingo, and one
thermal coal target yet to be drilled. All have development potential and are believed to represent some of the
best quality coal prospects in the Bowen and Wolfang Basins.
The Company’s Coorroorah project has advanced to a mineral development licence (MDL 453) following an
exploration program identifying an in-ground 124.9Mt coal resource (69.6Mt Indicated and 55.3Mt Inferred in
accordance with the JORC Code.) This project is surrounded by a number of operating coal mines. The most
significant of which are the Curragh and Jellinbah mines. I believe its location in close proximity to established
infrastructure assures its future.
Recently granted, our 100% owned “South Clermont” project abuts the 12 MT PA Glencore mine. Planning has
been completed for an exploration drilling program during the drilling season in the first half of the 2015 calendar
year. The target is the coal measures associated with the Wolfang Basin. This is the same coal produced from
the Glencore Clermont Mine where the main coal seam is up to 40 metres thick. If we are successful
in
discovering an economic coal resource in this part of the basin, we will be able to produce a premium quality,
direct shipping, thermal coal. Coal within the Wolfang Basin is possibly some of the best thermal coal produced
in Queensland. It is of such a high quality, low ash and sulphur product that you do not have to wash it.
First stage drilling of Dingo within the Blackwater project area has identified seams from Rangal Coal Measures
intersected with thicknesses up to 5m. Coal sampling has identified potential for a washed, high yielding Ultra
Low Volatile (ULV) PCI coal. This project requires further interpretation and drilling to elevate to a resource.
The Company’s main joint venture is the Mt Hillalong project with Rio Tinto Exploration. Rio are currently
conducting exploration of the project areas. Less than one year remains for Rio to exercise its option to proceed
to the next stage of the agreement. Rio’s exercise of their option will mean a cash injection into AQC. This will
be a milestone occasion for AQC. We will have the option to either retain a carried equity of 25% in a joint
venture with Rio Tinto reaping the rewards into the future or we have the ability to completely sell out our
interest in this project.
The Cuesta Coal JV gives AQC a 10% free carried equity in the four projects they hold. Some of these projects
contain JORC inferred coal resources. We are hopeful that in the future these assets may be valuable to AQC.
Our value-add strategy is ongoing across our portfolio of coal tenements. While at times progress may appear
to be gradual, we are confident that the Company’s strategy of proving up valuable coal resources will deliver
robust returns to shareholder in the long-term.
Your board are focussed on the potential development of one or more of our coal projects as China and India
have a strong desire for Australian premium thermal and coking coals. A potential partnership / joint venture is a
definite possibility for AQC.
I would like to take this opportunity to thank you – our shareholders – for your ongoing support of the Company
over the past 12 months. I would also like to acknowledge the dedication and efforts of the Board members and
management throughout the year, and thank all our staff and contractors for their diligent efforts.
Paul Byrne
Chief Executive Officer
Annual Report
Australian Pacific Coal Limited
Page i
Year Ending 30 June 2014
ABN 49 089 206 986
Chief Executive Officer’s Report
INFORMATION ON AUSTRALIAN PACIFIC COAL
Australian Pacific Coal Limited (AQC) is an ASX-listed junior coal
explorer focused on the Bowen Basin, Queensland.
Through a series of acquisitions, AQC has positioned itself with both
metallurgical and thermal
suited for
underground and open cut mining.
coal projects potentially
AQC has a built a portfolio of strategic holdings of coal exploration
tenements located in Queensland's Bowen, Galilee, Surat and
Clarence-Moreton basins. The philosophy of AQC's management has
been to secure strategic tenure by identifying available tenements
close to operating mines or in areas with proven or potential in-ground
resources in regions suitable for short
term development. The
Company’s projects are located close to the existing network of rail
and port infrastructure in the Bowen Basin.
The current focus of the company’s operations is to value add the coal
projects through evaluation of the resource potential of the projects
followed up with drilling as required to prove up the resource. Early
stage drilling has commenced on selected projects and will continue
through the coming year.
Following on from the value add process, AQC’s exploitation
opportunities for individual coal projects include development of the
project in its own right, farm-in, joint venture exploration, joint venture
development or outright sale.
AQC’s long term strategic focus is based on seeking out and identifying potentially lucrative resource
investment opportunities. The Company will continue to take advantage of low entry cost resource investment
opportunities that it identifies. Investing in these potentially lucrative resource plays is an important part of the
Board’s strategy to grow the Company.
BOARD OF DIRECTORS
Mr Peter Ziegler BCom (Hons), LLB (Hons), MFM, FCPA, CTA, ACA
Non-executive Chairman
Chairman of the Audit and Remuneration Committees
Mr. Ziegler is an experienced company director. He was a partner of one of the major international accounting
firms, specialising in taxation and corporate structuring. He is also a solicitor of the Supreme Court of Victoria.
Mr Ziegler is currently the principal of Ziegler Asset Partners, an asset management firm specialising in
investments in listed and unlisted equities and special opportunities. Director since 29 November 2005.
Mr Paul Byrne
Managing Director, Chief Executive Officer
Mr. Byrne joined the Company as Executive Director, following the acquisition of the Ipoh group of companies.
Mr. Byrne was a founder of the Ipoh group and has initiated environmental remediation projects in conjunction
with CSIRO, University of South Australia and the Queensland Department of Primary industries. He has also
been involved in the resources sector since 1985 in exploration and mining and has been a director of several
Australian public listed companies. Director since 29 November 2005.
Annual Report
Australian Pacific Coal Limited
Page ii
Year Ending 30 June 2014
ABN 49 089 206 986
Information on Australian Pacific Coal
INFORMATION ON AUSTRALIAN PACIFIC COAL
BOARD OF DIRECTORS - continued
Mr Paul Ingram B.AppSc.(Geology), AusIMM
Non-executive Director
Mr Ingram is a geologist with over thirty five years of experience in mineral exploration and mine development.
Mr Ingram has been involved in several start-up public companies, mostly focussed in the Asian region. He has
extensive experience in corporate M&A, and has been focussed on coal projects in Asia and Australia for the
past eight years. Mr Ingram brings to the Board of AQC an extensive network of professional contacts, which,
combined with close ties to the Chinese resource industry, will be of significant benefit to the Group as an
emerging coal company in Queensland. Director since 17 March 2011.
Mr Ingram is currently a director of Consolidated Global Investments Limited, A-Cap Resources Ltd and Impact
Minerals Limited.
Mr Paul Ryan
Non-executive Director
Mr. Ryan is a businessman with over twenty years’ experience as owner and manager of large scale privately
held companies. He has been involved in operations management at the Manimbah gold mine, contract mining,
and transport and logistics operations. Mr Ryan brings to the Board of AQC an extensive network of
professional contacts which, combined with relevant industry experience, are of significant benefit to the Group
as an emerging coal company in Queensland. Director since 29 November 2012.
KEY COMPANY DATA
Listing:
Australian Securities Exchange (ASX:AQC) – Listed in 1999
Shares on Issue:
920,897,748 AQC ORD as at 30 June 2014
(approximately 1,700 shareholders)
Options:
Nil outstanding
Market Capitalisation:
$3.68 million as at 30 June 2014
Cash at bank:
$451,226 as at 30 June 2014
Quarterly Share Price Activity:
June 2014
March 2014
December 2013
September 2013
High
$0.006
$0.009
$0.014
$0.016
Low
$0.004
$0.005
$0.006
$0.008
Last
$0.004
$0.006
$0.007
$0.015
Annual Report
Australian Pacific Coal Limited
Page iii
Year Ending 30 June 2014
ABN 49 089 206 986
Information on Australian Pacific Coal
REVIEW OF OPERATIONS
COAL EXPLORATION PROJECTS
Australian Pacific Coal Limited is an Australian public company focusing on acquiring and developing coking,
PCI and thermal coal deposits in Queensland. The Company now owns interests in 28 coal
tenements
comprising 1 granted mineral development licence, 24 granted coal exploration permits, and 3 coal exploration
applications one of which is currently proceeding to grant.
The Company has joint venture agreements in place with major miner Rio Tinto and Cuesta Coal.
Most of the coal tenements are in the Bowen Basin, a major source of supply of some of the world's best
metallurgical, PCI and thermal coal. The Company also has coal tenements in the Surat, Galilee and Clarence-
Moreton Basins. These basins contain large reserves of thermal coal and currently produce coal for export and
domestic use.
The Company’s coal
infrastructure and some are down-dip or along strike of operating coal mines or known coal resources.
tenements cover a combined area of 773km2. Many are close to rail and road
The tenements have been largely grouped into project areas which target similar coal seams within a close
geographical proximity. AQC has an exploration priority on coking coal, and scoped underground targets with a
resource potential greater than 50 million tonnes and open cut targets with a resource potential greater than 5
million tonnes.
Short term evaluation and exploration is focused on the most prospective targets. Priority targets include:
MDL453 ‘Cooroorah’
in the Blackwater project – a total resource of 124.9Mt (69.6Mt Indicated and
55.3Mt Inferred) measured in accordance with the JORC Code. Potential for secondary shallower open
cut coal in the north.
EPC 1859 ‘Dingo’
in the Blackwater project – seams from Rangal Coal Measures intersected with
thicknesses up to 5m with potential for a washed, high yielding Ultra Low Volatile (ULV) PCI coal.
Requires further interpretation and drilling to potentially elevate to a resource.
EPC 2011 “South Clermont’ – targeting extension of the Clermont Basin south of the Clermont Coal
Mine with potential for thick open cut mineable coal seams.
EPC 1995 ‘Carlo Creek’ in the Blackwater project – a geological target with prospectivity for shallow
German Creek and Fort Cooper formation seams.
COMPLIANCE STATEMENT
MDL 453 ‘Cooroorah’ Resource Estimate
The information is extracted from the report entitled EPC1827 “Cooroorah” Resource Estimate Update created on 20
November 2013 and is available to view on www.aqcltd.com/irm/content/asx-announcements.aspx.
EPC 1859 ‘Dingo’ Coal Quality
The information is extracted from the report entitled EPC 1859 Dingo Exploration Update created on 20 August 2014 and is
available to view on www.aqcltd.com/irm/content/asx-announcements.aspx.
The company confirms that it is not aware of any new information or data that materially affects the information included in
the original market announcements and, in the case of estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply
and have not materially changed. The company confirms that the form and context in which the Competent Person’s findings
are presented have not been materially modified from the original market announcement.
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page iv
Review of Operations
REVIEW OF OPERATIONS
Project Areas
The Company’s current exploration activities are focused on its 100% owned Blackwater projects.
Joint venture partners Rio Tinto Exploration Pty Ltd and Cuesta Coal Limited’s 100% owned subsidiary
Blackwood Resources Pty Ltd are currently carrying out exploration of JV project areas.
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page v
Review of Operations
Blackwater (AQC 100%)
REVIEW OF OPERATIONS
COOROORAH (MDL 453)
124.9 million tonne (69.6Mt Indicated & 55.3Mt Inferred) Resource*
•
• Mineral Development Licence (MDL453) granted January 2014
•
•
Located near rail network and developed infrastructure
Targeting PCI and semi-soft coking coal
DINGO (EPC 1859)
•
•
•
30 km east of operating Blackwater and Curragh mines, targeting Rangal Coal Measures
Initial drilling program completed in Q2 2014. Ultra Low Volatile PCI coal quality potential identified
Located on rail network
CARLO CREEK (EPC 1995)
• Historical drill holes and seismic sections identified two potential coal target sequences
*StatementofresourcequantityisinaccordancewithTheJORCCode2012Editionguidelines
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page vi
Review of Operations
REVIEW OF OPERATIONS
Cooroorah – MDL 453 (AQC 100%)
The target mineralisation is Late Permian Rangal Coal Measures coal within the Bowen Basin.
While coal is found in several seams within the Rangal Coal Measures, the project is targeting coal from the
Aries, Castor, Pollux and Pisces seams.
The four coal seams are located at a depth of between 180m and 520m, with no subcrops within the tenement.
RESOURCE ESTIMATE
124.9 Million tonnes resource
69.6 Mt Indicated
55.3 Mt Inferred
RAW COAL STATISTICS
All seam plies exhibit low to
moderate ash 9% to 39% (to
28% in target seams) and
volatile matter between 13%
and 22%
CSN typically range from1-4
but are as high as 8 within the
Aries seam in places
Sulphur ranges 0.02 – 0.07%
Phosphorus 0.04% and 0.19%
Specific Energy 24 to 32MJ/kg
Seam
Aries
Castor
Pollux
Pisces
All seams total
Measured
Indicated
Inferred
Resource Category (Mt)
-
-
-
-
-
0.6
27.2
17.5
24.3
69.6
7.0
7.9
10.4
30.0
55.3
Total
7.6
35.1
27.9
54.3
124.9
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page vii
Review of Operations
Dingo – EPC 1859 (AQC 100%)
REVIEW OF OPERATIONS
COAL QUALITY
Very Low Volatile
Low Ash
High Yield
PCI Product
Initial Washability
Volatile Content % for PCI Coals
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page viii
Review of Operations
South Clermont – EPC 2011 (AQC 100%)
REVIEW OF OPERATIONS
Proposed drilling of the South Clermont
target area aims to define an extension of
the Clermont Mine deposit with potential
for thick open cut mineable coal seams.
(Illustrated below.)
(Reference: N. September & R .Kirkwood, 2010. Clermont Coal Mine Project ,Selection of Tailings Paste Thickener, AusIMM –
Technical Meeting 17 February 2010, Sinclair Knight Merz)
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page ix
Review of Operations
REVIEW OF OPERATIONS
Exploration & Joint Venture Agreements
Rio Tinto Exploration Pty Ltd – EPC 1824 “Mt Hillalong”
EPC1824 is located in the heart of the Bowen Basin in close proximity to Rio Tinto’s existing Hail Creek mine
(see map below). The Company’s Exploration, Option and Joint Venture Agreement with Rio Tinto Exploration
Pty Ltd provides the Company with a number of options in the event that Rio Tinto exercises its option to
acquire a 75% interest in the tenement. Historical exploration conducted for the CRA Coal Group identified
outcropping coal in the northern part of the tenement. The RTX exploration program will expand on their
knowledge of the tenement and is focused on identifying a resource target in the central/southern areas of the
tenement.
Note. This map does not display tenements held by other explorers.
RIO TINTO EXPLORATION PTY LTD - EXPLORATION OTION AND JOINT VENTURE AGREEMENT TENEMENTS
EPC
Name
Holder
EPC 1824
Mount Hillalong
Area Coal Pty Ltd
EPC 1645
Mount Hess
Area Coal Pty Ltd (tobetransferredtoRioTinto
ExplorationPtyLtdongrant)
EPC 1773
Kemmis Creek
Rio Tinto Exploration Pty Ltd
EPC 1867
Mount Hess West
Rio Tinto Exploration Pty Ltd
Status
Granted
Application
Granted
Granted
Area
(km2)
48
32
6
13
Location
6km E of
Glenden
20km SE of
Glenden
32km SE of
Glenden
16km SE of
Glenden
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page x
Review of Operations
REVIEW OF OPERATIONS
Rio Tinto Exploration (RTX) have provided the following report on the initial outcomes and progress of their
exploration program for AQC and Rio Tinto Exploration’s Mt Hillalong JV project EPC1824.
“Rio Tinto Exploration has completed its 2013 exploration program on the Hillalong Project (EPC1824). Two
open holes and three 2D seismic lines were completed during September 2013 to assess the potential for
Rangal Coal measures.
Drill results:
•
•
HILL0002 intersected 12m net coal between 320m and 460m depth from the Leichhardt, Vermont and
Girrah Seams.
HILL0003 intersected 11m net coal between 155m and 185m depth from the Leichhardt and Vermont
Seams.
Coal chip samples from the two holes have been submitted to the coal laboratories for petrography analysis and
reflectance (RoMax) determination.
Final processing and interpretation of the seismic data has not yet been completed, however it confirms Rangal
Coal Measures are present and continuous within EPC1824.
Rio Tinto Exploration is planning to return to the project next field season to follow up this work.”
THE MT HILLALONG EXPLORATION, OPTION AND JOINT VENTURE AGREEMENT
Australian Pacific Coal Limited through its 100% owned subsidiary Area Coal Pty Ltd (Area Coal) has an
Exploration Option and Joint Venture Agreement (EOJVA) with Rio Tinto Exploration Pty Limited (RTX). This
EOJVA sets out terms of an exploration agreement and RTX’s potential acquisition or joint venture of the
Company’s Mt Hillalong project.
The key terms of the EOJVA are:
• An initial payment to the Company of $2.3 million was received in August 2011.
• Area Coal transferred title to EPC 1773 and 1867 to RTX. EPC 1645 is to be transferred to RTX if
granted to Area Coal.
• RTX must sole fund and manage an exploration program with a minimum expenditure of $700,000
within the first 24 months of gaining access to explore EPC 1824. The 24 month term commenced on
23 August 2013 and expires on 23 August 2015.
• RTX has an option to acquire a 75% interest in EPC 1824 by making a defined payment to Area Coal at
any time within the first 24 months of the exploration program (option). In the event of RTX’s exercise
of this option, the parties will form an unincorporated joint venture, in which Area Coal will retain a 25%
free carried interest.
•
•
•
If RTX exercises the option to acquire an interest in EPC 1824, Area Coal would then hold a put option
(exercisable on the date that is 12 months after the joint venture’s formation) (the first put option)
enabling it to sell its 25% interest in the JV to RTX for an additional defined payment to Area Coal.
If Area Coal does not exercise the first put option, it will have a second put option, exercisable within
180 days of the JV management committee commissioning a feasibility study, to sell its 25% interest in
the joint venture to RTX for consideration calculated on the basis of EPC 1824’s resource tonnage.
If Area Coal does not exercise this second put option it will become liable for 25% of all future
development and operational costs of the JV.
• Should RTX not exercise its option to acquire the aforementioned 75% interest in EPC 1824, Area Coal
will retain its existing 100% ownership of this tenement. In addition, it can reacquire the other Mt
Hillalong tenements that were transferred to RTX as part of this transaction.
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page xi
Review of Operations
REVIEW OF OPERATIONS
The Mount Hillalong project targets the Rangal and Fort Cooper Coal Measures in the northern Bowen Basin.
The project offers prospectivity for proving underground resources of metallurgical coal in the Rangals and open
cut coal
in the Fort Coopers. The project has limited previous exploration. However, past work has shown
isolated drill hole intercepts within the tenements and geophysical surveys that defined good drilling targets as
the basis for further exploration by the company.
EPC 1824 comprises 15 sub-blocks (48 km2) centred on the Mount Hillalong homestead, 65 km North West of
Nebo in central Queensland. The Burton and Hail Creek coal mines are 14 km south and 18 km south-
southwest of Mt Hillalong, respectively. EPC 1824 was acquired by the Company to explore the underlying
Rangal Coal Measures for near surface coal resources.
Historical exploration conducted for the CRA Coal Group identified outcropping coal in the northern part of the
tenement. A coal target in the Rangals has been defined by historical seismic survey and indicated coal at
between 300 and 500m. A drilling program is being undertaken by RTX to further evaluate this target with the
aim to define a resource. Initial results have been summarised in the preceding pages.
The area is well served with infrastructure with major nearby coal mines located to the west, south and east.
The Hail Creek railway is 18 km to the southeast and provides access to Mackay’s export coal
loading
terminals.
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page xii
Review of Operations
REVIEW OF OPERATIONS
Exploration & Joint Venture Agreements
Blackwood Resources Pty Ltd (Cuesta Coal Limited)
Australian Pacific Coal Limited, through its 100% owned subsidiary Mining Investments One Pty Ltd, entered
into a Tenement Sale and Joint Venture Agreement with Blackwood Resources Pty Ltd (Blackwood) in April
2010. Under the terms of the agreement, Blackwood acquired a 90% interest in EPCs 1979, 1955, 1987 and
1957 for a total cash consideration of $500,000. Blackwood are required to expend at least the minimum
exploration commitment with the aim to prove up a coal resource and complete a feasibility study for the
project(s). AQC retains a 10% free carried interest up to bankable feasibility study stage. AQC will then have the
option to enter into a joint venture agreement with Blackwood Resources to further explore and develop the
tenements.
The joint venture tenements cover large areas over the Clarence-Moreton, Surat and Galilee Basin and are
prospective for shallow thermal coal.
Blackwood Resources Pty Ltd is a 100% owned subsidiary of Cuesta Coal Limited.
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page xiii
Review of Operations
REVIEW OF OPERATIONS
BLACKWOOD RESOURCES PTY LTD - TENEMENT SALE AND JOINT VENTURE AGREEMENT TENEMENTS
EPC
Name
Holder
Cuesta Coal
Project Area
Status
Area
(km2)
Location
EPC 1955
Bungaban Creek
Blackwood Resources Pty Ltd
East Wandoan
Granted
197
EPC 1957
Laguna Creek
Mining Investments One Pty Ltd (Transferto
BlackwoodResourcesPtyLtdinprogress)
Eastern Galilee
Granted
382
EPC 1979
Kingsthorpe
Blackwood Resources Pty Ltd
East Ackland
Granted
155
EPC 1987
Quondong
Mining Investments One Pty Ltd (Transferto
BlackwoodResourcesPtyLtdinprogress)
East Wandoan
Granted
354
100km N of
Miles
150km NW of
Clermont
15km W of
Toowoomba
50km N of
Miles
Note: Mining Investments One Pty Ltd has retained a 10% equity interest in each of the above tenements.
CUESTA COAL – EAST WANDOAN PROJECT
Over the period June-October 2011 Cuesta Coal carried out a 17 open hole, 3 Core hole programme in the
southern corner of EPC 1955 immediately to the north of the Bottle Tree Deposit (35Mt resource, EPC 813) held
by Cockatoo Coal. All holes were geophysically logged and Core samples sent away for analysis and an
Inferred JORC resource of 23.9Mt was announced by the company on 6th of February 2011.
In March/April
2012 Cuesta completed 39 holes for a total of 59 holes drilled in the southern section of EPC 1955. The drilling
has resulted in the delineation of 44.6Mt (22.1Mt
Inferred) of resource calculated in
accordance with JORC guidelines, and is now referred to as the Thorn Hill Deposit. Follow-up drilling at the
Thorn Hill Deposit will include step out drilling and large diameter coring to enable washability test work to be
conducted to identify washability recovery and saleable product. Follow-up drilling will focus on the south-east
corner and northern extensions of the deposit aimed to further increase the overall resource and understanding
The Company has
of the coal quality. There is potential to increase this to 60Mt with additional drilling.
identified 4 other similar target areas which it will test in the next 12-18mth, priority targets will be identified
through ongoing geophysical and desktop studies. - See more at: http://www.cuestacoal.com.au/projects/east-
wandoan
Indicated, 22.5Mt
CUESTA COAL – EASTERN GALILIEE PROJECT, KARURA TARGET AREA (EPC 1957)
In conjunction with the 2012 exploration activities in Yellow Jacket, a detailed desktop review of Cuesta’s 90%
owned EPC 1957 has confirmed a target area of up to 50km2 is present immediately south of the Adani
Carmichael Project rail corridor. Historical regional seismic lines have been investigated and they indicate
syncline structures present in both Yellow Jacket and Karura that have the potential to preserve the Permian
coal measures of the Betts Creek Beds east of the known sub crop. This has been proven in Yellow Jacket
through the drilling activities in 2011 and 2012. The syncline structures in Yellow Jacket match the gravity
survey conducted earlier this year. There are very similar geological properties in the Karura Target area as
It is anticipated
there are in the Yellow Jacket Project, warrant further exploration to verify the presence of coal.
that a thirteen hole scout drilling campaign can test the presence of coal measures in the Karura Project area. -
See more at: http://www.cuestacoal.com.au/projects/eastern-galilee
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page xiv
Review of Operations
REVIEW OF OPERATIONS
Granted Tenements
100% AQC
Exploration & Joint
Venture Agreements
• MDL 453 – Cooroorah
Rio Tinto Exploration Pty Ltd
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
EPC 1566 – Bee Creek
EPC 1798 – Bluff Creek
EPC 1859 – Dingo
EPC 1894 – Rocky Creek
•
•
•
•
EPC 1645* – Mount Hess
EPC 1773 – Kemmis Creek
EPC 1824 – Mount Hillalong
EPC 1867 – Mount Hess West
EPC 1895 – Dawson River
* Application Pending
EPC 1896 – Bottle Tree Creek
EPC 1920 – Comet River
EPC 1965 – Kanga Creek
Blackwood Resources Pty Ltd
•
•
•
•
EPC 1955 – Bungaban Creek
EPC 1957 – Laguna Creek
EPC 1979 – Kingsthorpe
EPC 1987 – Quondong
EPC 1989 – Castlevale
EPC 1995 – Carlo Creek
EPC 1996 – Churchyard Creek
EPC 1997 – Mt Stuart
EPC 2011 – South Clermont
EPC 2035 – Bee Creek
EPC 2036 – Ripstone Creek
EPC 2037 – Almoola
EPC 2122 – Blackwater
Pending Applications - 100% AQC
•
EPC 1638** – Spear Creek
•
EPC 2016** – Drummond
** Competing Application
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page xv
Review of Operations
REVIEW OF OPERATIONS
INDUSTRIAL MINERALS PROJECTS
AQC owns two substantial industrial minerals projects in central/south western Queensland. The projects form
part of AQC’s former industrial minerals business and are no longer part of the company’s core business.
MANTUAN DOWNS BENTONITE
AQC’s Mantuan Downs calcium bentonite resource is located west of Springsure in Central Queensland.
The Mantuan Downs deposit comprises two main bentonite horizons that are essentially flat lying. The Upper
Bentonite Zone is the best developed, with an average cation exchange capacity (CEC) quality of 102
meq/100g. Near the centre of the deposit, the upper bentonite zone is 4-4.5m thick. The lower bentonite zone
similarly comprises good quality bentonite with an average CEC quality of around 90 meq/100g. This zone is
continuous throughout the deposit and is at least 2-4m thick.
The company has developed a number of products based on bentonite for industrial, livestock, agricultural, soil
improvement and composting applications. The project is currently on care and maintenance as new marketing
opportunities are being evaluated.
GRAFTON RANGE SODIUM BICARBONATE
Sodium bicarbonate (baking soda)
is used extensively in food manufacture, pharmaceuticals, mineral
processing and other industries. Major derivative products such as sodium carbonate (soda ash) and caustic
soda are also key inputs into a number of industries including chemicals and glass manufacture.
The Grafton Range sodium bicarbonate project is located 15 km northeast of Roma in western Queensland. It
covers part of the Surat Basin where elevated concentrations of sodium bicarbonate (NaHCO3) are present in
the Precipice Sandstone aquifer, which in the Grafton Range area is about 1,100 m below surface. Using
resource information obtained from petroleum and gas wells drilled in the area during 1969-93, independent
experts engaged by the Company have prepared a preliminary commercial feasibility analysis of the project.
The Company does not consider this project be a part of its core business and is seeking opportunities for
divestment.
Mineral Exploration Tenements - 100% AQC
Bentonite (Mantuan Downs)
Sodium Bicarbonate (Grafton Range)
• ML 70360 – Mantuan Downs
• ML 50207 – Grafton Range
•
EPM 17644 – Fairview
•
EPM 19039 – Grafton Range
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page xvi
Review of Operations
REVIEW OF OPERATIONS
Bentonite Based Technologies
AQC has developed calcium bentonite based technologies for the improvement of our environment. These
technologies include remediation of heavy metal contaminated soils, the removal of carcinogenic compounds
from high temperature smoke, the global
licence for absorption of oil spills in water, increasing agricultural
productivity through bentonite blending for fertilizer, and the reduction of methane emissions in livestock.
The major market being targeted is excess fertilizer run-off from farming lands along the Queensland coast.
Generally positive results from field trials have enhanced the long term prospects for use of AQC’s calcium
bentonite in this application. Commercial considerations for primary producers in these regions mean that
changes to traditional farming practice are only likely to happen in response to Government pressure to fix this
problem.
Based on prior research which highlighted the benefit of bentonite in enhancing soils and composts, AQC also
focused on the agriculture sector end users in broad acre, high value market gardens, and feed lots. While
feedback from field trials has generally been positive, the reticence of primary producers to change long term
farming practice has slowed market take up.
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page xvii
Review of Operations
Your directors present their report, together with the financial statements of the Group, being the company and
its controlled entities, for the financial year ended 30 June 2014.
DIRECTORS’ REPORT
Principal Activities and Significant Changes in Nature of Activities
The principal activities of the consolidated group during the financial year were:
evaluating coal exploration tenements held in the Bowen, Galilee, Surat and Clarence-Moreton basins;
identifying exploration opportunities on selected coal tenements including exploration by way of joint
venture agreement;
planning and initial implementation of exploration programs covering selected coal tenements;
seeking opportunities for divestment or joint venture operation of industrial minerals projects; and
reviewing other resource investment opportunities.
There were no significant changes in the nature of the consolidated group’s principal activities during the
financial year.
Operating Results
The consolidated loss of the consolidated group amounted to $1,790,492 (2013: $1,876,561) after providing for
income tax and eliminating minority equity interests.
Review of Operations
Australian Pacific Coal
Queensland’s principal coal basins close to established infrastructure.
is a coal
focused exploration group with strategic tenement holdings located in
During the course of 2014 the Group further advanced its exploration program. First stage drilling was
completed on its EPC1859 “Dingo” project area, and EPC1995 “Carlo Creek”. The Group has a number of
prospective tenement areas within its holdings in the Blackwater region. The four main exploration projects
identified are Dingo, Carlo Creek, Churchyard Creek and South Clermont. Activities being undertaken are
focused on drilling these target areas and improving the resource status of the tenements. Further drilling will be
undertaken as funds become available.
The Group’s flagship exploration project, MDL453 “Cooroorah”, advanced to a Mineral Development Licence
following the completion of the projects exploration program. Exploration has upgraded the resource estimate
for the project to 124.9Mt (69.6Mt Indicated and 55.3Mt Inferred).
The Group has an Exploration, Option and Joint Venture Agreement with Rio Tinto Exploration Pty Ltd covering
four of the Group’s Mt Hillalong tenements. Rio Tinto Exploration Pty Ltd commenced drilling of the joint venture
tenement in August 2013. The agreement has the potential to provide substantial additional funding to the
Group over the next two years.
The Group also holds a 10% free carried interest through to feasibility stage in four tenements that it transferred
to Blackwood Resources Pty Ltd. Blackwood is a subsidiary of Cuesta Coal Limited. Cuesta has secured
funding to complete its exploration program and is actively drilling the joint venture exploration tenements.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 1 of 59
Directors’ Report
DIRECTORS’ REPORT
Financial Position
The net assets of the consolidated group at 30 June 2014 are $2,314,112 (2013: $2,386,208). The following
factors contributed to the consolidated group maintaining its net asset position:
proceeds from share issues raising $1,568,396 after costs;
drilling costs for capitalised exploration expenditure being conducted under an agreement whereby the
drilling contractor earns equity in the relevant exploration project; and
operating expenditure controls.
The Group’s working capital, being current assets less current liabilities, is $900,899 deficit (2013: $336,358
deficit). Current liabilities include $175,000 of convertible securities. These convertible securities are expected
to be converted to ordinary shares during the course of the 2015 financial year.
The Group holds a number of highly prospective coal tenements in Queensland’s Bowen, Galilee, Surat and
Clarence-Moreton basins. During the past year, the Group has expended funds in evaluating, planning and
initial exploration of selected coal tenements held by the Group.
The directors believe the Group is in a stable financial position to expand, maintain and grow its current
operations.
Significant Changes in State of Affairs
The following significant changes in the state of affairs of the parent entity occurred during the financial year:
Changes in capital structure:
i.
The company issued 57,525,000 ordinary shares under its July 2013 share purchase plan offer, raising
$575,250 before costs, to provide funds for exploration and additional working capital.
ii. The company issued 168,432,539 ordinary shares to sophisticated and professional investors, raising
$975,000 before costs, to provide funds for exploration and additional working capital.
iii. The company issued 10,815,759 ordinary shares to geological consultants in accordance with the plan
rules for the Australian Pacific Coal Limited Officers, Executives, Consultants and Employee Share
Plan.
iv. During the financial year 21,428,571 ordinary shares were issued on conversion of convertible
securities having a face value of $150,000. The face value of outstanding convertible securities at 30
June 2014 is $175,000 (2013: $325,000).
The total number of ordinary shares issued during the financial year was 258,201,869 (2013: 97,701,953).
Dividends Paid or Recommended
No dividends of the Company or any entity of the Group have been paid or declared or recommended since the
end of the preceding year. The Directors do not recommend the payment of any dividend for the year ended
30th June 2014.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 2 of 59
Directors’ Report
DIRECTORS’ REPORT
Events after the Reporting Period
Other than the following the directors are not aware of any significant events since the end of the reporting
period.
On 11 September 2014 the company announced a Share Purchase Plan Offer (SPP). The SPP will raise a
maximum of $925,000 with eligible shareholders able to take a maximum investment of $15,000 representing
4,687,500 new shares at a price of 0.32 cents per share. The proposed closing date of the SPP is 2 October
2014 with issue and allotment of new shares under SPP to follow on 9 October 2014.
On 16 September 2014 the company issued two unlisted convertible securities to The Australian Special
Opportunity Fund, LP. The face values of the convertible securities are $50,000 and $75,000 respectively, both
expiring 24 months from issue. The company received cash consideration of $125,000 (before costs) for the
issue of the convertible securities.
No other matters or circumstances have arisen since the end of the financial year which significantly affected, or
could significantly affect the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial years.
Future Developments, Prospects and Business Strategies
Future developments in the operations of the Group and the expected results of those operations are discussed
where appropriate in the Annual Report under Review of Operations.
The Group will remain focused on its current business strategies which are:
evaluating and exploring its coal exploration tenements held in the Bowen, Galilee, Surat and Clarence-
Moreton basins;
seeking opportunities for divestment or joint venture operation of industrial minerals projects; and
reviewing other resource investment opportunities.
There are no further developments of which the Directors are aware which could be expected to affect the
results of the Group’s operations in subsequent financial years other than information which the Directors
believe comment on, or disclosure of, would prejudice the interests of the Group.
Environmental Issues
the
to significant environmental
The Group’s operations are subject
Commonwealth and Queensland in respect of its Australian exploration activities. The Company is committed to
undertaking all its operations in an environmentally responsible manner. The Group’s projects in Queensland
operate under granted Environmental Authorities issued under the Environmental Protection Act 1994 (Qld).
The Group is not aware of any non-compliance matters in relation to environmental issues up to the date of this
report.
regulations under
the laws of
The Group is not subject to the conditions imposed by the registration and reporting requirements of the
National Greenhouse and Energy Reporting Act 2007.
The Group is not subject to the conditions imposed by the registration and reporting requirements of the Energy
Efficiency Opportunities Act 2006 in the current financial year as its energy consumption was below the 0.5
petajoule registration threshold.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 3 of 59
Directors’ Report
Information on Directors
The names and details of the directors of the Company during the year and until the date of this report are:
DIRECTORS’ REPORT
Mr. Peter Ziegler B. Com (Hons), LL.B (Hons); MFM, FCPA, CTA, ACA (Chairman, Non-executive Director)
Appointed Chairman 29 November 2012, Director since 29 November 2005.
Experience and expertise
Mr. Ziegler is an experienced company director. He was a partner of one of the major international accounting
firms, specialising in taxation and corporate structuring. He is also a solicitor of the Supreme Court of Victoria.
Mr Ziegler is currently the principal of Ziegler Asset Partners, an asset management firm specialising in
investments in listed and unlisted equities and special opportunities.
Special responsibilities
Chairman of the Audit and Remuneration Committees
Interests in shares and options
10,233,333 ordinary shares in Australian Pacific Coal Limited
Directorships held in other listed entities in the three years prior to the current year
Nil
Mr. Paul Byrne (Executive Director)
Director since 29 November 2005.
Experience and expertise
Mr. Byrne joined the Company as Executive Director, following the acquisition of the Ipoh group of companies.
Mr. Byrne was a founder of the Ipoh group and has initiated environmental remediation projects in conjunction
with CSIRO, University of South Australia and the Queensland Department of Primary industries. He has also
been involved in the resources sector since 1985 in exploration and mining and has been a director of several
Australian public listed companies.
Special responsibilities
Managing Director
Interests in shares and options
94,312,907 ordinary shares in Australian Pacific Coal Limited
Directorships held in other listed entities in the three years prior to the current year
Nil
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 4 of 59
Directors’ Report
DIRECTORS’ REPORT
Mr. Paul Ingram B.AppSc.(Geology), AusIMM (Non-executive Director)
Director since 17 March 2011.
Experience and expertise
Mr Ingram is a geologist with over thirty five years of experience in mineral exploration and mine development.
Mr Ingram has been involved in several start-up public companies, mostly focussed in the Asian region. He has
extensive experience in corporate M&A and has been focussed on coal projects in Asia and Australia for the
past eight years. Mr Ingram brings to the Board of AQC an extensive network of professional contacts, which,
combined with close ties to the Chinese resource industry, will be of significant benefit to the Group as an
emerging coal company in Queensland.
Special responsibilities
Nil
Interests in shares and options
5,750,000 ordinary shares in Australian Pacific Coal Limited
Directorships held in other listed entities in the three years prior to the current year
Consolidated Global Investments Limited since September 2006
A-Cap Resources Limited since June 2009
Impact Minerals Limited since July 2009
Mr. Paul Ryan (Non-executive Director)
Appointed 29 November 2012
Experience and expertise
Mr. Ryan is a businessman with over twenty years’ experience as owner and manager of large scale privately
held companies. He has been involved in operations management at the Manimbah gold mine, contract mining,
and transport and logistics operations. Mr Ryan brings to the Board of AQC an extensive network of
professional contacts which, combined with relevant industry experience, are of significant benefit to the Group
as an emerging coal company in Queensland.
Special responsibilities
Nil
Interests in shares and options
Nil
Directorships held in other listed entities in the three years prior to the current year
Nil
All directors were in office for the entire year and up to the date of this report unless otherwise noted.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 5 of 59
Directors’ Report
DIRECTORS’ REPORT
Company Secretary
Mr. Kevin Mischewski B Bus (Acc), CA
(Company Secretary since 30 June 2008, Joint Company Secretary 29 February 2008 to 30 June 2008.)
Chartered Accountant and Registered Tax Agent with extensive commercial experience in senior financial and
management accounting roles. Previous positions include Chief Financial Officer, Company Secretary and
Finance Director for large private manufacturing companies. Extensive experience with listed public company
reporting and compliance requirements.
Meetings of Directors
The number of meetings of directors and meetings of committees of directors held during the year, and the
number of meetings including circulating resolutions attended by each director, was as follows:
Directors’ Meetings
Audit Committee
Number
attended
Number
eligible to
attend
9
9
9
9
Mr. Peter Ziegler
Mr. Paul Byrne
Mr. Paul Ingram
Mr. Paul Ryan
9
9
8
8
** = Not a member of the relevant committee.
Number
eligible to
attend
1
**
**
**
Number
attended
1
**
**
**-
Indemnifying Officers or Auditor
During the financial year, the Company paid a premium in respect of a contract of insurance indemnifying any
past, present, or future director, secretary, officer or employee of the Company against liability, which payment
or agreement to pay does not contravene the Corporations Act (Cth) 2001. The contract of insurance prohibits
disclosure of the terms of the policy and the amount of the premium.
The Company has not otherwise, during or since the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer of the Company or any related body corporate against the liability
incurred by such an officer.
Options
At the date of this report, there were no unissued ordinary shares of the Company under option
There have been no unissued shares or interests under any option of any controlled entity within the Group
during or since the end of the reporting period.
No options were issued to directors, officers or employees during the year as part of their remuneration.
No shares have been issued on the exercise of options granted during or since the end of the reporting period.
No person entitled to exercise any option had or has any right by virtue of the option to participate in any share
issue of any other body corporate.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 6 of 59
Directors’ Report
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or to intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the company
for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
DIRECTORS’ REPORT
Non-audit Services
The Board of Directors, in accordance with advice from the Audit Committee, is satisfied that the provision of
non-audit services during the year is compatible with the general standard of
independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not
compromise the external auditor’s independence for the following reasons:
all non-audit services are reviewed and approved by the audit committee prior to commencement to
ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided does not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the
Accounting Professional and Ethical Standards Board.
The following fees were paid or payable to the former auditors of
Accountants (Brisbane), for non-audit services provided during the year ended 30 June 2014:
the company, Sothertons Chartered
Taxation services
$7,500
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2014 has been received and can be
found on page 12 of the Annual Financial Report.
ASIC Class Order 98/100 Rounding of Amounts
The company is an entity to which ASIC Class Order 98/100 applies and, accordingly, amounts in the financial
statements and directors’ report have been rounded to the nearest dollar.
Compliance Statement
Cooroorah (EPC1827/MDL453) Resource Estimate
The information is extracted from the report entitled EPC1827 “Cooroorah” Resource Estimate Update created
on 20 November 2013 and is available to view on www.aqcltd.com/irm/content/asx-announcements.aspx. The
company confirms that it is not aware of any new information or data that materially affects the information
included in the original market announcement and, in the case of estimates of Mineral Resources or Ore
Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant
market announcement continue to apply and have not materially changed. The company confirms that the form
and context in which the Competent Person’s findings are presented have not been materially modified from the
original market announcement.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 7 of 59
Directors’ Report
DIRECTORS’ REPORT
Remuneration report
Remuneration Policy
The remuneration policy ensures that contracts for services are reviewed on a regular basis and properly reflect
the duties and responsibilities of the individuals concerned. The executive remuneration structure is based on a
number of factors including length of service, relevant market conditions, knowledge and experience with the
industry, organisational experience, performance of the Company and that the remuneration is competitive in
retaining and attracting motivated people. There are no guaranteed pay increases included in the senior
executives’ contracts.
The Board’s policy for determining the nature and amount of remuneration for key management personnel of
the consolidated group is as follows:
• The Board of Director’s is responsible for determining and reviewing compensation arrangements for the
directors and the senior executives. The Board also reviews and ratifies the remuneration of key management
and staff.
• All key management personnel receive a base salary (which is based on factors such as length of service and
experience), superannuation, fringe benefits, options and performance incentives.
• Performance incentives are generally only paid once predetermined key performance indicators have been
met.
• The Board reviews key management personnel packages periodically by reference to the consolidated group’s
performance, executive performance and comparable information from industry sectors.
Key management personnel receive a superannuation guarantee contribution required by the government,
which is currently 9.5%, and do not receive any other retirement benefits. Individuals, however, may choose to
sacrifice part of their salary to increase payments towards superannuation.
Upon retirement, key management personnel are paid employee benefit entitlements accrued to the date of
retirement. Key management personnel are paid the mandated statutory amount of their salary in the event of
redundancy.
All remuneration paid to key management personnel is valued at the cost to the company and expensed.
The Board’s policy is to remunerate non-executive directors at no greater than market rates for time,
commitment and responsibilities. The Board determines payments to the non-executive directors and reviews
their remuneration periodically, based on market practice, duties and accountability. Independent external
advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive
directors is subject to approval by shareholders at the Annual General Meeting and is currently set at $250,000
per annum.
Engagement of Remuneration Consultants
The company did not engage remuneration consultants to review the elements of key management personnel
remuneration during the financial year.
Performance-based Remuneration
Key management personnel remuneration comprises of a total fixed remuneration and does not comprise of any
short-term incentive schemes or equity based remuneration.
Relationship between Remuneration Policy and Company Performance
The Board do not consider that there is a direct relationship between the remuneration policy of the company
and company performance. The Managing Director of the company is also a substantial shareholder and as
such is sufficiently motivated to improve company performance.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 8 of 59
Directors’ Report
Employment Details of Members of Key Management Personnel and Other Executives
The following table provides employment details of persons who were, during the financial year, members of
key management personnel of the consolidated group. The table also illustrates the proportion of remuneration
that was performance and non-performance based.
DIRECTORS’ REPORT
Name
Position
Directors
Mr Peter Ziegler
Mr Paul Byrne
Mr Paul Ingram
Mr Paul Ryan
Otherexecutives
Chairman, Non-executive
Managing Director, Executive
Non-executive
Non-executive
Mr Kevin Mischewski
Company Secretary, Financial Accountant
Proportions of
elements of
remuneration
related to
performance
Proportions of
elements of
remuneration
not related to
performance
-
-
-
-
-
100%
100%
100%
100%
100%
The employment terms and conditions of key management personnel and Group executives are not currently
formalised in contracts of employment. Key management personnel contracts of employment are governed by
applicable statutory provisions which may set out minimum notice period prior to termination of their contract.
Statutory and common law termination provisions apply.
Terms of employment for employees of relevant group entities do not include termination provisions and do not
provide an executive contracted person with a minimum notice period prior to termination of contract. A
contracted person deemed employed on a permanent basis may terminate without notice. Statutory termination
provisions apply. Termination payments are not payable on resignation or under the circumstances of
unsatisfactory performance.
Non-executive directors are engaged in accordance with the company’s Directors Terms of Engagement
requiring no notice to be given on termination. Statutory termination provisions apply. Termination payments are
at the discretion of the Board.
Changes in Directors and Executives Subsequent to Year-end
Up to the date of signing of this report there have been no changes to directors and executives subsequent to
year end.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 9 of 59
Directors’ Report
Remuneration Details for the Year Ended 30 June 2014
The following table of benefits and payments details in respect
to the financial year the components of
remuneration for each member of the key management personnel of the consolidated group and, to the extent
different, the five Group executives and five company executives receiving the highest remuneration:
DIRECTORS’ REPORT
Table of Benefits and Payments for the Year Ended 30 June 2014
Group Key
Management
Personnel
Mr Peter Ziegler
Mr Paul Byrne
Mr Paul Ingram
Mr Paul Ryan
Mr Kevin Mischewski
Total Remuneration
Short-term benefits
Base
Remuneration
$
Consulting &
Contractor Fees
$
Post-employment
benefits
Superannuation
$
Other
$
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
60,000
50,000
36,000
36,000
36,000
37,018
36,000
20,688
—
—
168,000
143,706
211,200
129,600
201,600
194,000
—
—
—
—
192,273
179,398
605,073
502,998
—
—
—
—
—
1,982
—
512
—
—
—
2,494
—
—
—
—
—
—
—
—
—
—
—
—
Total
$
271,200
179,600
237,600
230,400
36,000
39,000
36,000
21,200
192,273
179,398
773,073
649,198
Commencing on 1 February 2013, directors agreed that they would defer the receipt of payment of their
remuneration. As at 30 June 2014 the amounts of directors’ fees and consulting fees unpaid and payable to
each director were: Peter Ziegler $314,418; Paul Byrne $272,018; Paul Ingram $51,000 and Paul Ryan
$51,000. These amounts are included in the above table.
Securities Received that are not Performance Related
No members of key management personnel are entitled to receive securities which are not performance-based
as part of their remuneration package.
Cash Bonuses, Performance-related Bonuses and Share-based Payments
No members of key management personnel are entitled to receive cash bonuses, performance-related bonuses
or share based payments as part of their remuneration package.
Options and Rights Granted
No members of key management personnel were granted options or rights during the financial year.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 10 of 59
Directors’ Report
This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution
of the Board of Directors, pursuant to section 298(2) of the Corporations Act 2001
DIRECTORS’ REPORT
On behalf of the Directors
Peter Ziegler
Chairman
Brisbane, 30th September 2014
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 11 of 59
Directors’ Report
Revenue
Raw materials and consumables
Exploration and evaluation costs of tenements sold
Loss on disposal of fixed assets
Employee benefits expense
Depreciation and amortisation expense
Exploration, evaluation and development expenses
Finance costs
Impairment of investments
Impairment of loans receivable
Impairment of exploration and evaluation
Administration and consulting expenses
Profit before income tax
Income tax expense (benefit)
Profit/(Loss) for the period
Profit/(Loss) attributable to:
Members of the parent entity
Earnings per share
From continuing operations:
Basic earnings per share (cents)
Diluted earnings per share (cents)
INCOME STATEMENT
For the year ending 30 June 2014
Note
Consolidated Group
2014
$
2013
$
3
24,220
413,389
(20,757)
-
-
(156,608)
(381)
-
(211,183)
(201,181)
(48,350)
(113,073)
(36,878)
-
(26,000)
(36,797)
(20,000)
-
(181,950)
(383,125)
(71,171)
(68,108)
(1,218,042)
(1,310,925)
(1,790,492)
(1,876,428)
-
(133)
(1,790,492)
(1,876,561)
(1,790,492)
(1,876,561)
(1,790,492)
(1,876,561)
(0.22)
(0.22)
(0.31)
(0.31)
4
5
8
8
Theaboveincomestatementshouldbereadinconjunctionwiththeaccompanyingnotes
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 13 of 59
Income Statement
STATEMENT OF COMPREHENSIVE INCOME
Profit/(Loss) for the period
Other comprehensive income
Net gain on revaluation of land and buildings
Share of other comprehensive income of associates
Income tax relating to components of other comprehensive income
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Total comprehensive income attributable to:
Members of the parent entity
For the year ending 30 June 2014
Note
Consolidated Group
2014
$
2013
$
(1,790,492)
(1,876,561)
-
-
-
-
-
-
-
-
(1,790,492)
(1,876,561)
(1,790,492)
(1,876,561)
Theabovestatementofcomprehensiveincomeshouldbereadinconjunctionwiththeaccompanyingnotes
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 14 of 59
ABN 49 089 206 986
Statement of Comprehensive Income
STATEMENT OF FINANCIAL POSITION
As at 30 June 2014
Consolidated Group
2014
$
2013
$
451,226
497,865
102,589
27,867
16,632
28,493
581,682
542,990
213,646
385,363
74,000
100,000
185,448
228,311
2,741,917
2,008,892
-
-
3,215,011
2,722,566
3,796,693
3,265,556
1,307,581
554,348
175,000
325,000
1,482,581
879,348
1,482,581
879,348
2,314,112
2,386,208
9
10
17
10
12
14
15
16
18
19
21
36,957,568
35,239,172
(34,643,456) (32,852,964)
2,314,112
2,386,208
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Trade and other receivables
Other financial assets
Property, plant and equipment
Exploration and evaluation expenditure
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Retained earnings
Total equity
Theabovestatementoffinancialpositionshouldbereadinconjunctionwiththeaccompanyingnotes
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 15 of 59
ABN 49 089 206 986
Statement of Financial Position
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2014
Note
Issued
Capital
Ordinary
Retained
Earnings
$
$
Total
$
34,310,319 (30,976,403)
3,333,916
CONSOLIDATED GROUP
Balance at 1 July 2012
Comprehensive income
Profit /(Loss) for the period
Total other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners, in their capacity as owners, and other
transfers
Share issued during the period
Transaction costs on share issue
Total transactions with owners and other transfers
-
-
-
(1,876,561)
(1,876,561)
-
-
(1,876,561)
(1,876,561)
1,170,000
(241,147)
928,853
-
-
-
1,170,000
(241,147)
928,853
Balance at 30 June 2013
35,239,172 (32,852,964)
2,386,208
Balance at 1 July 2013
Comprehensive income
Profit/(Loss) for the period
Total other comprehensive income for the period
Total comprehensive income for the period
Transactions with owners, in their capacity as owners, and other
transfers
Share issued during the period
Transaction costs on share issue
Total transactions with owners and other transfers
35,239,172 (32,852,964)
2,386,208
-
-
-
(1,790,492)
(1,790,492)
-
-
(1,790,492)
(1,790,492)
1,782,875
(64,479)
1,718,396
-
-
-
1,782,875
(64,479)
1,718,396
Balance at 30 June 2014
36,957,568 (34,643,456)
2,314,112
Theabovestatementofchangesinequityshouldbereadinconjunctionwiththeaccompanyingnotes
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 16 of 59
ABN 49 089 206 986
Statement of Changes in Equity
STATEMENT OF CASH FLOWS
For the year ended 30 June 2014
Consolidated Group
2014
$
2013
$
2,864
-
(1,094,864)
(1,150,531)
16,556
13,389
-
-
-
(133)
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Income tax paid
Net cash (used in)/provided by operating activities
24a
(1,075,444)
(1,137,275)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration, evaluation and development assets
(451,098)
(1,013,254)
Proceeds from sale of exploration, evaluation and development assets
Payments for investments
Proceeds from sale of investments
Purchase of non-current assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Capital raising costs
Proceeds from borrowings
Repayment of borrowings
Net cash used in/(provided by) financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of period
-
-
-
262,500
-
110,000
(5,868)
(720)
(456.966)
(641,474)
1,550,250
950,000
(64,479)
(241,147)
-
-
525,000
-
1,485,771
1,233,853
(46,639)
(544,896)
497,865
1,042,761
Cash and cash equivalents at end of period
9
451,226
497,865
Theabovestatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 17 of 59
Statement of Cash Flows
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2014
These consolidated financial statements and notes represent those of Australian Pacific Coal Limited and Controlled
Entities (the “consolidated group” or “Group”)
The separate financial statements of the parent entity, Australian Pacific Coal Limited have not been presented within
this financial report as permitted by the Corporations Act 2001.
The financial statements were authorised for issue on 29 September 2014 by the directors of the company.
1
BASIS OF PREPARATION
These general purpose financial statements have been prepared in accordance with the Corporations Act 2001,
Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and International
Financial Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity
for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the
preparation of these financial statements are presented below and have been consistently applied unless stated
otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on
historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial
assets and financial liabilities.
Going Concern
This financial report has been prepared on a going concern basis as the Directors believe that the company and the
consolidated entity will be able to realise its assets and settle its liabilities in the normal course of business and at the
amounts stated in the financial report. The continuation of the company and the consolidated entity as a going concern
is dependent upon their ability to achieve the following objectives:
Development and exploitation of the coal tenements
Realisation of surplus assets
Capital raising
The company has entered into a Share Purchase and Convertible Security Agreement with The Australian Special
Opportunities Fund, LP. The agreement provides ongoing capital raising to the company by way of monthly tranche
payments continuing through to October 2014.
However, should the anticipated activities and capital raisings not generate sufficient revenues and cash flows as
expected, the company and consolidated entity may not be able to pay their debts as and when they become due and
payable and they may be required to realise assets and extinguish liabilities other than in the ordinary course of business
and at amounts different from those stated in the financial statements. This report does not include any adjustments
relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be
necessary should the company and the consolidated entity not continue as going concerns.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 18 of 59
ABN 49 089 206 986
Notes to the Financial Statements
(a) Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Australian Pacific
Coal Limited) and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls.
The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note
13.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from
the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that
control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group
entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments
made where necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling
interests”. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries
and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-
controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling
interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling
interests are shown separately within the equity section of the statement of financial position and statement of
comprehensive income.
Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities
or businesses under common control. The business combination will be accounted for from the date that control is
obtained, whereby the fair value of the identified assets acquired and liabilities (including contingent liabilities) assumed
is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a
contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent
consideration classified as an asset or liability is remeasured each reporting period to fair value, recognising any change
to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to the business combination are recognised as expenses in profit or loss when
incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
Goodwill
Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
(i)
(ii)
(iii)
the consideration transferred;
any non-controlling interest (determined under either the full goodwill or proportionate interest method); and
the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair
value of any previously held equity interest shall form the cost of the investment in the separate financial statements.
Fair value remeasurements in any pre-existing equity holdings are recognised in profit or loss in the period in which they
arise. Where changes in the value of such equity holdings had previously been recognised in other comprehensive
income, such amounts are recycled to profit or loss.
The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds less than a 100% interest
will depend on the method adopted in measuring the non-controlling interest. The Group can elect in most circumstances
to measure the non-controlling interest in the acquiree either at fair value (full goodwill method) or at the non-controlling
interest’s proportionate share of
In such
circumstances, the Group determines which method to adopt for each acquisition and this is stated in the respective
notes to these financial statements disclosing the business combination.
the subsidiary’s identifiable net assets (proportionate interest method).
Under the full goodwill method, the fair value of the non-controlling interest is determined using valuation techniques
which make the maximum use of market information where available. Under this method, goodwill attributable to the non-
controlling interests is recognised in the consolidated financial statements.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 19 of 59
ABN 49 089 206 986
Notes to the Financial Statements
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included
in investments in associates.
Goodwill is tested for impairment annually and is allocated to the Group’s cash-generating units or groups of cash-
generating units, representing the lowest level at which goodwill is monitored not larger than an operating segment. Gains
and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed of.
Changes in the ownership interests in a subsidiary are accounted for as equity transactions and do not affect the carrying
values of goodwill.
(b)
Income Tax
The income tax expense/(income) for the year comprises current income tax expense/(income) and deferred tax
expense/(income).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities/(assets)
are measured at the amounts expected to be paid to/(recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year
as well unused tax losses.
Current and deferred income tax expense/(income) is charged or credited outside profit or loss when the tax relates to
items that are recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability
where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled and their measurement also reflects the manner in which management expects to
recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property,
plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred
tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely
through sale.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets
and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities
where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will
occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or
settled.
(c) Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending
on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie
unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to
determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific
asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one
or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market
data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the
most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the
receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account
transaction costs and transport costs).
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 20 of 59
ABN 49 089 206 986
Notes to the Financial Statements
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the
asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best
use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instrument, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statements.
(d)
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct
materials, direct labour and an appropriate portion of variable and fixed overheads. Overheads are applied on the basis
of normal operating capacity. Costs are assigned on the basis of weighted average costs.
The cost of mining stocks includes direct materials, direct labour, transportation costs and variable and fixed overhead
costs relating to mining activities.
(e) Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any
accumulated depreciation and impairment losses.
Property
Freehold land and buildings are recorded at their fair value (being the amount for which an asset could be exchanged
between knowledgeable willing parties in an arm’s length transaction), based on periodic, but at least triennial, valuations
by external independent valuers, less accumulated depreciation for buildings.
Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation surplus in
equity. Decreases that offset previous increases of the same asset are recognised against fair value reserves directly in
equity; all other decreases are recognised in profit or loss.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and
the net amount is restated to the revalued amount of the asset.
Plant and equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and
any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated
recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and
impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a
revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present (refer to
Note 1(i) for details of impairment).
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows
that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing
costs and an appropriate proportion of fixed and variable overheads.
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 recognised as expenses in profit or loss during the
financial period in which they are incurred.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 21 of 59
ABN 49 089 206 986
Notes to the Financial Statements
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land,
is depreciated on a straight-line basis over the asset’s useful life to the consolidated group commencing from the time
the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period
of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Buildings
Leasehold improvements
Plant and equipment
Leased plant and equipment
Depreciation Rate
4%
20%
10–40%
12.5--20%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
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 the statement of comprehensive income. When revalued assets are sold, amounts included in the
revaluation surplus relating to that asset are transferred to retained earnings.
(f) Exploration and Development Expenditure
Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable area of
interest. These costs are only capitalised to the extent that they are expected to be recouped through the successful
development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment
of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision
to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the
area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs
in relation to that area of interest.
Costs of site restoration are provided over the life of the facility from when exploration commences and are included in
the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building
structures, waste removal, and rehabilitation of the site in accordance with local laws and regulations and clauses of the
mining permits. Such costs have been determined using estimates of future costs, current legal requirements and
technology on an undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and
future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within
one year of abandoning the site.
(g) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the
legal ownership that is transferred to entities in the consolidated group, are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of
the leased property or the present value of the minimum lease payments, including any guaranteed residual values.
Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised
as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the
lease term.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 22 of 59
ABN 49 089 206 986
Notes to the Financial Statements
(h) Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to
the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase
or sale of the asset (ie trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified
‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Finance instruments are subsequently measured at fair value, amortised cost using the effective interest rate method, or
cost.
Amortised cost is calculated as the amount at which the financial asset or financial
liability is measured at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of
the difference between that initial amount and the maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and
other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term)
of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected
future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income
or expense item in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the
requirements of accounting standards specifically applicable to financial instruments.
(i) Financial assets at fair value through profit or loss
Financial assets are classified at ‘fair value through profit or loss’ when they are held for trading for the purpose of
short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid
an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key
management personnel on a fair value basis in accordance with a documented risk management or investment
strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in
profit or loss.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit and
loss through the amortisation process and when the financial asset is derecognised.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable
payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured
at amortised cost. Gains or losses are recognised in profit and loss through the amortisation process and when the
financial asset is derecognised.
(iv) Available-for-sale investments
Available-for-sale investments are non-derivative financial assets that are either not capable of being classified into
other categories of financial assets due to their nature or they are designated as such by management. They
comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable
payments.
They are subsequently measured at fair value with any remeasurements other than impairment losses and foreign
exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised,
the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is
reclassified into profit or loss.
Available-for-sale financial assets are classified as non-current assets when they are expected to be sold after 12
months from then end of the reporting period. All other financial assets are classified as current assets.
(v) Financial liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost.
Gains or losses are recognised in profit and loss through the amortisation process and when the financial asset is
derecognised.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 23 of 59
ABN 49 089 206 986
Notes to the Financial Statements
Impairment
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a "loss event") having occurred, which has an impact on the estimated
future cash flows of the financial asset(s).
In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument
is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also any
cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at
this point.
In the case of financial assets carried at amortised cost, Loss events may include: indications that the debtors or a group
of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments;
indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions
that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to
reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of
recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the
written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced
directly if no impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been recognised, the
Group recognises the impairment for such financial assets by taking into account the original terms as if the terms have
not been renegotiated so that the loss events that have occurred are duly considered.
Financial guarantees
Where material, financial guarantees issued that require the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at
fair value on initial recognition.
The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow
approach. The probability has been based on:
the likelihood of the guaranteed party defaulting in the next reporting period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and
the maximum loss exposed if the guaranteed party were to default.
Financial guarantees are subsequently measured at the higher of the best estimate of the obligation in accordance with
AASB 137: Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less, when
appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entity gives guarantees in
exchange for a fee, revenue is recognised in accordance with AASB 118.
De-recognition
Financial assets are derecognised when the contractual rights to receipt of cash flows expires or the asset is transferred
to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits
associated with the asset. Financial liabilities are derecognised when the related obligations are discharged, cancelled
or have expired. The difference between the carrying amount of the financial liability extinguished or transferred to
another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is
recognised in profit or loss.
(i)
Impairment of Assets
At each the end of each reporting period, the Group assesses whether there is any indication that an asset may be
impaired. The assessment will
include the consideration of external and internal sources of information including
dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits.
If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the
asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying amount. Any
excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the
asset is carried at a revalued amount in accordance with another Standard (eg in accordance with the revaluation model
in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued asset is treated as a revaluation
decrease in accordance with that other Standard
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 24 of 59
ABN 49 089 206 986
Notes to the Financial Statements
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives and intangible assets not
yet available for use.
(j)
Investments in Associates
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate
in the financial and operating policy decisions of the entity but is not control or joint control of those policies. Investments
in associates are accounted for in the consolidated financial statements by applying the equity method of accounting,
whereby the investment is initially recognised at cost (including transaction costs) and adjusted thereafter for the post-
acquisition change in the Group’s share of net assets of the associate company. In addition, the Group’s share of the
profit or loss of the associate is included in the Group’s profit or loss.
The carrying amount of the investment includes, when applicable, goodwill relating to the associate. Any discount on
acquisition, whereby the Group’s share of the net fair value of the associate exceeds the cost of investment, is recognised
in profit or loss in the period in which the investment is acquired.
Profits and losses resulting from transactions between the Group and the associate are eliminated to the extent of the
Group’s interest in the associate.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group discontinues
recognising its share of further losses unless it has incurred legal or constructive obligations or made payments on behalf
of the associate. When the associate subsequently makes profits, the Group will resume recognising its share of those
profits once its share of the profits equals the share of the losses not recognised.
(k)
Interests in Joint Arrangements
Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous
decisions about relevant activities are required.
Separate joint venture entities providing joint venturers with an interest to net assets are classified as a joint venture and
accounted for using the equity method. Refer to Note 1(j) for a description of the equity method of accounting.
Joint venture operations represent arrangements whereby joint operators maintain direct interests in each asset and
exposure to each liability of the arrangement. The Group’s interests in the assets, liabilities, revenue and expenses of
joint operations are included in the respective line items of the consolidated financial statements.
Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties’ interests.
When the Group makes purchases from a joint operation, it does not recognise its share of the gains and losses from
the joint arrangement until it resells those goods/assets to a third party.
(l)
Intangibles Other than Goodwill
Patents and trademarks
Patents and trademarks are recognised at cost of acquisition. Patents and trademarks have an indefinite life and are
carried at cost less any impairment losses.
Research and development
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are
capitalised only when technical feasibility studies identify that the project is expected to deliver future economic benefits
and these benefits can be measured reliably.
Capitalised development costs have a finite useful life and are amortised on a systematic basis based on the future
economic benefits over the useful life of the project.
(m) Employee Benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits
that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the
employees render the related service, including wages, salaries, annual leave and sick leave. Short-term employee
benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.
The Group’s obligations for short-term employee benefits are recognised as a part of current trade and other payables
in the statement of financial position.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 25 of 59
ABN 49 089 206 986
Notes to the Financial Statements
Provision is made for employees’ other long-term employee benefits that are not expected to be settled wholly within 12
months after the end of the annual reporting period in which the employees render the related service. Other long-term
employee benefits are measured at the present value of the expected future payments to be made to employees.
Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee
departures and are discounted at rates determined by reference to market yields at the end of the reporting period on
government bonds that have maturity dates that approximate the terms of the obligations. Any remeasurements for
changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods
in which the changes occur.
The Group’s obligations for other long-term employee benefits are presented as non-current provisions in its statement
of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12
months after the end of the reporting period, in which case the obligations are presented as current provisions.
(n) 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 economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the
reporting period.
(o) 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 converted to known amounts of cash and which are subject to insignificant risk of changes
in value and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the
statement of financial position.
(p) Revenue and Other Income
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade
discounts and volume rebates allowed. When the inflow of consideration is deferred, it is treated as the provision of
financing and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The
difference between the amount initially recognised and the amount ultimately received is interest revenue.
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant
risks and rewards of ownership of the goods and the cessation of all involvement in those goods.
Interest revenue is recognised using the effective interest rate method.
Dividend revenue is recognised when the right to receive a dividend has been established.
Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of
accounting.
Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the
transaction at the end of the reporting period, where outcome of the contract can be estimated reliably. Stage of
completion is determined with reference to the services performed to date as a percentage of total anticipated services
to be performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related
expenditure is recoverable.
All revenue is stated net of the amount of goods and services tax.
(q) Trade and Other Receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary
course of business. Receivables expected to be collected within 12 months of the end of the reporting period are
classified as current assets. All other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment. Refer to Note 1(i) for further discussion on the determination
of impairment losses.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 26 of 59
ABN 49 089 206 986
Notes to the Financial Statements
(r) Trade and Other Payables
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services
received by the Group during the reporting period which remains unpaid. The balance is recognised as a current liability
with the amount being normally paid within 30 days of recognition of the liability.
(s) 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, until such time
as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in income in the period in which they are incurred.
(t) 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 Tax Office.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial
position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts
from customers or payments to suppliers.
(u) Government Grants
Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and
all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary
to match the grant to the costs they are compensating. Grants relating to assets are credited to deferred income at fair
value and are credited to income over the expected useful life of the asset on a straight-line basis.
(v) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
Where the Group has retrospectively applied an accounting policy, made a retrospective restatement of items in the
financial statements or reclassified items in its financial statements, an additional statement of financial position as at the
beginning of the earliest comparative period will be disclosed.
(w) Rounding of Amounts
The parent entity has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts in the
financial report and directors’ report have been rounded off to the nearest $1.
(x) New and Amended Accounting Policies Adopted by the Group
Consolidated Financial Statements
The Group adopted the following Australian Accounting Standards, together with the relevant consequential amendments
arising from related Amending Standards, from the mandatory application date of 1 January 2013:
– AASB 10: Consolidated Financial Statements;
– AASB 12: Disclosure of Interests in Other Entities; and
– AASB 127: Separate Financial Statements.
AASB 10 provides a revised definition of "control" and may result in an entity having to consolidate an investee that was
not previously consolidated and/or deconsolidate an investee that was consolidated under the previous accounting
pronouncements.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 27 of 59
ABN 49 089 206 986
Notes to the Financial Statements
The Group’s assessment is that these new and amended pronouncements have had no material impact on the Group’s
financial statements.
Employee Benefits
The Group adopted AASB 119: Employee Benefits (September 2011) and AASB 2011-10: Amendments to Australian
Accounting Standards arising from AASB 119 (September 2011) from the mandatory application date of 1 January 2013.
The Group has applied these Standards retrospectively in accordance with AASB 108: Accounting Policies, Changes in
Accounting Estimates and Errors and the transitional provisions of AASB 119.
The Group’s assessment is that these new and amended pronouncements have had no material impact on the Group’s
financial statements.
(y) Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgments incorporated into the financial statements 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.
Key estimates
Impairment - general
The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the
Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using
value-in-use calculations which incorporate various key assumptions.
Key judgments
Provision for impairment of receivables
Included in trade and other receivables at the end of the reporting period are other amounts receivable amounting to
$904,148 (2013: $904,148). The company has funded the purchase of shares issued in accordance with the terms of the
Company’s Officers, Executives, Consultants and Employee Share Plan by way of limited-recourse loans repayable from
future dividends or out of proceeds when the allotted shares are sold. Impairment adjustments amounting to $782,848
(2013: $600,898) have been recorded where the market value of the shares held at 30 June 2014 was less than the
gross amount of the associated limited-recourse loan.
Exploration and Evaluation Expenditure
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable
or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves.
While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued
belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Such
capitalised expenditure is carried at the end of the reporting period at $2,741,917 ($2013: $2,008,892).
Intangible assets
The Group capitalises expenditure relating to a class of intangible assets where it is considered likely to be recoverable.
The useful lives of these intangible assets are assessed to be either finite or indefinite. Such capitalised expenditure is
carried at the end of the reporting period at $Nil.
(z) New Accounting Standards for Application in Future Periods
The Australian Accounting Standards Board has issued a number of new and amended Accounting Standards and
Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the
Group. The Group has decided not to early adopt any of the new and amended pronouncements. The Group’s
assessment is that these new and amended pronouncements will have no material impact on the Group’s financial
statements.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 28 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 2: PARENT INFORMATION
The following information has been extracted from the books and records of the parent and has been prepared in
accordance with Australian Accounting Standards.
STATEMENT OF FINANCIAL POSITION
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Retained earnings
Total equity
STATEMENT OF COMPREHENSIVE INCOME
Total profit
Total comprehensive income
Guarantees
2014
$
2013
$
464,402
496,776
464,555
614,476
961,178
1,079,031
1,508,450
1,552,676
-
-
1,508,450
1,552,676
36,957,568
35,239,172
(37,504,840)
(35,712,817)
(547,272)
(473,645)
(1,792,023)
(2,006,732)
(1,792,023)
(2,006,732)
Australian Pacific Coal Limited has not entered into any guarantees, in the current or previous financial year, in relation to
the debts of its subsidiaries.
Contingent liabilities
Australian Pacific Coal Limited has no known contingent liabilities.
Contractual commitments
At 30 June 2014, Australian Pacific Coal Limited had not entered into any contractual commitments for the acquisition of
property, plant and equipment (2013: Nil).
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 29 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 3: REVENUE AND OTHER INCOME
Revenue from Continuing Operations:
Sale of goods
Other revenue:
— interest received
Total Revenue
Other Income
— sale of interest in tenements
Total revenue and other income from continuing operations
Attributable to members of the parent entity
NOTE 4: PROFIT FOR THE YEAR
a.
Expenses
Interest expense on financial liabilities not at fair value through profit or
loss
Rental expense on operating leases:
— minimum lease payments
Employee benefits expense:
Note
Consolidated Group
2014
$
2013
$
7,664
-
16,556
24,220
13,389
13,389
-
400,000
24,220
413,389
24,220
413,389
Note
Consolidated Group
2014
$
2013
$
-
(20,000)
127,514
120,868
— defined contribution superannuation expense
3,529
4,969
b.
Significant Revenue and Expenses
The following significant revenue and expense items are relevant in
explaining the financial performance:
Sale of interest in tenements
Exploration and evaluation costs of tenements sold
Impairment of loans receivable
Impairment of capitalised exploration expenditure
-
-
400,000
(156,608)
(181,950)
(383,125)
(71,171)
(68,108)
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 30 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 5: INCOME TAX EXPENSE
a.
The components of tax expense comprise:
Current tax
Deferred tax
Note
Consolidated Group
2014
$
2013
$
20
-
-
-
133
-
133
b.
The prima facie tax on profit from ordinary activities before income tax is
reconciled to the income tax as follows:
Prima facie tax payable on profit from ordinary activities before income
tax at 30% (2013: 30%)
(537,148)
(562,928)
Add:
Tax effect of:
— non-deductible depreciation and amortisation
— other non-allowable items
— write-downs to recoverable amounts
Less:
Tax effect of:
— other allowable items
— tax losses transferred from controlled entities
Tax losses and temporary differences not brought to account
Income tax attributable to entity
14,505
2,875
83,736
33,922
2,286
182,352
(571,844)
(400,685)
-
-
(1,007,876)
(745,053)
1,007,876
744,920
-
133
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 31 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 6: INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP)
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each
member of the Group’s key management personnel for the year ended 30 June 2014.
The totals of remuneration paid or payable to KMP of the company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
2014
$
2013
$
773,073
672,104
-
2,494
773,073
674,598
KMP Options and Rights Holdings
No options over ordinary shares were held by any KMP of the Group during the financial year.
KMP Shareholdings
The number of ordinary shares in Australian Pacific Coal Limited held by each KMP of the Group during the financial year
is as follows:
30 June 2014
Balance at
beginning of
year
Granted as
remuneration
during the year
Mr Paul Byrne
Mr Peter Ziegler
Mr Paul Ingram
Mr Kevin Mischewski
30 June 2013
72,292,061
10,233,333
5,750,000
1,500,000
Balance at
beginning of
year
Granted as
remuneration
during the year
Mr Paul Byrne
Mr Peter Ziegler
Mr Paul Ingram
Mr Kevin Mischewski
61,148,548
10,233,333
5,750,000
1,500,000
Other KMP Transactions
Other changes
during the year
Balance at end of
year
Issued on
exercise
of options
during the
year
-
-
-
-
22,020,846
-
-
-
94,312,907
10,233,333
5,750,000
1,500,000
Other changes
during the year
Balance at end of
year
Issued on
exercise
of options
during the
year
-
-
-
-
11,143,513
-
-
-
72,292,061
10,233,333
5,750,000
1,500,000
-
-
-
-
-
-
-
-
There have been no other transactions involving equity instruments other than those described in the tables above.
For details of other transactions with KMP, refer to Note 30: Related Party Transactions.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 32 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 7: AUDITORS’ REMUNERATION
Remuneration of the auditor of the parent entity for:
— auditing or reviewing the financial statements
— taxation services
NOTE 8: EARNINGS PER SHARE
a.
Weighted average number of ordinary shares outstanding during the
year used in calculating basic EPS
Weighted average number of dilutive options outstanding
Weighted average number of dilutive convertible notes on issue
Weighted average number of ordinary shares outstanding during the
year used in calculating dilutive EPS
b.
Convertible notes are considered anti-dilutive as the consolidated
group is loss making. Convertible notes potentially dilute earnings per
share in the future.
NOTE 9: CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term bank deposits
The effective interest rate on short-term bank deposits was 3.73% (2013: 4.0%);
these deposits have an average maturity of 180 days.
Consolidated Group
2014
$
2013
$
60,995
-
60,050
8,500
Consolidated Group
2014
No.
2013
No.
810,704,801
602,956,109
-
-
-
-
810,704,801
602,956,109
Note
Consolidated Group
2014
$
2013
$
401,226
447,865
50,000
50,000
451,226
497,865
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 33 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 10: TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other receivables
Total current trade and other receivables
Non-current
Amounts receivable from related parties:
— loans to directors
Note
Consolidated Group
2014
$
2013
$
4,800
97,789
102,589
-
16,632
16,632
551,848
551,848
— loans to directors - provision for impairment
10a.(i)
(484,548)
(383,598)
— loans to key management personnel
— loans to key management personnel - provision for impairment
10a.(ii)
Other receivables
28,950
(22,950)
415,696
28,950
(13,950)
405,463
Other receivables - provision for impairment
10a.(iii)
(275,350)
(203,350)
Total non-current trade and other receivables
213,646
385,363
a.
Provision For Impairment of Receivables
Current trade and term receivables are non-interest bearing loans and generally on 30-day terms. Non-current
trade and term receivables are assessed for recoverability based on the underlying terms of the contract. A
provision for impairment is recognised when there is objective evidence that an individual trade or term receivable
is impaired. These amounts have been included in the income statements.
Movement in the provision for impairment of receivables is as follows:
Opening
Balance
1.7.2013
Charge
for the
Year
Amounts
recovered
Closing
Balance
30.6.2014
$
$
$
$
Consolidated Group
(i)
(ii)
Non-current related parties - directors
383,598
100,950
Non-current related parties – key management personnel
13,950
9,000
(iii)
Non-current other receivables
203,350
72,000
-
-
-
484,548
22,950
275,350
Opening
Balance
1.7.2012
Charge
for the
Year
Amounts
Written Off
Closing
Balance
30.6.2013
$
$
$
$
Consolidated Group
(i)
(ii)
Non-current related parties - directors
210,623
172,975
Non-current related parties – key management personnel
-
13,950
(iii)
Non-current other receivables
7,150
196,200
-
-
-
383,598
13,950
203,350
b.
Credit Risk — Trade and Other Receivables
The Group has no significant concentration of credit risk with respect to any single counterparty or group of
counterparties other than those receivables specifically provided for and mentioned within Note 10. The class of
assets described as “trade and other receivables” is considered to be the main source of credit risk related to the
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 34 of 59
ABN 49 089 206 986
Notes to the Financial Statements
Group.
The following table details the Group’s trade and other receivables exposed to credit risk (prior to collateral and
other credit enhancements) with ageing analysis and impairment provided for thereon. Amounts are considered as
‘past due’ when the debt has not been settled, with the terms and conditions agreed between the Group and the
customer or counterparty to the transaction. Receivables that are past due are assessed for impairment by
ascertaining solvency of the debtors and are provided for where there are specific circumstances indicating that the
debt may not be fully repaid to the Group.
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of
high credit quality.
Consolidated Group
Gross
amount
$
Past due
and
impaired
$
Past due but not impaired
(days overdue)
< 30
$
31–60
$
61–90
$
> 90
$
2014
Trade and term receivables
Amounts receivable from
related parties
Other receivables
Total
2013
Amounts receivable from
related parties
Other receivables
Total
4,800
580,798
513,485
1,099,083
580,798
422,095
1,002,893
c.
Collateral Held as Security
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Within
initial
trade
terms
$
Within
initial
trade
terms
and
impaired
$
-
-
-
-
-
-
-
-
4,800
507,498
73,300
275,350
238,135
782,848
316,235
397,548
183,250
203,350
218,745
600,898
401,995
Included in amounts receivable from related parties is an amount owing to the parent company of $580,798 at the
end of the reporting period (2013: $580,798). Included in other receivables is an amount owing to the parent
company of $323,350 at the end of the reporting period (2013: $323,350). The company has funded the purchase of
shares issued in accordance with the terms of the Company’s Officers, Executives, Consultants and Employee
Share Plan by way of limited-recourse loans repayable from future dividends or out of proceeds when the allotted
shares are sold. Impairment adjustments have been recorded where the market value of the shares held at 30 June
2014 was less than the gross amount of the associated limited-recourse loan. Collateral is held by way of security
over the shares issued. The shares are subject to a trading lock preventing disposal of the shares prior to the
respective holders making suitable arrangements for repayment of any outstanding amounts payable on the
associated loans.
d.
Financial Assets Classified as Loans and Receivables
Trade and other receivables:
-
-
total current
total non-current
Financial assets
Consolidated Group
2014
$
2013
$
102,589
213,646
316,235
16,632
385,363
401,995
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 35 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 11: ASSOCIATED COMPANIES
Interests are held in the following associated companies:
Name
Principal
Activities
Country of
Incorporation
Shares
Ownership Interest
Carrying amount of
investment
2014
2013
2014
2013
%
%
$
$
Unlisted:
Spinafex Uranium Pty Ltd
Mineral
exploration
Australia
Ord
Diamantina Uranium Pty Ltd Mineral
Australia
Ord
Frontier Uranium Pty Ltd
exploration
Mineral
exploration
Australia
Ord
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Movements during the year in equity accounted investment in associated
companies;
Balance at beginning of the financial year
Disposals during the year
Balance at end of the financial year
Note
Consolidated Group
2014
$
2013
$
-
-
-
110,000
(110,000)
-
On 30 June 2013 the Company disposed of its 20% interest in each of Spinafex Uranium Pty Ltd, Diamantina Uranium Pty
Ltd and Frontier Uranium Pty Ltd.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 36 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 12: OTHER FINANCIAL ASSETS
NON-CURRENT
Available-for-sale financial assets
Total non-current
a.
Available-for-sale financial assets
Unlisted investments, at cost:
— Shares in other corporations
— Shares in other corporations – Provision for impairment
Total available-for-sale financial assets
b.
Shares in other corporations
Unlisted investments:
Note
Consolidated Group
2014
$
2013
$
13a
74,000
74,000
100,000
100,000
13b
100,000
100,000
(26,000)
-
74,000
100,000
Shares in other corporations include a shareholding of 1,000,000 ordinary shares in Scott Creek Coal
Limited
Australian Pacific Coal Limited does not have the power to participate in the financial or operating
decisions of the entity and therefore does not exercise significant influence over Scott Creek Coal
Limited.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 37 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 13: CONTROLLED ENTITIES
a.
Controlled Entities Consolidated
Country of
Incorporation
Percentage Owned (%)*
2014
2013
Subsidiaries of Australian Pacific Coal Limited:
Area Coal Pty Ltd
Ipoh Pacific Resources Pty Ltd
Mining Investments One Pty Ltd
Mining Investments Two Pty Ltd
Mining Investments Three Pty Ltd
Mining Investments Four Pty Ltd
Mining Investments Six Pty Ltd
Kokstad Mining Pty Ltd
IPR Operations Pty Ltd
Ipoh Pacific Pty Ltd
Inter-Medteq Pty Ltd
Felix Street Pty Ltd
Medteq Holdings Pty Ltd
Medteq Innovations Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
* Percentage of voting power is in proportion to ownership
Acquisition of Controlled Entities
None
Disposal of Controlled Entities
None
100
100
100
100
100
100
100
100
100
100
100
100
50
50
100
100
100
100
100
100
100
100
100
100
100
100
50
50
Controlled Entities with Ownership Interest of 50% or Less
The parent entity holds 50% of the ordinary shares of Medteq Holdings Pty Ltd. Australian Pacific Coal Limited is
required to make all the financial and operating policy decisions of Medteq Holdings Pty Ltd and to ensure that
those policies are consistent with the policies of the economic entity.
The parent entity holds 50% of the ordinary shares of Medteq Innovations Pty Ltd. Australian Pacific Coal Limited
is required to make all the financial and operating policy decisions of Medteq Innovation Pty Ltd and to ensure that
those policies are consistent with the policies of the economic entity.
b.
c.
d.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 38 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 14: PROPERTY, PLANT AND EQUIPMENT
Note
Consolidated Group
LAND AND BUILDINGS
Buildings at cost
Less accumulated depreciation
Total Buildings
Total Land and Buildings
PLANT AND EQUIPMENT
Plant and equipment:
At cost
Accumulated depreciation
Leasehold improvements
At cost
Accumulated amortisation
Total Plant and Equipment
Total Property, Plant and Equipment
2014
$
2013
$
148,924
(30,291)
118,633
118,633
148,924
(24,334)
124,590
124,590
609,444
604,297
(543,295)
(502,014)
66,149
102,283
14,403
(13,737)
666
66,815
185,448
14,403
(12,965)
1,438
103,721
228,311
a.
Movements in Carrying Amounts
Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the
end of the current financial year
Consolidated Group:
Balance at 30 June 2012
Additions
Disposals
Depreciation expense
Balance at 30 June 2013
Additions
Disposals
Depreciation expense
Balance at 30 June 2014
Buildings
Leasehold
Improve-
ments
Plant and
Equipment
Total
$
$
$
$
130,547
3,824
206,293
340,664
-
-
-
-
720
-
720
-
(5,957)
(2,386)
(104,730)
(113,073)
124,590
1,438
102,283
228,311
-
-
(5,957)
118,633
-
-
5,868
(381)
5,868
(381)
(772)
(41,621)
(48,350)
666
66,149
185,448
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 39 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 15: EXPLORATION EXPENDITURE CAPITALISED
NON-CURRENT
Exploration and evaluation phases
Total
Consolidated Group
2014
$
2013
$
2,741,917
2,008,892
2,741,917
2,008,892
Recoverability of the carrying amount of exploration assets is dependent on successful exploration and sale of coal.
Capitalised exploration and evaluation costs amounting to $451,098 (2013: 1,013,254) have been included in cash flows
from investing activities in the statements of cash flow.
The company has engaged an exploration drilling contractor to provide exploration drilling services in exchange for an equity
interest in specified exploration tenements. The drilling partner must complete a specified quantum of drilling, based on
metres drilled, in order to secure their interest in the specified tenements. During the financial year, drilling valued at
$277,984 has been completed in accordance with the terms of the agreement. This non-cash amount has been included in
capitalised Exploration and evaluation expenditure.
NOTE 16: INTANGIBLE ASSETS
Goodwill
Cost
Accumulated impairment losses
Net carrying value
Trademarks and licences
Cost
Accumulated impairment losses
Net carrying value
Total intangibles
Consolidated Group
2014
$
2013
$
315,354
315,354
(315,354)
(315,354)
-
-
6,680,110
6,680,110
(6,680,110)
(6,680,110)
-
-
-
-
There have been no additions or disposals of intangible assets during the current or previous financial years.
NOTE 17: OTHER ASSETS
CURRENT
Prepayments
Total
Consolidated Group
2014
$
2013
$
27,867
27,867
28,493
28,493
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 40 of 59
ABN 49 089 206 986
Notes to the Financial Statements
Note
Consolidated Group
2014
$
2013
$
18a
560,501
288,784
747,080
265,564
1,307,581
554,348
1,307,581
554,348
-
-
1,307,581
554,348
Note
Consolidated Group
2014
$
2013
$
19a.b
175,000
325,000
175,000
325,000
175,000
325,000
19b.c
175,000
325,000
175,000
325,000
NOTE 18: TRADE AND OTHER PAYABLES
CURRENT
Unsecured liabilities:
Trade payables
Amounts payable to related parties:
— key management personnel related entities
Total
a.
b.
Trade payables includes $277,984 for capitalised exploration and
evaluation expenditure incurred under a drilling agreement whereby, on
completion, payment will be settled by the drilling partner acquiring an
equity interest in specified exploration projects.
Financial liabilities at amortised cost classified as trade and other
payables:
Trade and other payables:
- total current
- total non-current
NOTE 19: BORROWINGS
CURRENT
Secured liabilities:
Convertible security
Total current borrowings
Total borrowings
a.
Total current and non-current secured liabilities:
Convertible security
b. Convertible security
During the 2013 financial year, the parent entity issued convertible
securities with a face value of $545,000 to raise $525,000. The securities
are convertible into ordinary shares of the parent entity in accordance with
the terms of the parent entity’s Share Purchase and Convertible Security
Agreement with The Australian Special Opportunities Fund, LP. During the
financial year 21,428,571 (2013: 19,583,333) ordinary shares have been
issued on conversion of convertible securities having a face value of
$150,000 (2013: $220,000). The face value of outstanding convertible
securities at 30 June 2014 is $175,000 (2013: $325,000).
c. Collateral Provided
Convertible security is secured by ordinary shares held as security in
accordance with the parent entity’s Share Purchase and Convertible Security
Agreement with The Australian Special Opportunities Fund, LP.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 41 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 20: TAX
CURRENT
Income Tax Payable
NON-CURRENT
Consolidated Group
Consolidated Group
2014
$
2013
$
-
-
Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set
out in Note 1 occur:
— temporary differences $399,959 (2013: $933,462)
— tax losses: operating losses $8,865,183 (2013: $7,642,398)
— tax losses: capital losses $1,173,396 (2013: $1,173,396)
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 42 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 21: ISSUED CAPITAL
920,897,748 (2013: 662,695,879)
fully paid ordinary shares
a.
Ordinary Shares
At the beginning of reporting period
Shares issued during the year
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2/10/2012
31/10/2012
29/11/2012
31/12/2012
31/1/2013
1/3/2013
3/4/2013
26/4/2013
3/5/2013
4/6/2013
22/7/2013
25/7/2013
2/8/2013
27/8/2013
12/9/2013
16/9/2013
18/9/2013
14/10/2013
25/10/2013
26/11/2013
17/1/2014
19/2/2014
21/3/2014
22/4/2014
22/5/2014
20/6/2014
Consolidated Group
2014
$
2013
$
36,957,568
35,239,172
Consolidated Group
2014
No.
2013
No.
662,695,879
564,993,926
17,569,378
4,687,500
10,937,500
5,000,000
6,250,000
9,090,909
10,000,000
13,333,333
12,500,000
8,333,333
57,525,000
12,500,000
3,500,000
14,285,714
21,428,571
992,064
10,000,000
992,063
11,111,111
14,285,714
20,000,000
15,000,000
15,000,000
18,750,000
18,750,000
24,081,632
At the end of the reporting period
920,897,748
662,695,879
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the
number of shares held.
At the shareholders’ meetings each ordinary share is entitled to one vote when a poll
shareholder has one vote on a show of hands.
is called, otherwise each
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 43 of 59
ABN 49 089 206 986
Notes to the Financial Statements
b.
Capital Management
Management controls the capital of
to equity ratio, provide the
shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going
concern.
the Group in order to maintain a good debt
The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.
There are no externally imposed capital requirements.
Management 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, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the
prior year. The gearing ratio’s for the year ended 30 June 2014 and 30 June 2013 are as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Note
Consolidated Group
2014
$
2013
$
18,19
1,482,581
879,348
9
451,226
497,865
1,031,355
381,483
2,314,112
2,386,208
3,345,467
2,767,691
31%
14%
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 44 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 22: CAPITAL AND LEASING COMMITMENTS
a. Operating Lease Commitments
Non-cancellable operating leases contracted for but not capitalised in the
financial statements.
Payable — minimum lease payments:
not later than 12 months
between 12 months and 5 years
greater than 5 years
—
—
—
Total
Note
Consolidated Group
2014
$
2013
$
109,933
127,514
-
-
109,933
-
109,933
237,447
The property lease is non-cancellable lease with a three year term, with rent payable monthly in advance. Contingent
rental provisions within the lease agreements require the minimum lease payments shall be increased annually by the
greater of the consumer price index (CPI) or 4% per annum. An option exists to renew the lease at the end of the
three year term for an additional term of three years. The leases allow for subletting of all lease areas.
b.
Exploration and Evaluation Expenditure Commitments
The consolidated Group has certain obligations to perform exploration work and outlay minimum amounts of money in
order to maintain the current rights of tenure over its exploration tenements. These outlays are subject to renegotiation
on expiry of the leases or when application for a mining lease is made and have not been provided for in the financial
statements.
Total expenditure commitments at balance date and not provided for in the financial statements are approximately:
Payable:
— not later than 12 months
— between 12 months and 5 years
— greater than 5 years
Total
Note
Consolidated Group
2014
$
2013
$
950,851
715,015
1,983,918
2,237,230
-
-
2,934,769
2,952,245
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 45 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 23: OPERATING SEGMENTS
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of
Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.
The Group is managed primarily on the basis of resource category. Operating segments are therefore determined on the
same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have
similar economic characteristics.
Types of products and services by segment
i.
Mining exploration and evaluation
The mining exploration and evaluation segment seeks to identify prospective resource areas, secure tenure over the
relevant tenements and manage the exploration and evaluation process.
ii.
Technology investments
Technology investment operations are dormant and are no longer included separately within segment analysis as the
segment assets have been impaired to $Nil.
iii.
Bentonite Mining
The bentonite mining segment mines for bentonite.
Basis of accounting for purposes of reporting by operating segments
a. Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief decision maker with respect to
operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the
annual financial statements of the Group.
b.
Inter-segment transactions
An internally determined transfer price is set for all inter-segment sales. This price is based on what would be realised in the
event the sale was made to an external party at arm’s length. All such transactions are eliminated on consolidation of the
Group’s financial statements.
Corporate charges are allocated to reporting segments based on the segments’ overall proportion of direct operating costs
within the Group. The Board of Directors believes this is representative of likely consumption of head office expenditure that
should be used in assessing segment performance and cost recoveries.
Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of
transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to fair
value based on market interest rates. This policy represents a departure from that applied to the statutory financial
statements.
c. Segment assets
Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic
value from that asset.
In the majority of instances, segment assets are clearly identifiable on the basis of their nature and
physical location.
d. Segment liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations
of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not
allocated. Segment liabilities include trade and other payables and certain direct borrowings.
e. Unallocated items
The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not
considered part of the core operations of any segment:
— Net gains on disposal of available-for-sale investments
— Impairment of assets and other non-recurring items of revenue or expense
— Income tax expense
— Deferred tax assets and liabilities
— Current tax liabilities
— Other financial liabilities
— Intangible assets
— Discontinuing operations
— Retirement benefit obligations
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 46 of 59
ABN 49 089 206 986
Notes to the Financial Statements
— depreciation and amortisation
-
— impairment
evaluation
of
exploration
and
62,179
— impairment of loans receivable
— impairment of investments
-
26,000
i. Segment performance
2014
Revenue
External sales
Interest revenue
Other revenue
Total segment revenue
Total group revenue
Segment net profit from continuing
operations before tax
Net profit from continuing operations before
tax
Amounts included in segment result and
reviewed by the board:
2013
Revenue
External sales
Interest revenue
Other revenue
Total segment revenue
Total group revenue
Segment net profit from continuing
operations before tax
Net profit from continuing operations before
tax
Amounts included in segment result and
reviewed by the board:
finance charges
depreciation and amortisation
Exploration
Bentonite
Mining
Unallocated
Total
$
$
$
$
-
2
-
2
7,664
3
-
-
16,551
-
7,667
16,551
7,664
16,556
-
24,220
24,220
(104,776)
(88,169)
(1,597,547)
(1,790,492)
34,285
8,992
-
-
-
-
-
14,065
-
181,950
-
-
13,389
-
13,389
(1,790,492)
48,350
71,171
181,950
26,000
-
13,389
400,000
413,389
413,389
-
400,000
400,000
159,176
(143,282)
(1,892,455)
(1,876,561)
(1,876,561)
-
-
-
89,712
14,221
20,000
23,362
-
20,000
113,074
68,108
impairment
evaluation
of
exploration
and
53,887
impairment of loans receivable
-
-
383,125
383,125
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 47 of 59
ABN 49 089 206 986
Notes to the Financial Statements
ii. Segment assets
2014
Segment assets
Exploration
Bentonite
Mining
Unallocated
Total
$
$
$
$
Segment asset increases for the period
— capital expenditure
— acquisitions
804,196
-
804,196
Included in segment assets are:
Capitalised exploration and evaluation
2,741,917
-
-
-
-
5,868
810,064
-
-
5,868
810,064
-
2,741,917
Property, plant and equipment
-
160,359
25,089
Other financial assets
Other assets
Segment assets
Total group assets
2013
Segment assets
74,000
110,671
2,926,588
-
28,188
188,547
-
656,469
681,558
185,448
74,000
795,328
3,796,693
3,796,693
Segment asset increases for the period
— capital expenditure
— acquisitions
1,013,254
-
1,013,254
Included in segment assets are:
Capitalised exploration and evaluation
2,008,892
-
-
-
-
720
-
720
1,013,974
-
1,013,974
-
2,008,892
Property, plant and equipment
Other financial assets
Other assets
Segment assets
Total group assets
iii. Segment liabilities
2014
Segment liabilities
Reconciliation of segment liabilities to
group liabilities
Other financial liabilities
Total group liabilities
2013
Segment liabilities
Reconciliation of segment liabilities to
group liabilities
Other financial liabilities
Total group liabilities
-
-
73,660
2,182,553
194,644
-
25,055
219,699
33,667
100,000
829,638
863,304
228,311
100,000
928,353
3,265,556
3,265,556
Exploration
Bentonite
Mining
Unallocated
Total
$
$
$
$
325,671
3,409
1,153,501
1,482,581
1,482,581
69,528
472
809,347
879,347
879,347
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 48 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 24: CASH FLOW INFORMATION
a.
Reconciliation of Cash Flow from Operations with Profit after Income
Tax
Profit/(Loss) after income tax
Sale of interests in tenements
Exploration and evaluation costs of tenements sold
Gain/(Loss) on disposal of assets
Depreciation and amortisation
Impairment loss
Finance costs
Changes in assets and liabilities, net of the effects of purchase and disposal
of subsidiaries
(Increase)/decrease in trade and term receivables
(Increase)/decrease in other assets
Increase/(decrease) in trade payables and accruals
Cash flows from operations
b.
Non-cash Financing and Investing Activities
i. Share issue:
Consolidated Group
2014
$
2013
$
(1,790,942)
(1,876,561)
-
-
(400,000)
156,608
381
48,350
279,291
-
-
113,073
451,233
20,000
(88,679)
626
76,151
(2,000)
475,249
324,221
(1,075,444)
(1,137,275)
21,428,571 (2013: 19,583,333) ordinary shares were issued for a total consideration of $150,000 (2013:
$220,000). The company issued the shares on conversion of convertible securities issued to the Australian
Special Opportunity Fund, LLC.
ii. Payments for exploration and evaluation:
The company has engaged an exploration drilling contractor to provide exploration drilling services in
exchange for an equity interest in specified exploration tenements. The drilling partner must complete a
specified quantum of drilling, based on metres drilled,
in the specified
tenements. During the financial year, drilling valued at $277,984 has been completed in accordance with the
terms of the agreement.
in order to secure their interest
The company has issued 10,815,759 fully paid ordinary shares for a total consideration of $82,625. The shares
were issued as full payment for geological services provided by geological consultants during the financial
year.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 49 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 25: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Rio Tinto Exploration Pty Ltd – Exploration, Option and Joint Venture Agreement
On 22nd August 2011 the Company announced that its 100% owned subsidiary Area Coal Pty Ltd (Area Coal) had executed
an Exploration, Option and Joint Venture Agreement (“the agreement”) with Rio Tinto Exploration Pty Ltd (RTX) covering
four of its Mt Hillalong tenements. The Group has received an initial cash payment of $2,300,000 in the 2012 financial year
in accordance with the agreement. In addition to the cash payment the agreement terms include that:
title to EPC 1773 and EPCs 1867 and 1645 will be transferred to RTX;
RTX will sole fund and manage an exploration program for EPC 1824 with a minimum expenditure of $700,000 within
the first 24 months of gaining access to the tenement;
RTX has an option to acquire a 75% interest in EPC 1824 by making a defined payment to Area Coal at any time within
the first 24 months of the exploration program. In the event of RTX’s exercise of this option, the parties will form an
unincorporated joint venture in which Area Coal would retain a 25% free carry interest;
if RTX exercises the option to acquire an interest in EPC 1824, Area Coal would then hold a put option (exercisable on
the date that is 12 months after the formation of the joint venture) enabling it to sell its 25% interest in the joint venture
to RTX for an additional defined payment to Area Coal;
if Area Coal does not exercise the above put option, it will have a further put option, exercisable within 180 days of the
joint venture management committee commissioning a feasibility study, to sell its 25% interest in EPC1824 to RTX for
consideration calculated on the basis of resource tonnage;
if Area Coal does not exercise its second put option it will become liable for 25% of all future development and
operational costs of the joint venture; and
should RTX not exercise its option to acquire the 75% interest in the project, Area Coal will retain its existing 100%
ownership of EPC 1824 and can reacquire the other three Mt Hillalong tenements originally transferred to RTX under
the agreement.
RTX secured all approvals, thereby gaining access to EPC 1824 on 23 August 2013 triggering the start of the RTX 75%
option period. The expiry date of the option is 23 August 2015.
NOTE 26: EVENTS AFTER THE REPORTING PERIOD
Other than the following the directors are not aware of any significant events since the end of the reporting period.
On 11 September 2014 the company announced a Share Purchase Plan Offer (SPP). The SPP will raise a maximum of
$925,000 with eligible shareholders able to take a maximum investment of $15,000 representing 4,687,500 new shares at
a price of 0.32 cents per share. The proposed closing date of the SPP is 2 October 2014 with issue and allotment of new
shares under SPP to follow on 9 October 2014.
On 16 September 2014 the company issued two unlisted convertible securities to The Australian Special Opportunity Fund,
LP. The face values of the convertible securities are $50,000 and $75,000 respectively, both expiring 24 months from
issue. The company received cash consideration of $125,000 (before costs) for the issue of the convertible securities.
No other matters or circumstances have arisen since the end of the financial year which significantly affected, or could
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future
financial years.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 50 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 27: RELATED PARTY TRANSACTIONS
a.
The Group’s main related parties are as follows:
i.
ii.
Entities exercising control over the group:
The ultimate parent entity, which exercises control over the Group, is Australian Pacific Coal Limited.
Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the
entity, directly or indirectly, including any director (whether executive or otherwise) of that entity, are
considered Key Management Personnel (KMP).
iii.
Entities subject to significant influence by the Group:
An entity which has the power to participate in the financial and operating policy decisions of an entity, but
does not have control over those policies, is an entity which holds significant influence. Significant
influence may be gained by share ownership, statute or agreement.
For details of interests held in associated companies, refer to Note 13: Controlled Entities.
iv.
Other related parties:
Other related parties include entities controlled by the ultimate parent entity and entities over which key
management personnel exercise significant influence.
b.
Transactions with related parties:
Transactions between related parties are on normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
Other than key management personnel compensation disclosed in the Remuneration Report, there have been no
transactions between the consolidated group and related parties.
c.
Amounts outstanding from related parties:
Trade and other receivables:
Unsecured loans are made to the parent entity, subsidiaries, directors, key management personnel and other
related parties.
The following transactions occurred with related parties:
i. Key management personnel:
The company issued Nil (2013: Nil) ordinary shares to KMP in accordance with the
Company’s Officers, Executives, Consultants and Employee Share Plan. The terms
of the plan enabled the company to fund the purchase by way of limited-recourse
loans totalling $Nil (2013: $Nil) repayable from future dividends or out of proceeds
when the allotted shares are sold. Collateral is held by way of security over the
shares issued. The shares are subject to a trading lock preventing disposal of the
shares prior to the respective holders making suitable arrangements for repayment of
any outstanding amounts payable on the associated loans. Interest is not payable.
Balance at beginning of year
No longer included as related party loan
Loans advanced
Loan repayment received
Balance at end of year
Provision for impairment
Interest not charged (on an arms-length basis)
The number of KMP who have received loans during the period
Consolidated Group
2014
$
2013
$
580,798
741,548
-
-
-
(160,750)
-
-
580,798
580,798
(507,498)
(397,548)
36,540
46,304
0
0
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 51 of 59
ABN 49 089 206 986
Notes to the Financial Statements
The highest level of indebtedness during the reporting period for each KMP who
received loans:
Mr Peter Ziegler
Mr Paul Byrne
Mr Paul Ingram
Mr Kevin Mischewski
KMP Loans exceeding $100,000:
Included in the loan balances above are loans to Mr Paul Byrne (Director) Details of the
loans are outlined below:
Balance at beginning of year
Loans advanced
Loan repayment received
Balance at end of year
Interest not charged (on an arms-length basis)
Included in the loan balances above is a loan to Mr Peter Ziegler (Director) which
represents a loan to Wellton Holdings Pty Ltd, a related entity associated with Mr
Ziegler. Details of the loan are outlined below:
Balance at beginning of year
Loans advanced
Loan repayment received
Balance at end of year
Interest not charged (on an arms-length basis)
Included in the loan balances above is a loan to Mr Paul Ingram (Director). Details of
the loan are outlined below:
Balance at beginning of year
Loans advanced
Loan repayment received
Balance at end of year
Interest not charged (on an arms-length basis)
Consolidated Group
2014
$
2013
$
121,500
121,500
165,848
165,848
264,500
264,500
28,950
28,950
165,848
165,848
-
-
-
-
165,848
165,848
10,434
11,817
121,500
121,500
-
-
-
-
121,500
121,500
7,644
8,657
264,500
264,500
-
-
-
-
264,500
264,500
16,640
18,846
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 52 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 28: FINANCIAL RISK MANAGEMENT
The Group’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and
payable, loans to and from subsidiaries and convertible securities.
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting
policies to these financial statements, are as follows:
Financial assets
Cash and cash equivalents
Loans and receivables
Available-for-sale financial assets:
— unlisted investments at cost
Total financial assets
Financial Liabilities
Financial liabilities at amortised cost:
— trade and other payables
— borrowings
Total financial liabilities
Financial Risk Management Policies
Note
Consolidated Group
2014
$
2013
$
9
10
12
18
19
451,226
316,235
497,865
401,995
74,000
100,000
841,461
999,860
1,307,581
175,000
554,348
325,000
1,482,581
879,348
The Board of Directors, amongst other issues, monitor and manage financial risk exposures of the Group. The Board
monitors the Group’s financial risk management policies and exposures and approves financial transactions within the
scope of its authority. It also reviews the effectiveness of internal controls relating to identified areas of risk.
The Board’s overall risk management strategy seeks to assist the consolidated group in meeting its financial targets, while
minimising potential adverse effects on financial performance. Its functions include the review of credit risk policies and
future cash flow requirements.
Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial
consisting of interest rate risk, and equity price risk
instruments are credit risk, liquidity risk and market risk
a.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems
for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and
monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible, that
customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing
receivables for impairment. Depending on the division within the Group, credit terms are generally 14 to 30 days
from the invoice date.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in
entities that the Board has otherwise cleared as being financially sound.
Credit Risk Exposures
The maximum exposure to credit risk by class of recognised financial assets at balance date, excluding the value of
any collateral or other security held, is equivalent to the carrying value and classification of those financial assets
(net of any provisions) as presented in the statement of financial position.
The Group has no significant concentration of credit risk with any single counterparty or group of counterparties.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 53 of 59
ABN 49 089 206 986
Notes to the Financial Statements
Trade and other receivables that are neither past due or impaired are considered to be of high credit quality.
Aggregates of such amounts are as detailed in Note 10.b.
Credit risk related to balances with banks and other financial institutions is managed by management in accordance
with approved Board policy. The counterparty to these financial assets are large financial institutions with strong
credit ratings. The credit quality of these financial assets that are neither past due nor impaired is considered strong.
b.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial
The Group manages this risk through the following
mechanisms:
liabilities.
preparing forward looking cash flow analysis in relation to its operational, investing and financing activities;
obtaining funding from a variety of sources;
maintaining a reputable credit profile;
managing credit risk related to financial assets;
only investing surplus cash with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
(i) Financing arrangements
The company has entered into a funding agreement with The Australian Special Opportunity Fund, LP. The
agreement commenced in October 2012 and expires in October 2014. The company may terminate the agreement
at its discretion prior to October 2014. Under the agreement the company may receive tranche prepayments of
between $75,000 and $225,000, as monthly share subscriptions. The undrawn minimum balance of the facility as at
30 June 2014 is $300,000 (2013: $1,125,000).
(ii) Maturities of financial liabilities
The following table sets out the contractual maturities of financial liabilities.
Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual
timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial
liabilities reflects the earliest contractual settlement dates and does not reflect management’s expectations that
banking facilities will be rolled forward.
Carrying
amount
Less than
1-6
More than
1 month
months
6 months
30 June 2014
Trade and other payables
Borrowings
30 June 2013
Trade and other payables
Borrowings
1,307,581
175,000
1,482,581
554,348
325,000
879,348
-
-
-
-
-
-
1,307,581
175,000
1,482,581
554,348
325,000
879,348
-
-
-
-
-
-
c.
Market Risk
Market risk arises from the use of interest bearing financial, tradeable and foreign currency instruments. It is the
risk that the fair value of future cash flows of financial instruments will fluctuate because of changes in interest
rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk).
i.
Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the
reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed
rate financial
instruments. The Group is exposed to earnings volatility on floating rate instruments and is
limited to its cash and cash equivalent assets.
As at 30 June 2014, if interest rates had moved, as illustrated in the table below, with all other variables held
constant, post tax profit and equity would have been affected as follows:
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 54 of 59
ABN 49 089 206 986
Notes to the Financial Statements
Post Tax Profit
Consolidated Group
Higher/(Lower)
2014
2013
+1.00% (100 basis points)
-1.00% (100 basis points)
4,438
(4,438)
2,976
(2,976)
Equity
Consolidated Group
Higher/(Lower)
2014
2013
+1.00% (100 basis points)
-1.00% (100 basis points)
4,438
(4,438)
2,976
(2,976)
d.
Fair Value Estimation
Fair value is the amount at which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction.
Fair values may be based on information that is estimated or subject to judgment, where changes in assumptions
may have a material
impact on the amounts estimated. Areas of judgment and the assumptions have been
detailed below. Where possible, valuation information used to calculate fair value is extracted from the market,
with more reliable information available from markets that are actively traded. In this regard, fair values for listed
securities are obtained from quoted market bid prices. Where securities are unlisted and no market quotes are
available, fair value is obtained using discounted cash flow analysis and other valuation techniques commonly
used by market participants.
Differences between fair values and carrying amounts of financial instruments with fixed interest rates are due to
the change in discount rates being applied by the market since their initial recognition by the Group. Most of these
instruments, which are carried at amortised cost (ie term receivables, held-to-maturity assets and loan liabilities),
are to be held until maturity and therefore the fair value figures calculated bear little relevance to the Group.
The fair values of the consolidated entities have been determined based on the following methodologies:
(i)
(ii)
(iii)
Cash and cash equivalents, trade and other receivables, and trade and other payables are short-term
instruments in nature whose carrying amount is equivalent to fair value. Trade and other payables exclude
amounts provided for annual leave, which is outside the scope of AASB 139.
Term receivables generally reprice to a market interest rate every six months, and fair value therefore
approximates carrying amount.
In determining the fair values of the unlisted available-for-sale financial assets, the directors use inputs that
are observable either directly (as prices) or indirectly (derived from prices).
The directors have determined that the fair values of the existing available-for-sale financial assets carried at
cost and at recoverable amount cannot be reliably measured. The directors have made an estimate of the
fair value at the end of the reporting period based on the reported financial results of the underlying
investment. There is no active market for these investments, and there is no present intention to dispose of
these investments.
These available-for-sale financial assets are represented by the company’s holding of 1,000,000 ordinary
shares in Scott Creek Coal Limited. The shares were acquired on as part settlement for the sale of tenement
EPC1548 on 2 April 2013 at an acquisition cost of $100,000.
Financial Instruments Measured at Fair Value
Financial instruments recognised at fair value in the statement of financial position are analysed and classified
using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair
value hierarchy consists of the following levels:
-
-
-
quoted prices in active markets for identical assets or liabilities (Level 1);
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
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
Within the hierarchy, the consolidated entity’s investment in Scott Creek Coal Limited is classified at level 3.
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 55 of 59
ABN 49 089 206 986
Notes to the Financial Statements
NOTE 29: SHARE-BASED PAYMENTS
The Company has issued 10,815,759 fully paid ordinary shares to geological consultants in accordance with the plan rules
for the Australian Pacific Coal Limited Officers, Executives, Consultants and Employee Share Plan. The shares were
issued as full payment at the market rate for services provided by the consultants. Details of each payment are set out in
the following table:
Date of issue
2 Aug 2013
16 Sep 2013
14 Oct 2013
20 Jun 2014
Total
Amount payable for
services provided
Number of shares issued
Issue Price
(cents per share)
31,500
12,500
12,500
26,125
82,625
3,500,000
992,064
992,063
5,331,632
10,815,759
0.90
1.26
1.26
0.49
The amounts payable measure directly the fair value of the services provided. The total amount payable is included in Non-
current assets in Exploration and evaluation expenditure and has no effect on the company’s profit or loss for the financial
year.
NOTE 30: REGISTERED OFFICE AND PRINCIPAL OFFICE
The registered and principal office of the Australian Pacific Coal Limited (ABN 49 089 206 986) and its controlled entities is;
Level 7, 10 Felix Street, Brisbane Qld 4000
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
Page 56 of 59
ABN 49 089 206 986
Notes to the Financial Statements
DIRECTORS’ DECLARATION
In the opinion of the directors of Australian Pacific Coal Limited:
1.
the financial statements and notes, as set out on pages 13 to 56, are in accordance with the
Corporations Act 2001 including:
a. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
reporting requirements; and
b. give a true and fair view of the consolidated group’s financial position as at 30 June 2014 and of
its performance for the year ended on that date; and
2.
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
Note 1 confirms that the financial statements also comply with the International Financial Reporting Standards
as issued by the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and the chief financial officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Peter Ziegler
Chairman
Dated this 30th day of September 2014
Annual Financial Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 57 of 59
Directors’ Declaration
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Australian Pacific Coal Limited (“the Company”) is responsible for establishing the
corporate governance framework of
the Group having regard to the ASX Corporate Governance Council
the Corporate Governance Principles and Recommendations and published
(“CGC”) Second Edition of
the
guidelines. The Board guides and monitors the business and affairs of
shareholders.
the Company on behalf of
The Board seeks, where appropriate to adopt without modification, the CGC recommendations. Where there
has been any variation from the CGC recommendations, it is because the Board believes the Company is not
as yet of size, nor are its financial affairs of such complexity, to justify some of these recommendations. The
Board is of the view that with the exception of the departures to the CGC Corporate Governance Principles and
Recommendations as are set out below, it otherwise complied with all of the CGC Corporate Governance
Principles and Recommendations.
The following table summarises the Company’s compliance with the CGC recommendations and states whether
the Company has complied with each recommendation.
Recommendation
Summary of the Company’s Compliance
Principle 1 – Lay solid foundations for management and oversight
Companies should establish and disclose respective roles and responsibilities for Board and management
1.1: Companies should establish the functions
reserved to the board and those delegated to senior
executives and disclose those functions.
1.2: Companies should disclose the process for
evaluating the performance of senior executives.
The Board Charter clearly defines the respective
roles and responsibilities of
the Board and
establishes functions that are reserved to the Board
and functions delegated to senior executives. The
responsibilities for the operation and administration
of the Company have been delegated by the Board
to the executive management team.
The performance criteria for evaluating senior
management are aligned with objectives of
the
Company against a formalised set of qualitative
performance criteria established and monitored by
the Board.
1.3: Companies should provide the information
indicated in the Guide to reporting on Principle 1.
The Board reviews the performance of senior
executives periodically.
Principle 2 – Structure the board to add value
Companies should have a board of an effective composition, size and commitment to adequately discharge
its responsibilities and duties
2.1: A majority of the board should be independent
directors.
2.2: The chair should be an independent director.
The board consists of four directors. Three of those
(Chairman), Mr Paul
directors, Mr Peter Ziegler
Ingram and Mr Paul Ryan
considered
independent.
are
The Chair, Mr Peter Ziegler,
independent.
is
considered
2.3: The roles of chair and chief executive officer
should not be exercised by the same individual.
Mr Peter Ziegler holds the position of Chair.
Mr Paul Byrne holds the position of CEO.
Annual Report
Australian Pacific Coal Limited
Page 60
Year Ending 30 June 2014
ABN 49 089 206 986
Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
2.4: The board should establish a nomination
committee.
2.5: Companies should disclose the process for
evaluating the performance of
its
committees and individual directors
the board,
2.6: Companies should provide the information
indicated in the Guide to reporting on Principle 2.
The Company does not have a nomination
committee. The Board decides the selection of
members of the Board and makes recommendations
to shareholders for election of Directors. Each Board
member is responsible for assessing the necessary
competencies of the Board members to add value to
the Company, reviewing Board succession plans
and evaluating the Board’s performance.
The Board conducts its own evaluation of the skills,
performance and remuneration of existing Directors
Individual Directors may
from time to time.
recommend changes to the composition of
the
Board.
The skills, expertise and experience relevant to the
position of each director in office at the date of the
Annual Report are included in the Directors’ Report.
Directors are considered to be independent when
they are independent of management and free from
any business or relationship that could interfere with
or
independent
judgement.
reasonably interfere with their
The materiality thresholds for director independence
are assessed on a case by case basis taking into
account
specific
circumstances, rather than referring to a general
materiality threshold.
Director’s
relevant
the
Directors having a personal material
in
relation to a particular item of business must absent
themselves
before
commencement of discussion on the topic.
from the Board meeting
interest
Procedures are in place for directors to seek
independent professional advice, at the expense of
the Company, concerning any aspect of
the
Company’s operations or undertakings to fulfil their
duties and responsibilities as directors.
Annual Report
Australian Pacific Coal Limited
Page 61
Year Ending 30 June 2014
ABN 49 089 206 986
Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
Principle 3 – Promote ethical and responsible decision-making
Companies should actively promote ethical and responsible decision-making
3.1: Companies should establish a code of conduct
and disclose the code or a summary of the code as
to:
the practices necessary to maintain confidence in
the company’s integrity;
the practices necessary to take into account their
legal
reasonable
and
expectations of their stakeholders; and
obligations
the
the responsibility and accountability of individuals
for
of
and
reporting
unethical practices.
investigating
reports
3.2: Companies should establish a policy concerning
diversity and disclose the policy or a summary of that
policy. The policy should include requirements for
the board to establish measureable objectives for
achieving gender diversity and for
the board to
asses annually both the objectives and progress in
achieving them.
The Company Code of Conduct Policy and Ethics
Policy endeavours to foster a culture requiring that
directors and officers act with the utmost integrity,
objectivity and in compliance with the spirit of the law
and Company policies.
The Company has not adopted a formal Diversity
Policy as it has a small number of employees and
has limited opportunity to adopt
formalised policy
guidelines. The Board is committed to developing
diversity in its workplace to assist the Company to
meet
its goals and objectives by providing an
environment whereby appointments, advancement
and opportunities are considered on a fair and
equitable basis. The Company is committed to
promoting a corporate culture which embraces
diversity when determining the composition of the
Board, senior management and employees.
The Company will ensure that
recruitment and
selection decisions are based on the principle of
merit, skills and qualifications and regardless of age,
gender, nationality, cultural background or any other
factor not relevant to the position. Past skills and
experience in the mining and exploration industries
will be a key determinant in the selection process.
3.3: Companies should disclose in each annual
report
the measureable objectives for achieving
gender diversity set by the board in accordance with
the diversity policy and progress towards achieving
them.
The Company does not have measurable objectives
for achieving gender diversity. Given the Company’s
size, and stage of development, the Board does not
consider
is appropriate to include measurable
objectives in relation to gender.
it
3.4 Companies should disclose in each annual
report the proportion of women employees in the
whole organization, women in senior executive
positions and women on the board.
The percentage of woman in the whole organisation
as a whole organisation, senior management, and
the Board are as follows:-
Whole organisation: 20%
Senior Management: Nil
Board: Nil
3.5 Companies should provide the information
indicated in the Guide to reporting on Principle 3.
of
Explanation
3
recommendations are included in this Corporate
Governance Statement.
from Principle
departures
Annual Report
Australian Pacific Coal Limited
Page 62
Year Ending 30 June 2014
ABN 49 089 206 986
Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
Principle 4 – Safeguard integrity in financial reporting
Companies should have a structure to independently verify and safeguard the integrity of their financial
reporting
4.1: The board should establish an audit committee.
The Board has established an Audit Committee.
4.2: The audit committee should be structured so
that it:
consists only of non-executive directors
consists of a majority of
directors
independent
is chaired by an independent chair, who is
not chair of the board
has at least three members.
The Audit Committee consists of Mr Peter Ziegler
(Company
(Chairman) and Mr Kevin Mischewski
Secretary).
The Chairman Mr Peter Ziegler represents the board
is financially literate and
as independent director,
has the relevant qualifications and experience.
The company considers that due to the size, nature
and level of complexity of the Company, sourcing
directors in strict compliance with Principle 4.2 would
defeat the purpose of a board audit committee for
focusing on issues relevant
to the company’s
financial reporting.
the integrity of
Ultimate responsibility for
the
company’s financial reporting rests with the board
and the current composition of the Audit Committee
ensures that the Board has processes in place to
raise issues that are ordinarily considered by the
Audit Committee.
4.3: The audit committee should have a formal
charter
The Audit Committee operates under a Charter
approved by the Board.
4.4: Companies should provide the information
indicated in the Guide to reporting on Principle 4.
In accordance with the Audit Committee Charter, the
Audit Committee is responsible for reviewing the
integrity of
the company’s financial reporting and
oversees the independence of the external auditors.
The Audit Committee meets at least annually and is
required to report
to the Board on all matters
relevant to it’s roles and responsibilities.
Principle 5 – Make timely and balanced disclosure
Companies should promote timely and balanced disclosure of all material matters concerning the company
5.1: Companies should establish written policies
designed to ensure compliance with ASX Listing
and to ensure
Rule disclosure requirements
accountability at a senior executive level
for that
compliance and disclose those policies or a
summary of those policies.
The Company has written policies and procedures in
place to ensure compliance with ASX listing rule
disclosure requirements and accountability at a
senior executive level
that compliance. The
for
directors and senior management are made aware
of their disclosure requirements and obligations prior
to their engagement and regularly at Board and
Management meetings.
5.2: Companies should provide the information
indicated in the Guide to reporting on Principle 5.
any
The Company will
departures from Principle 5 recommendations as
report and address
Annual Report
Australian Pacific Coal Limited
Page 63
Year Ending 30 June 2014
ABN 49 089 206 986
Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
soon as it becomes aware of departure.
Principle 6 – Respect the rights of shareholders
Companies should respect the rights of shareholders and facilitate the effective exercise of those rights
6.1: Companies should design a communications
policy for promoting effective communication with
shareholders and encouraging their participation at
general meetings and disclose their policy or a
summary of that policy.
6.2: Companies should provide the information
indicated in the Guide to reporting on Principle 6.
The Company is committed to:
•
•
•
Communicating effectively with its shareholders
and ensuring that it is easy for shareholders to
communicate with the Company;
Complying with
disclosure
obligations applicable to the ASX listing rules
and other regulators; and
continuous
its
Ensuring that
the shareholders and other
stakeholders are provided with timely and full
information about the Company’s activities.
promote
effective
To
with
shareholders and to encourage participation by
shareholders, the Company ensures that information
is communicated to its shareholders through:
communications
•
•
•
•
•
•
An email based communications system;
Posting information on the Company’s web site
at www.aqcltd.com
The distribution of Notice of Meetings and other
information directly to shareholders through
letters and other forms of communications;
Ensuring that auditors are invited to the Annual
General Meeting to consider questions regarding
the conduct of the audit and the preparation and
content of the auditor report;
shareholders
Allowing
meetings to discuss resolutions; and
the
opportunity
at
Ensuring timely release of
market through the ASX.
information to the
The shareholder communication policy is designed
to ensure equal and timely access to information for
shareholders.
Annual Report
Australian Pacific Coal Limited
Page 64
Year Ending 30 June 2014
ABN 49 089 206 986
Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
Principle 7 – Recognise and manage risk
Companies should establish a sound system of risk oversight and management and internal control
the
7.1: Companies should establish policies for
oversight and management of material business
risks and disclose a summary of those policies.
to
7.2: The board should require management
design and implement
the risk management and
internal control system to manage the company’s
material business risks and report to it on whether
those risks are being managed effectively. The
board should disclose that management has
reported to it as to the effectiveness of
the
company’s management of
its material business
risks.
it has
7.3: The board should disclose whether
received assurance from the chief executive officer
financial officer (or
(or equivalent) and the chief
equivalent)
in
that
accordance with section 295A of the Corporations
risk
Act
is founded on a sound system of
management and internal control and that
the
system is operating effectively in all material
respects in relation to financial reporting risks.
declaration
provided
the
the
The Company has established policies for
oversight of material business risks and believes that
risk management and recognition is integral to the
Company meeting its objectives. The Board is
responsible for reviewing the Company’s policy on
risk management and risk oversight. The Audit
Committee also separately assesses management
of
makes
recommendations to the Board.
Company’s
risks
and
the
The Company has designed and implemented a risk
management and internal control system to manage
the Company’s material business risks and report to
it on whether
the risks are being effectively
managed. The Company has reviewed its risk
management procedures and considered the “Guide
for small-mid market capitalised companies on
Principle 7: Recognise and Manage Risk” released
under the ASX Markets Supervision Education and
Research Program. The Company continues to
review its existing risk management procedures, the
material business risks affecting the Company and
where necessary delegated further responsibilities
those material business risks to senior staff
for
members. The updated risk management system
has been designed to effectively manage and report
on the consolidated entity’s material business risks.
The Company has developed risk management
procedures including revised Risk Management
Policy, Risk Register, Risk Tolerance Review and a
Risk Management Framework which forms the basis
of
the Company’s risk management and internal
control system.
In accordance with section 259A of the Corporations
Act 2001, the Managing Director and Chief Financial
Officer have provided a declaration to the Board that:
•
•
their view provided in the Company’s financial
is founded on a sound system of risk
report
management and internal
compliance and
control which implements the financial policies
adopted by the Board; and
the Company’s risk management and internal
compliance and control system is operating
effectively in all material respects.
It is noted that the assurance from the Managing
Director and Chief Financial Officer can only be
Annual Report
Australian Pacific Coal Limited
Page 65
Year Ending 30 June 2014
ABN 49 089 206 986
Corporate Governance Statement
CORPORATE GOVERNANCE STATEMENT
reasonable and not absolute due to the level of
judgement required, the limitations of sampling and
the difficulty in designing systems to detect all
weaknesses in internal control procedures.
Management provides reports to the board on the
effectiveness of the Company’s management of its
material business risks.
7.4: Companies should provide the information
indicated in the Guide to reporting on Principle 7.
Principle 8 – Remunerate fairly and responsibly
Companies should ensure that the level and composition of remuneration is sufficient and reasonable and
that its relationship to performance is clear
8.1: The board should establish a remuneration
committee.
the
The full Board performs the function of
Remuneration Committee. Given the size of
the
Company it is considered that this function is better
performed at Board level.
8.2: The Remuneration committee should be
structured so that it:
The full Board performs the function of
remuneration committee.
the
consists of a majority of
directors
independent
is chaired by an independent chair, and
has at least three members
8.3: Companies should clearly distinguish the
structure of non-executive directors’ remuneration
from that of executive directors and senior
executives.
8.4: Companies should provide the information
indicated in the Guide to reporting on Principle 8.
The Board considers the procedures, policies and
key performance indicators used to measure the
performance of key executives and directors. Any
equity based executive remuneration may be made
by
in
shareholders and developed over time.
accordance with
thresholds
approved
Non-executive directors’ remuneration is generally
fee based.
and
and
framework
the Company’s remuneration
Full discussion of
philosophy
remuneration
received by directors and executives in the current
is contained in the Remuneration
financial year
the Directors’ Report. Further
Report section of
details of
the remuneration
procedures can be found in the Remuneration
Committee Charter.
the structure of
There is no scheme to provide retirement benefits to
to the
Directors, except
Superannuation Guarantee Contribution.
their entitlement
for
This Corporate Governance Statement and other corporate governance documents can be found in the
Corporate Governance section of the Company’s website at www.aqcltd.com
Annual Report
Australian Pacific Coal Limited
Page 66
Year Ending 30 June 2014
ABN 49 089 206 986
Corporate Governance Statement
Additional
follows. This information is current as at 30 September 2014.
information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as
ASX ADDITIONAL INFORMATION
1.
Shareholding
a.
Distribution of Shareholders – Ordinary Securities
Number
Number
Category (size of holding)
of holders
of shares held
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
172
111
108
623
688
25,137
390,045
864,538
31,811,788
948,020,525
1,702
981,112,033
b.
c.
The number of shareholdings held in less than a marketable parcel of 166,667 shares ($0.003 on 30
September 2014) is 1,134 and they hold 49,177,967 shares.
The names of the substantial shareholders listed in the holding company’s register as at 30 September
2014 are:
Shareholder
Mr Paul James Byrne
d.
Voting Rights
Number
of shares held
98,649,011
The voting rights attached to each class of equity security are as follows:
Ordinary shares:
—
Each ordinary share is entitled to one vote when a poll
present at a meeting or by proxy has one vote on a show of hands.
is called, otherwise each member
Annual Report
Year Ending 30 June 2014
Australian Pacific Coal Limited
ABN 49 089 206 986
Page 67
ASX Additional Information
e.
20 Largest Shareholders — Ordinary Shares
ASX ADDITIONAL INFORMATION
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Mr Paul Byrne
Mr Boutros Saad & Mrs Mariam Saad
Mr Peter Graham Wells
Dr Elizabeth Anne Byrne Henderson
Gordon Holdings (Qld) Pty Ltd
Moray Holdings (Qld) Pty Ltd
Shemariah Pty Ltd
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