HEALTH
TECHNOLOGY
RESOURCES
Annu al
Rep ort
2017
For personal use only CONTENTS
Chairman’s Letter
Company Focus and Developments
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial
Position
Consolidated Statement of Changes
in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial
Statements
Directors’ Declaration
Independent Auditor’s Report
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3
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24
25
26
27
58
59
Additional Securities Exchange Information
63
COMPANY
INFORMATION
Directors
David Breeze
Chairman and Managing Director
Thomas Fontaine
Non-Executive Director
Anthony Huston
Non-Executive Director
Scientific Advisors
Professor David Liley
Registered Office
14 View Street
NORTH PERTH WA 6006
Principal Business Address
14 View Street
NORTH PERTH WA 6006
Telephone: (08) 9328 8366
Facsimile: (08) 9328 8733
Website: www.bphenergy.com.au
E-mail: admin@bphenergy.com.au
Auditor
HLB Mann Judd
Level 4
130 Stirling Street
PERTH WA 6000
Share Registry
Advanced Share Registry Limited
110 Stirling Highway
NEDLANDS WA 6009
Australian Securities Exchange Listing
Australian Securities Exchange Limited
(Home Exchange: PERTH, Western Australia)
ASX Code: BPH
Australian Business Number
41 095 912 002
For personal use only CHAIRMAN’S LETTER
Dear Shareholder,
I am pleased to be able to advise on a number
of positive developments in what has been a
challenging year for your company.
In November 2016 investee Cortical Dynamics
Ltd (“Cortical”) was announced as the winner of
the Australian Technologies Competition (“ATC”)
Advanced Manufacturing category, runner up in the
Australian Technology Company of the Year, and
runner up in the Med Tech and Pharma category.
ATC has established itself as Australia’s premier
technology accelerator. The competition recognizes
those companies which are best positioned to
become global success stories .Over the last five
years the competition has generated over $250
million dollars in investment and project opportunities
for Australian SMEs.
Cortical was also invited by Austrade to attend
and present at the Austrade Med Tech Innovation
Showcase 2016 held in Korea in September 2016.
The showcase was for Australia’s key industry experts
and innovative Med Tech companies with senior
executives from leading Korean pharma and medical
device companies.
Discussions were initiated with a Korean medical
device distribution company who approached Cortical
seeking the Korean distribution rights. Organised
by Austrade, with the support of the Department of
Foreign Affairs and Trade (“DFAT”) and the Korean
Health Innovation Development Institute (“KHIDI”),
the showcase provided a platform for Australian
medical technology organisations to meet with
Korean businesses that are interested in partnering
with Australian technology and solutions providers.
In February 2017, the European Patent Office
granted Cortical a further patent titled, ‘Brain
function monitoring and display system’ for the Brain
Anaesthesia Response (“BAR”) monitoring system.
Europe has been estimated to hold over one third of
the worldwide electroence phalogram (“EEG”) / EMG
/ brain function monitoring market.
BPH is of the opinion that the current structure of
the board of MEC Resources Limited (“MEC”) has
been adverse to ongoing developments in Advent
Energy Limited (“Advent”). In July 2017 Advent
announced it had submitted its Environmental Plan
for approval to NOPSEMA prior to commencement of
seismic acquisition activities in PEP11. Advent initially
expected to commence its 2D seismic program in the
third quarter of 2017, pending regulatory approvals,
and has recently announced that this may not occur
until as late as the first quarter of 2018.
In February 2017, Advent announced it had received
conditional regulatory approval for suspension of the
permit work commitments and extension of the term
of EP386. The approval from the Western Australian
Department of Mines & Petroleum (“DMP”) allows the
current EP386 work commitments to be completed by
31 March 2018, subject to regulatory approval. This
work appears unlikely to be able to be completed by
this time given the likely near term onset of the wet
season.
1
BPH Energy | Annual Report 2017For personal use only CHAIRMAN’S LETTER
BPH has been involved in discussions and proposals
to fund the operations of Advent and continues to
do so and has attempted to do so despite ongoing
legal actions by MEC and has only taken such steps
as it considers necessary to protect its position. In
particular, its proposals involve funding initiatives
for each of Advent’s projects. BPH is focussed on
enabling the drilling of a further well at the Baleen
drilling target in PEP11 at the earliest possible
opportunity with an objective of doing so as early
as 2018 given significantly reduced rig rates and the
availability of rigs to achieve this.
supply shortfall. BPH is committed to do so at the
earliest opportunity and is prepared to commit that
all supplies from the successful development of this
project will be committed to meet only the domestic
market.
Yours Sincerely,
The gas prices and gas supply crisis in the east coast
market have created a significant market opportunity
to raise the funding to drill with the objective of
developing the PEP11 project to meet the gas
Mr David Breeze
Chairman
2
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only COMPANY FOCUS AND DEVELOPMENTS
BPH Energy’s major investment is in
Advent Energy Ltd, an unlisted oil
and gas exploration and development
company with onshore and offshore
exploration and near term development
assets around Australia.
Advent Energy Ltd
BPH Energy has a direct interest in Advent Energy
of 27.04% %.Advents assets include EP386 and
RL1 (100%) in the onshore Bonaparte Basin in the
north of Western Australia and Northern territory
and PEP11 (85%) in the offshore Sydney Basin.
PEP 11 Oil and Gas Permit
Advent, through wholly owned subsidiary Asset
Energy Pty Ltd, holds 85% of Petroleum Exploration
Permit PEP 11 – an exploration permit prospective for
natural gas located in the Offshore Sydney Basin.
PEP 11 is a significant offshore exploration area with
large scale structuring and potentially multi-Trillion
cubic feet (Tcf) gas charged Permo-Triassic reservoirs.
Mapped prospects and leads within the Offshore
Sydney Basin are generally located less than 50km
from the Sydney-Wollongong-Newcastle greater
metropolitan area.
The prospectivity of this proven petroleum basin has
been enhanced by the confirmation of the presence
of apparent ongoing hydrocarbon seeps. Sub-
bottom profile data, swath bathymetry, seismic and
echosounder data collected by Geoscience Australia
along the continental slope / permit margin has
demonstrated active erosional features in conjunction
with geophysical indications of gas escape.
Advent has previously interpreted significant
seismically indicated gas features. Key indicators
of hydrocarbon accumulation features have been
interpreted following review of the 2004 seismic data
(reprocessed in 2010). The seismic features include
apparent Hydrocarbon Related Diagenetic Zones
(HRDZ), Amplitude Versus Offset (AVO) anomalies and
potential flat spots.
In addition, a geochemical report has provided
support for a potential exploration well in PEP11. The
report reviewed the hydrocarbon analysis performed
on sediment samples obtained in PEP11 during
2010. The 2010 geochemical investigation utilised a
proprietary commercial hydrocarbon adsorption and
laboratory analysis technique to assess the levels
of naturally occurring hydrocarbons in the seabed
sediment samples.
3
BPH Energy | Annual Report 2017For personal use only COMPANY FOCUS AND DEVELOPMENTS
PEP 11 Oil and Gas Permit (continued)
The report supports that the area surrounding the
proposed drilling site on the Baleen prospect appears
best for hydrocarbon influence relative to background
samples. In addition, the report found that the Baleen
prospect appears to hold a higher probability of
success than other prospects.
Importantly, “a recent review of more than 850
wildcat wells – all drilled after geochemical surveys –
finds that 79% of wells drilled in positive anomalies
resulted in commercial oil and gas discoveries.”
(Surface geochemical exploration for oil and gas:
New life for an old technology, D. Schumacher, 2000,
The Leading Edge)
Advent has demonstrated considerable gas
generation and migration within PEP11, with the
mapped prospects and leads highly prospective for
the discovery of gas.
Heightening the prospectivity and critical positioning
of PEP11, the Australian Energy Market Operator
previously warned that the developed gas reserves
in eastern and south-eastern Australia can only meet
forecast demand until 2019.
Advent Energy is proceeding with a focussed seismic
campaign around a key drilling prospect in PEP11 at
Baleen, in the offshore Sydney Basin.
The high resolution 2D seismic survey covering
approximately 200 line km will be performed to assist
in the drilling of the Baleen target approximately
30 km south east of Newcastle, New South Wales.
A drilling target on the Baleen prospect at a depth
of 2150 metres subsea has been identified in a
review of previous seismic data. Intersecting 2D
lines suggest an extrapolated 6000 acre (24.3 km2)
seismic amplitude anomaly area at that drilling target.
The report on this drilling target noted previous 2D
seismic data showed that the Permian aged section
of the Bowen Basin has producing conventional gas
fields at a similar time and depth to PEP11 at the
Triassic/Permian age boundary.
Western Australia / Northern Territory
– Onshore Bonaparte Basin
Advent Energy Ltd (“Advent”), through wholly owned
subsidiary Onshore Energy Pty Ltd, holds 100% of
each of EP 386 and RL 1 in the onshore Bonaparte
Basin in northern Australia. The Bonaparte Basin
is a highly prospective petroliferous basin, with
significant reserves of oil and gas. Most of the basin is
located offshore, covering 250,000 square kilometres,
compared to just over 20,000 square kilometres
onshore.
Advent holds Exploration Permit EP 386 (2,568 square
kilometres in area) which is the sole petroleum permit
in the Western Australian section of the onshore
Bonaparte Basin. Since 1960 twelve wells have been
drilled in or near EP 386 and only sixteen in the
whole of the onshore basin, with a resultant excellent
technical success rate of encountering hydrocarbons.
Within EP386, recoverable resource estimates range
from 53.3 Bcf (Low) to 1,326.3 Bcf (High) of Prospective
Resources, with a Best Estimate of 355.9 Bcf of gas.
In the NT, Advent holds Retention Licence RL1
(166 square kilometres in area), which covers the
Weaber Gas Field, originally discovered in 1985.
Advent has previously advised that the 2C Contingent
Resources* for the Weaber Gas Field in RL1 are
11.5 billion cubic feet (Bcf) of natural gas following
an independent audit by RISC. Significant upside
3C Contingent Resources of 45.8 Bcf have also been
assessed by RISC.
The current rapid development of the Kununurra
region in northern Western Australia, including the
Ord River Irrigation Area phase 2, the township of
Kununurra, and numerous regional resource projects
provides an exceptional opportunity for Advent to
potentially develop its nearby gas resources.
Market studies have identified a current market
demand of up to 30.8 TJ per day of power
generation capacity across the Kimberley region that
could potentially be supplied by Advent Energy’s
conventional gas projects in EP386 and RL1.
4
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only Location of EP 386 and RL1 including Weaber, Waggon Creek and Vienta gas fields, and other prospects
and leads.
In addition, the Federal Government’s White Paper
on Developing Northern Australia described an
estimated increase in electricity consumption of
52 per cent by 2018 for northern Western Australia.
The Commonwealth Government is providing a new
$5 billion Northern Australian Infrastructure Facility
to provide concessional loans for the construction
of major infrastructure such as ports, roads, rail,
pipelines, electricity and water supply. This will
greatly assist Advent in further market development
and potential reduced costs through the government
funded infrastructure developments that may improve
roads and ports in the vicinity of Advent’s EP386 and
RL1 resources.
The government has previously announced a
commitment to the construction of an all-weather
highway on the Keep River Road. The Keep River
Road runs through Advent Energy’s RL1 permit and
brings the highway to within 4.5km of the Weaber
gas wells in the Northern Territory. Potential projects
to benefit include the planned Project Sea Dragon
aquaculture development, the expanded Ord River
irrigation scheme, and the potential development of
Advents Weaber Gas Field in RL1.
The Seafarms Group is progressing the potential
development of Project Sea Dragon, a proposed
world scale aquaculture operation adjacent to
Advent’s EP386 and RL1 gas resources spanning the
border of northern Western Australia and Northern
Territory
Advent is in an exceptional position to potentially
satisfy this growing regional demand where it remains
the operator and 100% owner of key petroleum
permits in the vicinity of this region.
5
BPH Energy | Annual Report 2017For personal use only COMPANY FOCUS AND DEVELOPMENTS
Production testing at Waggon Creek-1.
Unconventional Resources within EP 386
and RL1
The prospectivity of the Bonaparte Basin is evident
from the known oil and gas fields in both the offshore
and onshore portions of the basin. Advent’s onshore
EP386 and RL1 contain many large structures with
conventional reservoir gas discoveries.
Advent has identified significant shale areas in EP386
and RL1 and is continuing to assess these resources.
The following data illustrates detail from that study
showing results from the re-analysis of the well logs
from prior drilling in Advent’s areas using enhanced
computer processes.
• Advent has indicated significant potential upside
in prospective shale gas resources with estimated
unrisked original gas in place (OGIP) in the range
from 19 TCF to 141 TCF for the 100% Advent
owned EP386 and RL1;
• The thickness of the prospective shale gas play
varies from 300m to over 1500m;
•
In addition to the existing gas discoveries in
conventional petroleum reservoirs, composite
wireline and mudlog gas display of these wells
have consistently indicated the presence of
continuo us elevated gas shows. Source rock
analyses on core, sidewall core and cuttings
samples have indicated the presence of source
rocks with up to 4.3 % Total Organic Contact and
mature for gas and oil generation; and
• Advent has calculated a Prospective Resource
(best estimate) of 9.8 TCF for the shale gas
areas of the Bonaparte permits of EP386
and RL1.
6
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only Cortical Dynamics Limited
BPH Energy has a holding in Cortical of
4.56% with a right to increase to approx.14%)
BAR Technology
“Calibrating anaesthetic monitoring to the individual
rather than the average, results in better patient
outcomes and is focused on saving time, money and
lives” Cortical is an Australian based medical device
technology company that has developed an industry
disruptive brain function monitor independently
described as “a paradigm busting technology from
an Australian based device house that really gives a
significant advantage in this space”. Its competitive
advantage has been recognized by leading world
experts in Anaesthesia. Cortical has received
both TGA approval and the CE mark and has now
commenced its sales campaign.
The core product, the Brain Anaesthesia Response
(BAR) monitor, was developed to better detect
the effect of anaesthetic agents on brain activity,
aiding anaesthetists in keeping patients optimally
anaesthetised. The product is focused on integrated
distribution with the leading global brands in
operation theatre monitoring equipment.
The approach used is fundamentally different from
all other devices currently available in the market in
that its underlying algorithm produces EEG indexes
which are directly related to the physiological state
of the patient’s brain. Such monitoring is gaining
significant use during surgery, however even with the
use of EEG monitors, it is not uncommon for there
to be a critical imbalance between the patient’s
anaesthetic requirements and the anaesthetic
drugs administered. While a number of EEG
monitors are commercially available, one that is
reliably able to quantify the patient’s anaesthetic state
is still desperately needed.
To date, all of the existing EEG based depth of
anaesthesia monitors operate in the context of a
number of well documented limitations: (i) Inability to
monitor the analgesic effects; and (ii) Not all hypnotic
agents are reliably measured.
The above limitations highlight the inadequacies in
current EEG based depth of anaesthesia monitors,
particularly given surgical anaesthesia requires both
hypnotic and analgesic agents (and muscle relaxants).
The global brain monitoring market in 2012 was
valued at $1.08 billion and is poised to grow to
reach $1.6 billion by 2020. Around 234 million major
surgical procedures are undertaken every year
worldwide (Lancet 2008; 372) The pain monitoring
market is valued at over $3.0 billion.
Initial marketing will focus on Total Intravenous
Anaesthesia (TIVA), a method of inducing and
maintaining general anaesthesia without the use
of any inhalation agent. This is becoming more
widely accepted, particularly in Western Europe.
Approximately 29 million major general surgery
general anaesthesias are conducted in the European
Union each year, of which 55% are balanced
anaesthesia (using a combination of intravenous
agents such as propofol and volatile gases) and 20%
are total intravenous anaesthesia using propofol.
“The use of EEG-based depth of anaesthesia
monitors has been recommended in patients
receiving total intravenous anaesthesia because it
is cost effective and because it is not possible to
measure end-tidal anaesthetic concentration in this
group” (source: nice.org.uk)
This creates an immediate market opportunity to
Cortical in Europe alone.
Cortical’ s technology has a versatility that goes
beyond depth of anaesthesia and may be applied to
other EEG based markets, such as neuro-diagnostic,
drug discovery, drug evaluation and the emerging
Brain computer Interface (BCI) market. There are
considerable opportunities offered by subsequent
expansion of the company’s core technology through
developing the product to carry out additional
functions including neuro-diagnostics of changes
in brain and memory functions to provide early
warning of degenerative diseases, pain response
and tranquiliser monitoring for trauma patients in
intensive care units. The BAR monitor is protected by
five patent families in multiple jurisdictions worldwide
consisting of 22 granted patents. Cortical will continue
to drive the development of the BAR monitor,
maintain its intellectual property and concentrate on
obtaining regulatory approval for the BAR monitor.
Cortical has now commenced preparations for a sales
program of the device in Europe, Australia, New
Zealand and further development is also underway
in Korea, Iran and Hong Kong. A USA based
distributorship is expected to follow.
7
BPH Energy | Annual Report 2017For personal use only COMPANY FOCUS AND DEVELOPMENTS
Molecular Discovery Systems (BPH has a
direct interest in MDS of 20%.
HLS5 Technology
Molecular Discovery Systems (“MDSystems”) has
been working with the Molecular Cancer Research
Group at the Harry Perkins Institute of Medical
Research to validate HLS5 as a novel tumour
suppressor gene, particularly for liver cancer.
The researchers at the Perkins Institute originally
identified HLS5 (TRIM35) as a tumour suppressor
associated with leukaemia. However, in a separate
study conducted in China, low levels of HLS5 (TRIM35)
was found to correlate with human liver cancer
development, and that reduced HLS5 (TRIM35)
expression could potentially be used as prognostic
marker for the disease.
Research undertaken by the Perkins Institute team, and
laboratories in China, has revealed that HLS5 (TRIM35)
is capable of slowing the growth of tumour cells in
culture, including suppression of liver cancer cells.
Liver cancer ranks as the second leading cause of
cancer-related deaths in developing countries. An
estimated 782,500 new cases of liver cancer and
745,500 deaths occurred worldwide in 2012, of which
8
Corticals Brain Anaesthesia Response (BAR) Monitor.
China alone accounted for almost 50% of cases.
While survival rates for many cancers have improved
over the past two decades, there has been no major
improvement in liver cancer prognosis.
Liver cancer also looms as one of Australia’s greatest
cancer challenges, with new analyses predicting
increased mortality from the disease in the future. At
present, limited treatment options exist for patients
with liver cancer.
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only REVIEW OF OPERATIONS
Investment in Oil and Gas Exploration
Company
Advent Energy Ltd (“Advent”):
BPH Energy currently holds an interest of 27% in
unlisted Australian exploration company Advent
Energy Ltd (“Advent”).
Advent has assembled a range of hydrocarbon
permits which contain near term production
opportunities with pre-existing infrastructure and
exploration upside.
Advent’s assets include EP386 and RL1 (100%) in the
onshore Bonaparte Basin in the north of Western
Australia and Northern Territory and PEP11 (85%) in
the offshore Sydney Basin.
The Sydney Basin is a proven petroleum basin with
excellent potential for the discovery of gas. Advent
has demonstrated an active hydrocarbon system with
seeps reported in the offshore area and sampling has
indicated the presence of thermogenic hydrocarbon
gas. This is considered to occur in basins actively
generating hydrocarbons and/or that contain
excellent migration pathways. Previous drilling has
shown that the early Permian geological sequence is
mature for hydrocarbons.
Undiscovered gross prospective recoverable gas
resources for structural targets within the PEP11
offshore permit have been estimated at 5.7 Tcf (at
the Best Estimate level). A Low Estimate of 0.3 Tcf
and High Estimate of 67.8 Tcf has been assessed
by Pangean Resources in 2010. PEP 11 lies adjacent
to the most populous region of Australia and the
major industrial hub and port of Newcastle. A high
resolution 2D seismic survey is planned to assist in
the drilling of the Baleen target approximately 30 km
south of Newcastle.
Advent is investigating a considerable potential
shale gas resource within EP386 and RL1. Studies
indicate significant potential upside in prospective
shale gas resources with an estimated (Best Estimate)
prospective recoverable resource of 9.8 Tcf (Low
Estimate is 1.9 Tcf and High Estimate is 25.4 Tcf).
A 2C Contingent Resource of 11.5 Bcf (1C is 0.3 Bcf
and 3C is 45.8 Bcf) for the Weaber Gas Field (RL1)
has been assessed by an independent third party
as a component of Advent’s drive to commercialise
its 100% owned onshore Bonaparte Basin assets.
The rapid development of the Kununurra region
in northern Western Australia, including the Ord
Irrigation Expansion Project and numerous resource
projects, provides an exceptional opportunity
for Advent to potentially develop its nearby gas
resources for the benefit of the region along with
Advent and its shareholders.
Investment in Biotechnology Companies
BPH Energy’s existing Biotechnology investments
include its 3.89% interest in Cortical Dynamics
Limited (and its 20% interest in Molecular Discovery
Systems Limited. BPH also has a right to convert
debt and increase its shareholding in Cortical to
approximately 14 % by a conversion of its loan
facilities.
Cortical Dynamics Limited (“Cortical”):
Cortical is working with BPH Energy and the
Swinburne University of Technology (”SUT”) to
develop and commercialise a unique depth of
anaesthesia monitoring system for use during major
surgery. The core technology is based on real time
analysis of the patients electroencephalograph
(EEG) using a proprietary algorithm based on
a mathematically and physiologically detailed
understanding of the brain’s rhythmic electrical
activity.
Cortical has achieved a major milestone in the
commercialisation of its Brain Anaesthesia Response
Monitor (BAR). Cortical received notification from
the Therapeutic Goods Administration (“TGA) that a
decision was made to issue a conformity assessment
certificate to Cortical under section 41EC of the
Therapeutic Goods Act 1989. In addition to this
Cortical also received notification that to it would
be issued MRA EC certificates (“CE Mark”) under
the Mutual Recognition Agreement (MRA) with the
European Union therefore allowing the CE mark to
be applied to the BAR monitor.
Having achieved TGA certification and the CE Mark,
Cortical is now able to market the BAR monitor within
Australia and Europe.
9
BPH Energy | Annual Report 2017For personal use only REVIEW OF OPERATIONS
Investment in Biotechnology Companies
(continued)
Molecular Discovery Systems Limited
(”MDSystems”) - HLS5 Project:
MDSystems has been working with the Molecular
Cancer Research Group at the Harry Perkins Institute
of Medical Research to validate HLS5 as a novel
tumour suppressor gene, particularly for liver cancer.
The researchers at the Perkins Institute originally
identified HLS5 (TRIM35) as a tumour suppressor
associated with leukemia. However, in a separate
study conducted in China, low levels of HLS5 (TRIM35)
was found to correlate with human liver cancer
development, and that reduced HLS5 (TRIM35)
expression could potentially be used as prognostic
marker for the disease.
In a significant further phase of this research the
Perkins Institute researchers have developed a pre-
clinical model of liver cancer and have demonstrated,
in this model that removing the expression of HLS5
(TRIM35) can accelerate the development of liver
disease.
Research undertaken by the Perkins Institute team, and
laboratories in China, has revealed that HLS5 (TRIM35)
is capable of slowing the growth of tumour cells in
culture, including suppression of liver cancer cells.
Liver cancer ranks as the second leading cause of
cancer-related deaths in developing countries. An
estimated 782,500 new cases of liver cancer and
745,500 deaths occurred worldwide in 2012, of which
China alone accounted for almost 50% of cases.
While survival rates for many cancers have improved
over the past two decades, there has been no major
improvement in liver cancer prognosis.
Liver cancer also looms as one of Australia’s greatest
cancer challenges, with new analyses predicting
increased mortality from the disease in the future. At
present, limited treatment options exist for patients
with liver cancer.
It is anticipated that the work of the Perkins Institute
researchers will be prepared for publication. The
development of this pre-clinical model may enable
MDS to pursue research and partnering relationships
with a significant new range of collaborators and
investors.
10
Developments in the Company’s investments include:
Cortical Dynamics Ltd (BPH 4.56% with a right to
move to approximately 14%)
In November 2016 Cortical Dynamics Ltd (“Cortical”)
was announced as the winner of the Australian
Technologies Competition (“ATC”) Advanced
Manufacturing category, runner up in the Australian
Technology Company of the Year, and runner up in the
Med Tech and Pharma category. ATC has established
itself as Australia’s premier technology accelerator.
Over 130 of Australia’s best technology companies
were considered for these awards. Australian and
international government partners of the ATC include
the Australian Department of Industry, Innovation and
Science, Hong Kong Trade & Development Council
and UK Trade & Investment.
Cortical was also invited by Austrade to attend
and present at the Austrade Med Tech Innovation
Showcase 2016 held in Korea in September 2016.
The showcase was for Australia’s key industry experts
and innovative Med Tech companies with senior
executives from leading Korean pharma and medical
device companies.
Cortical Chairman, Mr David Breeze, presented
Cortical’s Brain Function Monitor and met with
four of the leading Korean teaching and research
hospitals, all of whom expressed interest in using the
technology when it became available in Korea.
Having achieved Therapeutic Goods Administration
(“TGA”) certification and the CE Mark, Cortical is
now able to market the BAR monitor within Australia
and Europe, one of the worlds’ largest EEG brain
function monitoring equipment markets. Cortical has
signed an initial agreement in Australia and is now
negotiating its first distribution agreement for Europe
and is receiving distribution enquiries from other
international centres.
The BAR monitor is designed to assist anaesthetists
and intensive care staff in ensuring patients do not
wake unexpectedly, as well as reducing the incidence
of side effects associated with the anaesthetic.
During the reporting period Cortical issued 5,400,000
fully paid ordinary shares (including 650,000 issued in
July 2017) at an issue price of $0.10 per share to fund
its ongoing activities.
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only In July 2017 Advent submitted its Environmental Plan
(“EP”) for approval to the National Offshore Petroleum
Safety and Environment Management Authority
(“NOPSEMA”) prior to commencement of seismic
acquisition activities in PEP11. Advent expects to
commence its 2D seismic program in the third quarter
of 2017 or early 2018, pending regulatory approvals.
The survey will acquire high resolution 2D seismic data
over the Baleen prospect, and will evaluate (amongst
other things) shallow geohazard indications including
shallow gas accumulations that can affect future
potential drilling operations.
(ii) EP386 and RL1
EP386 and RL1 are held by Advent’s 100% subsidiary
Onshore Energy Pty Ltd. The petroleum titles lie in
the onshore Bonaparte Basin, one of Australia’s most
prolific hydrocarbon producing basins. This field lies
immediately adjacent to the Project Sea Dragon
aquaculture project proposed by the Seafarms Group
which is planned to potentially grow to a 100,000
tonne export project. This project has Major Project
Status across multiple jurisdictions, and Advent
Energy has previously signed a letter of intent for the
potential supply of natural gas to Project Sea Dragon.
. The petroleum wells Waggon Creek-1, Vienta-1
(EP386) and Weaber-4 (RL1) are cased and suspended
as future producers.
In February 2017 Advent received conditional
regulatory approval for suspension of the permit work
commitments and extension of the term of EP386.
Advent has submitted a preliminary proposed well
intervention program to the designated authority for
consideration. .
Molecular Discover Systems Ltd (BPH 20%)
The Molecular Cancer Research Group at the Harry
Perkins Institute of Medical Research continued with
their research of HLS5 during the year.
Advent Energy Ltd (BPH 27.04%)
The information in this section has been extracted
from the ASX announcements of MEC Resources
Limited (ASX: MMR), the major shareholder in Advent
Energy Ltd.
(i) PEP 11
PEP11, offshore Sydney Basin adjacent to Newcastle-
Sydney offshore New South Wales, is held 85% and
operated by Asset Energy Pty Ltd (“Asset”), a wholly
owned subsidiary of Advent Energy Ltd (“Advent”).
Gas prices on the east coast have risen to extreme
levels in the last year as cold weather and rising
demand from the Queensland LNG projects has
resulted in short-term wholesale gas prices in Sydney
up to nearly $29 per gigajoule (GJ). This price spike
means that industrial gas buyers relying on the spot
market for gas supplies will be paying more than three
times as much as Japan is paying for importing LNG.
With the NSW onshore gas industry in turmoil and
the declining reserves in the Bass Strait and Cooper
Basin, Advent Energy is pushing ahead with a focussed
seismic campaign around a key potential drilling
prospect in PEP11 in the offshore Sydney Basin.
PEP11 holds significant structural targets potentially
capable of comprising multi-Tcf natural gas resources.
The offshore Sydney Basin has been lightly explored
to date, including a multi-vintage 2D seismic
data coverage and a single exploration well, New
Seaclem-1 (2010). Its position as the only petroleum
title offshore New South Wales provides a significant
opportunity should natural gas be discovered in
commercial quantities in this petroleum title. It lies
adjacent to the Sydney-Newcastle region and the
existing natural gas network servicing the east coast
gas market.
Advent’s two core prospects in PEP11 have previously
been calculated via external assessment to have
the potential for un-risked (P50) prospective gas
resources of 472 and 2,131 billion cubic feet (“BCF”)
respectively, with multi-trillion cubic feet upside
(“multi-TCF”, Pmean). This resource assessment was
originally comprised within the independent expert
report disclosed to the ASX on 22 December 2010
and has not materially changed since that date.
11
BPH Energy | Annual Report 2017For personal use only DIRECTORS’ REPORT
The directors of BPH Energy Ltd
(”BPH Energy” or the “Company”)
present their report on the company
and its controlled entities for the
financial year ended 30 June 2017.
Dividends
The directors recommend that no dividend be paid in
respect of the current period and no dividends have
been paid or declared since the commencement of
the period.
Directors
The names of directors in office at any time during or
since the end of the year are:
D L Breeze
T Fontaine
A Huston (appointed 26 June 2017)
B Whan (resigned 26 June 2017)
G Gilbert (resigned 1 June 2017)
Company Secretary
Mr David Breeze was appointed Company Secretary
on 23 November 2016. He has many years’ experience
in the management of listed entities. Ms Deborah
Ambrosini resigned as Company Secretary on 23
November 2016.
Principal Activities
The principal activities of the consolidated entity
during the financial year were investments in
biotechnology entities and an oil and gas exploration
entity.
Operating Results
The consolidated entity has reported a total
comprehensive loss after tax for the year ended 30
June 2017 of $2,544,301 (2016: loss of $511,446) and
has a net cash outflow from operating activities of
$517,680 (2016: outflow of $218,606). The loss for
the period is after recognising (i) a fair value loss
on reclassification of an associate, Advent Energy
Limited, of $1,308,563 after accounting for the
extinguishment of the related asset revaluation
reserve (ii) an impairment charge of $72,454 (2016:
$Nil) (iii) consulting and legal expenses of $285,065
(2016: $140,188).
Financial Position
The consolidated entity has reported a loss after
tax for the year ended 30 June 2017 of $2,544,301
(2016: loss of $511,446) and has a net cash outflow
from operating activities of $517,680 (2016: outflow
of $218,606). The consolidated entity has a working
capital deficit of $1,084,626 (2016: deficit $1,963,721).
The net assets of the consolidated entity decreased
by $15,927,700 to $4,386,329 at 30 June 2017.
The consolidated entity has a working capital deficit
of $1,084,626 as at 30 June 2017 (30 June 2016: deficit
of $1,963,721) which includes cash assets of $613,658
(30 June 2016: $111,648) and trade creditors and other
payables of $1,284,910 (30 June 2016: $1,217,748).
Included in trade creditors and payables is director
fee accruals of $760,176. The directors have
reviewed their expenditure and commitments for the
consolidated entity and have implemented methods
of costs reduction. The directors as a part of their
cash monitoring, have voluntarily suspended cash
payments for their directors’ fees to conserve cash
resources.
Review of Operations
A Review of Operations is set out on pages 9 to 11
and forms part of this Directors’ Report.
Significant Changes in State Of Affairs
Capital raisings
On 5 July 2016 the Company issued 70,730,318 shares
under a share placement plan at a price of $0.00533
per share to raise $376,993, being the maximum
30% of its share capital it could issue. Applications
in excess of $800,000 were received. A private
placement of shares to sophisticated and professional
investors was announced on 8th July 2016 at the same
price. A total of 45,966,214 shares were issued under
this placement which raised $245,000 from existing
shareholders of the Company.
12
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only In March and April 2017 the Company issued
219,701,468 shares under a share purchase plan at
$0.005 per share for $1,098,507. Of these subscription
monies, $803,469 was received in cash and $295,038
set off against related party payables.
During the year the Company issued 16,537,290
shares at an average price of $0.00526 per share in
lieu of $87,000 third party fees.
Proceedings on Behalf of Company
No person has applied for leave of Court to bring
proceedings on behalf of the Company or 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.
Subsequent Events
On 1 September 2017 the Company announced
that it had received a writ from MEC in the amount
of $270,000 plus interest and costs. The Company
had previously announced on 4 July 2017 that BPH
is entitled to payment on demand of $388,050 from
MEC and intends to defend the claim from MEC and
counterclaim to recover $388,050 plus interest and
costs from MEC.
There are no matters or circumstances that have
arisen since the end of the financial year other than
outlined elsewhere in this financial report that have
significantly affected, or may significantly affect,
the operations of the company, the results of those
operations, or the state of affairs of the company in
future financial years.
Environmental Issues
The consolidated entity’s operations are not regulated
by any significant environmental regulation under law
of the Commonwealth or of a state or territory.
Non-Audit Services
Information on Directors
D L Breeze
Managing Director and Executive Chairman – Age 63
Shares held – 77,669,486
Unlisted Options held – nil
David is a Corporate Finance Specialist with extensive
experience in the stock broking industry and capital
markets. He has been a corporate consultant to Daiwa
Securities; and held executive and director positions
in the stock broking industry. David has a Bachelor of
Economics and a Masters of Business Administration,
and is a Fellow of the Financial Services Institute of
Australasia, and a Fellow of the Institute of Company
Directors of Australia. He has published in the
Journal of Securities Institute of Australia and has
also acted as an Independent Expert under the
Corporations Act. He has worked on the structuring,
capital raising and public listing of over 70 companies
involving in excess of $250M. These capital raisings
covered a diverse range of areas including oil and
gas, gold, food, manufacturing and technology.
During the last 3 years David has held the following
listed company directorships:
No fees for non-audit services were paid/payable to
the external auditors during the year ended 30 June
2017 (2016: Nil).
– Grandbridge Limited (from December 1999
to present)
– MEC Resources Limited (from April 2005)*
Future Developments
The Company will continue its investment in energy
resources and to assist its investee companies to
commercialise breakthrough biomedical research
developed in universities, medical institutes and
hospitals.
*David Breeze was a Director of MEC and Advent
from April 2005 and November 2005 respectively
and was removed from the ASIC register by MEC
and Advent directors from MEC on 23 November
2016 and Advent on 26 November 2016 .He has
neither resigned or nor removed by shareholders
and disputes the actions taken by the Directors of
each company.
David is also a director of Cortical Dynamics Limited,
Molecular Discovery Systems Limited and Diagnostic
Array Systems Limited.
13
BPH Energy | Annual Report 2017For personal use only DIRECTORS’ REPORT
Information on Directors (continued)
B Whan (resigned 26 June 2017)
Non-Executive Director – Age 68
Shares held – Nil
Unlisted Options held – 2,000,000
Bruce Whan, BEng, PhD, FAICD, has a background in
industry covering a range of research, operations and
management positions, followed by a long career in
the management of innovation and commercialisation
of R&D, in particular from the public research sector.
For 12 years he was a Director of Swinburne
Knowledge and CEO of Swinburne Ventures Limited,
Swinburne University’s commercialisation Company.
Bruce was a member of the Commercialisation
Australia board and has been director of several
companies, mostly start-ups out of Swinburne, and
for 10 years was Chairman of the Victorian Innovation
Centre Limited (INNOVIC), a non-profit Company
assisting innovators at all levels. He is also a Director
of one Cooperative Research Centre. Bruce has
in-depth knowledge and working experience of the
challenges of the innovation process and of bringing
the outputs of R&D through the commercialisation
process to successful market entry.
During the last 3 years Bruce has not held any other
listed company directorships.
Bruce is also a Director of Molecular Discovery
Systems Limited and Cortical Dynamics Limited.
T Fontaine
Executive Director – Age 53
Shares held – 4,384,446
Unlisted Options held – 2,000,000
Tom is a reservoir engineer with over 25 years of
experience in project evaluation management,
development and capital raising. Tom has been
part owner of petroleum engineering companies
Epic Consulting in Canada and Focal Petroleum in
Australia and has provided technical services to many
companies worldwide. He is also primarily responsible
for the startup and subsequent listing on ASX of
Bounty Oil & Gas NL in 2002, and Coal Bed Methane
Company Pure Energy Resources Pty Ltd in 2006
which was acquired in 2009 by BG Group PLc in a
$1 billion takeover. Tom is also currently involved with
several small exploration companies in Canada, Russia,
Cuba, Nepal, Timor Leste and Africa. During the last
3 years Tom has held the following listed company
directorships.
Magnum Gas and Power Limited (from August 2010
to December 2016)
A Huston (appointed 26 June 2017)
Non-Executive Director – Age 62
Shares held – Nil
Unlisted Options held – Nil
Tony Huston has been involved for over 35 years in
engineering and hydrocarbon industries for both on
and off shore exploration/development. Early career
experience commenced with Fitzroy Engineering
Ltd, primarily working on development of onshore oil
fields. In 1996 Tony formed his own E&P Company
on re-entry of onshore wells, primarily targeting
shallow pay that had been passed or ignored from
previous operations. This was successful and the two
plays opened up 15 years ago are still in operation.
Recent focus (10 years) has been to utilise new
technology for enhanced resource recovery and has
been demonstrated in various fields, including US,
Mexico, Oman, Italy and Turkmenistan. During the last
3 years Tony has not held any other listed company
directorships.
14
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only G Gilbert (resigned 1 June 2017)
Remuneration Report (Audited)
Executive Director – Age 69
Shares held – 961,538
Unlisted options held at date of resignation
– 2,000,000
Greg is a specialist in strategy and planning and
most recently was the Science Adviser to the Federal
Minister for Industry and Science. He has a Masters
in Science from Cranfield University in the UK and, in
addition, has a Masters in Health Administration from
La Trobe University, an MBA from Deakin University,
a BA from the University of Queensland, and a Dip.
App Sc from the Royal Military College Duntroon.
He is currently undertaking a doctorate with a
research interest in productivity efficiency.
Greg has an extensive background in the health and
aged care sector as well as in merchant banking and
banking, having held the positions in global strategy
and finance with the National Australia Bank, as well
as having worked in executive roles with Capel Court
Investment Bank, and CIBC Australia Limited.
Greg has also worked with the National Australia Bank
as an Internal Consultant on strategic operational
reviews with Mckinsey and Company and Booz Allen
and Hamilton consultants.
A former Lieutenant Colonel in the Australian Defence
Force, he has extensive senior management experience
in strategic planning, financial management, change
management and project management as well as
merchant banking and corporate advisory experience
in mergers and acquisitions and valuations.
This report details the nature and amount of
remuneration for key management personnel of
BPH Energy. The Remuneration Report details the
remuneration arrangements for KMP who are defined
as those persons having authority and responsibility for
planning, directing and controlling the major activities
of the consolidated entity, directly or indirectly,
including any Director (whether executive or otherwise)
of the consolidated entity. The information provided
in the Remuneration Report has been audited as a
required by Section 308(3C) of the Corporations
Act 2001.
Key Management Personnel
The Directors and other key management personnel
of the Group during or since the end of the financial
year were:
D L Breeze
Executive Chairman and
Managing Director; Company Secretary
(appointed 23 November 2016)
T Fontaine
Non Executive Director
A Huston
G Gilbert
B Whan
Non Executive Director
(appointed 23 November 2016)
Non Executive Director
(resigned 1 June 2017)
Non-Executive Director
(resigned 26 June 2017)
D Ambrosini Company Secretary
(resigned 23 November 2016)
All the parties have held their current position for the
whole of the financial year and since the end of the
financial year unless otherwise stated.
During the last 3 years Greg has not held any other
listed company directorships.
Remuneration Policy
The remuneration policy of BPH Energy Limited
has been designed to align director and executive
objectives with shareholder and business objectives
by providing a fixed remuneration component and
offering specific long-term incentives as determined
by the board and/or shareholders. The remuneration
report as contained in the 2016 financial accounts
was adopted at the Company’s 2016 annual general
meeting. The board believes the remuneration
15
BPH Energy | Annual Report 2017For personal use only DIRECTORS’ REPORT
Remuneration Policy (continued)
policy to be appropriate and effective in its ability to
attract and retain the best executives and directors
to run and manage the Company, as well as create
goal congruence between directors, executives and
shareholders.
The board’s policy for determining the nature and
amount of remuneration for board members and
senior executives of the Company is as follows:
• The remuneration policy, setting the terms and
conditions for the executive directors and other
senior executives, was developed and approved by
the board.
• All executives receive a base salary (which is
based on factors such as length of service and
experience), superannuation, fringe benefits and
options.
• The board reviews executive packages annually
by reference to the Company’s performance,
executive performance and comparable
information from industry sectors and other listed
companies in similar industries.
The performance of executives is measured against
criteria agreed with each executive and is based
predominantly on the amount of their workloads and
responsibilities for the Company. The board may,
however, exercise its discretion in relation to approving
incentives, bonuses and options, and can recommend
changes to recommendations. Any changes must be
justified by reference to measurable performance
criteria. The policy is designed to attract the highest
calibre of executives and reward them for performance
that results in long-term growth in shareholder wealth.
Executives are also entitled to participate in the
employee share and option arrangements.
The executive directors and executives which
receive salaries receive a superannuation guarantee
contribution required by the government, which
is currently 9.50%, and do not receive any other
retirement benefits.
Shares given to directors and executives are valued
as the difference between the market price of those
shares and the amount paid by the director or
executive. Options are valued using an appropriate
valuation methodology.
16
The board policy is to remunerate non-executive
directors at market rates for comparable companies
for time, commitment and responsibilities. The
maximum pool of non-executive director fees
approved by shareholders is $250,000. Payments to
non-executive directors are based on market practice,
duties and accountability. Independent external
advice is sought when required on payments to non-
executive directors. 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. Fees for non-executive directors
are not linked to the performance of the Company.
However, to align directors’ interests with shareholder
interests, the directors are encouraged to hold shares
in the Company and are able to participate in the
employee option plan. The board does not have a
policy in relation to the limiting of risk to directors
and executives in relation to the shares and options
provided.
Employment Contracts of Directors and Senior
Executives
The employment conditions of the Managing Director,
David Breeze, is formalised in a Product Development
Agreement. The engagement is automatically
extended for a period of 2 years at each anniversary
date unless the Managing Director or the Company
give notice of termination prior to the expiry of each
term. The agreement stipulates the Managing Director
may terminate the engagement with a six month notice
period. The company may terminate the agreement
without cause by providing six months written notice
or making payment in lieu of notice, based on the
individual’s annual salary component together with
a redundancy payment of up to twelve months of
the individual’s fixed salary component. Termination
payments are generally not payable on resignation
or dismissal for serious misconduct. In the instance
of serious misconduct the company can terminate
employment at any time. Any options not exercised
before or on the date of termination will not lapse.
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only Details of Remuneration for the year ended 30 June 2017
The remuneration for each key management personnel of the consolidated entity during the year was as follows:
2017
Key Management
Person
Short-term Benefits
Post-employment
Benefits
Salary and fees
Bonus
Non-cash
benefit
Other
Superannuation
D L Breeze
T Fontaine
B Whan
G Gilbert
A Houton
D Ambrosini
148,000
25,000
24,728
22,913
411
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Key Management
Person
Long-term
Benefits
Share-based
payment
Total
Performance
Related
Other
Equity
Options
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,680
-
-
148,000
25,000
24,728
28,593
411
-
%
-
-
-
-
-
-
D L Breeze
T Fontaine
B Whan
G Gilbert
A Huston
D Ambrosini
2016
Compensation
Relating to
Options
%
-
-
-
19.9%
-
-
Key Management
Person
Short-term Benefits
Post-employment
Benefits
Salary and fees
Bonus
Non-cash
benefit
Other
Superannuation
D L Breeze
T Fontaine
B Whan
G Gilbert
D Ambrosini
148,000
25,000
25,000
8,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
BPH Energy | Annual Report 2017For personal use only DIRECTORS’ REPORT
Details of Remuneration for the year ended 30 June 2017 (continued)
2016 (continued)
Key Management
Person
Long-term
Benefits
Share-based
payment
Total
Performance
Related
Compensation
Relating to
Options
D L Breeze
T Fontaine
B Whan
G Gilbert
D Ambrosini
Other
Equity
Options
$
-
-
-
-
-
-
-
-
-
-
-
148,000
14,000
-
-
-
39,000
25,000
8,333
-
%
-
-
-
-
-
%
-
36
-
-
-
Interest in the shares and options of the Company and related bodies corporate
The following relevant interests in shares and options of the Company or a related body corporate were held by
key management personnel as at the date of this report.
Option Holdings
Balance
1.7.2016
or date of
appointment
-
2,000,000
-
2,000,000
-
-
-
-
D L Breeze
T Fontaine
A Huston
B Whan
G Gilbert
-
2,000,000
D Ambrosini
5,000,000
-
Shareholdings
Granted as
Compen-
sation
Options
Exercised
Balance
30.6.2017
or date of
resignation
Total Vested
30.6.2017
or date of
resignation
Total
Exercisable
and Vested
30.6.2017
Total
Unexercis-
able
30.6.2017
-
-
-
-
-
-
-
-
-
2,000,000
2,000,000
2,000,000
-
-
-
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
5,000,000
5,000,000
5,000,000
-
-
-
-
-
-
Number of shares held directly or indirectly by key management personnel:
Balance
1.7.2016 or
date of
appointment
21,334,743
2,192,223
-
480,769
-
-
Received as
Compensation
Options
Exercised
Acquired
Balance
30.6.2017
or date of
resignation
-
-
-
-
-
-
-
-
-
-
-
-
56,334,743
77,669,486
2,192,223
4,384,446
-
-
480,769
961,538
-
-
-
-
D L Breeze
T Fontaine
A Huston
G Gilbert
B Whan
D Ambrosini
18
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only Share based payments:
The following are the share based payment arrangements in existence for those key management personnel at
year end:
Grant Date
Date of Expiry
Fair Value at
Grant Date
20 April 2015
31 March 2020
27 November 2015
30 November 2020
23 November 2016
30 November 2021
$0.0030
$0.0070
$0.0028
Exercise Price
Vesting Date
$0.020
$0.020
$0.020
At grant date
At grant date
At grant date
There are no further service or performance criteria that need to be met in relation to options granted.
The following grants of share based payment compensation to directors and senior management relate to the
current financial year:
Name
Option Series
Granted No. vested
No.
% of grant
vested
% of grant
forfeited
% of compensation
for the year
consisting of options
G Gilbert
23 November 2016
2,000,000
2,000,000
100%
-
19.9%
The following table summarises the value of options granted, exercised or lapsed during the year to directors
and senior management:
Name
G Gilbert
Value of options granted
at grant date
Value of options exercised
at the exercise date
Value of options lapsed at
the date of lapse
$5,680
Not applicable
Not applicable
No options were exercised during the year (2016: Nil), and no options lapsed during the year (2016: Nil).
Underwiting fees
Mr Tom Fontaine received $548 during the year for underwriting fees in respect of a share issue.
Meetings of Directors
The board consults regularly by phone on matters relating to the Company’s operations. Resolutions are passed
by circulatory resolution. The Company did not hold any meetings of directors during the financial year.
Indemnifying Officers or Auditors
During or since the end of the financial year the Company has given an indemnity or entered an agreement to
indemnify, or paid or agreed to pay insurance premiums as follows:
The Company has paid premiums to insure directors and officers against liabilities for costs and expenses
incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity
of director or officer of the Company, other than conduct involving a wilful breach of duty in relation to the
Company. The amount of the premium was $15,995. The Company has not indemnified the current or former
auditor of the Company.
19
BPH Energy | Annual Report 2017For personal use only DIRECTORS’ REPORT
Options
At the date of this report, the unissued ordinary shares of BPH Energy Ltd under option are as follows:
Grant Date
Date of Expiry
Exercise Price
Number Under Option
1 July 2013
2 April 2015
20 April 2015
30 June 2018
31 March 2020
31 March 2020
27 November 2015
30 November 2020
23 November 2016
30 November 2021
$0.08
$0.02
$0.02
$0.02
$0.02
1,075,000
967,500
9,000,000
2,000,000
2,000,000
During the year ended 30 June 2017 no ordinary shares of BPH Energy Ltd were issued on the exercise of
options granted under the BPH Energy Ltd Incentive Option Scheme (2016: Nil). No person entitled to exercise
the option had or has any right by virtue of the option to participate in any share issue of any other body
corporate. No shares or interest have been issued during or since the end of the financial year as a result of
exercise of an option.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2017 has been received and can be
found on page 21.
The directors’ report is signed in accordance with a resolution of directors made pursuant to S298(2) of the
Corporations Act 2001.
David Breeze
Dated this 29 September 2017
20
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of BPH Energy Limited for the year ended
30 June 2017, I declare that to the best of my knowledge and belief, there have been no contraventions of:
a)
b)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
29 September 2017
B G McVeigh
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC 6849 | Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a worldwide organisation of accounting firms and business advisers.
21
BPH Energy | Annual Report 2017For personal use only CORPORATE GOVERNANCE STATEMENT
The Board of Directors of BPH Energy Limited is responsible for the corporate
governance of the economic entity. The Board guides and monitors the business
and affairs of the Company on behalf of the shareholders by whom they are
elected and to whom they are accountable.
To ensure that the Board is well equipped to discharge its responsibilities, it has
established guidelines and accountability as the basis for the administration of
corporate governance.
A copy of the Company’s Corporate Governance Statement can be found on the Company’s website at
www.bphenergy.com.au
22
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Revenue from ordinary activities
Other income
Share of associates’ loss
Impairment charge
Write back of loan
Interest expense
Fair value loss on reclassification of associate
Administration expenses
Provision against loans
Consulting and legal expenses
Depreciation
Employee expenses
Insurance expenses
Service Fees
Other expenses
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive income:
Items that will not be reclassified subsequently to profit and loss
Reclassification of revaluation reserve (net of tax)
Other comprehensive loss (net of tax)
Total comprehensive loss for the period
Loss attributable to non-controlling interests
Loss attributable to members of the parent entity
Total comprehensive loss attributable to owners of the Company
Total comprehensive loss attributable to non-controlling interests
Note
2
2
13
3
2
3
3
3
Consolidated
2017
$
2016
$
216,925
181,758
-
3,000
(90,355)
(161,787)
(72,454)
61,312
-
-
(28,726)
(14,321)
(1,308,563)
-
(191,584)
(116,932)
(551,167)
-
(285,065)
(140,188)
(22)
(72)
(128,931)
(123,303)
(18,593)
(21,151)
(140,335)
(116,945)
(6,743)
(1,505)
(2,544,301)
(511,446)
14
-
-
(2,544,301)
(511,446)
(15,015,000)
3
(15,015,000)
-
-
(17,559,301)
(511,446)
(35,655)
(1,988)
(2,508,646)
(509,458)
(17,523,646)
(509,458)
(35,655)
(1,988)
Earnings Per Share
– Basic and diluted earnings per share (cents per share)
6
(0.59)
(0.22)
The accompanying notes form part of and should be read in conjunction with these financial statements.
23
BPH Energy | Annual Report 2017For personal use only CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Current Assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Other current assets
Total Current Assets
Non-Current Assets
Financial assets
Investments in associates
Intangible assets
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Financial liabilities
Total Current Liabilities
Non-Current Liabilities
Financial liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Non-controlling interest
Total Equity
Consolidated
2017
$
2016
$
Note
7
8
10
9
10
13
11
12
15
16
16
613,658
25,059
165,058
17,960
821,735
111,648
8,155
97,625
24,417
241,845
5,064,359
2,289,308
493,047
19,915,966
-
-
72,454
22
5,557,406
22,277,750
6,379,141
22,519,595
1,284,910
1,217,748
621,451
987,818
1,906,361
2,205,566
86,451
86,451
-
-
1,992,812
2,205,566
4,386,329
20,314,029
17
18
43,454,632
41,828,904
492,580
15,501,707
(39,402,226)
(36,893,580)
(158,657)
(123,002)
4,386,329
20,314,029
The accompanying notes form part of and should be read in conjunction with these financial statements.
24
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Ordinary
Share
Capital
$
Accumu-
lated
losses
$
Option
Reserve
$
Revalua-
tion
Reserve
$
Note
Total
attributable
to owners of
the parent
entity
$
Non-
controlling
Interest
$
Total
$
Balance at 1 July 2015
41,759,904 (36,384,122) 469,650 15,015,000
20,860,432
(121,014) 20,739,418
Loss for the period
Total comprehensive
income for the year
Transactions with owners in
their capacity as owners
-
-
(509,458)
(509,458)
Shares issued for cash
69,000
Share based payments
exprense
18(a)
-
-
-
-
-
-
17,057
-
-
-
-
(509,458)
(1,988)
(511,446)
(509,458)
(1,988)
(511,446)
69,000
17,057
-
-
69,000
17,057
Balance at 30 June 2016
41,828,904 (36,893,580)
486,707 15,015,000
20,437,031
(123,002) 20,314,029
Loss for the period
Other comprehensive loss
(net of tax)
Total comprehensive loss
for the year
Transactions with owners in
their capacity as owners
Shares issued for cash
Share issue costs
Shares issued in lieu of
consulting fees
Shares issued as set-off
against loans payable
Share based payments
expense
-
-
-
(2,508,646)
-
(2,508,646)
1,356,462
(112,772)
87,000
295,038
18(a)
-
-
-
-
-
-
-
-
-
-
-
-
5,873
Balance at 30 June 2017
43,454,632 (39,402,226) 492,580
-
(2,508,646)
(35,655) (2,544,301)
(15,015,000)
(15,015,000)
-
(15,015,000)
(15,015,000)
(17,523,646)
(35,655) (17,559,301)
-
-
-
-
-
-
1,356,462
(112,772)
87,000
295,038
-
-
-
-
1,356,462
(112,772)
87,000
295,038
5,873
-
5,873
4,544,986
(158,657) 4,386,329
The accompanying notes form part of and should be read in conjunction with these financial statements.
25
BPH Energy | Annual Report 2017For personal use only CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Cash Flows From Operating Activities
Payments to suppliers and employees
Income received
Interest paid
Consolidated
2017
$
2016
$
Note
(519,206)
(219,083)
3,706
(2,180)
477
-
Net cash (used in) operating activities
20
(517,680)
(218,606)
Cash Flows From Investing Activities
Loans (to) / from related parties
Investment in unlisted entity
Net cash (used in) / provided by investing activities
Cash flows from financing activities
Proceeds from issue of securities (net of share issue costs)
Proceeds from borrowings
Repayment of borrowings
Net cash provided by financing activities
Net increase in cash held
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
7
(4,000)
2,692
(100,000)
(104,000)
-
2,692
1,243,690
-
(120,000)
69,000
160,000
1,123,690
229,000
502,010
111,648
613,658
13,086
98,562
111,648
The accompanying notes form part of and should be read in conjunction with these financial statements.
26
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1.
Statement of Significant Accounting
Policies
Corporate Information
The financial report includes the consolidated
financial statements and the notes of BPH Energy
Limited and its controlled entities (‘consolidated
entity’ or ‘Group’).
Included in trade creditors and payables is director
fee accruals of $760,176. The directors have
reviewed their expenditure and commitments for the
consolidated entity and have implemented methods
of costs reduction. The directors as a part of their
cash monitoring, have voluntarily suspended cash
payments for their directors’ fees to conserve cash
resources.
BPH Energy Limited is a Company incorporated and
domiciled in Australia and listed on the Australian
Securities Exchange.
The financial report was authorised for issue on 29
September 2017 by the board of directors.
Basis of Preparation
The financial report is a general purpose financial
report that has been prepared in accordance with
Australian Accounting Standards other authoritative
pronouncements of the Australian Accounting
Standards Board (“AASB”) and the Corporations
Act 2001. BPH Energy Ltd is a for-profit entity for the
purpose of preparing the financial statements.
Australian Accounting Standards set out accounting
policies that the AASB has concluded would result
in a financial report containing relevant and reliable
information about transactions, events and conditions
to which they apply. Material accounting policies
adopted in the preparation of this financial report are
presented below. They have been consistently applied
unless otherwise stated.
The financial report has been prepared on an accruals
basis and is based on historical costs, modified, where
stated below.
Financial Position
The consolidated entity has reported a loss after
tax for the year ended 30 June 2017 of $2,544,301
(2016: loss of $511,446) and has a net cash outflow
from operating activities of $517,680 (2016: outflow
of $218,606). The consolidated entity has a working
capital deficit of $1,084,626 (2016: deficit $1,963,721).
The net assets of the consolidated entity decreased
by $15,924,700 to $4,386,329 at 30 June 2017.
The directors have prepared cash flow forecasts,
including potential capital raisings, which indicate
that the consolidated entity should have sufficient
cash flows for a period of at least 12 months from
the date of this report. Based on the cash flow
forecasts including directors voluntarily suspending
cash payments for their director fees the directors are
satisfied that, the going concern basis of preparation
is appropriate. The financial report has therefore been
prepared on a going concern basis, which assumes
continuity of normal business activities and the
realisation of assets and the settlement of liabilities in
the ordinary course of business.
The consolidated entity is involved in a legal dispute
with MEC Resources Ltd. Should the consolidated
entity not be successful in raising additional funds
through the issue of new equity, should the need
arise, or should there be an unfavourable outcome in
the legal dispute with MEC Resources Ltd, this may
cast doubt as to whether or not the consolidated
entity will be able to continue as a going concern
and therefore, whether it will realise its assets and
discharge its liabilities as and when they fall due and
in the normal course of business and at the amounts
stated in the financial report.
The financial statements do not include any
adjustments relative to the recoverability and
classification of recorded asset amounts or, to the
amounts and classification of liabilities that might be
necessary should the entity not continue as a going
concern.
Compliance with IFRS
The consolidated financial statements of BPH
Energy Limited Group comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
27
BPH Energy | Annual Report 2017For personal use only NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
Non-controlling interests in the results and
equity of subsidiaries are shown separately in
the consolidated statement of profit or loss
and other comprehensive income, statement
of changes in equity and statement of financial
position respectively.
(ii) Changes in ownership interests
Changes in the Group’s interests in subsidiaries
that do not result in a loss of control are
accounted for as equity transactions. The
carrying amounts of the Group’s interests and
the non-controlling interests are adjusted to
reflect the changes in their relative interests
in the subsidiaries. Any difference between
the amount by which the non-controlling
interests are adjusted and the fair value of the
consideration paid or received is recognised
directly in equity and attributed to owners of
the Company.
When the Group loses control of a subsidiary,
the profit or loss on disposal is calculated as
the difference between (i) the aggregate of
the fair value of the consideration received
and the fair value of any retained interest
and (ii) the previous carrying amount of the
assets (including goodwill), and liabilities
of the subsidiary and any non-controlling
interests. Amounts previously recognised in
other comprehensive income in relation to the
subsidiary are accounted for (i.e. reclassified to
profit or loss or transferred directly to retained
earnings) in the same manner as would be
required if the relevant assets or liabilities were
disposed of. The fair value of any investment
retained in the former subsidiary at the date
when control is lost is regarded as the fair
value on initial recognition for subsequent
accounting under AASB 139 Financial
Instruments: Recognition and Measurement or,
when applicable, the cost on initial recognition
of an investment in an associate or jointly
controlled entity.
1.
Statement of Significant Accounting
Policies (continued)
Accounting Policies
(a)
Principles of Consolidation
(i) Subsidiaries
Subsidiaries are all entities (including
structured entities) over which the Group has
control. The Group controls an entity when the
Group is exposed to, or has rights to, variable
returns from its involvement with the entity and
has the ability to affect those returns through
its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the
Group. They are deconsolidated from the date
that control ceases.
A list of controlled entities is contained in Note
19 to the financial statements. All controlled
entities have a June financial year-end.
As at reporting date, the assets and
liabilities of all controlled entities have been
incorporated into the consolidated financial
statements as well as their results for the year
then ended.
The results of subsidiaries acquired or
disposed of during the year are included in the
consolidated statement of profit or loss and
other comprehensive income from the effective
date of acquisition and up to the effective date
of disposal, as appropriate. The acquisition
method of accounting is used to account for
business combinations by the Group.
Intercompany transactions, balances
and unrealised gains on transactions
between Group companies are eliminated.
Unrealised losses are also eliminated
unless the transaction provides evidence
of an impairment of the transferred asset.
Accounting policies of subsidiaries have
been changed where necessary to ensure
consistency with the policies adopted by the
Group.
28
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only
(b)
Income Tax
Tax incentives
The charge for current income tax expense is
based on the profit for the year adjusted for
any non-assessable or disallowed items. It is
calculated using the tax rates that have been
enacted or are substantially enacted by the
statement of financial position date.
Deferred tax is accounted for using the
statement of financial position liability method
in respect of temporary differences arising
between the tax bases of assets and liabilities
and their carrying amounts in the financial
statements. No deferred income tax will
be recognised from the initial recognition
of an asset or liability, excluding a business
combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that
are expected to apply to the period when the
asset is realised or liability is settled. Deferred
tax is recognised in the statement of profit
or loss and other comprehensive income
except where it relates to items that may be
recognised directly to equity, in which case the
deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised
to the extent that it is probable that future
tax profits will be available against which
deductible temporary differences or unused
tax losses and tax credits can be utilised.
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to
offset current tax assets and liabilities and
when the deferred tax balances relate to the
same taxation authority. Current tax assets and
tax liabilities are offset where the Company has
a legally enforceable right to offset and intends
either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
The amount of benefits brought to account or
which may be realised in the future is based
on the assumption that no adverse change
will occur in income taxation legislation and
the anticipation that the Company will derive
sufficient future assessable income to enable
the benefit to be realised and comply with the
conditions of deductibility imposed by the law.
The Company may be entitled to claim
special tax deductions in relation to qualifying
expenditure. As the Company is not in a
position to recognise current income tax
payable or current tax expense, a refundable
tax offset will be received in cash and
recognised as rebate revenue in the period the
underlying expenses have been incurred.
(c)
Property, Plant & Equipment
Each class of property, plant and equipment
is carried at cost less, where applicable, any
accumulated depreciation and impairment
losses.
Plant and equipment
Plant and equipment are measured on the
cost basis.
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 assets
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
Company 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 charged
to the statement of profit or loss and other
comprehensive income during the financial
period in which they are incurred.
29
BPH Energy | Annual Report 2017For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1.
Statement of Significant Accounting
Policies (continued)
(c)
Property, Plant & Equipment (continued)
through profit or loss are expensed to profit
or loss immediately. Financial instruments are
classified and measured as set out below.
Depreciation
Derecognition
The depreciable amount of fixed assets is
depreciated on a straight-line basis over their
useful lives.
The depreciation rates used for each class of
depreciable assets are:
Class of Fixed Asset Depreciation Rate
Plant and equipment
15 - 33 %
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at each
statement of financial position date.
An asset’s carrying amount is written down
immediately to its recoverable amount if the
asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined
by comparing proceeds with the carrying
amount. These gains and losses are included in
the statement of profit or loss. When revalued
assets are sold, amounts included in the
revaluation reserve relating to that asset are
transferred to retained earnings.
(d)
Financial Instruments
Recognition and Initial Measurement
Financial instruments, incorporating financial
assets and financial liabilities, are recognised
when the Company becomes a party to the
contractual provisions of the instrument.
Trade date accounting is adopted for financial
assets that are delivered within timeframes
established by marketplace convention.
Financial instruments are initially measured
at fair value plus transactions costs where
the instrument is not classified as at fair
value through profit or loss. Transaction costs
related to instruments classified as at fair value
Financial assets are derecognised where the
contractual rights to receipt of cash flows
expires or the asset is transferred to another
party whereby the Company is no longer has
any significant continuing involvement in the
risks and benefits associated with the asset.
Financial liabilities are derecognised where
the related obligations are either discharged,
cancelled or expire. The difference between
the carrying value 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.
Classification and Subsequent Measurement
(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 profit taking,
where they are derivatives not held for cash
flow hedging purposes, or 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. Realised
and unrealised gains and losses arising from
changes in fair value are included in profit or
loss in the period in which they arise.
(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 using the effective interest rate
method.
30
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only
(iii) Available-for-sale financial assets
Assets carried at amortised cost
Available-for-sale (“AFS”) financial assets are
non-derivative financial assets that are either
designated as such or that are not classified in
any of the other categories.
Listed shares held by the Group that are
traded in an active market are classified as AFS
and are stated at fair value. The Group also
has investments in unlisted shares that are not
traded in an active market but that are also
classified as AFS financial assets and stated
at fair value (because the directors consider
that fair value can be reliably measured).
Gains and losses arising from changes in fair
value are recognised in other comprehensive
income and accumulated in the investments
revaluation reserve, with the exception of
impairment losses, interest calculated using
the effective interest method, and foreign
exchange gains and losses on monetary assets,
which are recognised in profit or loss.
(v) Financial Liabilities
Non-derivative financial liabilities are
subsequently measured at amortised cost
using the effective interest rate method.
Fair value
Fair value is determined based on current bid
prices for all quoted investments. Valuation
techniques are applied to determine the
fair value for all unlisted securities, including
recent arm’s length transactions, reference to
similar instruments and valuation models using
non-market inputs prepared by independent
experts.
Impairment
At each reporting date, the Group assesses
whether there is objective evidence that a
financial instrument has been impaired. In
the case of available-for-sale equity financial
instruments, a significant or prolonged
decline in the value of the instrument below
cost is considered to determine whether an
impairment has arisen. Impairment losses are
recognised in the statement of profit or loss
and other comprehensive income.
For loans and receivables, the amount of the
loss is measured as the difference between the
asset’s carrying amount and the present value
of estimated future cash flows (excluding future
credit losses that have not been incurred)
discounted at the financial asset’s original
effective interest rate. The carrying amount of
the asset is reduced and the amount of the
loss is recognised in profit or loss. If a loan
or held-to-maturity investment has a variable
interest rate, the discount rate for measuring
any impairment loss is the current effective
interest rate determined under the contract. As
a practical expedient, the Group may measure
impairment on the basis of an instrument’s fair
value using an observable market price.
If, in a subsequent period, the amount of the
impairment loss decreases and the decrease
can be related objectively to an event
occurring after the impairment was recognised
(such as an improvement in the debtor’s
credit rating), the reversal of the previously
recognised impairment loss is recognised in
profit or loss.
Assets classified as available-for-sale
If there is objective evidence of impairment
for available-for-sale financial assets, the
cumulative loss – measured as the difference
between the acquisition cost and the current
fair value, less any impairment loss on that
financial asset previously recognised in profit or
loss – is removed from equity and recognised
in profit or loss.
Impairment losses on equity instruments
that were recognised in profit or loss are not
reversed through profit or loss in a subsequent
period.
If the fair value of a debt instrument classified
as available-for-sale increases in a subsequent
period and the increase can be objectively
related to an event occurring after the
impairment loss was recognised in profit or
loss, the impairment loss is reversed through
profit or loss.
31
BPH Energy | Annual Report 2017For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1.
Statement of Significant Accounting
Policies (continued)
(e)
Impairment of Assets
not exceed the carrying amount that would
have been determined, net of depreciation or
amortisation, if no impairment loss had been
recognised.
The Group reviews non-financial assets, other
than deferred tax assets, are reviewed at each
reporting date to determine whether there
is any indication of impairment. If any such
indication exists, then the asset’s recoverable
amount is estimated. For goodwill, and
intangible assets that have indefinite useful
lives or that are not yet available for use, the
recoverable amount is estimated each year at
the same time.
The recoverable amount of an asset or cash-
generating unit is the greater of its value in use
and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are
discounted to their present value using a pre-
tax discount rate that reflects current market
assessments of the time value of money and
the risks specific to the asset. For the purpose
of impairment testing, assets that cannot be
tested individually are Grouped together into
the smallest Group of assets that generates
cash inflows from continuing use that are
largely independent of the cash inflows of
other assets or Groups of assets (the “cash-
generating unit” or “CGU”). An impairment
loss is recognised if the carrying amount of
an asset or its CGU exceeds its estimated
recoverable amount. Impairment losses are
recognised in profit or loss. Impairment losses
recognised in respect of CGUs are allocated
first to reduce the carrying amount of any
goodwill allocated to the units, and then to
reduce the carrying amounts of the other assets
in the unit (Group of units) on a pro rata basis.
An impairment loss in respect of goodwill
is not reversed. In respect of other assets,
impairment losses recognised in prior periods
are assessed at each reporting date for any
indications that the loss has decreased or no
longer exists. An impairment loss is reversed
if there has been a change in the estimates
used to determine the recoverable amount.
An impairment loss is reversed only to the
extent that the asset’s carrying amount does
(f)
Investments in Associates
Associates are all entities over which the
Group has significant influence but not control
or joint control, generally accompanying a
shareholding of between 20% and 50% of the
voting rights. Investments in associates are
accounted for in the parent entity financial
statements using the cost method and in the
consolidated financial statements using the
equity method of accounting, after initially
being recognised at cost. The equity method
of accounting recognises the Group’s share of
post-acquisition reserves of its associates.
The Group’s share of its associates’ post-
acquisition profits or losses is recognised in the
profit or loss, and its share of post-acquisition
movements in reserves is recognised in other
comprehensive income. The cumulative post-
acquisition movements are adjusted against
the carrying amount of the investment.
Dividends receivable from associates are
recognised in the parent entity’s profit or loss,
while in the consolidated financial statements
they reduce the carrying amount of the
investment. When the Group’s share of losses
in an associate equals or exceeds its interest in
the associate, including any other unsecured
long-term receivables, the Group does not
recognise further losses, unless it has incurred
obligations or made payments on behalf of
the associate.
Unrealised gains on transactions between the
Group and its associates are eliminated to the
extent of the Group’s interest in the associates.
Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment
of the asset transferred. Accounting policies of
associates have been changed where necessary
to ensure consistency with the policies
adopted by the Group. Where an investment
is classified as a financial asset in accordance
with AASB 139, at the date significant influence
32
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only is achieved, the fair value of the investment
needs to be assessed. Any fair value gains are
recognised in accordance with the treatment
the classification the financial asset as required
by AASB 139.
Any excess of the cost of acquisition over
the Group’s share of the net fair value of the
identifiable assets, liabilities and contingent
liabilities of the associate recognised at the
date of acquisition is recognised as goodwill,
which is included within the carrying amount of
the investment. Any excess of the Group’s share
of the net fair value of the identifiable assets,
liabilities and contingent liabilities over the cost
of acquisition, after reassessment, is recognised
immediately in profit or loss.
The consolidated entity discontinues the use
of the equity method from the date when the
investment ceases to be an associate or a joint
venture, or when the investment is classified as
held for sale. When the a consolidated entity
retains an interest in the former associate
or joint venture and the retained interest
is a financial asset, the consolidated entity
measures the retained interest at fair value at
that date and the fair value is regarded as its
fair value on initial recognition in accordance
with AASB 139. The difference between the
carrying amount of the associate or joint
venture at the date the equity method was
discontinued, and the fair value of any retained
interest and any proceeds from disposing of
a part interest in the associate or joint venture
is included in the determination of the gains
or loss on disposal of the associate or joint
venture. In addition, the consolidated entity
accounts for all amounts previously recognised
other comprehensive income in relation to that
associate or joint venture on the same basis
as would be required if that associate or joint
venture had directly disposed of the related
assets or liabilities. Therefore, if a gain or loss
recognised in other comprehensive income
by that associate or joint venture would be
reclassified to profit or loss on the disposal of
the related assets or liabilities, the consolidated
entity reclassifies the gain or loss from equity to
profit or loss (as a reclassification adjustment)
when the equity method is discontinued.
(g)
Intangibles
Research
Expenditure during the research phase of a
project is recognised as an expense when
incurred.
Patents and Trademarks
Patents and trademarks are recognised at cost
of acquisition. Patents and trademarks have
a finite life and are carried at cost less any
accumulated amortisation and any impairment
losses. Patents and trademarks are amortised
over their useful life of 10 years.
(h)
Employee Benefits
Provision is made for the Company’s liability
for employee benefits arising from services
rendered by employees to balance date. Short
term employee benefits have been measured
at the amounts expected to be paid when the
liability is settled, plus related on-costs. Long
term employee benefits have been measured
at the present value of the estimated future
cash outflows to be made for those benefits
using the corporate bond rate.
(i)
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.
(j)
Cash and Cash Equivalents
Cash and cash equivalents include cash on
hand, deposits held at call with banks, other
short-term highly liquid investments, and bank
overdrafts. Bank overdrafts are shown within
short-term borrowings in current liabilities on
the statement of financial position.
(k)
Revenue and Other Income
Interest revenue is recognised when it is
probable that the economic benefits will flow
to the Group and the amount of revenue
can be measured reliably. Interest revenue
is accrued on a timely basis, by reference to
the principal outstanding and at the effective
interest rate applicable.
33
BPH Energy | Annual Report 2017For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1.
Statement of Significant Accounting
Policies (continued)
(k)
Revenue and Other Income (continued)
Dividend revenue is recognised when the right
to receive a dividend has been established.
Revenue from the rendering of a service
is recognised by reference to the stage of
completion of the contract.
All revenue is stated net of the amount of
goods and services tax (“GST”).
(l)
Goods and Services Tax
Revenues, expenses and assets are recognised
net of the amount of GST, except where the
amount of GST incurred is not recoverable
from the Australian Tax Office. In these
circumstances the GST is recognised as part
of the cost of acquisition of the asset or as
part of an item of the expense. Receivables
and payables in the statement of financial
position are shown inclusive of GST. Cash flows
are presented in the cash flow statement on
a gross basis, except for the GST component
of investing and financing activities, which are
disclosed as operating cash flows.
(m)
Trade and other payables
Liabilities are recognised for amounts to
be paid in the future for goods or services
received, whether or not billed to the
consolidated entity. The amounts are
unsecured and are usually paid within 45 days.
(n)
Share based payments
The fair value of options granted under
the Company’s Employee Option Plan is
recognised as an employee benefit expense
with a corresponding increase in equity. The fair
value is measured at grant date and recognized
over the period during which the employees
become unconditionally entitled to the options.
The fair value at grant date is independently
determined using an appropriate option
pricing model that takes into account the
exercise price, the term of the option, the
vesting and performance criteria, the impact
of dilution, the share price at grant date and
expected volatility of the underlying share, the
expected dividend yield and risk free interest
rate for the term of the option.
The fair value of the options granted excludes
the impact of any non-market vesting
conditions (for example, profitability and sales
growth targets). Non-market vesting conditions
are included in assumptions about the number
of options that are expected to vest. At each
statement of financial position date, the entity
revises its estimate of the number of options
that are expected to vest. The employee
benefit expense recognised each period
takes into account the most recent estimate.
Upon the exercise of options, the balance of
the share-based payments reserve relating to
those options is transferred to share capital.
(o)
Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker, the
directors (see Note 27).
(p)
Earnings per share
Basic earnings per share (“EPS”) is calculated
as net profit / loss attributable to members,
adjusted to exclude costs of servicing equity
(other than dividends) and preference share
dividends, divided by the weighted average
number of ordinary shares, adjusted for any
bonus element. Diluted earnings per share
adjusts the figures used in the determination of
basic earnings per share to take into account
the after income tax effect of interest and
other financing costs associated with dilutive
potential ordinary shares, and the weighted
average number of additional ordinary shares
that would have been outstanding assuming
the conversion of all dilutive potential ordinary
shares.
(q)
Critical accounting estimates and judgments
The directors evaluate estimates and
judgments incorporated into the financial
report based on historical knowledge and
best available current information. Estimates
34
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only assume a reasonable expectation of future
events and are based on current trends and
economic data, obtained both externally and
within the Group.
Key judgements — Provision for Impairment of
loan receivables
Included in the accounts of the consolidated
entity are secured and unsecured loan
receivables of $2,071,467 (2016: $2,337,984).
The Company raised a provision against its
unsecured loans of $551,167 in the reporting
period (2016: $Nil). This provision can be
reversed upon payment of the loans.
Key judgements —Impairment of intangible
assets
An impairment charge of $72,454 has been
recognised by a subsidiary in respect of
intangible assets (2016: $Nil). The carrying
value of intangibles at 30 June 2017 was $Nil
(2016: $72,454).
Key judgements — Investment in Advent
Energy Ltd (“Advent”)
As of 1 January 2017 a judgement was made
that, despite owning 27% of Advent, the
Company no longer exercised significant
influence over Advent and it ceased to be
treated as an associate entity from that date.
In particular, the Company was not involved
in the operational decision making of Advent
and did not have access to its operational and
financial records.
The discontinuation of equity accounting for
this associate triggered a re-assessment of the
fair value of the investment in Advent resulting
in an expense of $1,308,563 (2016: $Nil).- refer
to Note 13.
Key estimates - Investment in Molecular
Discovery Systems
The recoverable amount of the investment
in Molecular Discovery Systems Limited is
considered greater than the carrying amount
of the investment and hence no impairment
loss was recognised – refer to Note 13.
Key estimates - Investment in Cortical
The recoverable amount of the investment
in Cortical was considered greater than the
carrying amount of the investment and hence
no impairment loss was recognised – refer to
Note 10.
(r)
Application of New and Revised Accounting
Standards
Standards and Interpretations applicable to
30 June 2017
In the year ended 30 June 2017, the Directors
have reviewed all of the new and revised
Standards and Interpretations issued by the
AASB that are relevant to the Company and
effective for the current annual reporting
period. As a result of this review, the Directors
have determined that there is no material
impact of the new and revised Standards and
Interpretations on the Company and, therefore,
no material change is necessary to Group
accounting policies.
Standards and Interpretations in issue not yet
adopted
Certain new accounting standards and
interpretations have been publishes that are
not mandatory for 30 June 2017 reporting
periods. Those which may have a significant to
the Group are set out below. The Group does
not plan to adopt these standards early.
AASB 9 Financial Instruments (2014)
AASB 9 (2014), published in December
2014, replaces the existing guidance AASB 9
(2009), AASB 9 (2010) and AASB 139 Financial
Instruments: Recognition and Measurement
and is effective for annual reporting periods
beginning on or after 1 January 2018, with
early adoption permitted.
The new standard results in changes to
accounting policies for financial assets
and liabilities covering classification and
measurement, hedge accounting and
impairment. The Group has assessed these
changes and determined that based on the
current financial assets and liabilities held at
reporting date, the Group will need to
35
BPH Energy | Annual Report 2017For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
1.
(r)
Statement of Significant Accounting
Policies (continued)
Application of New and Revised Accounting
Standards (continued)
AASB 9 Financial Instruments (2014)
(continued)
reconsider its accounting policies surrounding
impairment recognition. The new impairment
requirements for financial assets are based on
a forward looking ‘expected loss model’ (rather
than the current ‘incurred loss model’).
The Group does not expect a significant effect
on the financial statements resulting from the
change of this standard however the Group
is in the process of evaluating the impact of
the new financial instrument standard. The
changes in the Group’s accounting policies
from the adoption of AASB 9 will be applied
from 1 July 2018 onwards.
AASB 15 Revenue from Contracts with
Customers
AASB 15 establishes a comprehensive
framework for determining whether, how
much and when revenue is recognised,
including in respect of multiple element
arrangements. It replaces existing revenue
recognition guidance, AASB 111 Construction
Contracts, AASB 118 Revenue and AASB 1004
Contributions. AASB 15 is effective from
annual reporting periods beginning on or after
1 January 2018, with early adoption permitted.
The core principle of AASB 15 is that it
requires identification of discrete performance
obligations within a transaction and associated
transaction price allocation to these
obligations. Revenue is recognised upon
satisfaction of these performance obligations,
which occur when control of goods or services
is transferred, rather than on transfer of
risks and rewards. Revenue received for a
contract that includes a variable amount is
subject to revised conditions for recognition,
whereby it must be highly probable that no
significant reversal of the variable component
may occur when the uncertainties around its
measurement are removed.
36
The Group’s current income is interest income,
therefore AASB 15 is not expected to have a
material impact on the Group. This however
may change depending on the income streams
in place when the AASB15 is effective in the
financial year beginning 1 July 2018.
AASB 16 Leases
AASB 16 replaces the current AASB 17 Leases
standard. AASB 16 removes the classification
of leases as either operating leases or
finance leases- for the lessee - effectively
treating all leases as finance leases. Most
leases will be capitalised on the balance
sheet by recognising a Vight-of-use’ asset
and a lease liability for the present value
obligation. This will result in an increase in
the recognised assets and liabilities in the
statement of financial position as well as a
change in expense recognition, with interest
and deprecation replacing operating lease
expense.
Lessor accounting remains similar to current
practice, i.e. lessors continue to classify leases
as finance and operating leases.
AASB 16 is effective from annual reporting
periods beginning on or after 1 January 2019,
with early adoption permitted for entities that
also adopt AASB 15.
This standard will primarily affect the
accounting for the operating leases. As at
30 June 2017, the Group did not have any
non-cancellable operating lease commitments,
however the potential impact will be
dependent on the lease arrangements in place
when the new standard is effective. The Group
has commenced the process of evaluating the
impact of the new lease standard.
No other new standards, amendments to
standards and interpretations are expected
to affect the Group’s consolidated financial
statements.
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only
2.
Revenue
Revenue
Interest revenue: other entities
Interest revenue: cash accounts
Other income
ATO refund
Write back of loan
Write back of loan no longer payable
3.
Expenses Included in Loss for the Year
Depreciation
Employee costs
- Director fees
- Share based payments
- Share based payments to directors
Total employee costs
Impairment charge
Intangibles
Fair value loss on reclassification of associate
Fair value loss
Reclassification of revaluation reserve in
relation to associate
Consolidated
2017
$
2016
$
213,219
181,292
3,706
466
216,925
181,758
-
-
3,000
3,000
61,312
61,312
-
-
22
72
123,058
106,246
193
5,680
3,057
14,000
128,931
123,303
72,454
72,454
16,323,563
(15,015,000)
1,308,563
-
-
-
-
-
37
BPH Energy | Annual Report 2017For personal use only NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
4.
Key Management Personnel Compensation
Names and positions held of economic and parent entity key management personnel in office at any time
during the financial year are:
D L Breeze
Executive Chairman and Managing Director
Company Secretary (appointed 23 November 2016)
T Fontaine
Non-Executive Director
A Huston
Non-Executive Director (appointed 26 June 2017)
G Gilbert
Non-Executive Director (resigned 1 June 2017)
B Whan
Non-Executive Director (resigned 26 June 2017)
D Ambrosini Company Secretary (resigned 23 November 2016)
Short term employee benefits
Consulting fee
Share based payments
Consolidated
2017
$
2016
$
123,052
106,246
98,000
5,680
98,000
14,000
226,732
218,246
Included in trade and other payables is current and former director and consulting fee accruals of
$1,220,767 (30 June 2016: $1,151,613).
Director
David Breeze
Thomas Fontaine
Tony Huston
Directors who have previously resigned
Balance owing at 30 June 2017
Amount Owing
30 June 2017
716,558
43,207
411
460,591
1,220,767
Key management personnel remuneration has been included in the Remuneration Report section of the
Directors Report.
5. Auditors’ Remuneration
Remuneration of the auditor of the parent entity for:
- auditing or reviewing the financial report
HLB Mann Judd
Nexia Perth Audit Services
38
Consolidated
2017
$
2016
$
24,000
-
24,000
16,000
10,525
26,525
BPH Energy | Annual Report 2017 HEALTH TECHNOLOGY RESOURCESFor personal use only
Consolidated
2017
$
2016
$
(2,508,646)
(509,458)
(2,508,646)
(509,458)
(0.59)
(0.59)
(0.22)
(0.22)
Number
Number
426,024,411 235,766,727
Consolidated
2017
$
2016
$
613,658
103,172
-
8,476
613,658
111,648
6.
Earnings per Share
Total loss per share attributable to ordinary equity holders
of the Company
Loss used in the calculation of basic loss per share and
diluted loss per share
For basic and diluted Earnings Per Share
From continuing operations
Total basic loss per share and diluted loss per share
Weighted average number of ordinary shares outstanding
during the year used in calculating basic EPS and diluted EPS
The Company’s potential ordinary shares, being its options granted,
are not considered dilutive as the conversion of these options will
result in a decreased net loss per share.
7.
Cash and Cash Equivalents
Cash at Bank and in hand
Short-term bank deposits
Cash at bank earns interest at floating rates based on daily
bank deposit rates.
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of
cash flows is reconciled to items in the statement of financial
position as follows:
Cash and cash equivalents
613,658
111,648
8.
Trade and Other Receivables
Current
Other receivables
25,059
25,059
8,155
8,155
39
BPH Energy | Annual Report 2017For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
Consolidated
2017
$
2016
$
17,960
17,960
24,417
24,417
-
2,494
162,564
165,058
55,645
2,494
39,486
97,625
1,906,409
1,738,359
-
502,000
148,949
48,949
3,009,001
-
5,064,359
2,289,308
2,400,579
2,232,529
(494.170)
(494.170)
1,906,409
1,738,359
1,141.637
1,092,200
(1,141,637)
(590,200)
-
502,000
9. Other Assets
Current
Prepaid insurance
10. Financial Assets
Current
Unsecured Loans to other entities:
Grandbridge Limited
MEC Resources Limited
Advent Energy Ltd
Non-Current
Secured Loans to other entities: (a)
Cortical Dynamics Limited (“Cortical”)
Molecular Discovery Systems Limited (“MDS”)
Available for sale financial assets at fair value:
Investments in unlisted entities – Cortical Dynamics Limited
Investments in unlisted entities – Advent Energy Ltd (b)
Loan receivables are stated net of the
following provisions:
Cortical Dynamics Limited (“Cortical”)
Gross receivable
Less provision
Molecular Discovery Systems Limited (“MDS”)
Gross receivable
Less provision
40
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only (a)
Secured loans
(b)
These loans are secured by a charge over all of
the assets and undertakings of each entity and
interest bearing. Subject to the conditions of
the agreement the Company has the right to
conversion to satisfy the debt on or before the
termination date.
The Company has a convertible loan
agreement with MDS at an interest rate of
7.69% per annum. The loan is for a maximum
amount of $500,000 and is to be used for short
term working capital requirements. Subject
to MDS being admitted to the Official List of
ASX (“Official List”), BPH Energy has a right of
conversion to satisfy the debt on or before the
termination date, being 26 November 2018.
As at reporting date the loan had been drawn
down by an amount of $547,167, including
capitalised interest (2016: $502,000). Interest
charged on the loan for the period was $45,166
(2016: $28,341). During the reporting period
the Company recognised a loan provision
of $551,167 resulting in the loan being fully
provided for at period end.
The Company has two convertible loan
agreements with Cortical. One loan is for a
maximum amount of $500,000 at an interest
rate of 8.16% per annum and is to be used
for short term working capital requirements.
Subject to Cortical being admitted to
the Official List BPH Energy has a right of
conversion to satisfy the debt on or before the
termination date, being 19 November 2018.
As at reporting date the loan had been drawn
down by an amount of $584,411, including
capitalised interest (2016: $533,561). Interest
charged on the loan for the period was
$50,850.
On 28th February 2012 BPH Energy entered
into a second convertible loan agreement
with Cortical. The facility is for an amount
of $1,000,000 at an interest rate of 9.4% per
annum and has an annual interest rate of
9.40%. The loan will be used for short term
working capital requirements and funding
further development of the BAR monitor. BPH
Energy has a right of conversion to satisfy the
debt on or before the termination date, being
28 February 2019. As at reporting date the
loan had been drawn down by an amount of
$1,322,078, including capitalised interest (2016:
$1,204,878). Interest charged on the loan for
the period was $117,201.
As of 1 January 2017 a judgement was made
that, despite owning 27% of Advent, the
Company no longer exercised significant
influence over Advent and it ceased to be
treated as an associate entity from that date.
In particular, the Company was not involved
in the operational decision making of Advent
and did not have access to its operational
and financial records. The discontinuation
of equity accounting for this associate
triggered a re-assessment of the fair value
of the investment in Advent as required
by accounting standards resulting in a fair
value loss expense of $1,308,563 (2016: $Nil).
Advent’s carrying value of its exploration assets
in its 30 June 2017 audited financial statements
was over $28 million.
Advent and its subsidiaries have reported
current commitments for its exploration
permits of $20,522,500 over the next
12 months. To assist in meeting these
commitments, both MEC and Advent have
stated they are continually seeking and
reviewing potential sources of both equity and
debt funding. Advent has stated it is currently
in negotiations with a number of parties on
the terms of investment and its management
has confidence that a suitable outcome will
be achieved however there is no certainty at
this stage that those discussions will result in
further funding being made available.
In relation to Advent’s exploration
commitments (which include Asset Energy
Pty Ltd) completing 200km of 2D seismic and
geotechnical studies within the PEP 11 area
by 12 August 2016 Advent’s wholly owned
subsidiary, Asset Energy Pty Ltd, lodged an
application in respect of Petroleum Exploration
Permit 11 (“PEP11”) with the National Offshore
Petroleum Titles Administrator (“NOPTA”)
prior to 30 June 2016 to vary a condition
41
BPH Energy | Annual Report 2017For personal use only NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
10. Financial Assets (continued)
of PEP11, suspend the years 2 and 3 work
commitments and request a subsequent
extension of the PEP11 permit term. NOPTA
is currently assessing the application. This
application and those made by Advents for
EP386 may not be approved. In addition to the
2D seismic commitment, Advent is committed
to drill an exploration well and perform a
seismic survey by the end of March 2018 for
EP 386.
Asset Energy Pty Ltd has invested over $25
million in the PEP11 title in recent history, and,
along with its JV partner Bounty Oil and Gas
NL, is committed to continuing to explore
for and ultimately exploit any petroleum
accumulations which may be identified in this
title area. Other projects may impact the ability
of Advent to raise funds.
The application to vary a condition of the
title and suspend the years 2 and 3 work
commitments was prepared following
discussions with NOPTA, however a decision
has not been received by Asset Energy from
NOPTA. The above conditions indicate the
uncertainty that may affect the ability of the
Group to realise the carrying value of its
investment in Advent in the ordinary course
of business. The valuation is dependent on
approvals for variations and extension to work
programs being approved by government.
11.
Intangible Assets
Patent costs capitalised
Cost
Accumulated amortisation and impairment
Net carrying value
Total intangibles
Patent costs include all costs associated with the filing and
maintenance of the patents for the company’s technologies.
12. Property, Plant and Equipment
Plant and Equipment:
At cost
Accumulated depreciation
Total Property, Plant and Equipment
(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.
Balance at the beginning of the year
Depreciation expense
Carrying amount at the end of the year
42
Consolidated
2017
$
2016
$
72,454
(72,454)
-
-
72,454
-
72,454
72,454
41,486
(41,486)
-
41,486
(41,464)
22
22
(22)
-
94
(72)
22
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only 13.
Investments Accounted for using the Equity Method
Investments in associates are accounted for in the consolidated financial statements using the equity
method of accounting.
Name of Entity
Country of
Incorporation
Ownership
Interest %
Principal Activity
Molecular Discovery Systems Limited
Australia
20% 20%
Biomedical Research
2017 2016
As of 1 January 2017 a judgement was made that, despite owning 27% of Advent, the Company no
longer exercised significant influence over Advent and it ceased to be treated as an associate entity from
that date. In particular, the Company was not involved in the operational decision making of Advent and
did not have access to its operational and financial records.
Shares in Associates
Advent Energy Limited
Molecular Discovery Systems Limited
(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:
Advent Energy Limited:
Balance at the beginning of the year
Transfer to financial assets
Share of associate loss for the year
Balance at end of the year
Molecular Discovery Systems Limited:
Balance at the beginning of the year
Share of associate loss for the year
Balance at end of the year
Valuation processes
Consolidated
2017
$
2016
$
-
19,380,613
493,047
535,353
493,047
19,915,966
19,380,613
19,511,430
(19,332,564)
-
(48,049)
(130,817)
-
19,380,613
535,353
566,323
(42,306)
(30,970)
493,047
535,353
The directors informally assess the fair value of its investments annually. A formal assessment is performed
as necessary by obtaining an external independent valuation report.
The fair value of the Group’s investment in MDS is supported by a capital raising completed in MDS in
January 2016 at $0.02 per share, together with on-going operational activities of that entity.
43
BPH Energy | Annual Report 2017For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
13.
Investments Accounted for using the Equity Method (continued)
(b)
Summarised financial information of associates
As of 1 January 2017 a judgement was made that, despite owning 27% of Advent, the Company no longer
exercised significant influence over Advent and it ceased to be treated as an associate entity from that date.
In particular, the Company was not involved in the operational decision making of Advent and did not have
access to its operational and financial records.
The results of its associates aggregated assets (including goodwill) and liabilities, including the Group’s
share of net assets and net loss for the period are as follows.
Total of Associate
Reconciliation to the Carrying Amount
Current
Assets
Non-
Current
Assets
Current
Liabilities
Non-
Current
Liabilities
Reve-
nues
Loss for
the Year
Total
Compre-
hensive
Loss for
the Year
Net
Assets
of Asso-
ciate
Owner-
ship
interest
% Goodwill
Carrying
Amount
of the
Group’s
Interest
Other
Adjust-
ments
1,475
179,129
851,356 556,632
62
(211,527)
(211,527)
(245,476)
20
1,487,291
(748,768)
493,047
1,475
179,129
851,356 556,632
62
(211,527)
(211,527)
(245,476)
20
1,487,291
(748,768)
493,047
-
-
-
-
173
(154,837)
(154,837)
(203,170)
20
1,487,291
(748,768)
535,353
173
(154,837)
(154,837)
(203,170)
20
1,487,291
(748,768)
535,353
1,708
(483,134)
(483,134) 6,169,046
27.04
1,708
(483,134)
(483,134) 6,169,046
27.04
-
-
13,211,567 19,380,613
13,211,567 19,380,613
2017
Molecular
Discovery
Systems
Ltd
2016
Molecular
Discovery
Systems
Ltd
30,525
312,003
1,358,382
30,525
312,003
1,358,382
110,131 28,055,584
5,351,194
Advent
Energy
Ltd
110,131 28,055,584
5,351,194
44
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only 14.
Income Tax Expense
(a)
The prima facie tax on loss from operations before income tax
is reconciled to the income tax as follows:
Accounting loss before tax
Prima facie tax payable on loss from operations
before income tax at 27.5% (2016: 30%)
Add tax effect of:
Non-deductible expenses
Tax benefit of revenue losses and temporary
differences not recognised
Income tax expense recognised
(b)
Tax losses
Unused tax losses for which no deferred tax asset
has been recognised
Potential tax benefit @27.5% (2016: 30%)
15. Trade and Other Payables
Current
Trade payables
Sundry payables and accrued expenses
Trade payables are non-interest bearing and normally settled within 60 days
16. Financial Liabilities
Current
Borrowings – unsecured
Non-Current
Borrowings – unsecured
Current borrowings are non-interest bearing. Non-current
borrowings include interest accrued at 8.97% per annum. Non-current
borrowings will not be called upon for repayment until the
Company is financially independent.
Consolidated
2017
$
2016
$
(2,544,301)
(511,446)
(699,683)
(153,434)
-
57,788
699,683
95,646
-
-
9,640,079
8,466,212
2,651,022
2,539,864
33,823
28,594
1,251,087
1,189,154
1,284,910
1,217,748
621,451
621,451
987,818
987,818
86,451
86,451
-
-
45
BPH Energy | Annual Report 2017For personal use only NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
Consolidated
2017
$
2016
$
17.
Issued Capital
588,702,017 (2016: 235,766,727) fully paid ordinary shares
43,454,632
41,828,904
The Company has no authorised capital and the issued
shares do not have a par value.
(a) Ordinary Shares
At the beginning of reporting period
41,828,904
41,759,904
235,766,727
235,766,727
Consolidated
Consolidated
2017
$
2016
$
2017
Number
2016
Number
Shares issued for cash
1,425,462
-
277,390,265
Shares issued at closure of Share
Purchase Plan
Share issue costs
Shares issued in lieu of consulting
fees
Shares issued as set-off against loans
payable
-
-
235,766,727
(69,000)
69,000
-
(112,772)
87,000
295,038
-
-
-
16,537,290
59,007,735
-
-
At reporting date
43,454,632
41,828,904
588,702,017
235,766,727
Fully paid ordinary shares carry one vote per share and carry the right to dividends. The market price of
the Company’s ordinary shares at 30 June 2017 was 0.2 cents per share.
(b) Options
There were 15,042,500 options on issue at the end of the year:
Total number
Exercise price
1,075,000
967,500
9,000,000
2,000,000
2,000,000
15,042,500
$0.08
$0.02
$0.02
$0.02
$0.02
Expiry date
30 June 2018
31 March 2020
31 March 2020
30 November 2020
30 November 2021
There were no options exercised during the year (2016: Nil). The holders of options do not have the right,
by virtue of the option, to participate in any share issue or interest issue of any other body corporate or
registered scheme.
46
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only (c) Capital risk management
The Group’s and the parent entity’s objectives when managing capital are to safeguard their ability to
continue as a going concern, so that they may continue to provide returns for shareholders and benefits
for other stakeholders.
The focus of the Group’s capital risk management is the current working capital position against the
requirements of the Group to meet corporate overheads. The Group’s strategy is to ensure appropriate
liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate
capital raisings as required.
The working capital position of the Group at 30 June 2017 and 30 June 2016 are as follows:
Cash and cash equivalents
Other current assets
Trade receivables and financial assets
Trade payables and financial liabilities
Net working capital position
Refer to Note 1 for further details of the Group’s financial position
and plans to manage the working capital deficit at 30 June 2017.
18. Reserves
Options Reserve (a)
Asset Revaluation Reserve (b)
(a)
Option Reserve
The option reserve records items recognised as expenses
on the valuation of director and employee share options.
Opening balance
Share based payments
Closing balance
(b)
Asset Revaluation Reserve
The asset revaluation reserve records the revaluation of
available for sale investments to fair value.
Opening balance
Fair value adjustment to reclassify associate to available for
sale investment
Closing balance
Consolidated
2017
$
613,658
17,960
190,117
2016
$
111,648
24,417
105,750
(1,906,361)
(2,205,566)
(1,084,626)
(1,988,138)
492,580
486,707
-
15,015,000
492,580
15,501,707
486,707
5,873
492,580
469,650
17,057
486,707
15,015,000
15,015,000
(15,015,000)
-
-
15,015,000
The $15,015,000 reduction in the revaluation reserve relates to the fair valuation of Advent on
discontinuation of being equity accounted as an associate. This amount has been recognised in other
comprehensive income in the Statement of profit or Loss and Other Comprehensive income.
47
BPH Energy | Annual Report 2017For personal use only NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
19. Controlled Entities
Name of
Entity
Principal
Activity
Country of
Incorporation
Ownership Interest
%
Parent Entity
BPH Energy Ltd
Subsidiaries of BPH Energy Ltd
Diagnostic Array Systems Pty Ltd
Investment
Australia
2017 2016
BioMedical Research
Australia
51.82 51.82
Balances and transactions between the Company and its subsidiaries, which are related parties of the
Company, have been eliminated on consolidation and not disclosed in this note. Details of transactions
between the Group and other related entities are disclosed below.
BPH owns 51.82% equity interest in Diagnostic Array Systems Pty Ltd (“DAS”) and consequentially
controls more than half of the voting power of those shares. Mr David Breeze is the Chairman of both
entities. BPH therefore has control over the financial and operating policies of DAS. DAS is controlled
by the Group and is consolidated in these financial statements. DAS’s loss for the year was $74,003 of
which $35,654 was attributable to minority interests. DAS’s total assets at year-end were $1,004 and total
liabilities $362,650, and net equity ($361,646).
20. Cash Flow Information
(a)
Reconciliation of Cash Flow from Operations with Profit after income tax:
Operating loss after income tax
Non-cash items:
Depreciation and amortisation
Interest revenue on loans
Write back of loan
Fair value loss on reclassification as associate
Impairment charge
Share based payment expense
Intercompany recharges
Provision against loans
Interest expense on loans
Share of Associates’ losses
Shares issued in lieu of third party fees
Changes in net assets and liabilities
Decrease in other assets
(Increase) in trade and other receivables
Increase in trade payables and accruals
Net cash (used in) operating activities
(b)
Financing Facilities
Credit card facility (limit)
48
Consolidated
2017
$
2016
$
(2,544,301)
(511,446)
22
72
(213,219)
(181,283)
(61,312)
1,308,563
72,454
5,873
-
551,167
26,545
90,355
87,000
6,457
(16,904)
-
-
-
17,057
59,473
-
10,530
161,787
-
2,896
-
169,620
222,308
(517,680)
(218,606)
20,000
20,000
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only 21. Subsequent Events
On 1 September 2017 the Company announced that it had received a writ from MEC in the amount of
$270,000 plus interest and costs. The Company had previously announced on 4 July 2017 that BPH is
entitled to payment on demand of $388,050 from MEC and intends to defend the claim from MEC and
counterclaim to recover $388,050 plus interest and costs from MEC.
There are no matters or circumstances that have arisen since the end of the financial year other than
disclosed elsewhere in this report that have significantly affected, or may significantly affect, the
operations of the company, the results of those operations, or the state of affairs of the company in future
financial years.
22. Financial Risk Management
(a)
Financial Risk Management
The Group’s financial instruments consist mainly of deposits with banks, investments, accounts receivable
and payable, and loans to and from subsidiaries. The main purpose of non-derivative financial instruments
is to raise finance for Group operations policies.
The main risks the Group is exposed to through its financial instruments are interest rate risk, liquidity risk,
credit risk and equity price risk.
Interest rate risk
Interest rate risk is managed with a mixture of fixed and floating rate financial assets. The Group’s financial
liabilities are currently not exposed to interest rate risk as the Group has no interest bearing financial
liabilities.
Liquidity risk
The Group manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast
and actual cash flows.
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance
date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those
assets, as disclosed in the statement of financial position and notes to the financial statements.
Equity price risk
The Group is exposed to equity price risk through its shareholdings in publicly listed entities. Material
investments are managed on an individual basis.
Foreign currency risk
The Group is not exposed to any material risks in relation to fluctuations in foreign exchange rates.
49
BPH Energy | Annual Report 2017For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
22. Financial Risk Management (continued)
(b)
Financial Instruments
Interest rate risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate
as a result of changes in market interest rates and the effective weighted average interest rates on classes
of financial assets and financial liabilities with floating rates, based on contractual maturities, is as follows:
Weighted
Effective
Interest Rate
%
Floating
Interest Rate
$
Fixed Interest
Rate
1 Year of less
Fixed Interest
Rate
1 to 5 Years
Non-Interest
Bearing
$
Total
$
2017 Consolidated
Assets
Cash and cash equivalents
0.60
613,658
Trade and other receivables
Financial assets
9.66
Liabilities
Trade and sundry payables
Financial liabilities
8.97
-
-
613,658
-
-
-
-
-
-
-
-
-
-
-
-
-
613,658
25,059
25,059
1,906,409
3,323,008
5,229,417
1,906,409
3,348,067
5,868,134
-
1,284,910
1,284,910
86,451
621,451
707,902
86,451
1,906,361
1,992,812
Weighted
Effective
Interest Rate
%
Floating
Interest Rate
$
Fixed Interest
Rate
1 Year of less
Fixed Interest
Rate
1 to 5 Years
Non-Interest
Bearing
$
Total
$
2016 Consolidated
Assets
Cash and cash equivalents
.009
111,648
Trade and other receivables
Financial assets
8.58
-
-
-
-
2,240,359
Liabilities
Trade and sundry payables
Financial liabilities
8.97
111,648
2,240,359
-
-
-
-
285,392
285,392
-
-
-
-
-
-
-
-
111,648
8,155
8,155
97,625
2,337,984
105,780
2,457,787
1,217,748
1,217,748
702,426
987,818
1,920,174
2,205,566
50
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only Fair Values
The fair values of:
• Term receivables are determined by discounting the cash flows, at the market interest rates of similar
securities, to their present value.
• Other loans and amounts due are determined by discounting the cash flows, at market interest rates
of similar borrowings to their present value.
• For unlisted investments where there is no organised financial market, the fair value has been based
on valuation techniques incorporating non-market data prepared by independent valuers.
No financial assets and financial liabilities are readily traded on organised markets in standardised form.
2017
2016
Carrying
Amount
$
Fair
Value
$
Carrying
Amount
$
Fair
Value
$
Financial Assets
Available-for-sale financial assets
3,157,950
3,157,950
48,949
48,949
Loans and trade and other receivables
2,071,467
2,337,987
2,337,987
2,337,987
5,229,417
5,229,417
2,386,933
2,386,933
Financial Liabilities
Other loans and amounts due
707,902
707,902
987,818
987,818
Trade payables
1,284,910
1,284,910
1,217,748
1,217,748
1,992,812
1,992,812
2,205,566
2,205,566
Sensitivity Analysis – Interest Rate Risk
The Group has performed sensitivity analysis relating to its exposure to interest rate risk at balance date.
This sensitivity analysis demonstrates the effect on the current year results and equity which could result
from a change in these risks. The effect on profit and equity as a result of changes in the variable interest
rate, with all other variables remaining constant would be as follows:
Change in loss
— Increase in interest rate 1%
— Decrease in interest rate by 0.5%
Liquidity risk
Consolidated Group
2017
2016
5,341
(267)
621
(310)
The Group manages liquidity risk by maintaining adequate reserves and borrowing facilities, by
continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial
assets and liabilities.
Liquidity is the risk that the Company will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset.
51
BPH Energy | Annual Report 2017For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
22. Financial Risk Management (continued)
The following are the contractual maturities at the end of the reporting period of financial liabilities.
Contractual cash flows
Carrying
amount
Total
2 mths or
less
2-12 mths 1-2 years
2-5 years
30 June 2017
Financial liabilities
Trade and other payables
1,284,910
1,284,910
32,938
1,251,972
Unsecured loan
707,902
707,902
-
621,451
1,992,812
1,992,812
32,938
1,873,423
-
86,451
86,451
-
-
-
Contractual cash flows
Carrying
amount
Total
2 mths or
less
2-12 mths 1-2 years
2-5 years
30 June 2016
Financial liabilities
Trade and other payables
1,217,748
1,217,748
Unsecured loan
987,818
987,818
2,205,566
2,205,566
-
-
-
1,217,748
987,818
1,922,669
-
-
-
-
-
-
(c)
Fair value measurements recognised in the statement of financial position
The following table provides an analysis of consolidated financial instruments that are measured
subsequent to initial recognition at fair value, grouped into levels 1 to 3 based on the degree to which
the fair value is observable.
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets
for identical assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for
the asset or liability that are not based on observable market data (unobservable inputs).
There were no transfers between the levels for recurring fair value measurements during the year.
Specific valuation techniques used to value financial instruments include:
• For unlisted investments where there is no organised financial market, the fair value has been based
on valuation techniques incorporating non-market data prepared by independent valuers.
52
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only
30 June 2017
Available for sale financial assets
— Investments in unlisted entities
Total
30 June 2016
Available for sale financial assets
— Investments in unlisted entities
Total
Reconciliation of fair value measurements of financial assets
Opening balance
Shares acquired during the year
Transferred from equity accounted investments - Advent Energy Ltd
Closing balance
$
Level 1
$
Level 2
$
Level 3
$
Total
$
Level 1
-
-
-
-
3,009,001
3,009,001
148,949
3,157,950
148,949
3,157,950
$
Level 2
$
Level 3
$
Total
-
-
48,949
48,949
48,949
48,949
2017
2016
Level 3
Level 3
48,949
100,000
3,009,001
3,157,950
48,949
-
-
48,949
23. Related Party Transactions
(a)
Equity interests in controlled entities
Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 19 to the
financial statements.
(b)
Directors’ remuneration
Details of directors’ remuneration and retirement benefits are located in the Directors Report and Note 4.
(c)
Directors’ equity holdings
Held as at the date of this report by directors and
their director-related entities in BPH Energy Limited
Ordinary Shares
Share options
Parent
2017
2016
Number
Number
83,015,470
24,007,735
2,000,000
4,000,000
Refer to the Remuneration Report in the Directors’ Report for details of options granted to directors.
53
BPH Energy | Annual Report 2017For personal use only NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
23. Related Party Transactions (continued)
(d)
Directors
The Company has an agreement with Trandcorp Pty Limited on normal commercial terms procuring the
services of David Breeze to provide product development services for $98,000 (2016: $98,000).
(e)
Director related entities
Grandbridge Limited (“Grandbridge”) has a common Managing Director, Mr David Breeze, and is
therefore a related party of the Company. During the period Grandbridge charged the Company
$252,595 in administration and service fees. At balance date $624,966 (2016: $563,578) was payable to
Grandbridge. Grandbridge received $10,370 during the period for management services in relation to
a share placement. Grandbridge’s 100% subsidiary, Grandbridge Securities Limited, received $8,750 in
respect of the underwriting of a share issue.
David Breeze was a Director of MEC from April 2005 and was removed from the ASIC register by MEC
directors on 23 November 2016. He has neither resigned or nor removed by shareholders and disputes
the actions taken by the directors of MEC. During the year the Company recognised an interest expense
of $26,545 on a liability to MMR.
(f)
Receivables, payables and transactions with associates
MDS is a related party of the Company. Refer to Notes 10 and 13 for the Company’s investment and loan
receivables. During the period the Company charged MDS $45,166 in loan interest. In addition, a loan
receivable exists between the consolidated entity and MDS of $594,200 (2016:$590,200). This amount is
unsecured, non-interest bearing and repayable on demand. The Company has raised a provision against
the full amount of this loan. The provision can be reversed upon payment of the loan.
Advent Energy is a related party of the Company. Refer to Notes 10 and 13 for the Company’s investment
and loan receivables.
(g) Other Interests
Cortical is a related party of the Company. Refer to Note 10 for the Company’s investment and loan
receivables. During the period the Company charged Cortical $168,051 in loan interest.
24. Share-Based Payments
The following share-based payment arrangements existed at 30 June 2017:
Total number
Grant date
Exercise price
1,075,000
967,500
9,000,000
1 July 2013
2 April 2015
20 April 2015
2,000,000
27 November 2015
2,000,000
23 November 2016
15,042,500
$0.080
$0.020
$0.020
$0.020
$0.020
Fair value
at grant date
$0.0013
$0.0004
$0.0030
$0.0070
$0.0030
Expiry date
30 June 2018
31 March 2020
31 March 2020
30 November 2020
30 November 2021
54
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only All options granted to key management personnel are to purchase ordinary shares in BPH Energy Limited,
which confer a right of one ordinary share for every option held.
During the year, 2,000,000 options were issued. The options were issued on 23 November 2016 and expire
on 30 November 2021 with a strike price of $0.02.
The fair value of the options granted is estimated as at the date of grant using a Black-Scholes model
taking into account the terms and conditions upon which the options were granted. The following table
lists the inputs to the model used.
Fair value at grant date
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividends
Risk-free interest rate
Valuation
$0.003
$0.007
$0.02
75%
5 years
Nil
2.5%
$5,680
The total value of these options was $5,680 at the date that they were granted.
Consolidated Group
2017
2016
Weighted
Average Exercise
Price
$
0.02
0.02
-
0.02
0.02
Number of
Options
13,042,500
2,000,000
-
15,042,500
15,042,500
Number of
Options
11,367,500
2,000,000
(325,000)
13,042,500
12,039,167
Weighted
Average Exercise
Price
$
0.02
0.02
0.16
0.03
0.02
Outstanding at the
beginning of the year
Granted
Expired
Outstanding at year-end
Exercisable at year-end
No options were exercised during the year ended 30 June 2017 (2016: Nil).
Included under employee benefits expense in the profit and loss is $5,873 for share based expense
(2016: $17,057) of which $5,680 (2016: $14,000) relates to options granted to directors, and relates, in full,
to equity.
55
BPH Energy | Annual Report 2017For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
25. Commitments and Contingencies
At reporting date there are no capital commitments other than those of an associate disclosed in Note 10.
The Company is a party to the following legal actions.
MEC Resources Ltd (ASX: MMR) Writ – Defence and Counterclaim
The Company has received a writ from MEC Resources Ltd (ASX: MMR) for an amount of $270,000 plus
interest and costs. BPH has previously advised the ASX on 4 July 2017 that BPH is entitled to payment on
demand of $388,050 from MMR .BPH will defend any claim from MMR and counterclaim to recover from
MMR the sum of $388,050 plus interest and costs.
Statutory Demand
The company has received a statutory demand from Deborah Ambrosini, a former Director of the
company for an amount of $117,481. The Company disputes this position and intends to have the
statutory demand set aside. The company has advised Mrs Ambrosini that the conditions precedent for
payment has not occurred and that any Directors fees are not due and owing.
Statutory Demand
The company has received a statutory demand from Goh Hock, a former Director of the company for an
amount of $145,832. The Company disputes this position and intends to have the statutory demand set
aside. The company has advised Hock Goh that the conditions precedent for payment has not occurred
and that any Directors fees are not due and owing.
56
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only
26. Parent Entity Disclosures
Financial Position
Assets
Current assets
Non-Current assets
Total asset
Liabilities
Current liabilities
Non-Current liabilities
Total liabilities
Equity
Issued Capital
Accumulated losses
Option Reserve
Asset Revaluation Reserve
Total equity
Financial Performance
(Loss) after tax for the year
Other comprehensive income
Total comprehensive income
Parent
2017
$
2016
$
820,732
241,292
5,490,849
23,218,574
6,311,581
23,459,866
1,838,801
2,102,742
86,451
-
1,925,252
2,102,742
43,454,632
41,828,904
(39,560,883)
(35,973,487)
492,580
486,707
-
15,015,000
4,386,329
21,357,124
(3,587,396)
(507,321)
-
-
(3,587,396)
(507,321)
27. Operating Segment
Operating segments have been identified on the basis of internal reports of the Company that are
regularly reviewed by the chief operating decision maker in order to allocate resources to the segments
and to assess their performance. The chief operating decision maker has been identified as the Board
of Directors. On a regular basis, the board receives financial information on the consolidated entity on
a basis similar to the financial statements presented in the financial report, to manage and allocate their
resources.
The consolidated entity’s only operating segment is investments. The consolidated entity holds
investments in two principal industries and these are biotechnology, and oil and gas exploration and
development, as disclosed in Note 13.
57
BPH Energy | Annual Report 2017For personal use only
DIRECTORS’ DECLARATION
The directors of the company declare that:
1.
the financial statements and notes, as set out on pages 23 to 57 are in accordance with the
Corporations Act 2001 and:
(a) comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
(b) give a true and fair view of the financial position as at 30 June 2017 and of the performance for the
year ended on that date of the consolidated entity;
2.
3.
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable:
the financial statements and notes comply with International Financial Reporting Standards as disclosed in
Note 1.
4.
the directors have been given the declarations required by S295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to S295(5) of the
Corporations Act 2001.
David Breeze
Executive Chairman
Dated this 29 September 2017
58
BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only
INDEPENDENT AUDITOR’S REPORT
To the members of BPH Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of BPH Limited (“the Company”) and its controlled entities (“the
consolidated entity”), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes to the financial statements, including a
summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the consolidated entity is in accordance with the
Corporations Act 2001, including:
a)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of its
financial performance for the year then ended; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the consolidated entity in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report, which indicates the existence of a material uncertainty that
may cast significant doubt on the consolidated entity’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern, we
have determined the matters described below to be the key audit matters to be communicated in our report.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC 6849 | Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a worldwide organisation of accounting firms and business advisers.
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BPH Energy | Annual Report 2017For personal use only INDEPENDENT AUDITOR’S REPORT
Key audit matter
How our audit addressed the key audit matter
Valuation of financial assets
Note 10 to the financial report
The consolidated entity has financial assets of loan
receivables totalling $2,071,467, financial assets
and available for sale financial assets at fair value of
$3,157,950 at balance date. The consolidated entity
recorded a provision against its loan receivables of
$551,167.
We considered this to be a key audit matter as it is
important to users’ understanding of the financial
statements as a whole and involves judgement in
relation to the determination of fair value.
Our procedures included but were not limited to the
following:
- We considered the ability of the other party
to repay its loan with the consolidated entity
to determine if any additional provisions were
required.
- We assessed the consolidated entity’s valuation
of individual investment holdings. Where readily
observable data was available, we sourced that
independently.
- For investments where there was less or little
observable market data, including level 2 and 3
holdings as disclosed in note 22, we obtained and
assessed other relevant valuation data.
- We assessed the appropriateness of the disclosures
included in the relevant notes to the financial
report.
Loss of significant influence in Advent Energy
Note 3 and 10 to the financial report
During the year the consolidated entity lost significant
influence over Advent Energy Limited and it ceased
to be treated as an associate. The discontinuation
of equity accounting for this associate triggered a
re-assessment of the fair value of the investment in
Advent as required by accounting standards resulting
in a fair value loss on reclassification of $1,308,563 after
accounting for the extinguishment of the related asset
revaluation reserve
Our procedures included but were not limited to the
following:
- We examined the available facts to determine
if the consolidated entity still had significant
influence over Advent Energy Limited.
- We examined the accounting for the
reclassification from associate to available for
sale financial assets with regards to the relevant
accounting standards.
This was considered a significant event for the
consolidated entity. Accounting for this reclassification
is complex and involves judgement in relation to the
determination of fair value.
- We considered the estimation of the fair value in
relation level 2 and 3 inputs as disclosed in note
22 and we considered and assessed other relevant
valuation data.
assessed the appropriateness of the disclosures
included in the relevant notes to the financial
report.
-
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information
included in the consolidated entity’s annual report for the year ended 30 June 2017, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
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BPH Energy | Annual Report 2017 HEALTH TECHNOLOGY RESOURCESFor personal use only
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the consolidated entity
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the consolidated entity or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the consolidated entity’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the consolidated entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
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BPH Energy | Annual Report 2017For personal use only INDEPENDENT AUDITOR’S REPORT
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Report on the Remuneration Report
Opinion on the remuneration report
We have audited the remuneration report included in the directors’ report for the year ended 30 June 2017.
In our opinion, the remuneration report of BPH Limited for the year ended 30 June 2017 complies with section
300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
29 September 2017
B G McVeigh
Partner
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BPH Energy | Annual Report 2017HEALTH TECHNOLOGY RESOURCESFor personal use only ADDITIONAL SECURITIES EXCHANGE INFORMATION
Additional information required by Australian Securities Exchange Limited and not
shown elsewhere in this report as follows.
The information is stated as at 19 September 2017.
1.
Substantial Shareholder
The name of the shareholder who has lodged a substantial shareholder notice with ASX is:
Shareholder
David Breeze, Trandcorp Pty Limited,
Grandbridge Limited
Shares
77,669,486
2.
(a) Distribution of Shareholders
Range of Holding
Shareholders
Number Ordinary Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
412
421
325
871
609
2,638
165,742
1,353,403
2,554,117
34,159,468
550,469,287
588,702,017
(b) Distribution of Unlisted Option Holders
Range of Holding
Option Holders
Number of Options
10,001 – 100,000
100,001 and over
2
10
12
142,500
14,900,000
15,042,500
The number of shareholders holding unmarketable parcels was 2,283.
%
13.19
%
0.03
0.23
0.43
5.80
93.51
100.00
%
0.01
99.99
100.00
3.
Voting Rights - Shares
All ordinary shares issued by BPH Energy Limited carry one vote per share without restriction.
4.
Voting Rights - Options
The holders of employee options do not have the right to vote
5.
Restricted Securities
There are no restricted securities on issue.
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BPH Energy | Annual Report 2017For personal use only ADDITIONAL SECURITIES EXCHANGE INFORMATION
6.
Twenty Largest Shareholders as at 19 September 2017
The names of the twenty largest shareholders of the ordinary shares of the Company are:
Name
Grandbridge Securities Pty Ltd
Trandcorp Pty Ltd
Avanteos Investments Limited
<1823205 Superannuation A/C>
Tre Pty Ltd