HEALTH TECHNOLOGY RESOURCES
ANN UAL
RE PORT
20 18
TABLE OF
CONTEN TS
BPH ENERGY LIMITED
AND IT’S CONTROLLED ENTITIES
Chairman’s Letter
Company Focus
and Development
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
1-2
3-6
7-11
12-18
19
20
21
22
23
24
Notes to the Consolidated
Financial Statements
25-58
Directors’ Declaration
Independent Auditor’s
Report
Additional Securities
Exchange Information
59
60-63
COMPANY INFORMATION
Directors
David Breeze – Chairman/Managing Director
Charles Maling – 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
ASX Limited
(Home Exchange: Perth, Western Australia)
ASX Code: BPH
64
Australian Business Number
41 095 912 002
Photographis and images used throughout this report do
not depict assets of the company unless expressly indicated.
CHAI RMAN’S
LETTE R
Dear Shareholder
Developments in the company’s biotech/medtech
investments continue.
BPH investee Cortical Dynamics Ltd announced a
number of significant advances during the period
which included:-
Its first European trial with the Hospital Foch in
Paris, France. The arrangement with Hospital Foch
was the second installation of the BAR Monitor
technology internationally and the first for Cortical in
Europe. Cortical also appointed Reno Wright Smith
& Partners (“RWS”) to undertake marketing activities
to assist Cortical to enter the European market.
RWS, based in Chicago, Illinois, are specialists
in commercialisation of early stage medical
technologies.
Further evaluation trials continue in Melbourne and
Sydney. Cortical’s BARM has recently been used in
further successful trials at Strathfield Private Hospital
in Sydney. Strathfield is part of the Ramsay private
hospital group.
Cortical advised it had signed its first European
Distribution agreement covering the BARM for of
Belgium, Netherlands and Luxembourg. Cortical will
initially focus on the Total Intravenous Anaesthesia
(“TIVA”) market within Europe. TIVA provides a
method of inducing and maintaining general
anaesthesia intravenously without the use of any
inhalation agents.
Cortical was also invited by Austrade to attend
and present at the Austrade Med Tech Innovation
Showcase held in Korea in September 2016 and
following this Cortical advised that it had signed
a distribution agreement in South Korea. Cortical’
s Monitor will be now exhibited by its Korean
distributor GLOBALUCK on 8th to 10th November
2018 at the Congress of Korean Anaesthesiology in
Seoul. Cortical’s CTO will attend this conference and
will also, with the assistance of Austrade, meet the
heads of leading teaching and research hospitals in
Korea.
Cortical also announced the appointment of Mr
Gary Todd as Managing Director. His extensive
international experience has included seven years
in the Anaesthetic & Critical care division as sales
and marketing manager for one of the three largest
Medical device distributors in Australia.
BPH Energy Ltd has also announced it intends
to pursue a complementary strategy of making
investments in the medical cannabis sector. The
medical cannabis sector is showing significant
growth with current developments boosting the
sectors viability including the move to legalise
cannabis in Canada, the announcements by the UK
Govt. to legalise medical cannabis and the Australian
Govt. to legalise the export of medical cannabis
from Australia.
Further discussions have been held on funding
proposals for the HLS5 cancer gene with Chinese
interest fostered by HLS5’s potential in the treatment
of liver cancer - a major medical challenge in China.
BPH has announced a rights issue to raise up
to $1,186,237 and Cortical has engaged Enable
Funding to undertake a pre-IPO capital raising of up
to $2 million.
These developments offer the capacity for exciting
growth in the company’s medtech investments.
BPH continues to focus on the priority drilling of a
well at the Baleen drilling target in PEP11 at the
earliest possible opportunity given significantly
reduced rig rates and the availability of rigs to
achieve this. (PEP11 interest held through Advent
Energy)
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HEALTH TECHNOLOGY RESOURCES
The gas supply crisis on the east coast of Australia
has created a significant market opportunity to raise
the funding to drill with the objective of developing
the PEP11 project and we continue to engage
with investors who wish to fund this project. Our
proposals involve funding initiatives for both of
Advent Energy Limited’s (“Advent”) projects.
On 10 January 2018 MEC announced the
acceptance by NOPSEMA of the Baleen 2D High
Resolution Seismic Plan. This approval process took
approximately 7 months for a seismic program with
a primary survey area of just 9 sq. km. This project
had an initial estimated cost of $500,000 and had a
final cost of $860,000.
In January 2018 MEC Resources Limited (“MEC”)
(ASX: MMR) announced an extension of the PEP11
permit had been granted until 2021. The drilling of a
well in PEP11 is a confirmed year 4 commitment as
disclosed in that release with this to be completed
by 12 February 2020 prior to a 3D seismic survey of
500 sq. km.
On 24 November 2017 the Advent AGM
presentation “Strategic Summary: Tactics to Success”
confirmed the strategy of “Complete current 2D
seismic commitment to deliver shallow hazard
survey work …to deliver ‘drill ready’ gas prospect
..and.. actively pursue farm-out ..for early drilling,
capturing near-term rig availability off Australia’s
coast.”
In December 2017 MEC announced a conditional
farmin with RL Energy Ltd, (“RL Energy”) a company
controlled by Greg Channon, who until immediately
prior to the announcement was a director of Advent
and charged with sourcing and negotiating funding
for Advent’s projects.
On 15 February 2018 MEC was placed in a trading
halt after the ASX had asked a series of questions
relating to MEC’s December 2017 announcement
referred to above. MEC confirmed in a letter released
to ASX on 15 February 2018 in relation to RL Energy
that “there can be no certainty that the provision
of funding” for “the … 3D seismic works will be
finalised”“.
On 19 February 2018 MEC also announced that the
3D farmin transaction with RL Energy would earn an
unspecified percentage interest in the PEP11 permit
by funding the 3D project only up to a maximum of
$4 million. MEC has previously estimated the cost of
this 500 sq. km of 3D at least up to $8 million.
A further announcement on 8 January 2018
confirmed Advent was planning the plug and
abandonment of the three Bonaparte Basin wells
Waggon Creek, Vienta and Weaber in the 2018
dry season. This did not occur. On 29 March 2018
an Instrument of Direction was issued to Advent’s
subsidiary, Onshore Energy Pty ltd, by the WA Govt.
(DMIRS) for the Waggon Creek and Vienta wells
in EP386. The Instrument of Direction to plug and
abandon the wells must be completed by March
2020. The wet season means this work must be
completed during 2019.
In the MEC prospectus lodged with ASIC on 16
May 2018 it was advised that a well management
plan, environmental plan and safety case must be
submitted to the DMIRS by 28 September 2018 for
the decommissioning of Waggon Creek-1 and Vienta
-1 wells. This also did not occur.
Independent proposals put forward to meet these
permit commitments have not been accepted by
Advent, and the Bonaparte assets have been ‘sold’ to
a company which has not confirmed any funding to
meet these commitments.
The issues at board level in MEC and Advent has
been adverse to the development of these key
projects and your company has continued to seek
resolution of the issues and has only taken such
steps as has been necessary to protect its position.
A number of legal actions continue. MEC and its
subsidiaries have court actions and claims against
them for amounts in excess of $1.29 million.
Yours Sincerely
David Breeze
Chairman
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CO MPANY F OCU S
& DEVELOPMENT
BPH ENERGY LIMITED
AND IT’S CONTROLLED ENTITIES
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
24%. 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.
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.
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.
Advent Energy has conducted 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 was 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
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COMPANY FOCUS & DEVELOPMENT
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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.
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.
Production testing at Wagon Creek
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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 calculated a Prospective Resource (best
estimate) of 9.8 TCF for the shale gas areas of the
Bonaparte permits of EP386 and RL1.
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).
CORTICAL DYNAMICS LIMITED
(BPH Energy has a holding in Cortical of 4.56%
with a right to increase to aprox. 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 recognised 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.
The global brain monitoring market is predicted
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
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BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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 and Hong Kong. A USA based
distributorship is expected to follow.
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 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.
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.
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REV IEW OF
OPERATIONS
BPH ENERGY LIMITED
AND IT’S CONTROLLED ENTITIES
INVESTMENT IN OIL AND GAS
EXPLORATION COMPANY
Advent Energy Ltd (BPH 24.0% direct)
Advent Energy Ltd (“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 has been conducted
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
development of the Kununurra region in northern
Western Australia, including the Ord Irrigation
Expansion Project and numerous resource projects,
provides an l opportunity for Advent to potentially
develop its nearby gas resources for the benefit of
the region along with Advent and its shareholders.
ASX listed MEC Resources Limited (“MEC”) has a 50%
interest in Advent Energy Ltd.
The 2018 MEC half year financial report to
31 December 2017 released on 27 Feb 2018,
confirmed that the MEC subsidiary Advent Energy
had (spending) “commitments” “for its exploration
permits of $4,497,500 over the next 12 months” to
maintain tenure. In the 2017 MEC Annual Report an
amount was confirmed of $2.5m of required permit
compliance expenditures to retain EP386.
On 21 July 2017 MEC announced the withdrawal of its
statutory demand against BPH prior to a settlement
conference between MEC, BPH and GBA to seek a
global resolution of the respective legal disputes.
On 1 September 2017 BPH received a writ from
MEC Resources Ltd for an amount of $270,000 plus
interest and costs and then received on 2 October
2017 an application for summary judgement in
relation to this claim. The application by MEC for
summary judgement was heard in December
2017 in the District Court of Western Australia.
The summary judgement application decision in
the claim by MEC Resources Ltd for $270,000 plus
interest and costs was handed down on 23 February
2018. The MEC application was dismissed by the
court. BPH disputes the basis of the claim by MEC
and its interest claims, and BPH asserts that there
has not been an Event of Default and that the loan
is not due and owing. BPH had previously advised
the market on 4 July 2017 that it has a claim against
MEC of $388,050 plus interest and costs and has
advised it will continue to pursue this matter.
On 12 October 2017 MEC announced the
appointment of a specialist firm to assist in finding
joint venture partners for 3D seismic for PEP11.
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No announcement on any partner from this
appointment has been made to date.
On 5 December 2017 MEC announced a conditional
farmin with RL Energy Ltd, a company controlled by
Greg Channon, who until immediately prior to the
announcement was a director of Advent Energy.
On 8 January 2018 MEC announced that an
extension of the PEP11 permit had been granted
until 2021.The drilling of a well in PEP11 is a
confirmed year 4 minimum commitment as set
out in that announcement with this program to be
completed by 12 February 2020 prior to a 3D seismic
survey of 500 sq km .
A further announcement on 8 January 2018
confirmed Advent was planning the plug and
abandonment of the three Bonaparte Basin wells
Waggon Creek, Vienta and Weaber in the 2018 dry
season. This has not occurred. In the MEC prospectus
lodged with ASIC on 16 May 2018 it was advised
that a well management plan, environmental plan
and safety case must be submitted to the DMIRS
by 28 September 2018 for the decommissioning of
Waggon Creek-1 and Vienta -1 wells.
halt after the ASX had asked a series of questions
by letters dated 31 January 2018 and 9 February
2018. MEC confirmed in a letter dated 14 February
2018 and released on 15 February 2018 in relation
to RL Energy that “there can be no certainty that
the provision of funding to finalise the phase 2 3D
seismic works will be finalised” (page 2) and “in
respect of the 3D seismic works…the second phase
“(the 3D seismic works) “will be subject to RL Energy
securing funding at the relevant time “(page 1).
On 19 Feb 2018 MEC announced that the 3D farmin
transaction with RL Energy, a company controlled
by previous Advent Director Greg Channon’s family
company, would need MEC shareholder approval
under ASX Listing Rule 10. Mr Channon’s company
would, under the proposed agreement, earn an
unspecified percentage interest in the PEP11 permit
by funding the 3D project only up to a maximum of
$4m. MEC has previously estimated the cost of this
500 sq km of 3D at least up to $8m.
On 23 February 2018 MEC announced that the 2D
seismic survey in PEP11, at the Baleen drill prospect,
was now planned for April 2018.
On 15 February 2018 MEC was placed in a trading
On 28 March 2018 BPH announced it had served
Notices of Demand on MEC Resources and Advent
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Energy for outstanding loans of $225,486 and
$164,744 respectively and on 4 April 2018 writs were
issued against MEC and Advent for these amounts.
The total amounts claimed against MEC and its
subsidiaries by both BPH and GBA is $820,661. A
statement of claim in the District Court of Western
Australia in this matter was lodged on 6 June 2018.
The information in this section contains material
extracted from MEC Resources Limited, the major
shareholder in Advent.
PEP 11
(i)
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.
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.
On 24 November 2017 the Advent AGM presentation
‘Strategic Summary: Tactics to Success ‘confirmed
the strategy of “Complete current 2D seismic
commitment to deliver shallow hazard survey work
…to deliver ‘drill ready’ gas prospect and actively
pursue farm-out for early drilling, capturing near-
term rig availability off Australia’s coast.”
On 10 January 2018 MEC announced the
acceptance by NOPSEMA of the Baleen 2D High
Resolution Seismic Plan. This approval process took
approximately 7 months for a seismic program with
a primary survey area of just 9 square km.
The proposed PEP11 3D seismic program is for
an area of 500 sq km (Refer 8th Jan 2018). The
anticipated operational area for a seismic survey of
500 sq km is 2500 sq km. The whale migration period
offshore NSW is between May to November which will
exclude seismic operations during this time.
evaluate (amongst other things) shallow geohazard
indications including shallow gas accumulations that
can affect future potential drilling operations. On the
19 April 2018 it was announced that processing of
this 2D data would take approximately 2 months.
No announcement about the processing has been
made to date.
It is a drilling prerequisite that a site survey is made
prior to drilling at the Baleen location.
EP386 and RL1
(ii)
EP386 and RL1 are held by Advent’s 100% subsidiary
Onshore Energy Pty Ltd (“Onshore”). The petroleum
titles lie in the onshore Bonaparte Basin, one of
Australia’s most prolific hydrocarbon producing
basins. The petroleum wells Waggon Creek-1,
Vienta-1 (EP386) and Weaber-4 (RL1) are cased and
suspended.
On 29 March 2018 an Instrument of Direction was
issued by the WA Department of Mines under S.95(1)
of the Petroleum and Geothermal Energy resources
Act 1967 to Onshore. The Instrument of Direction
is available on the WA Govt. website and relates to
Waggon Creek and Vienta wells in EP386 in the
onshore Bonaparte Basin in WA. The Instrument of
Direction to plug and abandon the wells must be
completed by March 2020. The wet season means
this work must be completed during mid-year 2019.
On 3 April 2018 MEC announced a two-year
extension to the EP386 permit to enable this work to
be completed.
INVESTMENT IN BIOTECHNOLOGY
COMPANIES
BPH Energy’s existing Biotechnology investments
include its 4.47% 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
which may take BPH to approximately 15.7% by a
conversion of its loan facilities. Conversion of portion
of the debt is subject to a listing of Cortical on the
Australian Securities Exchange.
In April 2018 Advent undertook a high resolution 2D
seismic data over the Baleen prospect designed to
Cortical Dynamics Limited (BPH 4.47%):
Cortical Dynamics Limited (“Cortical”) is working
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HEALTH TECHNOLOGY RESOURCES
REVIEW OF OPERATIONS BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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 patient’s
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.
In November 2016 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 2,240,000
fully paid ordinary at an issue price of $0.10 per share
to fund its ongoing activities.
BPH investee Cortical announced a number of
developments during the period which included: -
• On 18 October 2017 BPH confirmed a European
trial with Hôpital Foch in Paris, France. The
arrangement with Hôpital Foch was the second
installation of the BAR Monitor technology
internationally (after New Zealand) and the first for
Cortical in Europe.
• On 14 November 2017 BPH advised of the
appointment of Reno Wright Smith & Partners
(“RWS”) to undertake marketing activities to
assist Cortical to enter the European market
with the Brain Anaesthesia Response (“BAR”)
monitor technology. RWS, based in Chicago,
Illinois, are specialists in commercialisation
for early stage medical technologies. The RWS
President, David Smith, has a background in
medical device marketing & general management
for 25+ years including with Coopervision, Carl
Zeiss, Biocompatibles International plc, Cohesion
Technologies, Tenaxis Medical Inc & Device
Technologies Australia
1010
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• On 20 November 2017 BPH advised of the
Molecular Discover Systems Ltd (BPH 20%)
appointment of Dr Bruce Whan as Corporate
Development Director to assist to further the
development of Cortical. Bruce Whan has a
background in industry covering a range of
research, operations and management positions,
including the management of innovation and
commercialisation of R&D, from the public
research sector. He was Director of Swinburne
University of Technology’s commercialisation
unit for 12 years and a member of the
Commercialisation Australia board.
• On 13 December 2017 BPH confirmed the
European Patent Office had granted a further
patent titled, ‘EEG Analysis System’.
• On 14 December 2017 BPH advised that the
Cortical BAR Monitor was being used in evaluation
trials in a further major hospital in Melbourne.
This is the second installation of the BAR Monitor
technology in Melbourne, with further units being
evaluated in Queensland, and internationally in
New Zealand and Europe.
• On 22 December 2017 BPH advised that investee
Cortical was to be further evaluated in a Sydney
hospital in 2018. These trials introduce the BAR
Monitor to several anaesthetists to assess its
function, which in turns assists Cortical to better
understand how best to address the needs of the
market, underpinning its marketing campaign.
• On 16 January 2018 BPH advised that the Cortical
BAR Monitor was being used in a set of evaluation
trials in a further Melbourne hospital.
• On 19 April BPH advised that Cortical had
signed an agreement for the distribution of its
BAR Monitor in South Korea. The distribution
agreement arose because of an invitation by
Austrade to attend and present at the Austrade
Korean Medtech Innovation Showcase.
• On 29 April BPH advised that Cortical had signed
its first European Distribution agreement covering
the BARM for the Benelux Countries of Belgium,
Netherlands and Luxembourg. Cortical will initially
focus on the Total Intravenous Anaesthesia (“TIVA”)
market within Europe. TIVA provides a method
of inducing and maintaining general anaesthesia
intravenously without the use of any inhalation
agents.
Molecular Discover Systems Ltd (“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.
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BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
DIREC TOR’ S
REPORT
BPH ENERGY LIMITED
AND IT’S CONTROLLED ENTITIES
The directors of BPH Energy Ltd (”BPH Energy” or
“the Company”) present their report on the Company
and its controlled entities (“consolidated entity” or
“Group”) for the financial year ended 30 June 2018.
Directors
The names of directors in office at any time during or
since the end of the year are:
D L Breeze
A Huston
C Maling (appointed 17 October 2017)
T Fontaine (resigned 17 October 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.
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 net loss after
tax for the year ended 30 June 2018 of $1,506,758
(2017: loss of $2,544,301) and has a net cash
outflow from operating activities of $488,222 (2017:
outflow of $517,680). The loss for the period is after
recognising (i) an impairment charge relating to
an associate, Advent Energy Limited, of $1,003,001
(2017: $Nil) (ii) a fair value loss relating to an
associate, Advent Energy Limited, of $Nil (2017: loss
$1,308,563) (iii) consulting and legal expenses of
$311,680 (2017: $285,065).
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.
Financial Position
The consolidated entity has reported a net loss after
tax for the year ended 30 June 2018 of $1,506,758
(2017: loss of $2,544,301) and has a net cash outflow
from operating activities of $488,222 (2017: outflow
of $517,680). The net assets of the consolidated
entity decreased by $824,514 to $3,561,815 at 30
June 2018.
The consolidated entity has a working capital deficit
of $1,101,201 as at 30 June 2018 (30 June 2017:
deficit of $1,084,626) which includes cash assets
of $447,214 (30 June 2017: $613,658) and trade
creditors and other payables of $1,323,541 (30 June
2017: $1,284,910).
Included in trade creditors and payables is director
fee accruals of $765,027. 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 7 to 11
and forms part of this Directors’ Report.
Significant Changes in State of Affairs
Capital raisings
On 23 November 2017 BPH announced a one for
one non-renounceable entitlement issue at an issue
price of $0.002 per share to raise up to approximately
$1,177,404. The issue closed in January 2018 with
366,485,400 shares being issued for $566,940 in cash
and $166,030 of debt extinguishment.
On 19 April 2018 BPH issued 11,000,000 shares in
lieu of cash payment for $22,000 consulting fees.
Subsequent Events
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.
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BPH Energy I Annual Report 2018
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
No fees for non-audit services were paid/payable to
the external auditors during the year ended 30 June
2018 (2017: $Nil).
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.
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.
INFORMATION ON DIRECTORS
D L Breeze
Managing Director and Executive Chairman – Age 65
Shares held – 155,338,972
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
in 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:
• Grandbridge Limited (from December 1999 to
present)
• MEC Resources Limited (from April 2005) *
*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.
A Huston
Non-Executive Director – Age 63
Shares held – Nil
Unlisted options held – 2,000,000
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.
C Maling
Non-Executive Director – Age 64
(appointed 17 October 2017)
Shares held – 22,268
Unlisted options held – 2,000,000
1313
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HEALTH TECHNOLOGY RESOURCES
DIRECTOR’S REPORT BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Mr Charles Maling was formerly the Communications
Officer for the Office of the Western Australian
State Government Environmental Protection
Authority with a responsibility for advising the
Chairman of the EPA on media issues. He has a
Bachelor of Sociology and Anthropology with a
Media minor. Charles worked with the Western
Australian State Government Department of the
Environment for 14 years and further 8 years
for the EPA. His administrative roles included
environmental research (including a major study
on Perth Metropolitan coastal waters and Western
Australian estuaries) environmental regulation and
enforcement and media management.
In the past three years Charles has held the following
listed company directorships:
• Grandbridge Limited (November 2016 to present)
T Fontaine
Non-Executive Director – Age 54
(resigned 17 October 2017)
Shares held – 8,768,892
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)
Remuneration Report (Audited)
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, Managing Director
A Huston
C Maling
and Company Secretary
Non Executive Director
Non Executive Director
(appointed 17 October 2017)
T Fontaine Non Executive Director
(resigned 17 October 2017)
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.
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 2017 financial accounts
was not adopted at the Company’s 2017 Annual
General Meeting. Should at least 25% of the
votes be cast against the resolution to adopt this
remuneration report at the Company’s November
2018 Annual General Meeting a “Spill Resolution”
will be held at that Annual General Meeting. If put,
the Spill Resolution will be considered as an ordinary
resolution. If the Spill Resolution is passed then it
will be necessary for the Board to convene a further
general meeting of Shareholders (Spill Meeting)
within 90 days of this Annual General Meeting in
1414
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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.
order to consider the composition of the Board.
The board believes the remuneration 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.
1515
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BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
DIRECTOR’S REPORT BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Details of Remuneration for the year ended 30 June 2018
The remuneration for each key management personnel of the consolidated entity during the year was as follows:
2018
Key Management Person
Short-term Benefits
Post-employment Benefits
D L Breeze
C Maling
T Fontaine
A Huston
Salary and
fees
148,000
17,637
7,363
25,000
Bonus
Non-cash
benefit
Other
Superannuation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Key Management
Person
Long-term
Benefits
Share-based payment
Total
Performance
Related
Compensation
Compensation
Relating to
Options
D L Breeze
C Maling
T Fontaine
A Huston
Other
Equity
Options
$
-
-
-
-
-
-
-
-
-
717
-
717
148,000
18,354
7,363
25,717
%
-
-
-
-
%
-
3.9%
-
2.8%
Key Management Person
Short-term Benefits
Post-employment Benefits
2017
D L Breeze
T Fontaine
B Whan
G Gilbert
A Huston
D Ambrosini
Salary and
fees
148,000
25,000
24,728
22,913
411
-
Bonus
Non-cash
benefit
Other
Superannuation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Key Management
Person
Long-term
Benefits
Share-based payment
Total
Performance
Related
Compensation
Compensation
Relating to
Options
Other
Equity
Options
$
%
D L Breeze
T Fontaine
B Whan
G Gilbert
A Huston
D Ambrosini
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,680
-
-
148,000
25,000
24,728
28,593
411
-
-
-
-
-
-
-
%
-
-
-
19.9%
-
-
1616
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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
1.7.2017
or date of
appointment
Granted as
Compensation
Options
Exercised
Balance
30.6.2018
or date of
resignation
Total Vested
30.6.2017
or date of
resignation
Total
Exercisable
and Vested
30.6.2018
Total
Unexercisable
30.6.2018
D L Breeze
-
T Fontaine
2,000,000
-
-
A Huston
C Maling
-
-
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
2,000,000
2,000,000
-
-
-
-
Shareholdings
Balance
Balance
1.7.2017 or date of
Received as
Options Exercised
Acquired
30.6.2018 or date
appointment
Compensation
of resignation
D L Breeze
T Fontaine
A Huston
C Maling
77,669,486
4,384,446
-
11,134
-
-
-
-
-
-
-
-
77,669,486
155,338,972
4,384,446
8,768,892
-
11,134
-
22,268
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
Exercise Price
Number of
options
Vesting Date
29 November
30 November
$0.0004
$0.020
4,000,000
At grant date
2017
2022
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
No. Granted
Number
vested
% of grant
vested
% of grant
forfeited
% of compensation for the
year consisting of options
A Huston
29 November 2017
2,000,000
2,000,000
C Maling
29 November 2017
2,000,000
2,000,000
100%
100%
-
-
2.8%
3.9%
No options lapsed or were exercised during the current or previous financial years.
1717
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
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 held two meetings of directors during the financial year. Attendance by
each director during the year were:
Name
D Breeze
A Huston
C Maling
T Fontaine
Number eligible to attend
Number attended
2
2
1
1
2
2
1
1
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.
OPTIONS
At the date of this report, the unissued ordinary shares of BPH Energy Ltd under option are as follows:
Grant Date
2 April 2015
20 April 2015
Date of Expiry
31 March 2020
31 March 2020
27 November 2015
30 November 2020
23 November 2016
30 November 2021
29 November 2017
30 November 2022
Exercise Price
Number Under Option
$0.02
$0.02
$0.02
$0.02
$0.02
795,000
9,000,000
2,000,000
2,000,000
4,000,000
During the year ended 30 June 2018 no ordinary shares of BPH Energy Ltd were issued on the exercise of
options granted under the BPH Energy Ltd Incentive Option Scheme (2017: 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 2018 has been received and can be
found on page 19. 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 28 September 2018
1818
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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 2018, I declare that, to the best of my knowledge and belief, there have been no
contraventions of:
(a)
AUD ITOR’S
INDEPENDENCE
DECL ARATION
(b)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
28 September 2018
B G McVeigh
Partner
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 2018, I declare that, to the best of my knowledge and belief, there have been no
contraventions of:
(a)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
28 September 2018
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 WA 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 world-wide organisation of accounting firms and business advisers
14
1919
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 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 world-wide organisation of accounting firms and business advisers
14
HEALTH TECHNOLOGY RESOURCES
CO RP ORATE
GOVERNANCE
BPH ENERGY LIMITED
AND IT’S CONTROLLED ENTITIES
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
2020
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Revenue from ordinary activities
Other income
Share of associates’ loss
Impairment charge
Fair value loss
Write back of loan
Interest expense
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
12
3
3
2
3
3
13
3
Consolidated
2018
$
2017
$
235,824
216,925
3,720
(28,500)
(1,003,001)
-
-
(1,805)
(65,591)
(77,155)
-
(90,355)
(72,454)
(1,308,563)
61,312
(28,726)
(191,584)
(551,167)
(311,680)
(285,065)
-
(22)
(101,608)
(128,931)
(17,960)
(18,593)
(128,640)
(140,335)
(10,362)
(6,743)
(1,506,758)
(2,544,301)
-
-
(1,506,758)
(2,544,301)
-
-
(15,015,000)
(15,015,000)
(1,506,758)
(17,559,301)
(918)
(35,655)
(1,508,758)
(2,508,646)
(1,508,840)
(17,523,646)
(918)
(35,655)
Earnings per share
6
(0.20)
(0.59)
Basic and diluted loss per share (cents per share)
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
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BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
STATEMENT OF FINANCIAL POSITION
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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
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
Note
7
8
10
9
10
12
14
15
15
16
17
Consolidated
2018
$
447,214
19,658
165,058
4,051
635,981
2017
$
613,658
25,059
165,058
17,960
821,735
4,284,920
5,064,359
464,547
493,047
4,749,467
5,557,406
5,385,448
6,379,141
1,323,541
1,284,910
413,641
621,451
1,737,182
1,906,361
86,451
86,451
86,451
86,451
1,823,633
1,992,812
3,561,815
4,386,329
44,135,442
43,454,632
494,014
492,580
(40,908,066)
(39,402,226)
(159,575)
(158,657)
3,561,815
4,386,329
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
2222
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Ordinary
Share Capital
$
Accumulated
Losses
Option
reserve
$
Revaluation
Reserve
$
Total
attributable
to owners of
the parent
entity
$
Non-
controlling
Interest
$
Total
$
Balance as 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
-
-
-
(2,508,646)
-
(2,508,646)
1,356,462
(112,772)
87,000
295,038
-
-
-
-
-
-
-
-
-
-
-
-
5,873
Share based payments expense
-
Balance at 30 June 2017
43,454,632
(39,402,226)
492,580
Loss for the period
Total comprehensive loss for the
year
-
-
(1,505,840)
(1,505,840)
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
566,940
(74,161)
22,000
166,031
Share based payments expense
-
-
-
-
-
-
-
-
-
-
-
-
1,434
Balance at 30 June 2018
44,135,442
(40,908,066)
494,014
-
(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
5,873
-
-
-
-
-
1,356,462
(112,772)
87,000
295,038
5,873
4,544,986
(158,657)
4,386,329
(1,505,840)
(918)
(1,506,758)
(1,505,840)
(918)
(1,506,758)
566,940
(74,161)
22,000
166,031
1,434
-
-
-
-
-
566,940
(74,161)
22,000
166,031
1,434
3,721,390
(159,575)
3,561,815
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
2323
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BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
STATEMENT OF CASH FLOWS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Interest paid
Note
Consolidated
2018
$
2017
$
(467,999)
(519,206)
2,836
(1,805)
3,706
(2,180)
Net cash used in operating activities
19
(466,968)
(517,680)
Cash flows from investing activities
Loans to related parties
Investment in unlisted entity
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of securities (net of share issue
costs)
Repayment of borrowings
19
Net cash provided by financing activities
Net (decrease) / 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
(68,000)
-
(68,000)
(4,000)
(100,000)
(104,000)
492,778
1,243,690
(124,254)
368,524
(166,444)
613,658
(120,000)
1,123,690
502,010
111,648
7
447,214
613,658
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
2424
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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’).
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 28 September 2018 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 net loss after tax for the year ended 30 June 2018 of $1,506,758 (2017:
loss of $2,544,301) and has a net cash outflow from operating activities of $488,222 (2017: outflow of $517,680).
The net assets of the consolidated entity decreased by $824,514 to $3,561,815 at 30 June 2018. The consolidated
entity has a working capital deficit of $1,101,201 as at 30 June 2018 (30 June 2017: deficit of $1,084,626) which
includes cash assets of $447,214 (30 June 2017: $613,658) and trade creditors and other payables of $1,323,541
(30 June 2017: $1,284,910).
Included in trade creditors and payables is director fee accruals of $765,027. 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.
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.
2525
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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, there is a material uncertainty
that may cast significant 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).
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 18 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.
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.
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BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
(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.
(b)
Income Tax
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.
Tax incentives
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.
2727
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
(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.
Depreciation
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
Plant and equipment
Depreciation Rate
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.
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BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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 through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and
measured as set out below.
Derecognition
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.
(iii)
Available-for-sale financial assets
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.
(iv)
Financial liabilities
Non-derivative financial liabilities are subsequently measured at amortised cost using the effective interest rate
method.
2929
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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.
Assets carried at amortised cost
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.
(e)
Impairment of Assets
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
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BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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
not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
(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 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
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HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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.
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”).
3232
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(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 26).
Earnings per share
(p)
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.
3333
BPH Energy I Annual Report 2018
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HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
(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 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 $2,295,029
(2017: $2,071,467). The Company raised a provision against its unsecured loans of $77,155 in the reporting
period (2017: $551,167). This provision can be reversed upon payment of the loans.
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 Company currently has a 24% direct interest in Advent.
An impairment charge of $1,003,001 has been recognised against this investment in respect of the current
reporting period based on Advent’s most recent capital raising at $0.05 per share. The discontinuation of equity
accounting for this associate triggered a re-assessment of the fair value of the investment in Advent resulting in
an impairment charge of $1,308,563 in the prior year.
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 12.
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.
3434
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BPH Energy I Annual Report 2018
(r)
Application of New and Revised Accounting Standards
Standards and Interpretations applicable to 30 June 2018
In the year ended 30 June 2018, 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
2018 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 and associated Amending Standards (applicable to annual reporting periods
beginning on or after 1 January 2018).
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 standard eliminates the existing
139 categories of held to maturity, loans and receivables and available for sale. The Group has financial assets
in relation to available-for-sale equity investments of $2,154,949. Under AASB 9, the Group is able to elect to
continue classify these investments as at fair value through other comprehensive income. Accordingly, the Group
does not expect any impact to the classification and measurement of these financial assets. However, gains or
losses realised on the sale of the financial assets at fair value through other comprehensive income will no longer
be transferred to profit or loss but instead be reclassified below the line from the fair value reserve to retained
earnings. During the current financial year such gains of $Nil were recognised in profit or loss in relation to the
disposal of available-for-sale financial assets.
The impairment requirements of the new standard for financial assets are based on a forward looking
‘expected credit loss’ (ECL) model either on a 12-month or lifetime basis rather than the current ‘incurred loss’
model. The new impairment model will apply to financial assets at amortised cost or fair value through other
comprehensive income, except for investments in equity instruments, and to contract assets. The Group has
assessed these changes and determined that based on the current financial assets held at reporting date, the
Group will apply the simplified approach and record impairment based on lifetime expected losses.
The changes in the Group’s accounting policies from the adoption of AASB 9 will be applied retrospectively from
1 July 2018 onwards, with the practical expedients permitted under the standard and the comparatives will not
be restated.
The directors do not anticipate that the adoption of AASB 9 will have a material impact on the Group’s financial
instruments.
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after
1 July 2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date of
AASB 15).
3535
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
AASB 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from
contracts with customers. When effective, this Standard will replace the current accounting requirements
applicable to revenue with a single, principles-based model. Apart from a limited number of exceptions,
including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-
monetary exchanges between entities in the same line of business to facilitate sales to customers and potential
customers. The core principle of the Standard is that an entity will recognise revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the
following five-step process:
• identify the contract(s) with a customer;
• identify the performance obligations in the contract(s);
• determine the transaction price;
• allocate the transaction price to the performance obligations in the contract(s); and
• recognise revenue when (or as) the performance obligations are satisfied.
Based on a preliminary assessment performed, the effects of AASB 15 are not expected to have a material effect
on the Group.
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117:
Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the
requirement for leases to be classified as operating or finance leases. The main changes introduced by the new
Standard are as follows:
• recognition of a right-of-use asset and lease liability for all leases (excluding short-term leases with a lease term
12 months or less of tenure and leases relating to low-value assets);
• depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and
unwinding of the liability in principal and interest components;
• inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease
liability using the index or rate at the commencement date;
• application of a practical expedient to permit a lessee to elect not to separate non-lease components and
instead account for all components as a lease; and
• inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives
in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to
opening equity on the date of initial application. The directors do not anticipate that the adoption of AASB 16
will have a material effect on the Group.
No other new standards, amendments to standards and interpretations are expected to affect the Group’s
consolidated financial statements.
3636
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
2. Revenue
Revenue
Interest revenue: other entities
Interest revenue : cash accounts
Other Income
Loan establishment fees
Write back of loan
Write back of loan no longer payable
3. Expenses Included in Loss for the Year
Depreciation
Employee Costs
- Director fees
- Other
- Share based payments other than directors
- Share based payments to directors
Total employee costs
Impairment charge
Investment in unlisted entity – Advent
Intangibles
Consolidated
2018
$
2017
$
233,455
2,369
235,824
3,720
3,720
-
-
-
213,219
3,706
216,925
-
-
61,312
61,312
22
100,000
123,058
174
-
1,434
101,608
1,003,000
-
1,003,000
-
193
5,680
128,931
-
72,454
72,454
Fair value loss
Fair value loss on reclassification of associate
Reclassification of revaluation reserve in relation to associate
-
-
-
16,323,563
(15,015,000)
1,308,563
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
3737
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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, Managing Director and Company Director
C Maling -
A Huston -
T Fontaine –
Non Executive Director (appointed 17 October 2017)
Non Executive Director
Non Executive Director (resigned 17 October 2017)
Short term employee benefits
Consulting fee
Share based payments
Consolidated
2018
$
2017
$
100,000
123,052
98,000
1,434
98,000
5,680
199,434
226,732
Included in trade and other payables is current and former director and consulting fee accruals of $1,265,496 (30
June 2017: $1,220,767).
Director
David Breeze
Charles Maling
Tony Huston
Directors who have previously resigned
Balance owing at 30 June 2018
Amount owing
30 June 2018 $
721,979
17,637
25,411
500,469
1,265,496
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
3838
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
Consolidated
2018
$
2017
$
25,161
25,161
24,000
24,000
Consolidated
2018
$
2017
$
6. Earnings per Share
Total loss per share attributable to ordinary equity holders of the Company
(1,505,840)
(2,508,646)
Loss used in the calculation of basic loss per share and diluted loss per share
(1,505,840)
(2,508,646)
For basic and diluted loss per share (cents per share)
From continuing operations
Total basic loss per share and diluted loss per share
(0.20)
(0.20)
(0.59)
(0.59)
Number
Number
Weighted average number of ordinary shares outstanding during the year
used in calculating basic EPS and diluted EPS
742,486,388
426,024,411
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
Consolidated
2018
$
2017
$
447,214
447,214
613,658
613,658
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
447,214
613,658
8. Trade and other Receivables
Current
Other receivables
9. Other Assets
Current
Prepaid insurance
19,658
19,638
25,059
25,059
4,051
4,051
17,960
17,960
3939
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
10. Financial Assets
Current
Unsecured loans to other entities:
MEC Resources Ltd
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
(a) Secured loans
Consolidated
2018
$
2017
$
2,494
162,564
165,058
2,494
162,564
165,058
2,129,971
1,906,409
-
-
148,949
148,949
2,006,000
3,009,001
4,284,920
5,064,359
2,624,141
2,400,579
(494,170)
(494.170)
2,129,971
1,906,409
1,218,522
1,141.367
(1,218,522)
(1,141,367)
-
-
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 agreements 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 2019. As at reporting
date the loan had been drawn down by an amount of $596,322, including capitalised interest (2017:
$547,167). Interest charged on the loan for the period was $49,155 (2017: $45,166. The loan is fully provided
for at period end.
4040
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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 2019. As at reporting date the loan
had been drawn down by an amount of $639,751, including capitalised interest (2017: $584,411). Interest
charged on the loan for the period was $55,340 (2017: $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 2020. As at reporting date the loan had been drawn down by an
amount of $1,450,707, including capitalised interest (2017: $1,322,078). Interest charged on the loan for the
period was $183,559 (2017: $117,201).
An additional amount of $40,000 was lent to Cortical as at 30 June 2018 secured against Cortical’s
estimated research and development grant tax refund for the year ended 30 June 2018.
(b) 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 Company currently has a 24% direct interest in Advent.
The discontinuation of equity accounting for this associate triggered a re-assessment of the fair value of the
investment in Advent resulting in an impairment charge of $1,308,563 in the prior year. An impairment
charge of $1,003,001 has been recognised against this investment in respect of the current reporting
period based on Advent’s most recent capital raising at $0.05 per share (refer Note 21(c)).
Advent and its subsidiaries have reported no minimum work commitments for its exploration permits over
the next 12 months from its reporting date under the terms of its petroleum titles in order to maintain
tenure. It has reported work program commitments of $18,225,000 for its exploration permits in a period
greater than one year and less than five years. 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 now embarking on a campaign to attract new investors and /or joint
venture partners. Its management has confidence that a suitable outcome will be achieved however there
is no certainty at that this will result in further funding being made available.
In relation to the Group’s exploration commitments in the PEP 11 area Advent’s wholly owned subsidiary,
Asset Energy Pty Ltd has a commitment to drill an exploration well by 12 Feb 2020. Advent have reported a
conditional farm-in agreement with RL Energy for 3D which requires a change in the permit commitment
and which is subject to both funding and regulatory approval by the National Offshore Petroleum Titles
Administrator (“NOPTA”).
On 29 March 2018 an Instrument of Direction was issued by the WA Department of Mines under S.95 (1)
of the Petroleum and Geothermal Energy resources Act 1967 to Onshore. The Instrument of Direction is
available on the WA Govt. website and relates to Waggon Creek and Vienta wells in EP386 in the onshore
Bonaparte Basin in WA. The Instrument of Direction to plug and abandon the wells must be completed by
March 2020. Advent has commitments to provide a well management plan, environmental plan and safety
case for the decommissioning of Waggon Creek and Vienta by 28 September 2018.
The RL Energy application in PEP11 and those made by Advent for EP386 may not be approved. In addition,
Advent is committed to drill an exploration well and perform a seismic survey by the end of March 2020 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
4141
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
petroleum accumulations which may be identified in this title area. Other projects may impact the ability of
Advent to raise funds. 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. 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
Consolidated
2018
$
2017
$
41,486
41,486
(41,486)
(41,486)
-
-
-
-
-
22
(22)
-
12. Investment 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
Molecular Discovery Systems Limited
Australia
Ownership Interest
%
2018
20%
2017
20%
Principal
Activity
Biomedical
Research
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 Company currently has a 24% direct interest in Advent.
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BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
12. Investment Accounted for using the Equity Method (cont’d)
Shares in Associates
Molecular Discovery Systems Limited
(a) Movements in Carrying Amounts
Movements in the carrying amounts between the beginning and the end of
the current financial year:
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
Consolidated
2018
$
2017
$
464,547
464,547
493,047
493,047
-
-
-
-
19,380,613
(19,332,564)
(48,049)
-
493,047
(28,500)
464,547
535,353
(42,306)
493,047
Valuation processes
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.
4343
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
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L
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Consolidated
2018
$
2017
$
13. Income Tax Expenses
(a) The prima facie tax on loss from operations before income tax is reconciled
to the income tax as follows:
Accounting loss before tax
(1,506,758)
(2,544,301)
Prima facie tax payable on loss from operations before income tax at 27.5%
(2017: 27.5%)
(414,358)
(699,683)
Add tax effect of:
Tax benefit of revenue losses and temporary differences not recognised
414,358
699,683
Income tax expense recognised
-
-
(b) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
9,639,475
9,640,079
Potential tax benefit at 27.5% (2017: 27.5%)
2,650.856
2,651,022
14. Trade and Other Payables
Current
Trade payables
Sundry payables and accrued expenses - unrelated
Related party payables
Trade payables are non-interest bearing and normally settled within 60 days
15. Financial Liabilities
Current
Borrowings – unsecured
Non-Current
Borrowings – unsecured
Current borrowings are non-interest bearing Non-current borrowings will not
be called upon for repayment until the Company is financially independent.
4545
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
29,305
529,209
765,027
33,823
490,911
760,176
1,323,541
1,284,910
413,641
413,641
621,451
621,451
86,451
86,451
86,451
86,451
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Consolidated
2018
$
2017
$
16. Issue Capital
966,187,417 (2017: 588,702,017) fully paid ordinary shares
44,135,442
43,454,632
The Company has no authorised capital and the issued shares do not have a
par value.
(a) Ordinary Shares
Consolidated
Consolidated
2018
$
2017
$
2018
Number
2017
Number
At the beginning of reporting period
43,454,632
41,828,904
588,702,017
235,766,727
Shares issued for cash
566,940
1,425,462
283,469,930
277,390,265
Shares issued at closure of Share Purchase
Plan
-
(69,000)
Share issue costs
(74,161)
(112,772)
-
-
-
-
Shares issued in lieu of consulting fees
22,000
87,000
11,000,000
16,537,290
Shares issued as set-off against loans
payable and payables
166,031
295,038
83,015,470
59,007,735
At reporting date
44,135,442
43,454,632
966,187,417
588,702,017
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 2018 was 0.1 cents per share.
4646
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
(b)
Options
Refer to Note 23 for options on issue at the end of the financial year.
There were no options exercised during the year (2017: 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.
(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 2018 and 30 June 2017 are as follows:
Cash and cash equival Cash and cash equivalents ents
Other current assets
Trade receivables and financial assets
Trade payables and financial liabilities
Net working capital position
Consolidated
2018
$
2017
$
447,214
613,658
4,051
17,960
184,716
190,117
(1,737,182)
(1,906,361)
(1,101,201)
(1,084,626)
Refer to Note 1 for further details of the Group’s financial position and plans to manage the working capital
deficit at 30 June 2018.
4747
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
17. 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 investm,
investment
Closing balance
Consolidated
2018
$
2017
$
494,014
492,580
-
-
494,014
492,580
492,580
486,707
1,434
5,873
494,014
492,580
-
-
-
15,015,000
(15,015,000)
-
The $15,015,000 reduction in the revaluation reserve in the prior year 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.
18. Controlled Entities
Name of Entity
Principal Activity
Country of Incorporation
Investment
Australia
Ownership Interest
%
2018
2017
BioMedical Research
Australia
51.82
51.82
Parent Entity
BPH Energy Ltd
Subsidiaries
Diagnostic Array
Systems Pty Ltd
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.
4848
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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 $1,908 (2017: loss of $74,003) of which $918 (2017:
$35,655) was attributable to minority interests. DAS’s total assets at year-end were $727 (2017: $1,004), total
liabilities $364,281 (2017: $362,650), and net equity negative $363,554 (2017: negative $361,646).
19. Cash Flow Information
(a) Reconciliation of cash flow from operations with loss 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
Impairment charge
Share based payment expense
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
Decrease / (increase) in trade and other receivables
Increase in trade payables and accruals
Net cash (used in) operating activities
(b) 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
(c) Financing facilities
Credit card limit:
Cash and cash equivalents
(d) Changes in liabilities arising from financing activities – unsecured borrowings
Balance at 1 July
Net cash used in financing activities
Shares issued as set off against loans payable
Balance at 30 June
4949
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
Consolidated
2018
$
2017
$
(1,506,758)
(2,544,301)
-
22
(232,714)
(213,219)
-
-
(61,312)
1,308,563
1,003,001
1,434
77,155
-
28,500
22,000
13,909
5,401
121,104
72,454
5,873
551,167
26,545
90,355
87,000
6,457
(16,904)
169,620
(466,968)
(517,680)
447,214
613,658
20,000
20,000
707,902
(124,254)
(83,556)
500,092
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
20. Subsequent Events
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.
21. 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.
5050
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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
or less
Fixed
Interest
Rate
Non-
Interest
Bearing
1 to 5 Years
$
Total
$
2018 Consolidated
Assets
Cash and cash equivalents
0.55
447,214
Trade and other
receivables
Financial assets
Liabilities
Trade and sundry
payables
Financial liabilities
2017 Consolidated
Assets
9.00
-
-
-
447,214
-
-
-
Weighted
Effective
Interest
Rate
%
Floating
Interest
Rate
$
Fixed
Interest
Rate
1 Year
or less
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
447,214
19,658
19,658
2,129,971
2,320,007
4,449,978
2,129,971
2,339,665
4,916,850
-
-
-
1,323,541
1,323,541
500,092
500,092
1,823,633
1,823,633
Fixed
Interest
Rate
Non-
Interest
Bearing
1 to 5 Years
$
Total
$
-
-
-
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
5151
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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.
Consolidated 2018
Consolidated 2017
Carrying
Amount
$
Fair Value
$
Carrying
Amount
$
Fair Value
$
Financial Assets
Available-for-sale financial assets
2,154,949
2,154,949
3,157,950
3,157,950
Loans and trade and other receivables
2,295,029
2,295,029
2,071,467
2,071,467
4,449,978
4,449,978
5,229,417
5,229,417
Financial Liabilities
Other loans and amounts due
500,092
500,092
707,902
707,902
Trade payables
1,323,541
1,323,541
1,284,910
1,284,910
1,823,633
1,823,633
1,992,812
1,992,812
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%
5252
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
Consolidated
2018
$
4,472
(2,059)
2017
$
5,341
(267)
Liquidity risk
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.
The following are the contractual maturities at the end of the reporting period of consolidated financial
liabilities.
Contractual cash flows
Carrying
amount
$
Total
$
2 mths
or less
$
2-12 mths
$
1-2 years
$
2-5 years
$
1,323,541
1,323,541
29,305
1,294,236
Unsecured loans
500,092
500,092
-
413,641
1,823,633
1,823,633
29,305
1,707,877
Contractual cash flows
Carrying
amount
$
Total
$
2 mths
or less
$
2-12 mths
$
1-2 years
$
2-5 years
$
30 June 2018
Financial liabilities
Trade and other
payables
30 June 2017
Financial liabilities
Trade and other
payables
-
86,451
86,451
-
86,451
86,451
-
-
-
-
-
-
1,284,910
1,284,910
32,938
1,251,972
Unsecured loans
707,902
707,902
-
621,451
1,992,812
1,992,812
32,938
1,873,423
5353
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
(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.
30 June 2018
Available for sale financial assets
- Investments in unlisted entities
Total
30 June 2017
Available for sale financial assets
- Investments in unlisted entities
Total
$
Level 1
$
Level 2
$
Level 3
$
Total
-
-
2,006,000
148,949
2,154,949
2,006,000
148,949
2,154,949
$
Level 1
$
Level 2
$
Level 3
$
Total
-
-
3,009,001
148,949
3,157,950
3,009,001
148,949
3,157,950
Reconciliation of fair value measurements of financial assets:
Opening balance
Shares acquired during the year
Closing balance
Opening balance
2018 ($)
Level 3
148,949
-
148,949
2018 ($)
Level 3
3,009,001
2017 ($)
Level 3
48,949
100,000
148,949
2017 ($)
Level 3
-
Transferred from equity accounted investments - Advent Energy Ltd
-
3,009,001
Impairment charge
Closing balance
(1,003,001)
-
2,006,000
3,009,001
An impairment charge of $1,003,001 has been recognised against this investment in respect of the current
reporting period based on Advent’s most recent capital raising at $0.05 per share.
5454
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
22. Related Party Transactions
(a) Equity interests in controlled entities
Details of the percentage of ordinary shares held in controlled entities are disclosed in Note 18 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
2018 Number
2017 Number
155,361,240
83,015,470
155,361,240
83,015,470
4,000,000
2,000,000
Refer to the Remuneration Report in the Directors’ Report for details of options granted to directors.
(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 (2017: $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 $152,210 in administration and service
fees (2017: $252,595). At balance date $413,640 (2017: $624,966) was payable to Grandbridge. Grandbridge received
$Nil (2017: $10,370) during the period for management services in relation to a share placement. Grandbridge’s 100%
subsidiary, Grandbridge Securities Limited, received $Nil (2017: $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 $Nil (2017: $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 12 for the Company’s investment and loan
receivables. During the period the Company charged MDS $49,155 (2017: $45,166) in loan interest. In addition,
a loan receivable exists between the consolidated entity and MDS of $622,200 (2017:$594,200). 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 12 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 $184,301 in loan interest.
5555
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
23. Share-Based Payments
The following share-based payment arrangements existed at 30 June 2018:
Total number
Grant Date
Exercise price
795,000
9,000,000
2,000,000
2,000,000
4,000,000
17,795,000
2 April 2015
20 April 2015
27 November 2015
23 November 2016
29 November 2017
$0.020
$0.020
$0.020
$0.020
$0.020
Fair value
at grant date
Expiry date
$0.0004
$0.0030
$0.0070
$0.0030
$0.0004
31 March 2020
31 March 2020
30 November 2020
30 November 2021
30 November 2022
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, 4,000,000 options were issued. The options were issued on 29 November 2017 and expire on 30
November 2022 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
$0.0004
$0.002
$0.02
75%
5 years
Nil
2.5%
$1,434
5656
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
Consolidated Group
2018
2017
Number of
Options
Weighted
Average
Exercise
Price $
Number of
Options
Weighted
Average
Exercise
Price $
Outstanding at the beginning of the year
15,042,500
0.02
13,042,500
Granted
Expired / cancelled
Outstanding at year-end
Exercisable at year-end
4,000,000
(1,247,500)
17,795,000
17,795,000
0.02
0.08
0.02
0.02
2,000,000
-
15,042,500
15,042,500
0.02
0.02
-
-
0.02
No options were exercised during the year ended 30 June 2018 (2017: Nil).
Included under employee benefits expense in the profit and loss is $1,434 for share based expense (2017:
$5,873) of which $1,434 (2017: $5,680) relates to options granted to directors, and relates, in full, to equity.
24. 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 summary judgement application decision in the matter of a claim by MEC for $270,000 plus interest and
costs was handed down on 23 February 2018. The application by MEC for summary judgement was heard in
December 2017 in the District Court of Western Australia. The MEC application was dismissed by the court.
BPH disputes the basis of the claim by MEC and its interest claims, and BPH asserts that there has not been an
Event of Default and that the loan is not due and owing. The Company has a claim against MEC of $388,050 plus
interest and costs and will continue to pursue this matter.
Statutory Demand
The company 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 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.
5757
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
25. Parent Entity Disclosures
Financial Position
Decrease in interest rate by 0.5%
Assets
Current assets
Non-current assets
Total asset
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued Capital
Accumulated losses
Option Reserve
Total equity
Financial Performance
Loss after tax for the year
Other comprehensive income
Total comprehensive loss
26. Operating Segment
Parent
2018
$
4,472
(2,059)
2017
$
5,341
(267)
635,185
820,732
4,769,154
5,490,849
5,404,339
6,311,581
1,756,073
1,838,801
86,451
86,451
1,842,524
1,925,252
44,135,442
43,454,632
(41,067,641)
(39,560,883)
494,014
492,580
3,561,815
4,386,329
(1,506,758)
(3,587,396)
-
-
(1,506,758)
(3,587,396)
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 12.
5858
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
DIR ECTOR’ S
DECL ARATION
BPH ENERGY LIMITED
AND IT’S CONTROLLED ENTITIES
The directors of the Company declare that:
1. the financial statements and notes, as set out on pages 21 to 58 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 2018 and of the performance for the year
ended on that date of the consolidated entity;
2. 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:
3. 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 28 September 2018
5959
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
Independent Auditor’s Report
To the Members of BPH Energy Limited
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of BPH Energy Limited (“the Company”) and its controlled entities
(“the consolidated entity”), which comprises the consolidated statement of financial position as at 30
June 2018, the consolidated statement of profit or loss and comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and 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 2018 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 confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
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 that a material uncertainty exists
that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
Material Uncertainty Related to Carrying Value of Investment in Advent Energy Limited
We also draw attention to Note 10 in the financial report which indicates a material uncertainty in relation
to the consolidated entity’s ability to realise the carrying value of its investment in Advent Energy Limited
in the ordinary course of business. Our opinion is not modified in respect of this matter.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 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 world-wide organisation of accounting firms and business advisers
55
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BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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 section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Key Audit Matter
How our audit addressed the key audit
matter
Valuation of financial assets
Notes 10 and 21 in the financial report
carrying
receivables with a
The consolidated entity had financial assets of
loan
value
$2,295,029. The consolidated entity had financial
assets of available for sale financial assets at fair
value of $2,154,949 at balance date. The
consolidated entity recorded an
impairment
expense of $1,003,001 on its investment in
Advent Energy Limited that is accounted for as an
available for sale financial asset at fair value.
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:
to
repay
loan with
- We considered the ability of the other
party
the
its
consolidated entity to determine if any
additional provisions were required.
- We assessed the consolidated entity's
valuation
investment
holdings. Where readily observable data
was
that
independently.
available, we
individual
sourced
of
- For investments where there was less or
little observable market data, including
level 2 holdings as disclosed in note 21,
we obtained and assessed other relevant
valuation data.
- We 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 2018, 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.
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.
56
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BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
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.
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.
.
57
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BPH Energy I Annual Report 2018
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
2018.
In our opinion, the Remuneration Report of BPH Energy Limited for the year ended 30 June 2018
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
28 September 2018
B G McVeigh
Partner
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BPH Energy I Annual Report 2018
HEALTH TECHNOLOGY RESOURCES
ADDITIONAL SECURITIES EXCHANGE INFORMATION
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Additional information required by Australian Securities Exchange Limited and not shown elsewhere in this
report as follows.
The information is stated as at 10 September 2018
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
155,338,972
%
16.26%
2.
(a) Distribution of Shareholders
%
0.02%
0.13%
0.24%
3.37%
96.25%
100%
%
0.25
99.75
100.00
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
399
390
296
836
717
2,638
163,159
1,238,031
2,321,216
32,512,945
929,952,066
966,187,417
(b) Distribution of Unlisted Option Holders
Range of Holding
10,001 to 100,000
100,001 and over
Option Holders
Number of Options
1
9
10
45,000
17,750,000
17,795,000
The number of shareholders holding unmarketable parcels was 2,341.
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.
6464
BPH Energy I Annual Report 2018
BPH Energy I Annual Report 2018
ADDITIONAL SECURITIES EXCHANGE INFORMATION
for the year ended 30 June 2018
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
6.
Twenty Largest Shareholders as at 10 September 2018
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>
Mr Mark Andrew Tkocz + Ms Susan Elizabeth Evans
Tre Pty Ltd