HEALTH TECHNOLOGY RESOURCES
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TABLE OF
CONTEN TS
BPH ENERGY LIMITED
AND IT’S CONTROLLED ENTITIES
Chairman’s Letter
Review of Operations
Directors’ Report
Auditor’s Independence
Declaration
Corporate Governance
Statement
Consolidated Statement
of Profit or Loss and Other
Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Notes to the Consolidated
Financial Statements
Directors’ Declaration
Independent Auditor’s
Report
Additional Securities
Exchange Information
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COMPANY INFORMATION
Directors
David Breeze – Chairman/Managing Director
Charles Maling – Non Executive Director
Anthony Huston - Non Executive Director
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 (WA) Partnership
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 Codes: BPH, BPHAO
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
There have been key developments this year in BPH investees Advent Energy Ltd and Cortical Dynamics.
In January 2020 Advent submitted to the National Offshore Petroleum Titles Administrator (NOPTA) an
application to enable the drilling of the Baleen drill target in the PEP11 permit offshore NSW. Advent, through
its subsidiary Asset Energy Pty Ltd, holds an 85% interest in PEP11. Bounty Oil and Gas NL (Bounty) holds the
remaining 15% in the Joint Venture.
PEP 11 covers 4,576 sq. km of the offshore Sydney Basin immediately adjacent to the largest gas market in
Australia and is a high impact exploration project. PEP11 remains one of the most significant untested gas plays
in Australia. Gas has now become a key input into Australia’s future economic growth.
PEP 11 is a substantial offshore exploration area with large scale structuring and potentially multi-Trillion cubic
feet (Tcf) gas charged Permo-Triassic reservoirs located less than 50km from the Sydney-Wollongong-Newcastle
greater metropolitan area and gas pipeline network.
Heightening the prospectivity and critical positioning of PEP11, the Australian Energy Market Operator (AEMO)
has warned that the developed gas reserves in eastern and south-eastern Australia can only meet forecast
demand for a short period of time. The supply of gas into NSW has historically been from gas fields in the Bass
Strait and Cooper Basin in South Australia. These gas reserves are declining.
The 2020 Gas Statement of Opportunities (GSOO) from AEMO forecasts demand and uses information from gas
producers about reserves and forecast production to project the supply-demand balance and potential gaps for
eastern and south-eastern Australian gas markets to 2039. There is continuing uncertainty about the longer-term
gas supply outlook. AEMO has warned about potential supply shortages emerging on the east coast within five
years, particularly in the southern states.
The gas supply crisis on the east coast of Australia has created a significant market opportunity to raise funding
and drill with the objective of developing the PEP11 project.
In August 2020 the Australian Competition and Consumer Commission (ACCC) released an update report
confirming that the gas prices offered over late 2019 to early 2020 were in the $8–11/GJ range.
Subject to validation of gas resource these circumstances create an excellent opportunity to develop the PEP11
project into the existing NSW gas pipeline network.
The PEP11 Joint Venture has reviewed the work program and now proposes to proceed with the drilling of a
well at Baleen subject to approvals from NOPTA and other regulatory authorities and financing and has now
made application to NOPTA to change the current permit conditions to proceed with the drilling.
The current permit expiry date is in March 2021. The application to NOPTA includes the extension of the permit
title for up to two years to enable the drilling and includes an application for the removal of the requirement for
a 500 sq. km 3D seismic program.
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NOPTA has confirmed that the application is now in the final decision phase.
The drilling target at Baleen at a depth of 2150 metres subsea has been identified in a review of previous seismic
data which suggest an extrapolated 6000 acre (24.3 km2) seismic amplitude anomaly area at that drilling target.
The Marlin 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. Advent completed a 200-line km 2D seismic survey in PEP11 as a precursor to drilling of
this target.
The Company is also proposing with its Joint Venture partner Bounty, to use the drilling program at Baleen to
investigate the potential for CCS - Carbon Capture and Storage (geo-sequestration of CO2 emissions) in PEP11.
CCS can capture CO2 fossil fuel emissions.Both the International Energy agency and the Intergovernmental
Panel on Climate change believe that CCS can play an important role in helping to meet global emission
reduction targets. CCS is part of a suit of solutions with the potential to mitigate greenhouse gas emissions and
help address climate change. The Sydney Basin is a major contributor to Australia’s greenhouse gas emissions
and contributes up to 34% of the total national emissions
Independent Government published research has indicated at least 2 TCF(Trillion Cubic Ft) of CO2 storage may
be feasible in the offshore Sydney Basin.
Significant further positive developments have occurred in Cortical Dynamics. BPH is the largest shareholder
in Cortical. Cortical’s industry disruptive brain function monitor competitive advantage has been recognised
by leading world experts in anesthesia. Cortical’s technology has a versatility that goes beyond depth of
anaesthesia.
There are considerable opportunities offered by subsequent expansion of the company’s core technology
through developing the product to carry out additional functions in other EEG based markets 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, as well as drug discovery, drug
evaluation and the brain computer Interface (BCI) market. The measurement of pain is a massive global market.
In the March 2020 quarter it was announced that the Company had secured an investment of $250,000 from
IntuitiveX (“IX”) and Korean based VC investor Gentium Partners. IX is a Seattle-based life science consulting firm
and incubator Cortical has now begun the FDA 510K filing process for the brain anesthesia response monitor
(BARM) in the USA assisted by its strategic investor IX.
In a truly exciting development Cortical has now entered into a non-exclusive Licence and Co-operation
Agreement with Philips Healthcare North America Corp (Philips), which will enable Cortical to interface its BARM
into the Philips IntelliVue and Patient Information Center (PIC iX) Monitoring Systems using the IntelliBridge
integration product line. The Phillips system is used in nearly 60 % of the world’s operating theatres.
These important developments create a significant growth pathway in the coming year. Our strong share price
rise in the last six months has reflected these excellent strategic initiatives.
Yours Sincerely
David Breeze
Chairman
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REV IEW OF
OPERATIONS
BPH ENERGY LIMITED
AND IT’S CONTROLLED ENTITIES
Advent Energy Ltd (“Advent”), BPH 22.3%
Advent Energy Ltd is an unlisted oil and gas
exploration and development company with
onshore and offshore exploration and near-term
development assets around Australia. Advent’s assets
include PEP11 (85%) in the offshore Sydney Basin
and RL1 (100%) in the onshore Bonaparte Basin in
the Northern territory.
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 and gas pipeline network.
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. The total P50 Prospective Resource
calculated for the PEP11 prospect inventory is 5.9
Tcf with a net 5 Tcf to Advent Energy (85%WI). The
two largest prospects in the inventory are Fish and
Baleen.
Advent has previously interpreted significant
seismically indicated gas features in PEP11. 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 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 focused 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 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.
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Advent’s prior 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 ....for early drilling ,capturing
near-term rig availability off Australia’s coast.”
The high resolution 2D seismic data over the
Baleen prospect designed to evaluate (amongst
other things) shallow geohazard indications
including shallow gas accumulations that can affect
future potential drilling operations. It is a drilling
prerequisite that a site survey is made prior to drilling
at the Baleen location. On 31 December 2018 MEC
announced that there were “no ‘seismically defined
shallow gas hazards “at the proposed well location
on the Baleen Prospect.
Onshore Bonaparte Basin
Advent Energy Ltd (“Advent”), through wholly owned
subsidiary Onshore Energy Pty Ltd, holds 100% of
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.
In the Northern Territory, 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 project RL1.
Unconventional Resources within 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
has identified significant shale areas in RL1.
Cortical Dynamics Ltd (“Cortical”), BPH 16.1%
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 anesthesia. Cortical has received both TGA
approval and the CE mark and has now commenced
its sales campaign.
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The core product, the Brain Anaesthesia Response
Monitor (BARM), was developed to better detect
the effect of anaesthetic agents on brain activity,
aiding anaesthetists in keeping patients optimally
anaesthetised. The product is focused on integrated
distribution with the leading global brands in
operation theatre monitoring equipment.
The approach used is fundamentally different from
all other devices currently available in the market in
that its underlying algorithm produces EEG indexes
which are directly related to the physiological state
of the patient’s brain. Such monitoring is gaining
significant use during surgery, however even with the
use of EEG monitors, it is not uncommon for there
to be a critical imbalance between the patient’s
anaesthetic requirements and the anaesthetic drugs
administered. While a number of EEG monitors
are commercially available, one that is reliably able
to quantify the patient’s anaesthetic state is still
desperately needed.
To date, all of the existing EEG based depth of
anaesthesia (“D o A”) monitors operate in the context
of a number of well documented limitations: (i)
inability to monitor the analgesic effects; and (ii)
reliably measure certain hypnotic agents.
The above limitations highlight the inadequacies in
current EEG based depth of anaesthesia monitors,
particularly given surgical anaesthesia requires both
hypnotic and analgesic agents (and muscle relaxants).
The global brain monitoring market is poised to grow
to reach $1.6 billion by 2020. Around 312 million
major surgical procedures requiring anaesthesia are
undertaken every year worldwide (WHO 2012.) The
pain monitoring market is valued at over $8.6 billion
per annum by 2022. (www.grandviewresearch.com/
industry-analysis/pain-management-devices-market-
April 2016).
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 Europe. Approximately 29
million major general surgery general anaesthesias
are conducted in the European Union each year,
of which 55% (circa 16 million) are balanced
anaesthesia (using a combination of intravenous
agents such as propofol and volatile gases) and 20%
are total intravenous anaesthesia using propofol. This
creates a market opportunity of between $83m to
$229m to Cortical in the European Union alone.
“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).
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.
While the current array of bedside monitoring and
imaging systems in the critical care environment
has led to dramatic reductions in mortality, they
do not as yet involve the continuous monitoring of
brain function. This is widely acknowledged to be a
major problem, as the care and management of the
critically ill patient is ultimately all about the brain.
The continuous monitoring of a patients’ brain
state is not only necessary to diagnose and manage
acute deteriorations in brain function that may have
long lasting effects, but also to aid in the optimal
administration of sedation and analgesia. Sedation
and analgesia in the critically ill patient play a pivotal
role in their care and is necessary to minimize
patient distress and agitation, being essential to
facilitate the utility of a wide variety of life support
equipment and procedures, the most important of
which is mechanical ventilation.
Study after study has shown that too deep sedation
increases the time on mechanical ventilation, which
leads to increases in mortality, the incidence of
complications and treatment costs. Given these
acknowledged advantages to brain function
monitoring in the ICU why then is continuous
monitoring of brain function not currently available?
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There are two main reasons for this:
1. Firstly, the size and the complexity of
configuration of most approaches to monitoring
brain function are simply not capable of being
adapted for use in the busy and crowded ICU
environment.
2. Secondly, in those monitoring approaches that
could be potentially deployed at the bedside,
they depend on physiologically uncertain
principles of operation that are not relevant, or
meaningfully interpretable, in the context of the
critically ill patient.
Cortical aims to address both these limitations
by the further development and trialling of
the novel bedside and remotely deployable
Australian manufactured and designed,
electroencephalographically based (EEG-based),
BARM system. The BARM is configured to efficiently
image and display complex information related to
the clinically relevant state of the brain.
The BARM is not only expected to address the
shortcomings of these EEG-based DoA approaches,
and thus realise their documented promise, but to
extend the functionality of bedside EEG monitoring
to the objective monitoring of pain, a measure
also vital to the management of the sedated
mechanically ventilated critically ill patient.
In Australia between 2015 and 2016 there were
approximately 149,000 admissions to ICU of which
48,000 required continuous ventilatory support
(CVS) and thus required sedation, pain relief and
who would have potentially benefited from an
instrumental approach to imaging brain activity.
Given that the average patient time on CVS was
96 hours in Australia, this equates to potentially
4.5 million hours of instrumental monitoring and
approximately a quantity of 188,000 of 24-hour
single patient-use sensors to image brain activity. In
the USA, based on 1.5 million ICU patients (30% CVS)
requiring CVS, and given that the first episode of an
average patient time on CVS is 96 hours, this equates
to 144 million hours of instrumental monitoring and
approximately 6 million of 24-hour single patient use
sensors to image brain activity. For the European
Union (EU), based on similar statistics to USA, there
would be an estimated 5 million single patient use
sensors, used per annum. Total market opportunity
per annum of the US, Western Europe and Australian
markets only, would be approximately 11.188 million
24-hour single-use patient sensors per annum,
which with an average cost of $AU20 per single
patient use sensor, would represent a total revenue
stream conservatively estimated to be of the order of
$AU223.8 million per annum.
The BARM system is protected by five patent families
in multiple jurisdictions worldwide consisting of
22 granted patents. Cortical will continue to drive
the development of the BAR monitor, maintain its
intellectual property and concentrate on obtaining
regulatory approval for the BAR monitor.
Cortical has now commenced preparations for a
sales program of the device in Europe, Australia,
New Zealand and further development is also
underway in Korea and Singapore. A USA based
distributorship is expected to follow once Cortical
attains the FDA certification.
Cortical’s Brain Anesthesia Response Monitor
(‘BARM”) has now been used in further successful
trials at Strathfield Private Hospital in Sydney.
Strathfield is part of the Ramsay private hospital
group.
Cortical announced a number of developments
during the period which included:-
-
In July 2019 it was announced that the Company
was trialling the Brain Anaesthesia Response
Monitor (“BARM”) at Southampton University
Hospital in the UK.
- On 29 September 2019 Globaluck, the
Company’s South Korean exclusive distributor of
the BARM, confirmed it has now received Korean
KGMP certification. This regulatory milestone,
the KGMP certificate of approval for its BARM
(Class II Medical Device) from the Korea Good
Manufacturing Practice (KGMP) followed an
independent Korean audit of Cortical’s facility
in Scoresby, Victoria during July 2019. KGMP
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BPH Energy I Annual Report 2020
certification is required by the Korean Ministry of
Food and Drug Safety (MFDS) before placement
of Class II, III, and IV medical devices on the South
Korean market.
-
In the March 2020 quarter it was announced
that the Company had secured an investment of
$250,000 from IntuitiveX (“IX”) and Korean based
VC investor Gentium Partners Inc (“GP”) by the
issue of 12,500,000 shares at $0.02 per share.
Mr Charles Chang and Mr Ashley Zimpel joined
the Cortical board following the resignations of
Cortical directors Mr Gary Todd and Mr David
Liley. BPH director David Breeze remained as a
Cortical board member.
IX is a Seattle-based life science consulting
firm and incubator. Its management team
is comprised of life science entrepreneurs,
physicians, investors, and innovators. It brings
a combined 100+ years of experience in R&D,
Clinical, IP Strategy, Prototyping, Product
Development, and Commercialisation. IX
catalyzes medical innovation by identifying novel
and timely ideas and applying its resources
to make them possible. From initial concept
to final commercialisation, IntuitiveX has the
in-house knowledge and network to meet the
unique needs of the most innovative life science
companies in the world. The Intuitive X team
will assist Cortical in the FDA regulatory approval
process. It has investments in eleven MedTech,
digital health, robotics to augmented reality, and
3-D printing to biotech and brings to Cortical
extensive experience in the US capital raising and
commercialisation arena.
Gentium Partners Inc is a FSS licensed asset
management company based in Seoul, South Korea.
It was established in 2018 by professionals who have
broad experience in domestic and global financial
institutions. Previously, the partners have headed
up divisions at Morgan Stanley, Bankers Trust, KB
Bank, Commerzbank, and Meritz Securities. Using
their collective broad network and experience, GP
was created to assist venture companies, particularly
those in the startup stages, with mentoring and
fund raising. GP also assists and invests in promising
pre-IPO companies. While sector agnostic, GP prefers
to invest in companies with innovative technologies
and/or ideas, particularly when they are impactful in
healthcare, environment, and lifestyle. Among some
of GP’s investments are: the leading urban farm
business in Korea; B2C payment technology based
on Bluetooth identifier; a biomedical startup with a
breakthrough approach for diagnosing and treating
amyloid diseases; and “hycore” for electrifying a 26”
bicycle, just to name a few.
In the June 2020 quarter it was announced
that Cortical has entered into a non-exclusive
Licence and Co-operation Agreement with Philips
Healthcare North America Corp (“Philips”), which
will enable Cortical to interface its BARM into the
Philips IntelliVue and Patient Information Center
(PIC iX) Monitoring Systems using the IntelliBridge
integration product line.
Cortical has now begun the FDA 510K filing process
for BARM in the USA assisted by its strategic investor
IX. The Food and Drug Administration (“FDA”) is the
federal agency of the United States Department
of Health and Human Services which regulates
the sale of medical device products (including
diagnostic tests) in the U.S. and monitors the safety
of all regulated medical products. FDA approval is a
necessary precursor for sales of BARM to commence
in the USA. Cortical already has achieved both CE
(Europe) and TGA (Australian) registration and is
currently awaiting final approval of the Company’s
registration application to the Korean Ministry of
Food and Drug Safety.
Patagonia Genetics Pty Ltd.
On 21 August 2019 the Company announced that
it intended to pursue a complementary strategy
of making an investment (or investments) in the
medical cannabis sector, as it is considered that an
investment of this nature is in line with its investee
company strategy and, in particular, its biomedical
business. The medical cannabis sector is showing
significant growth with current developments
boosting the sectors viability including the move to
legalise cannabis in Canada and the announcement
by the UK Government to legalise medical cannabis.
On 2 September 2019 BPH announced it had
agreed to acquire an initial investment of 10% (with
the option to increase its percentage to 49%) in
Patagonia Genetics Pty Ltd (“PG Aust”), the entity
that owns a 100% interest in Patagonia Genetics SPA
(“PG”), a Chilean entity.
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The key terms were:
(a) BPH agreed to acquire a total 10% interest in PG
Aust in consideration for a subscription amount
of $50,000 in cash into the entity and the issue
of 150,000,000 BPH shares and payment of
$50,000 by equal instalments over 6 months to
the shareholders of PG Aust (“T1 transaction”).
The amount of capital issued by BPH for the
consideration represents approximately 5.5% of
the capital of BPH. The 150,000,000 BPH shares
were issued on 30 August 2019 and the cash
consideration has been paid in full ; and
(b) BPH is granted the option to acquire a total
shareholding of 49% in PG Aust (that is, an
additional 39% when added to the original
acquisition of a 10% interest) in consideration for
a subscription amount of $700,000 into the entity
and the issue of 450,000,000 shares in the capital
of BPH (“T2 transaction”).
The T2 transaction was to be conditional on
appropriate due diligence and shareholder approval.
There was no requirement for shareholder approval
for the T1 transaction as the consideration was met
from the current cash position and the shares issued
from the existing 15% ASX Listing Rule 7.1 capacity
of BPH. The option was not initiated.
On 17 September 2019 the Company announced
that PG had purchased its first 1,300ltrs of
Wonderland Agronutrients products to send
samples to major licensed producers and grow
shops internationally. PG has secured the exclusive
worldwide distribution rights (excluding Chile &
Argentina) to Chile’s leading cannabis fertilizer and
biostimulant range, Wonderland Agronutrients. PG
has also executed a joint venture agreement with
Israeli based research group Bio-Sciences Pharma
Ltd (BSP), a subsidiary of Impact NRS (NRS).
The Company has fully provided for its $250,000
investment in PG Aust at 30 June 2020.
On 8 April 2020 the Company announced it had
completed a 1 for 10 share consolidation with a
corresponding consolidation of share options.
The Company requested voluntary suspension of its
securities on 30 April 2020 pending the release of an
announcement in respect to potential investments
under its expanded investment mandate. The
voluntary suspension was lifted on 17 June 2020. The
Company announced it had entered into a terms
sheet in relation to a COVID related transaction.
The terms sheet specified a 60-day due diligence
period. Its terms were subject to ASX approval. The
Company announced that it had terminated this
agreement by mutual consent with the vendor and
had accordingly asked the ASX to lift the Company’s
voluntary suspension. The ASX Life Science Code of
Best Practice for Reporting by Life Science Practice
and ASX Listing Rules specifies certain disclosures
in relation to intellectual property and testing. These
requirements could not be met. The Company is
continuing to evaluate new opportunities.
Molecular Discovery Systems Limited, BPH 20%
Molecular Discovery Systems Limited (“MDSystems”),
launched in 2006 and spun off from BPH in 2010, is
an associate of BPH. 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 Molecular Cancer Research Group has
developed a pre-clinical model of liver cancer where
the expression of HLS5 is ablated i.e. it mimics, in
part, patients that have low HLS5 (TRIM35) and
develop liver cancer. Research conducted at the
Perkins Institute has shown that HLS5 has significant
tumour suppressor properties. The Perkins findings
are supported by the two independent peer
reviewed scientific publications, identifying a role
for HLS5 in cancer, demonstrating that the loss
of HLS5 expression may be a critical event in the
development and progression of liver cancer.
The publications — a collaboration between Fudan
University Shanghai Cancer Centre and other
Chinese Institutes, including Shanghai Cancer
Institute, Liver Cancer Institute, Second Military
Medical University and Qi Dong Liver Cancer Institute
—focused on identifying the role of HLS5 in liver
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BPH Energy I Annual Report 2020
cancer. The first article demonstrated that HLS5
binds a key enzyme involved in the production of
energy for cancer cells (Pyruvate Kinase isoform
M2 (PKM2)). They showed that HLS5 binds PKM2
to form a complex which inhibits the activation of
PKM2. The formation of this HLS5/PKM2 complex
ultimately limits the cancer cell’s means of energy
production and its ability to proliferate. In the second
publication the expression levels of HLS5 and PKM2
were assessed for potential use as a prognostic
marker for hepatocellular carcinoma (HCC) - (liver
cancer) .The study analysed liver samples of 688
patients who had HCC. The study found that patients
who were positive for PKM2 expression and negative
for HLS5 expression had poorer overall survival and
shorter time to recurrence. Taken together, the
findings of both papers further support the research
into HLS5 by MDS and the Harry Perkins Institute of
Medical Research.
Significant Changes in State Of Affairs
•
In August 2019 the Company entered into a Deed
of Settlement and Release (“Deed”) between BPH
Energy Limited (BPH”), MEC Resources Limited
(“MEC”), Grandbridge Limited, Trandcorp and
Mr David Breeze and other relevant parties. As
part of the settlement it was agreed that Messrs
Matthew Battrick and Tobias Foster would
appoint Messrs Steven James, Tony Huston and
Thomas Fontaine as directors of Advent, and
that Messrs Matthew Battrick and Tobias Foster
would then resign from the Board of Advent. The
incoming directors have since confirmed and
acknowledged Mr David Breeze as a duly elected
director of Advent.
The other key terms of the settlement are as follows:
- MEC provided an irrevocable proxy to BPH on the
voting rights attaching to 100% of the shares held
by MEC in Advent at any meeting of shareholders
of the Company up to 23 July 2021.
- Until 23 July 2021, MEC agrees to not directly or
indirectly interfere with the board composition
and/or management of Advent.
- For a period of one year commencing from 6
August 2019 MEC must not sell or otherwise
dispose of any shares it holds in Advent, other
than by an in-specie distribution to MEC if
requested in writing to do so by Advent. If notice
is given, MEC must do all that is required to effect
and support the In-Specie Distribution.
- The loans owed by Advent to MEC will be
recoverable by MEC only by the following means
and only in the following circumstances:
One month prior to the scheduled
commencement date for the drilling of a well
within the PEP 11 Permit Area, Advent will
issue to MEC ordinary shares to the face value
of the debt calculated at 80% of (a) the volume-
weighted average price of Advent shares over the
5 days trading immediately prior to that date; or
(b) if as at that date Advent shares are not listed
on any securities exchange, the price at which
ordinary shares in Advent were last issued.
• On 28 September 2018, MEC announced
the signing of a binding term sheet for the
majority sale of Onshore Energy Pty Ltd (“OE”)
to Bonaparte Petroleum Pty Ltd (“BP”). This
agreement was terminated on 10 August 2019.
• Onshore Energy (“Onshore”) made an application
for suspension and extension of the permit
conditions in EP386 which was not accepted
by the Department (DMIRS). Onshore sought
a review of the decision by the Minister of
Resources who responded setting out a course of
action in relation to that decision which Onshore
is following. Onshore Energy Pty Ltd will be
lodging an appeal against this decision with the
State Administrative Tribunal (SAT).
• The conditional farmin agreement to PEP11
between Asset Energy Pty Ltd and RL Energy Pty
Ltd was registered as a dealing by the National
Offshore Petroleum Titles Administrator in
September 2018. This registration was a condition
precedent to the farmin agreement. This farmin
agreement was terminated on 17 September
2019.
• On 17 September 2019 BPH announced that
Advent has now terminated by mutual consent
the RL Energy Joint Venture Agreement for the
PEP11 permit. As a result Advent, through wholly
owned subsidiary Asset Energy Pty Ltd, now holds
an 85% interest and is operator of the permit
(and RL Energy has no further interest). Bounty
Oil and Gas NL (ASX: BUY) holds the remaining
15%.
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BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
REVIEW OF OPERATIONS BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
• Advent Energy Ltd has submitted to the National
Offshore Petroleum Titles Administrator (NOPTA)
an application to enable the drilling of the Baleen
drill target in the PEP11 permit offshore NSW.
The PEP11 Joint Venture has reviewed the work
program and now proposes to proceed with the
drilling of a well at Baleen subject to approvals
from NOPTA and other regulatory authorities
and financing and has now made application to
NOPTA to change the current Permit conditions.
The current permit expiry date is in March 2021.
The application to NOPTA includes the extension
of the permit title for up to two years to enable
the drilling and includes an application for the
removal of the requirement for a 500 sq. km 3D
seismic program. NOPTA has confirmed that this
application is now in the final decision phase.
• On 19 September 2019 BPH announced Advent
has been granted a renewal of Retention Licence
1 (RL1) in the Northern Territory by the NT
Department of Primary Industry and Resources
for a five-year term concluding July 2023. Advent,
through its wholly owned subsidiary Onshore
Energy Pty Ltd, holds a 100 % interest in RL1 and
is operator of the Retention Licence.
•
In November 2019 it became apparent that
the Company’s previous management, who
were also the management of MEC prior to the
Deed entered into in August 2019 between the
Company and other relevant parties, had lodged
a Research and Development Tax Incentive claim
for the year ending 30 June 2018 in the name
of MEC in respect of work performed on the
PEP 11 permit, the majority of which costs had
been borne by Advent. MEC owned only 53% of
Advent.
MEC noted in their December 2018 quarterly
Appendix 4C cash flow report lodged with ASX
on 31 January 2019 that they had been “granted
a Research and Development (“R & D”) incentive
in the quarter ended 31 December 2018 after
recent seismic activities within PEP 11. An
amount of $384k was received under the scheme
in Q2”. Subsequent to the Deed the Company’s
new management questioned why the R & D
claim not been submitted in the name of Advent.
As a result of these enquiries the $728,563 costs
incurred by Advent in respect of the PEP 11 June
2018 R & D claim, together with $68,408 costs
in respect of a proposed June 2019 R & D claim
by MEC, have been recharged to MEC and are
showing as a current asset of the Company at 30
June 2020. The Company has commenced legal
action to recover amounts due from MEC.
The legality of MEC’s conversion of $532,500 of debt
into Company shares in March 2019 at a time when,
given the R & D recharges that should have been
booked, potentially no such convertible debt existed,
is currently under review.
•
In February 2020 the Company converted a
receivable of $162,286 into 3,251,320 shares in
Advent at a conversion price of $0.05 per share in
accordance with shareholder approval received
by Advent shareholders on 29 November 2019.
• During the year the Company issued 3,400,000
shares at $0.05 for $170,000 cash. A further
$15,000 had been received at year end for shares
issued subsequent to year end.
MEC Resources Limited (“MEC”), BPH 0.8%
Settlement of Legal Matters with MEC
On 9 August 2019 BPH announced that it had
reached a settlement with MEC in relation to
the oppression proceedings it commenced in
the Supreme Court of Western Australia with
Grandbridge, Trandcorp Pty Ltd (“Trandcorp”), and Mr
David Breeze.
In addition to the settlement of the oppression
proceedings, BPH, MEC, GBA, Trandcorp and Mr
David Breeze settled a number of other proceedings
and entered into a Deed of Settlement and Release
in August 2019 with Advent Energy Ltd (“Advent”)
and other relevant parties as outlined in the Advent
Energy summary above.
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BPH Energy I Annual Report 2020
DIR ECTOR’ S
REP ORT
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 2020.
Directors
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.
Review of Operations
A Review of Operations is set out on pages 1 to 8 and
forms part of this Directors’ Report.
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.
The names of directors in office at any time during or
since the end of the year are:
Non-Audit Services
D L Breeze
A Huston
C Maling
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, a medical cannabis entity,
and an oil and gas exploration entity.
Operating Results
The consolidated entity has reported a net profit
after tax for the year ended 30 June 2020 of
$1,121,263 (2019: loss of $3,013,043) and has a net
cash outflow from operating activities of $504,295
(2019: outflow of $487,427).
The net profit from ordinary activities after tax is after
recognising (i) a fair value loss of $734,542 (2019:
gain of $280,372) (ii) consulting and legal costs of
$357,291 (2019: $332,102), (iii) share of associates
losses of $30,793 (2019: $28,006), (iv) a doubtful debt
reversal of $2,929,199 (2019: expense of $2,889,033)
(v) an impairment expense of $420,731 (2019: $Nil)
and (vi) share based payments expense of $171,425
(2019: $82,422).
No fees for non-audit services were paid/payable to
the external auditors during the year ended 30 June
2020 (2019: $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 and in medicinal cannabis.
Financial Position
The consolidated entity has a working capital deficit
of $1,324,846 (2019: deficit $941,825). The net assets
of the consolidated entity increased by $2,281,577 to
$4,283,836 at 30 June 2020.
Included in trade creditors and payables is current
director fee accruals of $849,987 (2019: $812,783).
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.
Significant Changes in State Of Affairs
Capital raisings
The Company completed a 1 for 10 share
consolidation in April 2020 subsequent to
shareholder approval. Prior to this share
consolidation BPH issued 215,518,877 shares
under a Share Purchase Plan at an issue price of
1111
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
DIRECTOR’S REPORT BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
$0.00140056 per share, of which $211,847 was
received in cash and $90,000 satisfied by debt
set-off, raised $282,000 cash from the issue of
282,000,000 placement shares, issued 150,000,000
shares as partial consideration for 10% of Patagonia
Genetics, issued 15,000,000 shares as an introductory
fee for a business transaction, issued 20,000,000
shares as part of director remuneration, and issued
115,666,667 shares in lieu of consultants’ fees.
Subsequent to the share consolidation the Company
issued 37,079,166 shares for $333,700 cash, and issued
2,011,580 shares in lieu of $18,104 consulting fees.
Subsequent Events
On 23 July 2020 the Company announced it had
completed a placement and that it intends to
undertake a non-renounceable rights issue.
The placement consisted of 29,987,500 fully paid
ordinary shares at an issue price of $0.015 per share,
together with one free attaching option with an
exercise price of $0.05 per share and an expiry date
of 29 July 2022 for every two placement shares
subscribed for and issued to sophisticated and
professional investors under the Company’s existing
placement capacity, raising $449,813 in cash.
In August 2020 the Company completed the 2 for 5
non-renounceable rights issue at $0.015 per share
together with one free attaching option with an
exercise price of $0.05 per share and an expiry date
of 29 July 2022 for every two shares subscribed for
and issued, raising $1,685,752 in cash and $250,518
in in extinguishment of amounts owed to directors.
In addition, a further 16,012,566 shortfall shares
(representing $241,539) and attaching options under
the non-renounceable rights issue will, subject to
shareholder approval at a meeting anticipated to be
held in October 2020, be issued in extinguishment of
amounts owed to directors.
There are no other 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.
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, Executive Chairman, and
Company Secretary – Age 67
Shares held – 46,493,714 / Options held – 6,641,960
David is a Corporate Finance Specialist with
extensive experience in the stock broking industry
and capital markets. He has been a corporate
consultant to Daiwa Securities; and held executive
and director positions in the stock broking industry.
David has a Bachelor of Economics and a Masters
of Business Administration, and is a Fellow of the
Financial Services Institute of Australasia, and
a Fellow of the Institute of Company Directors
of Australia. He has published in the Journal of
Securities Institute of Australia and has also acted
as an Independent Expert under the Corporations
Act. He has worked on the structuring, capital raising
and public listing of over 70 companies involving
in excess of $250M. These capital raisings covered
a diverse range of areas including oil and gas, gold,
food, manufacturing and technology. During the last
3 years David has held the following listed company
directorships:
Grandbridge Limited (November 2016 until its de-
listing in February 2020)
MEC Resources Limited (from April 2005). David
Breeze was a Director of MEC Resources Limited
(“MEC”) from April 2005 and was removed from the
ASIC register by MEC directors on 23 November
2016. He has neither resigned nor been removed by
shareholders and disputes the actions taken by the
Directors of MEC.
David is also a director of Cortical Dynamics Limited,
Molecular Discovery Systems Limited, Diagnostic
1212
BPH Energy I Annual Report 2020
Array Systems Limited, Advent Energy Limited,
Onshore Energy Pty Ltd, and Asset Energy Pty Ltd.
Grandbridge Limited (November 2016 until its de-
listing in February 2020).
A Huston
Non-Executive Director – Age 65
Shares held – 8,598,800 / Options held – 1,428,400
Tony Huston has been involved for over 40 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. During the 1990’s Tony managed JFP NZ
International, a Texas based exploration company
that included a Jack Up rig operating in NZ waters.
In 1994 Tony oversaw the environmental consent
process required to drill a near inshore well that was
drilled from “land” into the offshore basin during
1995. In 1996 Tony formed his own E&P Company to
focus 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 20 years ago are still in operation.
Recent focus (12 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 been a director of listed company
BPH Energy Limited from June 2017 to present and is
a non executive director of Advent Energy Ltd.
C Maling
Non-Executive Director – Age 66
Shares held – 3,005,036 / Options held – 1,829,291
Mr Charles Maling was formerly the Communications
Officer for the Office of the Western Australian
State Government Environmental Protection
Authority (“EPA”) 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:
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
Number
eligible to
attend
Number
attended
D Breeze
A Huston
C Maling
2
2
2
2
2
2
Indemnifying Officers or Auditors
During or since the end of the financial year the
Company has not given an indemnity or entered an
agreement to indemnify, or paid or agreed to pay
directors and officers insurance premiums.
The Company has not indemnified the current or
former auditors of the Company.
Remuneration Report (Audited)
This report details the nature and amount of
remuneration for key management personnel of
BPH Energy Limited. 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 and Company Secretary
A Huston - Non-Executive Director
C Maling - Non-Executive Director
1313
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
DIRECTOR’S REPORT BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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 2019 financial accounts
was adopted at the Company’s 2019 Annual General
Meeting. 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 Company did not
engage remuneration consultants during the period.
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.
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
1414
BPH Energy I Annual Report 2020
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.
Key Management Personnel Remuneration
The remuneration for each key management personnel of the consolidated entity during the year was as follows:
2020
Key Management Person
Short-term Benefits
Post-employment Benefits
Salary and
fees
Bonus
Non-cash
benefit
Other
Superannuation
D L Breeze
C Maling
A Huston
Total
148,000
25,000
35,000
208,000
-
-
-
-
-
-
-
-
-
-
-
-
Key Management
Person
Long-term
Benefits
Share-based payment
Total
Performance
Related
Compensation
Relating to
Securities
D L Breeze
C Maling
A Huston
Other
Equity
Options
$
-
-
-
-
-
20,000
20,000
-
5,771
-
148,000
30,771
55,000
5,771
233,771
%
-
-
-
%
-
18.8%
36.4%
11.0%
2019
Key Management Person
Short-term Benefits
Post-employment Benefits
Salary and
fees
Bonus
Non-cash
benefit
Other
Superannuation
D L Breeze
C Maling
A Huston
Total
148,000
25,000
36,335
209,335
-
-
-
-
-
-
-
-
-
-
-
-
-
-
665
665
Key Management
Person
Long-term
Benefits
Share-based payment
Total
Performance
Related
Compensation
Compensation
Relating to
Options
D L Breeze
C Maling
A Huston
Total
Other
Shares
Options
$
-
-
-
-
-
-
20,000
20,000
-
-
-
-
148,000
25,000
57,000
230,000
%
-
-
-
%
-
-
35.1%
8.70%
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BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
DIRECTOR’S REPORT BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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
1.7.2019
or date of
appointment
Granted as
Compensation
1 for 10
consolid-
ation
Balance
Total Vested
30.6.2020
Total
Exercisable
and Vested
30.6.2020
Total
Unexercisable
30.6.2020
D L Breeze
-
A Huston
2,000,000
-
-
-
-
-
-
(1,800,000)
200,000
200,000
200,000
C Maling
2,000,000
12,000,000
(12,600,000)
1.400,000
1,400,000
1,400,000
-
-
-
Shareholdings
Balance
1.7.2019
Received as
Acquired
1 for 10
Compensation
consolidation
Balance
30.6.2020
D L Breeze
310,677,944
-
21,420,004
(298,888,153)
33,209,795
A Huston
C Maling
20,000,000
20,000,000
21,420,004
(55,278,004)
44,536
-
21,420,004
(19,318,086)
6,142,000
2,146,454
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
$0.00041
$0.20
400,000
At grant date
2017
2022
29 November
30 November
$0.00051
$0.02
1,200,000
At grant date
2019
2024
1. Pre-consolidation
There are no further service or performance criteria that need to be met in relation to options granted.
The current year options were issued to Mr Maling. No options attributable to key management personnel were
exercised or lapsed during the year.
1616
BPH Energy I Annual Report 2020
Company performance, shareholder wealth and director and executive remuneration
The following table shows the gross revenue and the operating result for the last 5 years for the listed entity, as
well as the share price at the end of the respective financial years.
2016
2017
2018
2019
2020
Revenue from ordinary activities
181,758
216,925
235,824
278,227
240,243
Net profit / (loss)
(511,446)
(2,544,301)
(1,506,758)
(3,013,043)
1,121,263
Share price at year end (cents per
5.3
share)
Earnings per share (cents)
(2.2)
1.9
(5.9)
0.8
(2.0)
1.0
(1.7)
2.3
0.35
The 2016 to 2019 share prices and earnings per share have been adjusted for the 1 for 10 share consolidation
completed in April 2020.
Options
At the date of this report, the unissued ordinary shares of BPH Energy Ltd under option are as follows:
Grant Date
Date of Expiry
Exercise Price
Number Under Option
27 November 2015
30 November 2020
23 November 2016
30 November 2021
29 November 2017
30 November 2022
24 June 2019
9 August 2019
20 June 2024
9 August 2024
29 November 2019
30 November 2024
20 April 2020
31 August 2020
15 September 2020
20 June 2024
29 July 2022
29 July 2022
$0.20
$0.20
$0.20
$0.02
$0.02
$0.02
$0.02
$0.05
$0.05
200,000
200,000
400,000
2,700,000
2,000,000
1,200,000
600,000
64,542,453
8,051,412
During the year ended 30 June 2020 no ordinary shares of the Company were issued on the exercise of options
granted under the BPH Energy Ltd Incentive Option Scheme (2019: 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.
300,000 shares have been issued since the end of the financial year as a result of exercise of options. There were
9,795,000 options (pre-consolidation) with an exercise price of $0.02 per share that lapsed unexercised during
the period
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2020 has been received and can be
found on page 18. 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 30 September 2020
1717
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
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 2020, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
AUD I TOR ’S
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
IND EPENDENCE
DECL ARATION
any applicable code of professional conduct in relation to the audit.
b)
a)
Perth, Western Australia
30 September 2020
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 2020, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
a)
the auditor independence requirements of 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
30 September 2020
B G McVeigh
Partner
(cid:883)(cid:889)(cid:3)
1818
BPH Energy I Annual Report 2020
(cid:883)(cid:889)(cid:3)
COR PORATE
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
1919
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Revenue from ordinary activities
Other income
Share of associates losses
Fair value (loss) / gain
Impairment expense
Interest expense
Administration expenses
Derecognition of financial liability
Doubtful debts reversed / (expense)
Consulting and legal
Directors fees
Insurance
Service expenses
Share based payments
Other expenses
Profit / (loss) before income tax
Income tax expense
Profit / (loss) for the year
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Other comprehensive profit (net of tax)
Total comprehensive profit / (loss) for the period
(Loss) attributable to non-controlling interests
Profit / (loss) attributable to members of the parent entity
Total comprehensive profit / (loss) attributable to owners of the
Company
Note
2
2
10
3
2
21
11
Consolidated
2020
$
240,243
6,210
(30,793)
(734,542)
(420,731)
(359)
(97,182)
-
2019
$
278,227
17,625
(28,006)
280,372
-
(774)
(73,928)
83,956
2,929,199
(2,889,033)
(357,291)
(332,102)
(100,000)
(100,000)
-
(9,029)
(128,640)
(128,640)
(171,425)
(13,426)
(82,422)
(29,289)
1,121,263
(3,013,043)
-
-
1,121,263
(3,013,043)
-
-
1,121,263
(3,013,043)
(538)
(245)
1,121,801
(3,012,798)
1,121,801
(3,012,798)
Total comprehensive (loss) attributable to non-controlling interests
(538)
(245)
Earnings per share
Basic and diluted (loss) per share (cents per share)
4
0.35
(1.68)
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
2020
BPH Energy I Annual Report 2020
STATEMENT OF FINANCIAL POSITION
for the year ended 30 June 2020
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
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Non-controlling interest
Total Equity
Note
7
8
9
9
10
12
13
14
15
Consolidated
2020
$
257,739
32,675
43,564
360
334,338
2019
$
437,316
20,969
190,342
33,869
682,496
3,455,378
2,507,543
2,153,304
436,541
5,608,682
2,944,084
5,943,020
3,626,580
1,538,098
1,424,235
121,086
200,086
1,659,184
1,624,321
4,283,836
2,002,259
46,716,896
45,574,507
526,361
508,436
(42,799,063)
(43,920,864)
(160,358)
(159,820)
4,283,836
2,002,259
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 2020
HEALTH TECHNOLOGY RESOURCES
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Ordinary Share
Capital
$
Accumulated
Losses
Option reserve
$
Total
attributable to
owners of the
parent entity
$
Non-controlling
Interest
$
Total
$
44,135,442
(40,908,066)
494,014
3,721,390
(159,575)
3,561,815
-
-
(3,012,798)
(3,012,798)
(3,012,798)
(3,012,798)
(245)
(245)
(3,013,043)
(3,013,043)
Shares issued in exchange for
100,000
ordinary shares in listed entity
Share based payments expense
-
Balance as at 30 June 2018
Loss for the period
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
Shares issued as director
remuneration
Balance at 30 June 2019
Profit for the period
Total comprehensive loss for the year
Transactions with owners in
their capacity as owners
Transactions with owners in their
capacity as owners
Shares issued for cash
Share issue costs
Shares issued as partial
acquisition for investment
Shares issued as introductory fee
for business transaction
Shares issued in lieu of
consulting fees
Shares issued as set-off against
amounts payable
1,175,504
(153,025)
138,050
158,536
20,000
827,547
(96,762)
150,000
15,000
136,604
90,000
14,422
14,422
45,574,507
(43,920,864)
508,436
2,162,079
(159,820)
2,002,259
-
-
1,121,801
1,121,801
1,121,801
1,121,801
(538)
(538)
1,121,263
1,121,801
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,175,504
(153,025)
138,050
158,536
20,000
100,000
827,547
(96,762)
150,000
15,000
136,604
90,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,175,504
(153,025)
138,050
158,536
20,000
100,000
14,422
-
-
-
-
-
-
-
827,547
(96,762)
150,000
15,000
136,604
90,000
37,925
Share based payments expense
20,000
17,925
37,925
Balance at 30 June 2020
46,716,896
(42,799,063)
526,361
4,694,194
(160,358)
4,283,836
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
2222
BPH Energy I Annual Report 2020
STATEMENT OF CASH FLOWS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Interest paid
Note
Consolidated
2020
$
2019
$
(504,105)
(488,458)
169
(359)
1,805
(774)
Net cash used in operating activities
17(a)
(504,295)
(487,427)
Cash flows from investing activities
Payment for unlisted investments
Loans to other entities
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of securities (net of share issue
costs)
Repayment of borrowings
17(c)
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
(100,000)
(245,170)
(345,170)
-
(505,000)
(505,000)
748,888
1,112,529
(79,000)
669,888
(130,000)
982,529
(179,577)
437,316
(9,898)
447,214
17(b)
257,739
437,316
The accompanying notes form part of, and should be read in conjunction with, these financial statements.
2323
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
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 30 September 2020 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 profit after tax for the year ended 30 June 2020 of $1,121,263 (2019:
loss of $3,013,043) and has a net cash outflow from operating activities of $504,295 (2019: outflow of $487,427).
The net profit from ordinary activities after tax is after recognising (i) a fair value loss of $734,542 (2019: gain
of $280,372) (ii) $357,291 consulting and legal costs (2019: $332,102), (iii) share of associates losses of $30,793
(2019: $28,006) (iv) a loan provision reversal of $2,929,199 (2019: expense of $2,889,033) (v) an impairment
expense of $420,731 (2019: $Nil) and (vi) share based payments expense of $171,425 (2019: $82,422).
The consolidated entity has a working capital deficit of $1,324,846 (2019: deficit $941,825). The net assets of the
consolidated entity increased by $2,281,577 to $4,283,836 at 30 June 2020.
Included in trade creditors and payables is current director fee accruals of $849,987 (2019: $812,783). 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. Subsequent to year end the Company has raised $2,377,103 in cash from the issue of shares of shares
under a share placement and non-renounceable rights issue. Based on the cash flow forecasts including
directors voluntarily suspending cash payments for their director fees the directors are satisfied that, the going
2424
BPH Energy I Annual Report 2020
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.
Should the consolidated entity not be successful in raising additional funds through the issue of new equity,
should the need arise 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 16 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.
(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
2525
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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.
(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.
2626
BPH Energy I Annual Report 2020
(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:
Depreciation Rate
15 - 33 %
Class of Fixed Asset
Plant and equipment
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 derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at
the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted
for transaction costs (where applicable). For the purpose of subsequent measurement, financial assets, other
than those designated and effective as hedging instruments, are classified into the following categories:
2727
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
fair value through profit or loss (FVTPL)
> amortised cost
>
> equity instruments at fair value through other comprehensive income (FVOCI)
> debt instruments at fair value through other comprehensive income (FVOCI).
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
The classification is determined by both:
>
>
the entity’s business model for managing the financial asset, and
the contractual cash flow characteristics of the financial asset.
Subsequent measurement of financial assets
(i)
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):
>
they are held within a business model whose objective is to hold the financial assets to collect its contractual
cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
>
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting
is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most
other receivables fall into this category of financial instruments.
(ii)
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect
and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial
assets whose contractual cash flows are not solely payments of principal and interest are accounted for at
FVTPL. All derivative financial instruments fall into this category, except for those designated and effective
as hedging instruments, for which the hedge accounting requirements apply. The category also contains an
equity investment. The Group accounts for the investment at FVTPL and did not make the irrevocable election
to account for the investment in unlisted and listed equity securities at fair value through other comprehensive
income (FVOCI). The fair value was determined in line with the requirements of AASB 9, which does not allow
for measurement at cost. Assets in this category are measured at fair value with gains or losses recognised in
profit or loss. The fair values of financial assets in this category are determined by reference to active market
transactions or using a valuation technique where no active market exists.
(iii)
Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable election at
inception to be measured at FVOCI. Under Equity FVOCI, subsequent movements in fair value are recognised
2828
BPH Energy I Annual Report 2020
in other comprehensive income and are never reclassified to profit or loss. Dividends from these investments
continue to be recorded as other income within the profit or loss unless the dividend clearly represents return
of capital. This category includes unlisted equity securities that were previously classified as ‘available-for-sale’
under AASB 139. Any gains or losses recognised in other comprehensive income (OCI) are not recycled upon
derecognition of the asset.
(iv)
Debt instruments at fair value through other comprehensive income (Debt FVOCI)
Financial assets with contractual cash flows representing solely payments of principal and interest and held
within a business model of collecting the contractual cash flows and selling the assets are accounted for at debt
FVOCI. The Group accounts for financial assets at FVOCI if the assets meet the following conditions:
>
they are held under a business model whose objective it is to “hold to collect” the associated cash flows and
sell financial assets; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
>
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the
asset.
Impairment of financial assets
AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses
– the ‘expected credit loss (ECL) model’. This replaced AASB 139’s ‘incurred loss model’. Instruments within the
scope of the new requirements included loans and other debt-type financial assets measured at amortised cost
and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan commitments
and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead
the Group considers a broader range of information when assessing credit risk and measuring expected credit
losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
> financial instruments that have not deteriorated significantly in credit quality since initial recognition or that
have low credit risk (‘Level 1’) and
> financial instruments that have deteriorated significantly in credit quality since initial recognition and whose
credit risk is not low (‘Level 2’).
‘Level 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
>
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are
recognised for the second category. Measurement of the expected credit losses is determined by a probability-
weighted estimate of credit losses over the expected life of the financial instrument.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract
assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls
in contractual cash flows, considering the potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking
information to calculate the expected credit losses using a provision matrix. The Group assess impairment of
trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped
based on the days past due.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.
2929
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless
the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are
measured at amortised cost using the effective interest method except for derivatives and financial liabilities
designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss
(other than derivative financial instruments that are designated and effective as hedging instruments).
(e)
Impairment of Assets
The Group reviews non-financial assets, other than deferred tax assets, at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount
is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for
use, the recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are
Grouped together into the smallest Group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or Groups of assets (the “cash-generating unit” or “CGU”).
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs
are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the
carrying amounts of the other assets in the unit (Group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or
no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
(f)
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.
3030
BPH Energy I Annual Report 2020
(g)
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.
(h)
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.
(i)
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.
(j)
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 9, 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 9.
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
3131
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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 9. The difference between the carrying amount of the
associate or joint venture at the date the equity method was discontinued, and the fair value of any retained
interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the
determination of the gains or loss on disposal of the associate or joint venture. In addition, the consolidated
entity accounts for all amounts previously recognised other comprehensive income in relation to that associate
or joint venture on the same basis as would be required if that associate or joint venture had directly disposed
of the related assets or liabilities. Therefore, if a gain or loss recognised in other comprehensive income by that
associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities,
the consolidated entity reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment)
when the equity method is discontinued.
(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”).
(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 90 days. Trade and
other payables are recognised at amortised cost.
(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 and the fair value
of shares and options issued to consultants is measured at the fair value of services received.
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.
3232
BPH Energy I Annual Report 2020
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 23).
(p)
Earnings per share
Basic earnings per share (“EPS”) is calculated as net profit / loss attributable to members, adjusted to exclude
costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average
number of ordinary shares, adjusted for any bonus element. Diluted earnings per share adjusts the figures used
in the determination of basic earnings per share to take into account the after income tax effect of interest and
other financing costs associated with dilutive potential ordinary shares, and the weighted average number of
additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential
ordinary shares.
(q)
Critical accounting estimates and judgments
The directors evaluate estimates and judgments incorporated into the financial report based on historical
knowledge and best available current information. Estimates 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 loan receivables of $43,564 (2019: $162,564) net of
expected credit loss provisions of $$1,358,895 (2019: $4,601,725). The Company recognized a doubtful debt
reversal of $2,929,199 in the reporting period (2019: expense of $2,889,033).
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. As a consequence of a legal settlement reached in August 2019 and
David Breeze’s confirmation as a director of Advent the Company has resumed significant influence over Advent
Energy Limited. The Company currently has a 22.3% direct interest in Advent, and, as part of the legal settlement
reached with MEC in August 2019, if at any time before 23 July 2021 Advent has less than 51 members then
MEC will, upon written request by BPH, execute an irrevocable proxy in favour of BPH in respect of all business to
be considered at any meeting of members of Advent. For a period of one year commencing from 6 August 2019
MEC must not sell or otherwise dispose of any shares it holds in Advent, other than by an in-specie distribution
to MEC if requested in writing to do so by Advent. If notice is given, MEC must do all that is required to effect and
support the In-Specie Distribution. Advent requested the in- specie distribution on 6 August 2019 but it has yet
to be actioned by MEC.
Key estimates - Investment in Molecular Discovery Systems
The investment in Molecular Discovery Systems Limited is equity accounted, refer to Note 10. The Company
recognized an impairment expense of $420,731 (2019: $Nil) to fully impair the carrying value of the investment
in Molecular Discovery Systems.
3333
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Key estimates - Investment in Patagonia Genetics Pty Ltd
The Company recognized a fair value loss of $250,000 (2019: $Nil) against the carrying value of the investment in
Patagonia Genetics Pty Ltd.
Key estimates - Investment in Cortical
The investment in Cortical is carried at fair value, refer to Note 9.
(r)
Application of New and Revised Accounting Standards
Standards and Interpretations in issue not yet adopted
The Directors have reviewed new accounting standards and interpretations that have been published that are
not mandatory for 30 June 2020 reporting periods. 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 likely to company accounting policies.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January
2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition
criteria as well as new guidance on measurement that affects several Accounting Standards. Where the
consolidated entity has relied on the existing framework in determining its accounting policies for transactions,
events or conditions that are not otherwise dealt with under the Australian Accounting Standards, the
consolidated entity may need to review such policies under the revised framework.
At this time, the application of the Conceptual Framework is not expected to have a material impact on the
consolidated entity’s financial statements.
Standards and Interpretations applicable to 30 June 2020
In the 12 month period ended 30 June 2020, 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.
AASB 16 Leases
The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 ‘Leases’ and
for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases
and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the
statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation
charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease
liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease
under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings
Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced
by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the
interest portion is disclosed in operating activities and the principal portion of the lease payments are separately
disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor
accounts for leases.
3434
BPH Energy I Annual Report 2020
There is no material impact to statement of profit or loss and other comprehensive income or net assets on the
adoption of this new standard in the current or comparative years as the consolidated entity has no leases to
which AASB 16 is applicable to.
2. Revenue
Revenue
Interest revenue: other entities
Interest revenue : cash accounts
Other Income
Loan establishment fees
3. Expenses Included in Profit / (Loss) for the Year
Fair value (loss) / gain
Fair value (loss) on listed investments
Fair value (loss) / gain on unlisted investments
Impairment expense
Molecular Discovery Systems Limited
Consolidated
2020
$
2019
$
240,074
169
240,243
6,210
6,210
(5,556)
(728,986)
(734,542)
420,731
420,731
276,422
1,805
278,227
17,625
17,625
(72,222)
352,594
280,372
-
-
4. Earnings per Share
Total earnings attributable to ordinary equity holders of the Company
Earnings used in the calculation of basic earnings per share and diluted
earnings per share
1,121,801
1,121,801
(3,012,798)
(3,012,798)
Earnings /(loss) per share (cents per share)
From continuing operations
Total basic earnings per share and diluted earnings per share
0.35
0.35
(1.68)
(1.68)
Number
Number
Weighted average number of ordinary shares outstanding during the
year used in calculating EPS
345,889,360
179,020,029
The Company completed a 1 for 10 share consolidation in April 2020 subsequent to shareholder approval. The
2019 earnings / (loss) per share calculation and weighted average number of ordinary shares outstanding during
the year used in calculating earnings / (loss) per share have been adjusted for this 1 for 10 consolidation.
3535
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
5. 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 -
Non Executive Director
Non Executive Director
Short term employee benefits
Post-employment benefits - superannuation
Consulting fee
Share based payments
Consolidated
2020
$
100,000
-
2019
$
99,335
665
108,000
110,000
25,771
20,000
233,771
230,000
Included in trade and other payables is current and former director and consulting fee accruals of $1,347,259 (30
June 2019: $1,310,055). .
Director
David Breeze
Charles Maling
Tony Huston
Directors who have previously resigned
Balance owing at 30 June 2019
Amount owing
30 June 2020 $
774,604
37,637
37,746
497,272
1,347,259
Key management personnel remuneration has been included in the Remuneration Report section of the
Directors Report.
6. Auditors’ Remuneration
Remuneration of the auditor of the parent entity for:
- auditing or reviewing the financial report
HLB Mann Judd
30,420
22,656
Consolidated
2020
$
2019
$
3636
BPH Energy I Annual Report 2020
7. Cash and Cash Equivalents
Cash at Bank and in hand
Consolidated
2020
$
2019
$
257,739
257,739
437,316
437,316
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
257,739
437,316
8. Trade and other Receivables
Current
Other receivables
9. Financial Assets
Current
Secured loans to other entities (interest free):
Advent Energy Ltd (refer Note 10)
Cortical Dynamics Limited
Investments in listed entities
MEC Resources Ltd (Level 1)
Non - current
32,675
32,675
20,969
20,969
6,760
14,582
22,222
43,564
162,564
-
27,778
190,342
Investments in unlisted entities - Cortical Dynamics Limited (Level 2)
3,455,378
501,543
Investments in unlisted entities – Advent Energy Ltd (a) (Level 2)
Investments in unlisted entities – Patagonia Genetics Pty Ltd (Level 3)
-
-
2,006,000
-
3,455,378
2,507,543
During the period a fair value loss of $250,000 has been recognised against the investment of $250,000 in
Patagonia Genetics Pty ltd.
3737
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Loan receivables are stated net of the following provisions:
Cortical Dynamics Limited (c)
Gross receivable – secured
Gross receivable – unsecured
Less provision for impairment
Molecular Discovery Systems Limited (b)
Gross receivable
Less provision for impairment
Consolidated
2020
$
-
2019
$
14,582
2,290,538
-
-
1,026,670
(3,317,208)
14,582
-
1,358,895
1,284,517
(1,358,895)
(1,284,517)
-
-
(a) 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. As a consequence of a legal settlement reached in August
2019 and David Breeze’s confirmation as a director of Advent the Company has resumed significant influence
over Advent Energy Limited and it has been treated as an associate again from that date.
During the period the Company converted $162,286 in loans due from Advent into shares in that Company.
(b) The Company has an unsecured loan with MDS for $650,700 as well as a convertible loan agreement with
MDS at an interest rate of 7.69% per annum.
The convertible 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 January 2022. As at reporting
date this loan had been drawn down by an amount of $708,195, including capitalised interest (2019:
$649,818). Interest charged on the loan for the period was $58,378 (2019: $53,496).
(c) During the period the Company converted $3,746,451 in loans and short term amounts due from Cortical
into shares in that Company. Consequently a reversal of an expected credit loss provision of $3,317,208 was
recognised during the year on the loans with Cortical.
3838
BPH Energy I Annual Report 2020
10. Investments Accounted for Using 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
Principal Activity
%
2020
20%
2019
20%
Biomedical Research
Advent Energy Limited
Australia
22.3%
22.6%
Oil and Gas Exploration
Shares in Associates
Advent Energy Limited (i)
Molecular Discovery Systems Limited (ii)
Molecular Discovery Systems Limited
Impairment provision (ii)
Consolidated
2020
$
2019
$
2,153,304
-
420,731
436,541
(420,731)
-
2,153,304
436,541
Consolidated
Advent
MDS
30 June 2020
$
30 June 2019
$
30 June 2020
$
30 June 2019
$
32
3,901,465
-
3,901,465
-
-
-
-
-
-
(79,047)
(78,371)
-
-
(79,047)
(78,371)
Revenue
Profit / (loss) for the period
Other comprehensive income for
the period
Total comprehensive income /
(loss) for the period
Advent 2020 numbers are from
6th August 2019
3939
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Consolidated
Advent
30 June 2020
$
Advent
30 June 2019
$
MDS
30 June 2020
$
MDS
30 June 2019
$
847,611
14,060,190
184,641
4,824,343
9,898,817
-
-
-
-
-
1,009
-
908,747
717,660
955
-
888,023
659,282
(1,625,398)
(1,546,350)
30 June 2020
$
30 June 2019
$
30 June 2020
$
30 June 2019
$
2,153,304
-
-
2,153,304
-
2,006,000
-
162,287
(14,983)
2,153,304
-
-
-
-
-
-
-
-
-
-
(325,080)
1,487,291
(1,162,211)
(309,270)
1,487,291
(741,480)
-
436,541
436,541
464,547
-
(420,731)
-
(15,810)
-
-
-
-
(28,006)
436,541
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Share of the group’s ownership
interest in associate
Goodwill
Other adjustments
Carrying value of the group’s
interest in associate
Opening balance
Reclassification of fair value of
investment
Impairment expense
Conversion of debt to equity
Share of associates loss
Closing balance
4040
BPH Energy I Annual Report 2020
(i) As of 1 January 2017 a judgement was made that, despite owning 27% of Advent Energy Limited (“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. If an entity holds, directly
or indirectly, twenty per cent or more of the voting power of an investee it is presumed that the entity has
significant influence, unless it can be clearly demonstrated that this is not the case.
On 6 August 2019 the Company entered into a Deed of Settlement and Release (“Deed”) with Advent, MEC
Resources Limited (“MEC”), Grandbridge Limited (“GBA”), Trandcorp Pty Ltd (“Trandcorp”) and Mr David Breeze
and other relevant parties. As a condition of this Deed it was agreed that Messrs Matthew Battrick and Tobias
Foster would appoint Messrs Steven James, Tony Huston and Thomas Fontaine as directors of Advent, and
that Messrs Matthew Battrick and Tobias Foster would then resign from the Board of Advent. The incoming
directors have since confirmed and acknowledged Mr David Breeze as a duly elected director of Advent.
The existence of significant influence by an BPH over Advent from the date of the Deed is evidenced by
Mr David Breeze being the Managing Director of both BPH and Advent, MEC no longer have a MEC Board
position, and, if at any time before 23 July 2021 Advent has less than 51 members then MEC, who currently
holds 49% of Advent will, upon written request by BPH, execute an irrevocable proxy in favour of BPH in
respect of all business to be considered at any meeting of members of Advent. As a consequence the
Company regained significant influence over Advent and Advent has once again been recognised as an
associate of BPH from 6 August 2019.
In the June 2018 year Advent’s management at that time assessed capitalised costs for impairment by
reference to the value implied for the PEP 11 permit by virtue of a conditional farmin agreement entered
into with RL Energy Pty Ltd. Based on this assessment the asset was considered to be impaired and an
adjustment to the fair value was booked at 30 June 2018. This farmin agreement was terminated on 17
September 2019 and therefore the writedown of $18,780,680 booked to the fair value at 30 June 2018 was
pre-emptive. In the current period the Advent directors have assessed the valuation of the PEP 11 permit
against what they consider a comparable transaction with the result that the 2018 year PEP 11 impairment
has been reversed to the extent of $6,882,247 resulting in the $14,893 share of an associate loss recognized
by BPH in the year net of notional goodwill of $933,354 not brought to account on recognition of Advent as
an associate again from 6 August 2019.
Advent is continually seeking and reviewing potential sources of both equity and debt funding. Advent
is now embarking on a fresh marketing campaign to attract new investors and/or joint venture partners.
Management has confidence that a suitable outcome will be achieved however there is no certainty at this
stage that this will result in further funding being made available. Asset Energy Pty Ltd has invested over $25
million in the PEP11 title in recent history and, along with its JV partner Bounty Oil and Gas NL, is committed
to continuing to explore for and ultimately exploit any petroleum accumulations which may be identified in
this title area. If Advent is unable to source further funding for each of PEP11, RL1 and EP 386 each of these
permits are at risk.
The above conditions indicate a material uncertainty that may affect the ability of Advent to realise the
carrying value of the exploration assets in the ordinary course of business and may affect the ability of the
Company to realise the carrying value of its loan receivable and its investment in Advent in the ordinary
course of business.
(ii) The carrying value of Molecular Discovery Systems Limited has been fully impaired during the period. The
Molecular Discovery Systems Limited 30 June 2020 financial statements are still in the process of being
audited.
4141
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Consolidated
2020
$
2019
$
11. Income Tax Expenses
(a) The prima facie tax on the profit / (loss) from operations before income tax
is reconciled to the income tax as follows:
Accounting profit / (loss) before tax
1,121,263
(3,013,043)
Prima facie tax / (benefit) on the profit / (loss) from operations before income
tax at 30% (2019: 30%)
336,379
(903,913)
Add tax effect of:
Tax effect of revenue losses and temporary differences not recognised
(523,856)
903,913
Income tax benefit not brought to account
Income tax expense recognised
(b) Tax losses
187,477
-
-
-
Unused tax losses for which no deferred tax asset has been recognised
10,328,772
10,225,453
Potential tax benefit at 30% (2019: 30%)
3,098,632
3,067,636
12. 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 90 days
13. Financial Liabilities
Current
Borrowings – unsecured interest free
174,565
513,546
849,987
72,463
538,989
812,783
1,538,098
1,424,235
121,086
121,086
200,086
200,086
4242
BPH Energy I Annual Report 2020
Consolidated
2020
$
2019
$
14. Issue Capital
373,236,818 (2019: 2,543,277,658) fully paid ordinary shares
46,716,896
45,574,507
(a) Ordinary Shares
Consolidated
Consolidated
2020
$
2019
$
2020
Number
2019
Number
At the beginning of reporting period
45,574,507
44,135,442
2,543,277,658
966,187,417
Shares issued for cash
Share issue costs
827,547
1,175,504
470,338,031 1,175,504,193
(96,762)
(153,025)
-
-
Shares issued in lieu of consulting fees
136,604
138,050
117,678,247
123,050,000
Shares issued as set-off against loans
payable and payables
Shares issued in exchange for ordinary
shares in listed entity
Shares issued as partial acquisition of
investment
Shares issued as introductory fee for
business transaction
90,000
158,536
64,260,012
158,536,048
-
100,000
-
100,000,000
150,000
15,000
-
-
150,000,000
15,000,000
-
-
Shares issued as director remuneration
20,000
20,000
20,000,000
20,000,000
Reduction in shares from a 1 for 10 share
consolidation
-
-
(3,007,317,130)
-
At reporting date
46,716,896
45,574,507
373,236,818 2,543,277,658
Fully paid ordinary shares do not have a par value, have one vote per share, and carry the right to dividends. The
market price of the Company’s ordinary shares at 30 June 2020 on ASX was 2.3 cents per share.
(b)
Options
Refer to Note 21 for options on issue at the end of the financial year. There were no options exercised during the
year (2019: 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 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 2020 and 30 June 2019 is as follows:
4343
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Cash and cash equival Cash and cash equivalents
Other current assets
Trade receivables and financial assets
Trade payables and financial liabilities
Net working capital position
Consolidated
2020
$
2019
$
257,739
437,316
360
33,869
76,239
211,311
(1,659,184)
(1,624,321)
(1,324,846)
(941,825)
Refer to Note 1 for further details of the Group’s financial position and plans to manage the working capital deficit at 30 June 2020.
15. Reserves
Options Reserve (a)
(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
16. Controlled Entities
526,361
526,361
508,436
508,436
508,436
494,014
17,925
14,422
526,361
508,436
Name of Entity
Principal Activity
Country of
Incorporation
Ownership Interest
%
Parent Entity
BPH Energy Ltd
Subsidiaries
Diagnostic Array Systems Pty Ltd
Investment
Australia
2020
20189
BioMedical Research Australia
51.82
51.82
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and not disclosed in this note.
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 $1,117 (2018: loss of $509) of which $538 (2019: $245) is
attributable to minority interests. DAS’s total assets at year-end were $251 (2019: $218), total liabilities $365,431
(2019: $364,281), and net equity negative $365,180 (2019: negative net equity $364,063).
4444
BPH Energy I Annual Report 2020
17. Cash Flow Information
(a)
Reconciliation of cash flow from operations with loss after income tax:
Operating profit / (loss) after income tax
1,121,263
(3,013,043)
Consolidated
2020
$
2019
$
Fair value loss / (gain)
Impairment expense
Interest revenue on loans
Derecognition of financial liability
Share based payments
Doubtful debts (reversed) / expense
Share of Associates’ losses
Changes in net assets and liabilities,
Decrease / (increase) in other assets
(Increase) / decrease in trade and other receivables
Increase in trade payables and accruals
Increase in trade payables and accruals
Net cash (used in) operating activities
734,542
420,731
(280,372)
-
(240,074)
(253,992)
-
171,425
(83,956)
82,422
(2,929,199)
2,889,033
30,793
28,006
33,509
(11,707)
164,422
(29,818)
(1,310)
175,603
(504,295)
(487,427)
(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
257,739
437,316
(c) 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
Loan derecognised
Balance at 30 June
200,086
(79,000)
-
121,086
500,292
(130,000)
(83,555)
(86,451)
200,086
4545
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
18. Subsequent Events
On 23 July 2020 the Company announced it had completed a placement and that it intends to undertake a
non-renounceable rights issue.
The placement consisted of 29,987,500 fully paid ordinary shares at an issue price of $0.015 per share, together
with one free attaching option with an exercise price of $0.05 per share and an expiry date of 29 July 2022 for
every two placement shares subscribed for and issued to sophisticated and professional investors under the
Company’s existing placement capacity, raising $449,813 in cash.
In August 2020 the Company completed the 2 for 5 non-renounceable rights issue at $0.015 per share together
with one free attaching option with an exercise price of $0.05 per share and an expiry date of 29 July 2022
for every two shares subscribed for and issued, raising $1,685,752 in cash and $250,518 in in extinguishment
of amounts owed to directors. In addition, a further 16,012,566 shortfall shares (representing $241,539) and
attaching options under the non-renounceable rights issue will, subject to shareholder approval at a meeting
anticipated to be held in October 2020, be issued in extinguishment of amounts owed to directors.
There are no other 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.
19. 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.
4646
BPH Energy I Annual Report 2020
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.
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
$
2020 Consolidated
Assets
Cash and cash equivalents
0.05
257,739
Trade and other
receivables
Financial assets
Liabilities
Trade and sundry
payables
Financial liabilities
2019 Consolidated
Assets
-
-
257,739
-
-
-
Weighted
Effective
Interest
Rate
%
Floating
Interest
Rate
$
Fixed
Interest
Rate
1 Year
or less
Cash and cash equivalents
0.46
437,316
Trade and other
receivables
Financial assets
9.00
Liabilities
Trade and sundry payables
Financial liabilities
-
-
-
437,316
-
-
-
4747
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
257,739
32,675
32,675
3,498,942
3,498,942
3,531,617
3,789,356
1,538,098
1,538,098
121,086
121,086
1,659,184
1,659,184
Fixed
Interest
Rate
Non-
Interest
Bearing
1 to 5 Years
$
Total
$
-
-
-
-
-
-
-
-
437,316
20,969
20,969
2,697,885
2,697,885
2,718,854
3,156,170
1,424,235
1,424,235
200,086
200,086
1,624,321
1,624,321
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
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.
No financial assets and financial liabilities are readily traded on organised markets in standardised form.
Consolidated 2020
Consolidated 2019
Carrying
Amount
$
Fair Value
$
Carrying
Amount
$
Fair Value
$
Financial Assets
Investment in unlisted entities
3,455,378
3,455,378
2,507,543
2,507,543
Investment in listed entities
22,222
22,222
27,778
27,778
Financial assets and trade and other
receivables
54,017
54,017
183,533
183,533
3,531,617
3,531,617
2,718,854
2,718,854
Financial Liabilities
Other loans and amounts due
121,086
121,086
200,086
200,086
Trade payables
1,538,098
1,538,098
1,424,235
1,424,235
1,659,184
1,659,184
1,624,321
1,624,321
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 profit (loss)
Increase in interest rate 1%
Decrease in interest rate by 0.5%
4848
BPH Energy I Annual Report 2020
Consolidated
2020
$
2,577
(1,289)
2019
$
4,373
(1,661)
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
$
30 June 2020
Financial liabilities
Trade and other
payables
1,538,098
1,538,098
174,565
1,363,533
Unsecured loans
121,086
121,086
-
121,086
1,659,184
1,659,184
174,565
1,484,619
Contractual cash flows
Carrying
amount
$
Total
$
2 mths
or less
$
2-12 mths
$
1-2 years
$
1,424,235
1,424,235
72,463
1,351,772
30 June 2019
Financial liabilities
Trade and other
payables
Unsecured loans
200,086
200,086
-
200,086
1,624,321
1,624,321
72,463
1,551,858
(c) Fair value measurements recognised in the statement of financial position
-
-
-
-
-
-
2-5 years
$
-
-
-
-
-
-
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.
4949
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
30 June 2020
Financial assets at fair value through profit and loss
- Investments in unlisted entities
- Investments in listed entities
Total
30 June 2019
$
Level 1
$
Level 2
$
Level 3
$
Total
-
3,455,378
-
3,455,378
-
-
-
3,455,378
22,222
3,477,600
$
Level 2
$
Level 3
$
Total
22,222
22,222
$
Level 1
Financial assets at fair value through profit and loss
- Investments in unlisted entities
- Investments in listed entities
Total
-
2,507,543
27,228
27,778
-
2,507,543
-
-
-
2,507,543
27,228
2,535,321
Reconciliation of fair value measurements of financial assets:
Opening balance
(Disposal) / acquisition of investments
Conversion of debt to equity
Recognition as an associate
Fair value adjustment
Closing balance
Opening balance
Acquisition of investments
Fair value adjustment
Closing balance
20.
Related Party Transactions
(a)
Equity interests in controlled entities
2020 ($)
Level 1
2020 ($)
Level 2
27,778
2,507,543
2020 ($)
Level 3
-
-
-
-
(313,630)
250,000
3,746,451
(2,006,000)
-
-
(5,556)
22,222
(478,986)
(250,000)
3,455,378
-
2019 ($)
Level 1
2019 ($)
Level 2
-
2,006,000
2019 ($)
Level 3
148,949
-
100,000
(72,222)
-
501,543
(148,949)
27,778
2,507,543
-
The % of ordinary shares held in controlled entities are disclosed in Note 16 to the financial statements.
5050
BPH Energy I Annual Report 2020
(b)
Directors’ remuneration
Details of directors’ remuneration and retirement benefits are located in the Directors Report and Note 5.
Held as at the date of this report by directors and their director-related entities
in BPH Energy Limited
Ordinary Shares
Share options
2020
Number
2019
Number
58,097,550
330,722,480
9,899,651
4,000,000
The June 2020 numbers are post a 1 for 10 share consolidation completed in April 2020. Refer to the
Remuneration Report in the Directors’ Report for shares and 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 (2019: $98,000), included as part
of his fees in the Remuneration Report.
(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 $128,640 in administration
and service fees (2019: $139,140). At balance date $121,086 (2019: $200,086) was payable to Grandbridge.
Grandbridge’s 100% subsidiary, Grandbridge Securities Limited, charged the Company $Nil (2019: $17,790) in
respect of the management of a share issue.
David Breeze was a Director of MEC Resources Limited (“MEC”) from April 2005 and was removed from the ASIC
register by MEC directors on 23 November 2016. He has neither resigned nor been removed by shareholders and
disputes the actions taken by the Directors of MEC.
(f) Receivables, payables and transactions with associates
Molecular Discovery Systems Limited (“MDS”) is a related party of the Company. Refer to Notes 9 and 10 for
the Company’s loan receivable and investment. During the period the Company charged MDS $58,378 (2019:
$53,495) in loan interest on a convertible loan with a balance of $708,195 at year end (2019: $649,818). The
Company has raised a provision against the full amount of this loan. In addition, a loan receivable exists between
the consolidated entity and MDS of $650,700 (2019: $634,700). This amount is unsecured, non-interest bearing
and repayable on demand. The Company has raised a provision against the full amount of this loan. In addition
the Company recognized an impairment expense of $420,731 (2019: $Nil) to fully impair the carrying value of its
investment in MDS.
Advent Energy is a related party of the Company. Refer to Notes 9 and 10 for the Company’s investment and
loan receivables.
(g) Other Interests
Refer to Note 9 for the Company’s investment in and loan receivables with Cortical. During the period the
5151
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
Company charged Cortical $187,906 (2019: $240,793) in loan interest and fees.
21. Share-Based Payments
The following share-based payment arrangements existed at 30 June 2020:
Total number
Grant Date
Exercise price
Fair value at
grant date
Expiry date
200,000
200,000
400,000
3,000,000
2,000,000
27 November 2015
23 November 2016
29 November 2017
24 June 2019
9 August 2019
1,200,000
29 November 2019
600,000
7,600,000
20 April 2020
$0.20
$0.20
$0.20
$0.02
$0.02
$0.02
$0.02
$0.0070
$0.0030
$0.0004
$0.0005
$0.0005
$0.0005
$0.0042
30 November 2020
30 November 2021
30 November 2022
24 June 2024
9 August 2024
30 November 2024
20 June 2024
All options granted are to purchase ordinary shares in BPH Energy Limited, which confer a right of one ordinary
share for every option held. 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:
Issue date
9 August 20191
29 November 20191
20 April 2020
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividends
Risk-free interest rate
Fair value at grant date
$0.001
$0.002
75%
5 years
Nil
2.5%
$9,615
$0.001
$0.002
75%
5 years
Nil
2.5%
$5,771
$0.01
$0.02
75%
4 years
Nil
2.5%
$2,539
5252
BPH Energy I Annual Report 2020
1. Issued pre a 1 for 10 consolidation associated with a 1 for 10 share consolidation completed in April 2020.
Consolidated Group
2020
2019
Number of
Options
Weighted
Average
Exercise
Price
$
Number of
Options
Weighted
Average
Exercise
Price
$
Outstanding at the beginning of the year
47,795,000
0.01
17,795,000
Expired
Issued
(9,795,000)
(0.002)
-
32,000,000
0.002
30,000,000
1 for 10 consolidation
(63,000,000)
(0.002)
Issued
Outstanding at year-end
Exercisable at year-end
600,000
7,600,000
7,600,000
0.02
0.04
0.04
-
-
47,795,000
47,795,000
0.02
-
0.002
-
-
0.01
0.01
No options were exercised during the year (2019: Nil). Included under share based payments in the profit and
loss is $171,425 for share based expense (2019: $82,422) of which $17,925 (2019: $14,422) relates to options
granted and $153,500 (2019: $68,000) relates to equity.
22.
Commitments and Contingencies
At reporting date there are no capital commitments other than those of Advent Energy Limited, an entity in
which the Company currently has a 22.3% direct interest as disclosed in Note 10.
The Company is a party to the following legal actions.
In November 2019 the Company announced that following a mediation in the Supreme Court of Western
Australia that there has been a resolution of residual legal issues meaning there was then no active litigation
against the Company.
The settlement included litigation previously announced as follows:
(a) Supreme Court of WA proceedings being a defamation proceeding against Hock Goh, Deborah Ambrosini,
Heng Yu, Darryl Moore and Peter Stern. This matter was dismissed with each party to bear their own costs
and with no admission of liability by any party.
(b) A standstill agreement relating to Directors fees claims by Hock Goh, Deborah Ambrosini and Kevin
Hollingsworth against the Company, Grandbridge Limited and Advent Energy Limited. This standstill
agreement concluded on 15 September 2020. In relation to BPH in Goh & Ors v BPH Energy Ltd & Anor
- District Court of WA CIV 4264 of 2019 the matter has by consent been referred to mediation which is
set down for the 1 December 2020.In this matter Kevin Hollingsworth has discontinued his claim against
Grandbridge leaving Goh and Ambrosini as the remaining claimants. If the matter continues after
mediation BPH will defend and counterclaim. The claim had been also previously pursued in the District
Court of New South Wales proceedings 2019/00227022.The applicants were unsuccessful in their attempt
to have the matter heard in NSW and total costs of $29,168 were ordered against Goh Hock, Ambrosini and
Hollingsworth .
5353
BPH Energy I Annual Report 2020
HEALTH TECHNOLOGY RESOURCES
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
(c) In November 2019 it became apparent that the Company’s previous management, who were also the
management of MEC prior to the Deed entered into in August 2019 between the Company and other
relevant parties, had lodged a Research and Development Tax Incentive claim for the year ending 30 June
2018 in the name of MEC in respect of work performed on the PEP 11 permit, the majority of which costs
had been borne by Advent. MEC owned only 53% of Advent.
MEC noted in their December 2018 quarterly Appendix 4C cash flow report lodged with ASX on 31 January
2019 that they had been “granted a Research and Development (“R & D”) incentive in the quarter ended 31
December 2018 after recent seismic activities within PEP 11. An amount of $384k was received under the
scheme in Q2”. Subsequent to the Deed the Company’s new management questioned why the R & D claim
not been submitted in the name of Advent. As a result of these enquiries the $728,563 costs incurred by
Advent in respect of the PEP 11 June 2018 R & D claim, together with $68,408 costs in respect of a proposed
June 2019 R & D claim by MEC, have been recharged to MEC and are showing as a current asset of the
Company at 30 June 2020. The Company has commenced legal action to recover amounts due from MEC.
23.
Operating Segment
Operating segments have been identified on the basis of internal reports of the Company that are regularly
reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess
their performance. The chief operating decision maker has been identified as the Board of Directors. On a
regular basis, the board receives financial information on the consolidated entity on a basis similar to the
financial statements presented in the financial report, to manage and allocate their resources.
The consolidated entity’s only operating segment is investments. The consolidated entity holds investments
in three principal industries and these are biotechnology, and oil and gas exploration and development, and
medicinal cannabis.
Company
5454
BPH Energy I Annual Report 2020
24. Parent Entity Disclosures
Financial Position
Assets
Current assets
Non-current assets
Total asset
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued Capital
Accumulated losses
Option Reserve
Total equity
Financial Performance
Profit / (loss) after tax for the year
Other comprehensive income
Total comprehensive profit / (loss)
2020
$
2019
$
334,088
682,277
5,628,563
2,963,289
5,962,651
3,645,566
1,678,815
1,643,307
-
-
1,678,815
1,643,307
46,716,896
45,574,507
(42,959,421)
(44,080,684)
526,361
508,436
4,283,836
2,002,259
1,121,263
(3,013,043)
-
-
1,121,263
(3,013,043)
5555
BPH Energy I Annual Report 2020
DI RECTOR’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 20 to 55 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 2020 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 30 September 2020
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BPH Energy I Annual Report 2020
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 Group”), which comprises the consolidated statement of financial position as at 30
June 2020, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, 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 Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2020 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 Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report, which indicates that a material uncertainty exists
that may cast significant doubt on the entity’s ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
Material uncertainty related to the carrying value of the investment in Advent Energy Limited
We draw attention to Note 10 in the financial report, which indicates that a material uncertainty in
relation to the Group’s ability to realise the carrying value of its investment in Advent Energy Limited
and subsidiaries in the ordinary course of business . Our opinion is not modified in respect of this
matter.
(cid:887)(cid:887)(cid:3)
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BPH Energy I Annual Report 2020
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 and the material uncertainty related to the carrying value in
Advent Energy Limited 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
Investments accounted for using the equity method
Note 10
As at 30 June 2020, the carrying value of the
investments accounted for using the equity method was
$2,153,304. During the year, the Group fully impaired
its investment in Molecular Discovery Systems Limited
and regained significant influence of Advent Energy
Limited and reclassified the investment from fair value
through profit or loss to investments accounted for
using the equity method. Additionally, the Group
converted a loan receivable from Advent Energy
Limited into to equity.
We considered this to be a key audit matter as it is
important to users’ understanding of the financial
statements as a whole and involved significant levels of
judgement in relation to the concept of significant
influence.
Our procedures included, but were not
limited to;
- We considered if the Group had
regained significant influence over
the investment;
- We reviewed the accounting for the
reclassification of the investment
from fair value through profit or loss
to investments accounted for using
the equity method;
- We considered if that any notional
goodwill in excess of cost could be
recognised;
- We have agreed the share of loss to
the audited financial statements;
- We have reviewed management’s
assessment
the
to
investment in Molecular Discovery
Systems Limited; and
impair
- We reviewed the disclosures made
in the financial statements; and
- An emphasis of matter is included in
relation
of
investment and loans in Advent
Energy Limited.
recoverability
to
Valuation of financial assets
Notes 9
As at 30 June 2020, the Group had financial assets of
loan receivables with a carrying value $21,342 and
financial assets at fair value of $3,727,600 at balance
date. During the year, the Group recorded a fair value
loss of $484,542 on its investments and reversed
doubtful debts provisions on its loan receivables of
$2,929,119.
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 and expected
credit losses.
Our procedures included but were not
limited to the following:
- We considered the ability of the
other party to repay its loan with the
consolidated entity to determine if
any additional provisions were
required;
- We assessed the Group’s valuation
of individual investment holdings.;
- For investments where there was
less or little observable market data,
including
level 3
level 2 and
holdings as disclosed in note 19, we
obtained and assessed other
relevant valuation data; and
- We reviewed the disclosures made
in the financial statements.
(cid:887)(cid:888)(cid:3)
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BPH Energy I Annual Report 2020
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 Group’s annual report for the year ended 30 June 2020, 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.
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 Group
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 Group
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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
-
(cid:887)(cid:889)(cid:3)
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BPH Energy I Annual Report 2020
-
-
-
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 Group’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 Group 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.
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 within the directors’ report for the year ended
30 June 2020.
In our opinion, the Remuneration Report of BPH Energy Limited for the year ended 30 June 2020
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
30 September 2020
B G McVeigh
Partner
(cid:887)(cid:890)(cid:3)
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BPH Energy I Annual Report 2020
ADDITIONAL SECURITIES EXCHANGE INFORMATION
for the year ended 30 June 2020
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 29 September 2020
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
46,493,714
%
8.48%
2.
(a) Distribution of Shareholders
Range of Holding
Shareholders
Number Ordinary Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
1,026
550
253
1,427
697
3,953
340,906
1,402,797
2,058,670
61,417,150
483,492,176
548,711,699
The number of shareholders holding unmarketable parcels was1,700.
(b) Distribution of Listed Option Holders
Range of Holding
Option Holders
Number of Options
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
196
111
130
372
108
917
41,264
335,107
1,038,603
13,335,257
57,843,634
72,593,865
The number optionholders holding unmarketable parcels ws 492.
(c) Distribution of Unlisted Option Holders
Range of Holding
100,001 and over
Option Holders
Number of Options
7,300.000
7,300.000
9
9
6161
BPH Energy I Annual Report 2020
%
0.06%
0.26%
0.38%
11.19%
88.11%
100%
%
0.06%
0.46%
1.43%
18.37%
79.68%
100%
%
100.00
100.00
ADDITIONAL SECURITIES EXCHANGE INFORMATION
for the year ended 30 June 2020
BPH ENERGY LIMITED AND IT’S CONTROLLED ENTITIES
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.
6.
Twenty Largest Shareholders as at 29 September 2020
The names of the twenty largest shareholders of the ordinary shares of the Company are:
Name
Trandcorp Pty Ltd
Jgm Property Investments Pty Ltd
Ms Chunyan Niu
Protax Nominees Pty Ltd
Hongmen Pty Ltd
Mr Bin Liu
Citicorp Nominees Pty Limited
Mr Anthony Huston
Bujo Pty Ltd
Patagonia Funds Pty Ltd
Mr Sufian Ahmad
Trandcorp Pty Ltd
Miss Sandra Joy Feeley
Jlm Corporation Pty Ltd
Kew Superannuation Fund Pty Ltd
Thirteenth Cinsaut Pty Ltd
Tre Pty Ltd