ANNUAL FINANCIAL REPORT
FOR THE FINANCIAL YEAR ENDED
31 DECEMBER 2016
CONTENTS
Corporate Directory
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit and 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 Shareholders’ Information
PAGE
2
3
9
14
15
23
24
25
26
27
52
53
57
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 1
CORPORATE DIRECTORY
NON-EXECUTIVE CHAIRMAN
Michael Fry
MANAGING DIRECTOR
David Prentice
NON-EXECUTIVE DIRECTOR
Loren King
COMPANY SECRETARY
Loren King
REGISTERED OFFICE
C/- Cicero Corporate Services Pty Ltd
Suite 9, 330 Churchill Avenue
Subiaco WA 6008
POSTAL ADDRESS
PO Box 866
Subiaco WA 6904
PRINCIPAL PLACE OF BUSINESS
Suite 9, 330 Churchill Avenue
Subiaco, WA 6008
Tel: (08) 6489 1600
Fax: (08) 6489 1601
Email: info@brookside-energy.com.au
WEBSITE
www.brookside-energy.com.au
AUDITORS
HLB Mann Judd (WA Partnership)
Level 4, 130 Stirling Street
Perth WA 6000
BANKERS
Commonwealth Bank of Australia
150 St Georges Terrace
Perth WA 6000
SHARE REGISTRY
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
Telephone: +61 8 9315 2333
Facsimile: +61 8 9315 2233
SECURITIES EXCHANGE LISTING
Australian Securities Exchange
Level 40, Central Park
152-158 St George's Terrace
Perth WA 6000
ASX CODE
BRK (Ordinary Shares)
BRKO (Options)
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 2
DIRECTORS’ REPORT
The Directors submit their report for the Company and its subsidiary (Group or Company) for the
financial year ended 31 December 2016. In order to comply with the provisions of the Corporations
Act, the directors report is as follows:
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the date
of this report are as follows. Directors were in office for the entire period unless otherwise stated.
Board of Directors
Name
Michael Fry
David Prentice
Loren King
Position
Independent Chairman
Managing Director
Non-Executive Director
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
The Group’s principal activities during the year were the exploration and appraisal of, and
development and production of, oil and gas.
OPERATING RESULT
The after-tax loss for the Group for the financial year ended to 31 December 2016 amounted to $0.4m
(2015: $2.2m).
DIVIDENDS
There were no dividends paid or recommended during or subsequent to the financial year ended 31
December 2016 (2015: Nil).
REVIEW OF OPERATIONS
During the year, the Company continued to pursue a strategy aimed at building value per share by
leveraging the expertise, experience and contacts of the Board and its partner and manager of US
operations, Black Mesa Production LLC (Black Mesa). The Black Mesa team has identified an
opportunity to secure a position in the world class STACK Play in Oklahoma. The Company is
capitalising on a short window in which to build a material premier asset position in this high-margin
repeatable play.
The 12-month period ending 31 December 2016 was important for the Group with key elements critcial
to the implementation of the Company’s strategic plan in place by year end and the process of
securing and developing a material acreage position in a world-class, high margin repeatable (oil
and gas) resource play well underway.
With the agreements with Black Mesa executed, a suitably qualified and experienced executive team
on the ground in Tulsa and an opportunity in the STACK Play in Oklahoma identified, the Company
commenced work to acquire interests in acreage that has the capacity to deliver suitable rates of
return at the current forward strip for oil and gas. These efforts focussed on both direct leasing to
secure non-operated working interest leasehold acreage as well as the acquisition of mineral royalty
acreage.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
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DIRECTORS’ REPORT
The Company made its first acquisition in March 2016, with the RA Minerals Acquisition closed in Blaine
County, Oklahoma. The Company subsequently announced several non-operated working interest
leasehold acquisitions (also in Blaine County), culminating in the announcement that approximately
500 acres had been secured (inclusive of the ~100 acres secured via the RA Minerals Acquisition) in
the core of the world-class STACK Play.
Mid-year the Company secured another key element in the implementation of its strategic plan with
the announcement that it had successfully secured funding (via an off balance sheet joint venture
structure) for the initial drilling and completion capital required for the development of its STACK
acreage (the STACK-A Joint Venture).
In July 2016 the Company announced that it had reached an in-principle agreement for a joint
venture between Merchant Funds Management Pty Ltd (or nominees) (Merchant) and Brookside’s
wholly owned subsidiary BRK Oklahoma Holdings, LLC (BRK Oklahoma). The proposed joint venture to
be formed and funded for the purpose of drilling and completing oil and gas wells in the STACK Play.
Under the STACK-A Joint Venture, BRK Oklahoma is to contribute its non-operated working interest in
certain oil and gas wells to be drilled within its leasehold in the STACK Play (Joint Venture Wells).
Merchant is to provide up to US$3,500,000 in loan funding to the joint venture to fund BRK Oklahoma’s
share of drilling and completion costs on up to ten (10) Joint Venture Wells in the STACK play.
The unique structure of the proposed joint venture enables the Group to capture value and deliver
growth through the addition of cash flow, oil and gas reserves and importantly very substantial future
development potential from proven undeveloped locations without dilution that would come from
equity capital at this point in the Company’s life.
As at the date of this report the STACK-A Joint Venture had advanced USD1,144,790.84 to fund the
Group’s participation in five wells in the core of the STACK Play.
The Company is now participating in a total of twelve horizontal wells in the core of the world-class
STACK Play (see Table below), with working interests ranging from approximately 1% to 9% (consistent
with the Company’s stated strategy of accumulating minority non-operated working interest positions
in as many development units as possible while the leasing opportunity continues).
Well Name
Operator
WI Acres Status
Strack 1-2-11XH
Marathon Oil, Co.
12.5 First sales exp. June Qtr. 2017
Ike 1-20-17XH
Continental Resources, Inc.
38.0 Drilling
Davis 1-8-1611MH
Triumph Energy, LLC
7.5 Drilling
Herring 1-33 1513MH
Triumph Energy, LLC
57.2 Spudding March 2017
HR Potter 1511 1-3-34XH
Marathon Oil, Co.
10.2 Spudding April 2017
Sphinx 26-16N-11W 1H
Devon Energy Corp.
40.0 Spudding April 2017
Landreth BIA 1-14H
Marathon Oil, Co.
8.5 Permitted
Watonga 1-19H
Highmark Resources, LLC
1.9 Permitted
Scoville 1-17-20XH
Continental Resources, Inc.
47.4 Permitted
Kevin 1-20-17XH
Continental Resources, Inc.
21.1 Permitted
Henry Federal 1-8-5XH
Continental Resources, Inc.
66.6 Permitted
Alta BIA 1511 1-6-31MXH Marathon Oil, Co.
16.0 Permitted
Importantly, experienced well-funded operators are operating all these wells. Several of these
companies are leading the successful development of the STACK Play and have flagged very large
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 4
DIRECTORS’ REPORT
drilling and completion capital allocations for calendar 2017 with full-field development slated for
calendar 2018.
As previously announced, the Company is moving quickly to capitalise on a short window in which to
build a material premier asset position in this high-margin repeatable part of the STACK Play. These
wells are the first of many that the Group will have the opportunity to participate in through its growing
non-operated working interest position in the play.
The Company is looking forward to keeping shareholders updated during 2017 with a strong pipeline
of news flow expected as oil and gas sales are established, proved reserves are booked and further
wells are drilled and/or added to the inventory.
Non STACK Exploration & Production Activities
No exploration was conducted during the period on the Company’s leasehold interests in Payne
County, Oklahoma.
There was no material production from the Company’s leasehold interests during the quarter.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL PERIOD
On 13 January 2017, the Company announced an update to the activities at the STACK play.
On 25 January 2017, the Company announced a capital raising of $1,980,000 (before costs) via the
issue of 165,000,000 fully paid ordinary shares at an issue price of $0.012 per share with a one free
attaching listed option (Options)(exercisable on or before December 31, 2018 at $0.02) for every two
new shares issued under the Placement.
During the year, the Company entered into a loan agreement with Cicero Advisory Services for a total
of $200,000. Repayment was made on 3 February 2017 including interest. Refer to Note 9.B for further
details.
On 28 March 2017, the Company held a General Meeting of Shareholders where all resolutions put
forward to the meeting were passed by a show of hands. As a result of the meeting a total of
27,500,000 Options (exercisable on or before December 31, 2018 at $0.02) were issued to Brokers and
Advisers as part consideration for ongoing capital raising advice and support provided to the
Company. In addition, Mr David Prentice was issued 15,000,000 unlisted options (Unlisted Options)
(exercisable on or before December 31, 2020 at $0.03) with Mr Michael Fry being issued 10,000,000
Unlisted Options. Refer to the Company’s Notice of General Meeting released to ASX on 22 February
2017 for further details.
The Directors are not aware of any other matter or circumstance that has arisen since 31 December
2016 which significantly affected, or may significantly affect, the operations of the Group, the results
of those operations, or the state of affairs of the Group, in future financial years.
ENVIRONMENTAL REGULATIONS
The Company is aware of its environmental obligations with regards to these activities and ensured
that it complied with all regulations. There have not been any known breaches of the entity’s
obligations under these environmental regulations during the year under review and up to the date
of this report.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 5
DIRECTORS’ REPORT
INFORMATION ON DIRECTORS
Michael Fry
Non-Executive Chairman
Qualifications
B.Comm, F.Fin
Experience
Other
Directorships
Michael Fry holds a Bachelor of Commerce degree from the University of Western
Australia, is a Fellow of the Financial Services Institute of Australasia, and is a past
member of the ASX. Michael has extensive experience in capital markets and
corporate treasury management specialising in the identification of commodity,
currency and interest rate risk and the implementation of risk management
strategies.
Michael Fry is currently the non-executive chairman of ASX Listed Companies
Norwest Energy NL (ASX: NWE), Challenger Energy Limited (ASX: CEL) and
Technology Metals Australia Limited (TMT).
David Prentice Non-Executive Chairman
Qualifications Grad. Dip BA, MBA
Experience
Other
Directorships
David is a senior resources executive with 25 plus years domestic and international
experience. David started his career working in commercial and business
development roles within the resources sector working for some of Australia’s most
successful gold and nickel exploration and production companies. During the last
12 years David has gained international oil and gas exploration and production
sector experience (with a specific focus on the Mid-Continent region of the United
States) working in both executive and non-executive director roles with Australian
publicly traded companies.
David Prentice is currently a Non-Executive Director of Black Mesa Production, LLC
and Non-Executive Chairman of Lustrum Minerals Limited. Jameson Resources
Limited (resigned 30 April 2014).
Loren King
Non-Executive Director and Company Secretary
Qualifications Grad. Dip (Applied Corporate Governance), BSc (Psych), Cert
IV FinSvcs
(Bookkeeping)
Experience
Other
Directorships
Loren King has worked in finance and back office administration roles with ASX listed
companies, stockbroking and corporate advisory services for the past 11 years.
During this time, she has gained invaluable experience in dealing with all aspects of
corporate governance and compliance, specialising in initial public offerings (IPO),
backdoor listings, private capital raising and business development.
Loren King is a Non-Executive Director at Blaze International Limited (ASX: BLZ),
Lustrum Minerals Limited and Red Fox Capital Limited. Past Non-Executive
Directorships include Intiger Group Limited (resigned 17 August 2016), Fraser Range
Metals Group Limited (resigned 29 July 2016), and MMJ Phytotech Limited (resigned
14 August 2014).
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 6
DIRECTORS’ REPORT
CORPORATE INFORMATION
Group Corporate Structure
Brookside Energy Limited is a public company incorporated and domiciled in Western Australia listed
on the Australian Securities Exchange (ASX Code: BRK) and wholly owned subsidiary, BRK Oklahoma
Holdings LLC, a Limited Liability Company incorporated and domiciled in Oklahoma, USA.
Employees
Brookside Energy Limited has no full-time employees as at the date of this report.
Meetings of Directors
The number of Directors' meetings (including committees) held during the year for each director who
held office, and the number of meetings attended by each director are:
Director
Michael Fry
David Prentice
Loren King
OPTIONS
Directors Meetings
Meetings Attended
5
5
5
Number Held and Eligible to
Attend
5
5
5
At the date of this report 460,000,000 options over ordinary shares in the Group were on issue and no
options were exercised during the year.
During the year ended 31 December 2016, options on issue are as detailed below.
Type
Date of Expiry
Exercise Price
Number on issue
Listed option (BRKO)
31 Dec 2018
$0.02
250,000,000
Directors’ holdings of shares and options during the financial period have been disclosed in the
Remuneration Report. Option holders do not have any right, by virtue of the option, to participate in
any share issue of the Company.
INDEMNIFYING OFFICERS
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every
Officer, or agent of the Company shall be indemnified out of the property of the Company against
any liability incurred by him in his capacity as Officer, or agent of the Company or any related
corporation in respect of any act or omission whatsoever and howsoever occurring or in defending
any proceedings, whether civil or criminal.
The Company currently has a Directors’ and Officers’ liability insurance in place. The liabilities insured
are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of the Company, and any other payments arising from
liabilities incurred by the officers in connection with such proceedings. This does not include such
liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use
by the officers of their position or of information to gain advantage for themselves or someone else or
to cause detriment to the Company.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 7
DIRECTORS’ REPORT
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied to the Court for leave to bring proceedings on behalf of the Company or to
intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or any part of those proceedings. The Company was not a party to
any such proceedings during the year.
NON-AUDIT SERVICES
No non‐audit services were paid to the external auditors during the year ended 31 December 2016.
AUDITOR’S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the
Directors of the Company with an Independence Declaration in relation to the audit of the annual
report. This Independence Declaration is set out on page 14 and forms part of this Directors’ Report
for the year ended 31 December 2016.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 8
REMUNERATION REPORT (Audited)
This Remuneration Report, which forms part of the directors’ report, sets out information about the
remuneration of Brookside Energy Limited’s Directors and its Key Management Personnel for the
financial year ended 31 December 2016.
A.
INTRODUCTION
The information provided in this Remuneration Report has been audited as required by Section
308(3C) of the Corporations Act 2001. Information regarding the remuneration of Key Management
Personnel (KMP) is required by Corporations Regulations 2M.3.03. KMP are those individuals who have
the authority and responsibility for planning, directing and controlling the activities of the Company
and the Group
A.1
Brookside’s KMPs
Key Management Personnel for Brookside include the following Directors who were in office during or
since the end of the financial year:
Name
Category
Position
Appointment Date
Michael Fry
Non-Executive Director
Independent Chairman
20 April 2004
David Prentice
Loren King
Executive Director
Non-Executive Director
Managing Director
Non-Executive Director
20 April 2004
5 June 2015
A.2 Comments on Remuneration Report at Brookside’s most recent AGM
The Company received a 37.69% of “yes” votes on its Remuneration Report for the 2015 financial year.
The Company did not receive any specific feedback from shareholders at the 2015 Annual General
Meeting on its remuneration practices.
Additional information
The loss of the consolidated entity for the five years to 31 December 2016 are summarised below:
Revenue
EBITDA
EBIT
Loss after income tax
2016
A$’000
6
(416)
(410)
(410)
2015
A$’000
29
(2,248)
(2,240)
(2,240)
2014
A$’000
-
(16)
(16)
(16)
2013
A$’000
18,657
(329)
(5,089)
(5,089)
2012
A$’000
8,869
(3,241)
(6,254)
(6,254)
The factors that are considered to affect total shareholders return (TSR) are summarised below:
Share price at financial year end (AUD)
Total dividends declared (cents per share)
Basic loss per share (cents per share)
2016
0.01
-
0.11
2015
0.01
-
2014
0.01
-
2013
0.38
-
2012
0.75
-
2.13
USD38.40 USD1.37 USD2.14
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 9
REMUNERATION REPORT (Audited)
B.
REMUNERATION POLICY DURING THE REPORTING PERIOD
The Brookside Board is committed to transparent disclosure of its remuneration strategy and this report
details the Company’s remuneration objectives, practices and outcomes for KMP, which includes
Directors and senior executives, for the period ended 31 December 2016. Any reference to
“Executives” in this report refers to KMPs who are not Non-Executive Directors.
B.1
Remuneration Policy Framework
The key objective of Brookside’s remuneration policy is to be a key enabler for the Company in
achieving its strategic goal of continuing to build a successful oil and gas exploration and production
company. It has been designed to reward executives and employees fairly and responsibly in
accordance with the regional and international market in which the Company operates, and to
ensure that Brookside:
Provides competitive rewards that attract, retain and motivate executives and employees of
the highest calibre, who can successfully deliver, particularly as the Company moves through
the current phase of rapidly increased development and production;
Sets demanding levels of expected performance that have a clear linkage to an executive’s
remuneration;
Benchmarks remuneration against appropriate comparator peer groups to make the
Company competitive in a tight skilled human resources market, through an offering of both
short and long term incentives and competitive base salaries.;
Provides a level of remuneration structure to reflect each executive’s respective duties and
responsibilities;
Aligns executive incentive rewards with the creation of value for shareholders;
Complies with legal requirements and appropriate standards of governance.
B.2
Policy for Executive Remuneration for Future Reporting Periods
Executive Remuneration consists of the following key elements:
Fixed remuneration or base salaries; and
Variable remuneration, being the “at risk” component related to performance comprising;
o Short Term Incentives (STI); and
o Long Term Incentive (LTI).
C.
REMUNERATION COMPONENTS
C.1
Fixed Remuneration
Fixed remuneration was reviewed by the Remuneration and Nomination Committee in 2013 and
remained consistent for the current reporting period.
C.2
STI Plan for the 2016 Reporting Period
Due to the strategic review conducted during 2015, no STI plan was implemented for the 2016
reporting period.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 10
REMUNERATION REPORT (Audited)
C.3
Policy for and Components of Non-Executive Remuneration During the Reporting Period
Remuneration Policy
Non-Executive Director Fees
The overall level of annual Non-Executive Director fees was approved by shareholders in accordance
with the requirements of the Company’s Constitution and the Corporations Act. The maximum
aggregate Directors’ fees payable to all of the Company’s Non-Executive Directors is $500,000 per
annum. This aggregate amount was approved by shareholders at the 2012 Annual General Meeting.
Equity Compensation
In accordance with Australian practice and shareholder preference, the Company’s current policy is
not to grant equity based compensation to Non-Executive Directors. Accordingly, no equity
components (LTI Rights) were offered to Non-Executive Directors in the reporting period to 31
December 2016.
Remuneration Structure
Non-Executive Directors receive a fixed remuneration of base fees plus statutory superannuation. In
addition, and in recognition of the higher workloads and extra responsibilities of participating on a
Board committee, if applicable, they also received a committee fee and chairing a committee also
warrants a higher fee. In addition to these fees, Non-Executive Directors are entitled to reimbursement
of reasonable travel, accommodation and other expenses incurred in attending meetings of the
Board, committee or shareholder meetings whilst engaged by Brookside. Non-Executive Directors do
not earn retirement benefits other than superannuation and are not entitled to any compensation on
termination of their directorships.
D.
DETAILS OF REMUNERATION
During the year there were material changes to base salaries paid to Key Management Personnel as
a result of the reinstatement to the ASX of Brookside Energy Limited.
Tables 2a and 2b below outline the remuneration of directors and Key Management Personnel for the
year ended 31 December 2015 and the year ended 31 December 2016:
Table 2a: Key Management Personnel Remuneration for the year ended 31 December 2016
Primary
Post- employment
Base Salary
and Fees
$
Bonus
STI
$
Non-
Monetary
Benefits
$
Super-
annuation
Contributions
$
Termination
Payments
$
TOTAL
$
Percentage
Performance
Related
%
31 December 2016
Executive Directors
David Prentice
150,000
Non-Executive Directors
Michael Fry
Loren King^
Total 31 Dec 2016
45,000
30,000
225,000
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
-
-
-
45,000
30,000
225,000
-
-
-
^ During the year ended 31 December 2016, Cicero Corporate Pty Ltd, an entity related to Loren King, received $114,000
exclusive of GST for the provision of company secretarial and accounting work to the Company. Cicero has been engaged to
provide corporate services to the Group.
Table 2b: Key Management Personnel Remuneration for the year ended 31 December 2015
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 11
REMUNERATION REPORT (Audited)
Primary
Post- employment
Base Salary
and Fees
$
Bonus
STI
$
Non-
Monetary
Benefits
$
Super-
annuation
Contributions
$
Termination
Payments
$
TOTAL
$
Percentage
Performance
Related
%
31 December 2015
Executive Directors
David Prentice
62,500
Non-Executive Directors
Michael Fry
Loren King^
Total 31 Dec 2015
18,750
15,000
96,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62,500
18,750
15,000
96,250
-
-
-
^ During the year ended 31 December 2015, Cicero Corporate Pty Ltd, an entity related to Loren King, received $57,000
exclusive of GST for the provision of company secretarial and accounting work to the Company. Cicero has been engaged to
provide corporate services to the Group.
E. ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL
(i)
Shares held by Key Management Personnel
The number of shares in the Company held during year by each Director of Brookside Energy Limited
and other Key Management Personnel, including their personally related parties, are set out below.
There were no shares granted during the year as compensation.
31 December 2016
Balance at
1 Jan 2016
Shares
Issued
Other
Balance at
31 Dec 2016
Directors
David Prentice
Michael Fry
Loren King
187,372
1,542,870
-
1,730,242
-
-
-
-
1,250,000
-
-
1,437,372
1,542,870
-
1,250,000
2,980,242
(ii)
Options Held by Key Management Personnel
Options held by Key Management Personnel during the reporting period are as follows:
31 December 2016
Balance at
01 Jan 16
Shares
Issued
Other
Balance at
31 Dec 16
Directors
David Prentice
Michael Fry
Loren King
40,000,000
25,000,000
-
65,000,000
-
-
-
-
-
1,274,924
-
40,000,000
26,274,924
-
1,274,924
66,274,924
No shares were issued on the exercise of options during the period.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 12
REMUNERATION REPORT (Audited)
(iii)
Loans to Key Management Personnel
No loans were made to key management personnel of the Company during the financial year or the
prior corresponding period.
(iv) Other Transactions and Balances with Key Management Personnel
Other than as stated above, there have been no other transactions with key management personnel
during the year.
During and since the financial year ended 31 December 2016 (2015: nil), no compensation options
were granted or vested to directors.
F.
SERVICE AGREEMENTS
Director
Base Salary
Terms of the Agreement
Notice Period
$12,500 per month
Until termination
6 Months
David Prentice
CEO/Managing Director
Michael Fry
Non-Executive Chairman
$45,000 per annum
Loren King
Non-Executive Director
$30,000 per annum
$114,000 per annum for the
provision of company
secretarial and office support
Until termination in
accordance with the
Company’s Constitution
Until termination in
accordance with the
Company’s Constitution
Reasonable
notice
Reasonable
notice
Until Termination
6 Months
- - END OF REMUNERATION REPORT - -
This report is made in accordance with a resolution of the Directors.
David Prentice
Chief Executive Officer
31 March 2017
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 13
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Brookside Energy Limited for the
year ended 31 December 2016, 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
31 March 2017
N G Neill
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 14
CORPORATE GOVERNANCE
This Corporate Governance Statement report sets out information about the Corporate Governance
of Brookside Energy Limited for the financial year ended 31 December 2016.
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement is current as at 4 April 2016 and has been approved by the
Board of the Company on that date.
This Corporate Governance Statement discloses the extent to which the Company will follow the
recommendations set by the ASX Corporate Governance Council in its publication Corporate
Governance Principles and Recommendations (Recommendations). The Recommendations are not
mandatory, however the Recommendations that will not be followed have been identified and
reasons provided for not following them along with what (if any) alternative governance practices
the Company intends to adopt in lieu of the recommendation.
The Company has adopted a Corporate Governance Plan which provides the written terms of
reference for the Company’s corporate governance duties.
The Company’s Corporate Governance Plan
http://brookside-energy.com.au/.
is available on the Company’s website at
RECOMMENDATIONS (3RD EDITION)
COMPLY
EXPLANATION
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
A listed entity should have and disclose a
charter which sets out the respective roles
and responsibilities of the Board, the Chair
and management, and
includes a
description of those matters expressly
reserved
those
delegated to management.
the Board and
to
YES
The Company has adopted a Board Charter that sets out the
specific roles and responsibilities of the Board, the Chair and
management and includes a description of those matters
expressly reserved to the Board and those delegated to
management.
The Board Charter sets out the specific responsibilities of the
Board, requirements as to the Board’s composition, the roles
and responsibilities of the Chairman and Company Secretary,
the establishment, operation and management of Board
Committees, Directors’ access to Company records and
information, details of
relationship with
management, details of the Board’s performance review
and details of the Board’s disclosure policy.
the Board’s
A copy of the Company’s Board Charter, which is part of the
Company’s Corporate Governance Plan, is available on the
Company’s website.
Recommendation 1.2
A listed entity should:
(a)
YES
(a)
appropriate
checks
undertake
before appointing a person, or
putting forward to security holders a
candidate for election, as a Director;
and
(b) provide security holders with all
material information relevant to a
decision on whether or not to elect or
re-elect a Director.
The Company has guidelines for the appointment and
selection of the Board in its Corporate Governance
Plan. The Company’s Nomination Committee Charter
(in the Company’s Corporate Governance Plan)
requires the Nomination Committee (or, in its absence,
the Board) to ensure appropriate checks (including
checks in respect of character, experience, education,
(as
criminal
appropriate)) are undertaken before appointing a
person, or putting forward to security holders a
candidate for election, as a Director.
record and bankruptcy
history
(b) Under the Nomination Committee Charter, all material
information relevant to a decision on whether or not to
elect or re-elect a Director must be provided to security
holders in the Notice of Meeting containing the
resolution to elect or re-elect a Director.
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Recommendation 1.3
A
listed entity should have a written
agreement with each Director and senior
executive setting out the terms of their
appointment.
YES
Recommendation 1.4
The company secretary of a listed entity
should be accountable directly to the
Board, through the Chair, on all matters to
do with the proper functioning of the
Board.
YES
The Company’s Nomination Committee Charter requires the
Nomination Committee (or, in its absence, the Board) to
ensure that each Director and senior executive is a party to a
written agreement with the Company which sets out the
terms of that Director’s or senior executive’s appointment.
The Company has written agreements with each of its
Directors and senior executives.
The Board Charter outlines the roles, responsibility and
accountability of the Company Secretary. In accordance
with this, the Company Secretary is accountable directly to
the Board, through the Chair, on all matters to do with the
proper functioning of the Board.
Recommendation 1.5
A listed entity should:
(a)
PARTIALLY
(a) have a diversity policy which includes
requirements for the Board or a
relevant committee of the Board to
set measurable objectives
for
achieving gender diversity and to
assess annually both the objectives
and the entity’s progress in achieving
them;
(b) disclose that policy or a summary or
it; and
(c) disclose as at the end of each
reporting period:
(i)
the measurable objectives for
achieving gender diversity set
by the Board in accordance
with the entity’s diversity policy
and
towards
its progress
achieving them; and
(ii) either:
(b)
(c)
-
-
the respective proportions
of men and women on the
Board, in senior executive
positions and across the
whole
organisation
(including how the entity
“senior
has
executive”
these
purposes); or
defined
for
under
if the entity is a “relevant
employer”
the
Workplace Gender Equality
Act, the entity’s most recent
“Gender
Equality
Indicators”, as defined in
the Workplace Gender
Equality Act.
Recommendation 1.6
A listed entity should:
(a)
YES
(a) have and disclose a process for
periodically
the
its
performance of
committees and individual Directors;
and
the Board,
evaluating
The Company has adopted a Diversity Policy which
provides a framework for the Company to establish and
achieve measurable diversity objectives, including in
respect of gender diversity. The Diversity Policy allows
the Board
set measurable gender diversity
objectives, if considered appropriate, and to assess
annually both the objectives if any have been set and
the Company’s progress in achieving them.
to
The Diversity Policy is available, as part of the Corporate
Governance Plan, on the Company’s website.
(i)
intend to set
The Board does not presently
measurable gender diversity objectives because:
‐
-
the Board does not anticipate there will be a
need to appoint any new Directors or senior
executives due to limited nature of the
Company’s existing and proposed activities
and the Board’s view that the existing
Directors and
senior executives have
sufficient skill and experience to carry out the
Company’s plans; and
if it becomes necessary to appoint any new
Directors or senior executives, the Board
considered the application of a measurable
gender diversity objective
requiring a
specified proportion of women on the Board
and in senior executive roles will, given the
small size of the Company and the Board,
unduly limit the Company from applying the
the
Diversity Policy as a whole and
Company’s policy of appointing based on
skills and merit: and
(ii)
the respective proportions of men and women on
the Board, in senior executive positions and across
the whole organisation (including how the entity
has defined “senior executive” for these purposes)
for each financial year will be disclosed in the
Company’s Annual Report.
The Board, in the absence of a Nomination Committee,
is responsible for evaluating the performance of the
Board, its committees and individual Directors on an
annual basis. It may do so with the aid of an
independent advisor. The process for this is set out in the
Company’s Corporate Governance Plan, which is
available on the Company’s website.
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(b) disclose, in relation to each reporting
period, whether a performance
evaluation was undertaken in the
reporting period in accordance with
that process.
(b)
The Company’s Corporate Governance Plan requires
the Company to disclose whether or not performance
evaluations were conducted during the
relevant
reporting period. The Company intends to complete
performance evaluations in respect of the Board, its
committees (if any) and individual Directors for the
each financial year in accordance with the above
process.
Recommendation 1.7
A listed entity should:
(a)
YES
(a) have and disclose a process for
the
periodically
performance of its senior executives;
and
evaluating
(b) disclose, in relation to each reporting
period, whether a performance
evaluation was undertaken in the
reporting period in accordance with
that process.
(b)
The Board, in the absence of a Nomination Committee
is responsible for evaluating the performance of the
Company’s senior executives on an annual basis. The
Board, in the absence of a Remuneration Committee is
responsible for evaluating the remuneration of the
Company’s senior executives on an annual basis. A
senior executive, for these purposes, means Key
Management Personnel (as defined in the Corporations
Act) other than a non-executive Director.
The applicable processes for these evaluations can be
found in the Company’s Corporate Governance Plan,
which is available on the Company’s website.
The Company’s Corporate Governance Plan requires
the Company to disclose whether or not performance
evaluations were conducted during the
relevant
reporting period. The Company intends to complete
performance evaluations in respect of the senior
executives for each financial year in accordance with
the applicable processes.
Principle 2: Structure the Board to add value
Recommendation 2.1
The Board of a listed entity should:
YES
(a) have a nomination committee
which:
(i)
has at least three members, a
are
of
majority
independent Directors; and
whom
(ii)
is chaired by an independent
Director,
and disclose:
(iii)
the charter of the committee;
(iv)
the members of the committee;
and
(v) as at the end of each reporting
period, the number of times the
committee met throughout the
period and
individual
attendances of the members at
those meetings; or
the
(a) The Company does not currently have a Nomination
Committee. The Company’s Nomination Committee
Charter provides for the creation of a Nomination
Committee (if
it will benefit the
is considered
Company), with at least three members, a majority of
whom are independent Directors, and which must be
chaired by an independent Director.
it
(b) The Company does not have a Nomination Committee
as the Board considers the Company will not currently
benefit from its establishment. In accordance with the
Company’s Board Charter, the Board carries out the
duties that would ordinarily be carried out by the
Nomination Committee under
the Nomination
Committee Charter, including the following processes to
address succession issues and to ensure the Board has
skills, experience,
the appropriate balance of
independence and knowledge of the entity to enable
it to discharge its duties and responsibilities effectively:
(i) devoting time at least annually to discuss Board
succession issues and updating the Company’s
Board skills matrix; and
(b)
issues and
succession
that
if it does not have a nomination
committee, disclose that fact and
the processes it employs to address
to
Board
the
ensure
appropriate balance of
skills,
experience,
independence and
knowledge of the entity to enable it
its duties and
to discharge
responsibilities effectively.
the Board has
(ii) all Board members being
the
Company’s nomination process, to the maximum
extent permitted under the Corporations Act and
ASX Listing Rules.
involved
in
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Recommendation 2.2
A listed entity should have and disclose a
Board skill matrix setting out the mix of skills
and diversity that the Board currently has or
is looking to achieve in its membership.
YES
Recommendation 2.3
A listed entity should disclose:
YES
(a) the names of the Directors considered
by the Board to be independent
Directors;
(b) if a Director has an interest, position,
association or relationship of the type
described
in Box 2.3 of the ASX
Corporate Governance Principles and
Recommendation (3rd Edition), but
the Board is of the opinion that it does
not compromise the independence of
the Director, the nature of the interest,
position, association or relationship in
question and an explanation of why
the Board is of that opinion; and
(c) the length of service of each Director
Recommendation 2.4
A majority of the Board of a listed entity
should be independent Directors.
YES
Under the Nomination Committee Charter (in the Company’s
Corporate Governance Plan), the Nomination Committee
(or, in its absence, the Board) is required to prepare a Board
skill matrix setting out the mix of skills and diversity that the
Board currently has (or is looking to achieve) and to review
this at least annually against the Company’s Board skills matrix
to ensure the appropriate mix of skills and expertise is present
to facilitate successful strategic direction.
The Company has a Board skill matrix setting out the mix of
skills and diversity that the Board currently has or is looking to
achieve in its membership. A copy will be made available in
the Company’s next Annual Report.
The Board Charter requires the disclosure of each Board
member’s qualifications and expertise. Full details as to each
Director and senior executive’s relevant skills and experience
are available on the Company’s website.
(a)
(b)
The Board Charter requires the disclosure of the names
of Directors considered by
to be
independent. The Company will disclose those Directors
it considers to be independent in its Annual Report and
on its ASX website. The Board considers the following
Directors are independent: Michael Fry and Loren King.
the Board
There are no independent Directors who fall into this
category. The Company will disclose in its Annual Report
and ASX website any instances where this applies and
an explanation of the Board’s opinion why the relevant
Director is still considered to be independent.
(c)
The Company’s Annual Report will disclose the length of
service of each Director, as at the end of each financial
year.
The Company’s Board Charter requires that, where practical,
the majority of the Board should be independent.
The Board currently comprises a total of 3 directors, of whom
Michael Fry and Loren King are considered
to be
independent. As such, independent directors are currently
an independent majority of the Board.
Recommendation 2.5
The Chair of the Board of a listed entity
should be an independent Director and, in
particular, should not be the same person
as the CEO of the entity.
Recommendation 2.6
A listed entity should have a program for
inducting new Directors and providing
appropriate professional development
opportunities for continuing Directors to
develop and maintain
the skills and
knowledge needed to perform their role as
a Director effectively.
Principle 3: Act ethically and responsibly
YES
The Board Charter provides that, where practical, the Chair
of the Board should be an independent Director and should
not be the CEO/Managing Director.
The Chair of the Company is an independent Director and is
the CEO/Managing Director.
YES
In accordance with the Company’s Board Charter, the
Nominations Committee (or, in its absence, the Board) is
responsible for the approval and review of induction and
continuing professional development programs and
procedures for Directors to ensure that they can effectively
discharge their responsibilities. The Company Secretary is
responsible
inductions and professional
development.
facilitating
for
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The Company’s Corporate Code of Conduct applies to
the Company’s Directors, senior executives and
employees.
The Company’s Corporate Code of Conduct (which
forms part of the Company’s Corporate Governance
Plan) is available on the Company’s website.
The Company does not currently have an Audit and Risk
Committee. The Company’s Corporate Governance
Plan contains an Audit and Risk Committee Charter that
provides for the creation of an Audit and Risk
Committee (if
it will benefit the
is considered
Company), with at least three members, a majority of
whom must be independent Directors, and which must
be chaired by an independent Director who is not the
Chair.
it
its establishment.
The Company does not have an Audit and Risk
Committee as the Board considers the Company will
not currently benefit
In
from
accordance with the Company’s Board Charter, the
Board carries out the duties that would ordinarily be
carried out by the Audit and Risk Committee under the
Audit and Risk Committee Charter
including the
independently verify and
following processes
reporting,
safeguard the
including the processes for the appointment and
removal of the external auditor and the rotation of the
audit engagement partner:
to
integrity of
financial
its
(i)
the Board devotes time at annual Board meetings
to fulfilling the roles and responsibilities associated
with maintaining the Company’s internal audit
function and arrangements with external auditors;
and
(ii) all members of the Board are involved in the
Company’s audit function to ensure the proper
maintenance of the entity and the integrity of all
financial reporting.
YES
The Company’s Audit and Risk Committee Charter requires
the CEO and CFO (or, if none, the person(s) fulfilling those
functions) to provide a sign off on these terms.
The Company intends to obtain a sign off on these terms for
each of its consolidated financial statements in each
financial year.
(a)
(b)
(a)
(b)
Recommendation 3.1
A listed entity should:
YES
(a) have a code of conduct for its
senior executives and
Directors,
employees; and
(b) disclose that code or a summary of it.
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1
The Board of a listed entity should:
YES
(a) have an audit committee which:
(i)
has at least three members, all
of whom are non-executive
Directors and a majority of
whom
independent
are
Directors; and
(ii)
is chaired by an independent
Director, who is not the Chair of
the Board,
and disclose:
(iii)
the charter of the committee;
(iv)
(v)
the relevant qualifications and
experience of the members of
the committee; and
in relation to each reporting
period, the number of times the
committee met throughout the
period and
individual
attendances of the members at
those meetings; or
the
(b)
it employs
if
it does not have an audit
committee, disclose that fact and
that
the processes
independently verify and safeguard
the integrity of its financial reporting,
including
the
the processes
appointment and removal of the
external auditor and the rotation of
the audit engagement partner.
for
Recommendation 4.2
that
from
The Board of a listed entity should, before it
the entity’s consolidated
approves
financial statements for a financial period,
receive
its CEO and CFO a
declaration that the financial records of
the entity have been properly maintained
financial
the consolidated
and
statements comply with the appropriate
accounting standards and give a true and
fair view of the financial position and
performance of the entity and that the
opinion has been formed on the basis of a
sound system of risk management and
internal control which
is operating
effectively.
Recommendation 4.3
A listed entity that has an AGM should
ensure that its external auditor attends its
YES
The Company’s Corporate Governance Plan provides that
the Board must ensure the Company’s external auditor
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AGM and is available to answer questions
from security holders relevant to the audit.
attends its AGM and is available to answer questions from
security holders relevant to the audit.
Principle 5: Make timely and balanced disclosure
Recommendation 5.1
A listed entity should:
(a) have a written policy for complying
disclosure
continuous
with
obligations under the Listing Rules;
and
its
(b) disclose that policy or a summary of
it.
(a)
YES
The Board Charter provides details of the Company’s
disclosure policy.
the Corporate
Governance Plan details the Company’s disclosure
requirements as required by the ASX Listing Rules and
other relevant legislation.
In addition,
(b)
The Corporate Governance Plan, which incorporates
the Board Charter, is available on the Company
website.
Principle 6: Respect the rights of security holders
Recommendation 6.1
A listed entity should provide information
about itself and its governance to investors
via its website.
Recommendation 6.2
listed entity
A
should design and
implement an investor relations program to
facilitate
two-way
effective
communication with investors.
Recommendation 6.3
A listed entity should disclose the policies
and processes it has in place to facilitate
and encourage participation at meetings
of security holders.
Recommendation 6.4
A listed entity should give security holders
the option to receive communications
from, and send communications to, the
entity and its security registry electronically.
YES
YES
YES
YES
Information about the Company and its governance is
available in the Corporate Governance Plan which can be
found on the Company’s website.
The Company has adopted a Shareholder Communications
Strategy which aims to promote and facilitate effective two-
way communication with investors. The Strategy outlines a
range of ways in which information is communicated to
shareholders and is available on the Company’s website as
part of the Company’s Corporate Governance Plan.
Shareholders are encouraged to participate at all general
meetings and AGMs of the Company. Upon the despatch of
any notice of meeting to Shareholders, the Company
Secretary shall send out material stating that all Shareholders
are encouraged to participate at the meeting.
The Shareholder Communication Strategy provides that
security holders can register with the Company to receive
email notifications when an announcement is made by the
Company to the ASX, including the release of the Annual
Report, half yearly reports and quarterly reports. Links are
made available to the Company’s website on which all
information provided to the ASX is immediately posted.
Shareholders queries should be referred to the Company
Secretary at first instance.
Principle 7: Recognise and manage risk
Recommendation 7.1
(a)
The Board of a listed entity should:
YES
(a) have a committee or committees to
oversee risk, each of which:
(i)
has at least three members, a
majority
are
of
independent Directors; and
whom
(ii)
is chaired by an independent
Director,
The Company does not currently have an Audit and Risk
Committee. The Company’s Corporate Governance
Plan contains an Audit and Risk Committee Charter that
provides for the creation of an Audit and Risk
Committee (if
it will benefit the
is considered
Company), with at least three members, a majority of
whom must be independent Directors, and which must
be chaired by an independent Director.
it
(b) A copy of the Corporate Governance Plan is available
on the Company’s website.
and disclose:
(c)
(iii)
the charter of the committee;
(iv)
the members of the committee;
and
(v) as at the end of each reporting
period, the number of times the
committee met throughout the
The Company does not have an Audit and Risk
Committee as the Board consider the Company will not
currently benefit from its establishment. In accordance
with the Company’s Board Charter, the Board carries
out the duties that would ordinarily be carried out by the
Audit and Risk Committee under the Audit and Risk
Committee Charter including the following processes to
oversee the entity’s risk management framework:
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period and
individual
attendances of the members at
those meetings; or
the
(b)
if it does not have a risk committee or
committees that satisfy (a) above,
disclose that fact and the process it
employs for overseeing the entity’s
risk management framework.
Recommendation 7.2
The Board or a committee of the Board
should:
YES
(a)
review the entity’s risk management
framework with management at
least annually to satisfy itself that it
continues to be sound; and
(b) disclose in relation to each reporting
period, whether such a review has
taken place.
Recommendation 7.3
A listed entity should disclose:
YES
(a)
(b)
if it has an internal audit function,
how the function is structured and
what role it performs; or
if it does not have an internal audit
function, that fact and the processes
it employs
for evaluating and
the
continually
effectiveness of its risk management
and internal control processes.
improving
Recommendation 7.4
A listed entity should disclose whether it has
any material exposure
to economic,
environmental and social sustainability risks
and, if it does, how it manages or intends
to manage those risks.
YES
(i)
(ii)
the Board devotes time at quarterly Board
meetings to fulfilling the roles and responsibilities
associated with overseeing risk and maintaining
the entity’s risk management framework and
associated
internal compliance and control
procedures; and
the Board has required management to design
and implement risk management and internal
the Company’s
control systems
to manage
material business
required
management to report to it on whether those risks
are being managed effectively; and
risks and has
(iii)
the Chief Executive Officer reports to the Board as
to
the Company’s
management of its material business risks.
the effectiveness of
The Audit and Risk Committee Charter requires that the
Audit and Risk Committee (or, in its absence, the Board)
should, at
the
Company’s risk management framework continues to
be sound.
least annually, satisfy
itself
that
The Company’s Corporate Governance Plan requires
the Company to disclose at least annually whether such
a
risk management
framework has taken place.
the Company’s
review of
The Audit and Risk Committee Charter provides for the
Audit and Risk Committee to monitor the need for an
internal audit function.
The Company does not have an internal audit function.
The Audit and Risk Committee evaluates and looks to
continually approve
the
Company’s risk management and internal control
processes as set out in the duties and responsibilities of
the Audit and Risk Committee Charter (contained in the
Corporate Governance Plan available on
the
Company’s website).
the effectiveness of
(a)
(b)
(a)
(b)
The Audit and Risk Committee Charter requires the Audit and
Risk Committee (or, in its absence, the Board) to assist
management determine whether the Company has any
material exposure to economic, environmental and social
sustainability risks and, if it does, how it manages or intends to
manage those risks.
The Company’s Corporate Governance Plan requires the
Company to disclose whether it has any material exposure to
economic, environmental and social sustainability risks and, if
it does, how it manages or intends to manage those risks. The
Company will disclose this information in its Annual Report
and on its ASX website as part of its continuous disclosure
obligations.
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
(a)
The Board of a listed entity should:
YES
(a) have a
remuneration committee
which:
(i)
has at least three members, a
majority
are
of
independent Directors; and
whom
The Company does not currently have a Remuneration
Committee. The Company’s Corporate Governance
Plan contains a Remuneration Committee Charter that
provides for the creation of a Remuneration Committee
(if it is considered it will benefit the Company), with at
least three members, a majority of whom must be
independent Directors, and which must be chaired by
an independent Director.
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(ii)
is chaired by an independent
Director,
(b)
its establishment.
The Company does not have a Remuneration
Committee as the Board considers the Company will
not currently benefit
In
from
accordance with the Company’s Board Charter, the
Board carries out the duties that would ordinarily be
carried out by the Remuneration Committee under the
Remuneration Committee Charter
the
following processes to set the level and composition of
remuneration for Directors and senior executives and
ensuring that such remuneration is appropriate and not
excessive:
including
(i)
(ii)
(iii)
(iv)
the Board devotes time at the annual Board
meeting to assess the level and composition of
remuneration for Directors and senior executives;
the Company has not adopted any schemes for
retirement benefits;
the total maximum remuneration of non-executive
Directors is initially set by the Constitution and
subsequent variation is by ordinary resolution of the
shareholders in general meeting; and
the determination of non-executive Directors’
remuneration within the maximum amount fixed
will be made by the Board having regard to the
inputs and value to the Company or the respective
contributions be each non-executive Director.
YES
The Company’s Corporate Governance Plan requires the
Board to disclose its policies and practices regarding the
remuneration of Directors and senior executives, which is
disclosed on the Company’s website.
and disclose:
(iii)
the charter of the committee;
(iv)
the members of the committee;
and
(v) as at the end of each reporting
period, the number of times the
committee met throughout the
period and
individual
attendances of the members at
those meetings; or
the
if it does not have a remuneration
committee, disclose that fact and
the processes it employs for setting
the
level and composition of
remuneration for Directors and senior
executives and ensuring that such
remuneration is appropriate and not
excessive.
(b)
Recommendation 8.2
the
regarding
A listed entity should separately disclose its
policies and practices
the
remuneration of non-executive Directors
and
remuneration of executive
Directors and other senior executives and
ensure
roles and
the different
responsibilities of non-executive Directors
compared to executive Directors and
other senior executives are reflected in the
level
their
remuneration.
composition
and
that
of
Recommendation 8.3
(a)
A listed entity which has an equity-based
remuneration scheme should:
YES
(a) have a policy
on whether
participants are permitted to enter
into transactions (whether through
the use of derivatives or otherwise)
which limit the economic risk of
participating in the scheme; and
(b) disclose that policy or a summary of
it.
The Company does not have an equity based
remuneration scheme. The Company does not have a
policy on whether participants are permitted to enter
into transactions (whether through the use of derivatives
or otherwise) which
risk of
limit
participating in the scheme.
the economic
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the financial year ended 31 December 2016
Notes
2.A
2.A
2.B
Interest revenue
Other revenue
Other expenses
Director and employee related expenses
Consultants fees
Compliance and registry expenses
Write-off of fixed assets
Write-off of assets not collectable
Residual of administration write-offs
Project expense(impairment)/reversal of impairment
7.A
Options valuation expense
Gain/(loss) on foreign exchange movement
Loss before income tax expense
Income tax expense
Net loss for the year
For the year
ended
31 Dec 2016
$
For the year
ended
31 Dec 2015
$
6,010
-
(166,715)
(225,000)
(96,557)
(164,138)
-
-
20,025
131,006
(24,875)
110,250
7,424
22,269
(182,012)
(110,000)
(158,907)
(128,106)
(4,149)
(33,067)
387,191
(131,006)
(1,913,231)
2,598
(409,994)
(2,240,996)
3
-
-
(409,994)
(2,240,996)
Other comprehensive income
Items that may be reclassified subsequently to profit and loss:
Foreign exchange gain/(loss) reclassified to profit and loss
Other comprehensive loss for the year net of taxes
(43,805)
(43,805)
-
-
Total comprehensive loss for the year
(453,799)
(2,240,996)
Earnings/(Loss) Per Share
Basic and diluted loss per share (cents)
16
(0.11)
(0.20)
The accompanying notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 23
STATEMENT OF FINANCIAL POSITION
As at 31 December 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other assets
Exploration and evaluation
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
As at
31 Dec 2016
$
As at
31 Dec 2015
$
Notes
5
6
7
8
9
9
256,857
33,017
289,874
1,858,994
69,881
1,928,875
1,951,077
1,830,733
3,781,810
4,071,684
-
-
-
1,928,875
260,252
200,000
460,252
460,252
69,376
-
69,376
69,376
3,611,432
1,859,499
10
12
11
220,586,610
218,405,878
1,929,426
1,948,231
(218,904,604)
(218,494,610)
3,611,432
1,859,499
The accompanying notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 24
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2016
BALANCE AT 1 JANUARY 2015
Loss for the period
Total comprehensive loss for the period
Shares issued during the period
Options issued during the period
Capital raising costs
BALANCE AT 31 DECEMBER 2015
BALANCE AT 1 JANUARY 2016
Loss for the period
Other comprehensive loss
Total comprehensive loss for the period
Shares issued during the period
Options issued during the period
Capital raising costs
BALANCE AT 31 DECEMBER 2016
Share
Based
Payment
Reserve
$
Foreign
Currency
Translation
Reserve
$
Issued
Capital
$
Accumulated
Losses
$
215,487,649
(216,253,614)
-
-
(2,240,996)
(2,240,996)
3,149,979
-
(231,750)
-
-
-
-
-
-
-
1,948,231
-
218,405,878
(218,494,610)
1,948,231
218,405,878
(218,494,610)
1,948,231
-
-
-
(409,994)
-
(409,994)
2,300,000
-
(119,268)
-
-
-
-
-
-
-
25,000
-
Total
$
(765,965)
(2,240,996)
(2,240,996)
3,149,979
1,948,231
(231,750)
1,859,499
1,859,499
(409,994)
(43,805)
(453,799)
2,300,000
25,000
(119,268)
3,611,432
-
-
-
-
-
-
-
-
-
(43,805)
(43,805)
-
-
-
220,586,610
(218,904,604)
1,973,231
(43,805)
The accompanying notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 25
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2016
For the year
ended
31 Dec 2016
$
For the year
ended
31 Dec 2015
$
Notes
CASH FLOWS USED IN OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Settlement of DOCA
(603,651)
6,010
-
NET CASH PROVIDED BY OPERATING ACTIVITIES
13
(597,641)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investments
Payments for exploration activities
Payments for acquisition of oil and gas properties
NET CASH (USED IN) INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options
Transaction costs on issue of shares
Proceeds from borrowings
NET CASH PROVIDED BY FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Cash at beginning of the period
Effect of exchange rates on cash
CASH AT END OF PERIOD
13
(1,621,065)
(827,429)
(1,003,304)
(3,451,798)
2,300,125
(119,268)
200,000
2,380,857
(1,668,582)
1,858,994
66,445
256,857
(185,359)
7,424
(737,892)
(915,827)
(131,006)
-
-
(131,006)
3,134,979
(231,750)
-
2,903,229
1,856,396
-
2,598
1,858,994
The accompanying notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.A.
BASIS OF PREPARATION
The financial report includes the consolidated financial statements and notes of Brookside Energy
Limited (BRK) and its subsidiary (Group or Consolidated Group).
The consolidated financial report is a general-purpose financial report, which has been prepared in
accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations,
and complies with other requirements of the law.
1.A.1. Functional and Presentation Currency
The consolidated financial statements are presented in Australian dollars (AUD$), which is the Group’s
presentation currency unless otherwise stated.
1.A.2. Accounting Policies
The same accounting policies and methods of computation have been followed in this consolidated
financial report as were applied in the most recent half year financial statements.
1.A.3. Going Concern
The Group incurred a loss of $409,994 for the year ended 31 December 2016. In addition, the Group
has working capital deficiency of $170,378. Cash and cash equivalents at the year-end amounted to
$256,857.
Post year end the Company completed a placement raising $1,980,000, before costs, via the issue of
165,000,000 fully paid ordinary shares at $0.012 per share with free attaching options, exercisable on
or before 31 December 2018, at $0.02, at 1 for every 2 placement shares issued.
The ability of the company and consolidated entity to continue as going concerns is dependent on
a combination of a number of factors, the most significant of which is the ability of the company to
raise additional funds, on top of those already raised post year end, in the following 12 months through
issuing additional shares.
These factors indicate a material uncertainty that may cast significant doubt as to whether the
company and consolidated entity will continue as going concerns and therefore whether they will
realise their assets and extinguish their liabilities in the normal course of business and at the amounts
stated in the financial report.
1.B.
ADOPTION OF NEW AND REVISED STANDARDS
1.B.1.
Changes in accounting policies on initial application of Accounting Standards
In the year ended 31 December 2016, the Directors have reviewed all of the new and revised
Standards and Interpretations issued by the AASB that are relevant to its operations and effective for
the current annual reporting period.
It has been determined by the Directors that there is no impact, material or otherwise, of the new and
revised Standards and Interpretations on its business and, therefore, no change is necessary to Group
accounting policies.
The Directors have also reviewed all new Standards and Interpretations that have been issued but are
not yet effective for the year ended 31 December 2016. As a result of this review, the Directors have
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
determined that there is no impact, material or otherwise, of the new and revised Standards and
Interpretations on its business and, therefore, no change necessary to Group accounting policies
1.C.
STATEMENT OF COMPLIANCE
The general purpose consolidated financial statements for the period ended 31 December 2016 were
approved and authorised for issue on 31 March 2017.
The consolidated financial statements of the Company have been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board. Compliance with Australian
Accounting Standards results in full compliance with the International Financial Reporting Standards
(IRFS) as issued by the International Accounting Standards Board (IASB).
1.D.
BASIS OF PREPARATION
The consolidated financial statements have been prepared on the basis of historical costs. Cost is
based on the fair values of the consideration given in exchange for assets. All amounts are presented
in Australian dollars, unless otherwise noted
The accounting policies and methods of computation adopted in the preparation of the financial
report are consistent with those adopted and disclosed in the Group’s annual financial report for the
year ended 31 December 2015.
1.E.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
Brookside Energy Limited as at 31 December 2016 and the results its subsidiary for the year then ended.
Brookside Energy Limited and its subsidiary together are referred to in these consolidated financial
statements as the 'group'.
Subsidiaries are all those 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 de-
consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the
Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence
of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change
in ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-
controlling interest acquired is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement
of comprehensive income, statement of financial position and statement of changes in equity of the
Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that
results in a deficit balance.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities
and non-controlling interest in the subsidiary together with any cumulative translation differences
recognised in equity. The Group recognises the fair value of the consideration received and the fair
value of any investment retained together with any gain or loss in profit or loss.
1.F.
INCOME TAX
The income tax expense for the reporting period is the tax payable on the current financial year’s
taxable income based on the income tax rate adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected
to apply when the assets are recovered or liabilities are settled, based on those tax rates which are
enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the
cumulative amounts of deductible and taxable temporary differences to measure the deferred tax
asset or liability. An exception is made for certain temporary differences arising from the initial
recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these
temporary differences if they arose in a transaction, other than a business combination, that at the
time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if
it is probable that future taxable amounts will be available to utilise those temporary differences and
losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying
amount and tax bases of investments in controlled entities where the parent entity is able to control
the timing of the reversal of the temporary differences and it is probable that the differences will not
reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
1.G.
TRADE AND OTHER PAYABLES
Trade payables and other accounts payable are recognised when the entity becomes obliged to
make future payments resulting from the purchase of goods and services. Amounts are unsecured
and are usually paid within 30 to 45 days of recognition.
1.H.
CASH AND CASH EQUIVALENTS
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value. Bank overdrafts are shown within borrowings in current liabilities in the statement of
financial position.
For the purpose of the Statement of Cash Flows, cash includes on hand and other funds held at call
net of bank overdrafts.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
1.I.
GOODS AND SERVICES TAX (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount
of GST incurred is not recoverable from the Australian Tax Office (“ATO”). 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.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or
liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash
flows arising from investing and financing activities which are recoverable from, or payable to, the
ATO are classified as operating cash flows.
1.J.
EARNINGS PER SHARE
The Group presents basic earnings per share (“EPS”) data for its ordinary shares. Basic earnings per
share is calculated as net earnings attributable to members, adjusted to exclude costs of servicing
equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted
for any bonus element.
1.K.
TRADE AND OTHER RECEIVABLES
Trade receivables, which generally have 30-90 day terms, are recognised and carried at original
invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is
made when collection of the full amount is no longer probable. Bad debts are written off when
identified.
Receivables from related parties are recognised and carried at the nominal amount due.
1.L.
ISSUED CAPITAL
Issued and paid up capital is recognised at the fair value of the consideration received by the
Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in
equity as a reduction of the share proceeds received.
1.M.
REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity
and the revenue can be reliably measured.
The following specific recognition criteria must also be met before revenue is recognised:
(i)
Interest revenue is recognised when control of the right to receive the interest payment.
1.N.
EMPLOYEE BENEFITS
Provision is made for employee benefits accumulated as a result of employees rendering services up
to the reporting date. These benefits include wages and salaries, annual leave, sick leave and long
service leave.
Liabilities arising in respect of wages and salaries, annual leave, sick leave and other employee
benefits expected to be settled wholly within twelve months of the reporting date are measured at
their undiscounted nominal amounts based on remuneration rates which are expected to be paid
when the liability is settled. Employee benefits that are expected to be settled later than one year
(including any annual leave entitlements which are not used within one year) are measured at the
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
present value of the estimated future cash flows. Employee benefits expenses and revenues arise in
respect of the following categories:
1.
2.
Employment expenses comprise wages and salary payments non-monetary benefits, annual
leave, sick leave and other leave benefits; and
other types of employee benefits are recognised against earnings on a net basis in their
respective categories.
1.O.
EXPLORATION AND DEVELOPMENT EXPENDITURE
Exploration, evaluation and development expenditures incurred are capitalised in respect of each
identifiable area of interest. These costs are only capitalised to the extent that they are expected to
be recovered through the successful development of the area or where activities in the area have
not yet reached a stage that permits reasonable assessment of the existence of economically
recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in
which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised
over the life of the area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing
to capitalise costs in relation to that area of interest.
Costs of site restoration are provided for over the life of the project from when exploration commences
and are included in the costs of that stage. Site restoration costs include the dismantling and removal
of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in
accordance with local laws and regulations and clauses of the permits. Such costs have been
determined using estimates of future costs, current legal requirements and technology on an
undiscounted basis. Any changes in the estimates for the costs are accounted for on a prospective
basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent
of the restoration due to community expectations and future legislation. Accordingly the costs have
been determined on the basis that the restoration will be completed within one year of abandoning
the site.
1.P.
FINANCIAL INSTRUMENTS
Recognition and Initial Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the
entity becomes a party to the contractual provisions of the instrument.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is
not classified at fair value through profit or loss. Transaction costs related to instruments classified at
fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are
classified and measured as set out below.
Derecognition
Financial assets are derecognised when the contractual right to receipt of cash flows expires or the
asset is transferred to another party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised
when the related obligations are either discharged, cancelled or expire. The difference between the
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
carrying value of the financial liability extinguished or transferred to another party and the fair value
of the consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised
in profit or loss.
(i)
(ii)
Receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market and are subsequently measured at amortised cost using the
effective interest rate method.
Loans and borrowings are non-derivative financial liabilities and are initially recognised at the
fair value of the consideration received less directly attributable transaction costs. After initial
recognition, interest-bearing loans and borrowings are subsequently measured at amortised
cost using the effective interest rate method. Gains and losses are recognised in profit or loss
when the liabilities are derecognised as well as through the effective interest rate amortisation
process.
1.Q.
SHARE-BASED PAYMENT TRANSACTIONS
Equity settled transactions
The Group has a Performance Rights Plan which provides equity based awards to Key Management
Personnel and employees. The Remuneration Committee (or, in its absence, or if one has not yet been
established, the Board) approves the grant of such Performance Rights as incentives to attract and
maintain the long term commitment of executives to the Group.
The cost of the awards are measured by reference to the fair value of the equity instrument on the
grant date and they are amortised as an expense in profit or loss over the period in which the
performance and service conditions are fulfilled (vesting) period.
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects:
(i)
(ii)
the extent to which the vesting period has expired; and
the Entity’s best estimate of the number of equity instruments that will ultimately vest.
No adjustment is made for the likelihood of market performance conditions being met as the effect
of these conditions is included in the determination of fair value at grant date. The profit or loss charge
or credit for a period represents the movement in cumulative expense recognised as at the beginning
and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
only conditional upon a market condition.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original
award, as described in the previous paragraph.
1.R.
SIGNIFICANT ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS
The preparation of the consolidated financial statements requires the Group’s management to make
estimates and assumptions that affect the reported amounts of assets and liabilities. The determination
of estimates requires the exercise of judgment based on various assumptions and other factors such
as historical experience, current and expected economic conditions. Actual results could differ from
those estimates.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
The more significant areas requiring the use of management estimates and assumptions relate to
impairment calculations, production assets and restoration provisions. Estimates and judgments are
continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of the assets and liabilities within the next financial year are discussed below.
Exploration and evaluation expenditure
The Directors have conducted a review of the Group’s capitalised exploration expenditure to
determine the existence of any indicators of impairment. Based upon this review, the Directors have
determined that no impairment is present at this time.
Share-based Payments
The Group’s policy for share based compensation is discussed in Note 1.Q. The application of this
policy requires the Directors to make certain estimates and assumptions as to future events and
circumstances relating to the stock’s vesting.
1.S.
FOREIGN CURRENCY TRANSACTIONS AND BALANCES
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are
presented in Australian dollars, which is the parent entity’s functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-
end exchange rate. Non-monetary items measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non-monetary items measured at fair value are
reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other
comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income; otherwise the exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the
Group’s presentation currency, are translated as follows:
•
•
•
assets and liabilities are translated at exchange rates prevailing at the end of the reporting
period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the
transaction.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
Exchange differences arising on translation of foreign operations with functional currencies other than
Australian dollars are recognised in other comprehensive income and included in the foreign currency
translation reserve in the statement of financial position. These differences are recognised in profit or
loss in the period in which the operation is disposed of.
2.
REVENUES AND EXPENSES
2.A.
REVENUE
Other Revenue
Interest received
Other received
2.B. OTHER EXPENSES
Administration expenses
Consultants’ fees
Interest expense
Travel expenses
Other expenses
3.
INCOME TAX EXPENSE
The components of tax expense comprise:
Current tax
Deferred tax
Year ended
31 Dec 2016
$
Year ended
31 Dec 2015
$
6,010
-
6,010
24,004
-
6,234
87,283
49,194
166,715
7,424
22,269
29,693
5,542
52,160
-
90,914
33,395
182,011
Year ended
31 Dec 2016
$
Year ended
31 Dec 2015
$
-
-
-
-
-
-
The prima facie tax benefit on loss from ordinary activities before income tax is reconciled to the
income tax as follows:
Prima facie tax benefit on loss from ordinary activity before
income tax at 30% (31 December 2015: 30%)
(122,999)
(672,299)
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
3.
INCOME TAX EXPENSE (continued)
Add tax effect of:
Other non-allowable items
Losses not recognised
Less tax effect of:
Other non-assessable items
Losses recognised not previously brought to account
Income tax expense
4.
DEFERRED TAX
4.A.
UNRECOGNISED DEFERRED TAX ASSETS
Carry forward revenue losses
Provisions and accruals
Capital raising
Other
Year ended
31 Dec 2016
$
Year ended
31 Dec 2015
$
43,358
173,814
94,174
83,009
11,165
-
664,947
120,812
113,460
-
113,460
-
Year ended
31 Dec 2016
$
Year ended
31 Dec 2015
$
2,581,171
6,000
31,532
-
2,618,703
2,407,357
7,032
35,361
1,294
2,451,044
The tax benefits of the above deferred tax assets will only be obtained if:
(a)
the company derives future assessable income of a nature and of an amount sufficient to
enable the benefits to be utilised;
(b)
the company continues to comply with the conditions for deductibility imposed by law; and
(c) no changes in income tax legislation adversely affect the company in utilising the benefits.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
5.
CASH AND CASH EQUIVALENTS
Cash at bank
As at
31 Dec 2016
$
As at
31 Dec 2015
$
256,857
256,857
1,858,994
1,858,994
Cash at bank earns interest at floating rates based on a daily bank deposit rates.
6.
TRADE & OTHER RECEIVABLES
Current
Other receivables
Prepayments
As at
31 Dec 2016
$
As at
31 Dec 2015
$
33,017
-
33,017
59,332
10,549
69,881
Terms and conditions relating to the above financial instruments:
(a) Other receivables are non-interest bearing and generally on 30 day terms
Ageing of past due but not impaired:
Current – 30 days
Total
7.
OTHER ASSETS
At cost
Accumulated depreciation and impairment
33,017
33,017
59,332
59,332
As at
31 Dec 2016
$
As at
31 Dec 2015
$
1,951,077
-
1,951,077
-
-
-
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
7. OTHER ASSETS (continued)
7.A. MOVEMENT IN CARRYING AMOUNTS
Opening balance
Black Mesa Productions LLC – Earn-in
RA Minerals - Royalty rights acquisition (at cost)
Impairment(i)
Closing balance
As at
31 Dec 2016
$
As at
31 Dec 2015
$
-
617,745
1,202,326
131,006
1,951,077
-
131,006
-
(131,006)
-
On 7 December 2015, BRK Oklahoma Holdings LLC, a wholly owned subsidiary of the Company,
entered into an agreement investing in the United States focused energy start-up Black Mesa
Production, LLC. (i) At 31 December 2015, A$131,006 of costs had been incurred and due to the
infancy stage of the project, these costs were impaired. During the current financial year, the project
has progressed beyond infancy stage resulting in the impairment being reversed.
Investment in Subsidiary
Subsidiary
BRK Oklahoma Holdings LLC^
2016
%
100
2015
%
100
2016
$
366
2015
$
366
^ On 7 October 2015, the company registered its wholly owned subsidiary BRK Oklahoma Holdings LLC, an Oklahoma, USA,
Limited Liability Company.
8.
EXPLORATION AND EVALUATION
Costs carried forward in respect of areas of interest in:
Exploration and evaluation phases – at cost
Opening Balance
STACK project (acquisition costs)
As at
31 Dec 2016
$
As at
31 Dec 2015
$
-
1,830,733
-
1,830,733
1,830,733
-
-
-
-
-
The recoupment of costs carried forward in relation to areas of interest in the exploration and
evaluation phases are dependent on the successful development and commercial exploitation or
sale of the respective areas.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
9.
TRADE & OTHER PAYABLES
9.A. CURRENT
Trade creditors (a)
Other creditors and accruals*
*Aggregate amounts payable to related parties included:
Directors and director-related entities
Terms and conditions
As at
31 Dec 2016
$
As at
31 Dec 2015
$
211,570
48,682
260,252
1,280
68,096
69,376
16,250
16,250
(a)
Trade creditors are non-interest bearing and are normally settled on 30 day terms.
9.B.
BORROWINGS
Borrowings
200,000
200,000
-
-
During the year, the Company entered into a loan agreement with Cicero Advisory Services for a total
of $200,000. The terms of the loans are as follows:
Date of
agreement
24 October
2016
Principal
Interest
Terms
$200,000
$10,000
To be repaid at the earlier of 24 February 2017
or the next capital raising. Repayment was
made on 3 February 2017 including interest.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
10.
ISSUED CAPITAL
Issued and paid up capital
625,000,000 Ordinary shares
(31 December 2015: 400,000,000)
10.A. MOVEMENTS IN ISSUED CAPITAL
As at
31 Dec 2016
$
As at
31 Dec 2015
$
220,586,610
218,405,878
At the beginning of the period
218,405,878
215,487,649
Shares issued during the period:
- Prospectus
- Cicero borrowings conversion
- Placement @ $0.01
- Placement @ $0.012
Share issue costs
At end of the period
-
-
2,000,000
300,000
(119,268)
220,586,610
2,499,979
50,000
-
600,000
(231,750)
218,405,878
10.B. MOVEMENTS IN NUMBER OF SHARES ON ISSUE
Fully paid
At the beginning of the period
Number
400,000,000
Number
501,051,719
Shares issued during the period:
- Placement – 15 April 2016 – tranche 1
- Placement – 30 June 2016 – tranche 2
- Placement – 24 August 2016
- Placement – 24 October 2016
- Placement – 8 December 2016
- Consolidation of capital, 1 for 2 – June 2015
- Prospectus – 15 July 2015
- Conversion of Cicero borrowings
- Consolidation of capital, 1 for 10 – Oct 15
- Placement – 6 November 2015
At end of the period
Terms and conditions of contributed equity
Ordinary shares
60,000,000
40,000,000
25,000,000
60,000,000
40,000,000
-
-
-
-
-
625,000,000
-
-
-
-
-
(250,526,063)
2,499,979,704
749,494,640
(3,149,999,697)
49,999,697
400,000,000
Ordinary shares have the right to receive dividends as declared and, in the event of the winding up
of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the
number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
Company.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
10.
ISSUED CAPITAL (continued)
10.C. OPTIONS
At the end of the reporting period, 250,000,000 options over unissued shares were on issue at the end
of the reporting period.
Type
Options
Date of Expiry
Exercise Price
AUD
Number of Options
on Issue
31 Dec 2018
$0.02
250,000,000
10.D. MOVEMENTS IN NUMBER OF OPTIONS ON ISSUE
Fully paid
At the beginning of the period
Shares issued during the period:
- Options issued in lieu of capital raising fees
- Options placement – June 2016
- Options placement – October 2015
- Placement – 6 November 2015; free attaching
- Expired during the period
At end of the period
11. ACCUMULATED LOSSES
Balance at the beginning of the period
Net loss for the period
Balance at end of the period
12.
RESERVES
Option valuation reserve
Foreign currency translation reserve
As at
31 Dec 2016
Number
187,499,924
As at
31 Dec 2015
Number
-
12,500,076
50,000,000
-
-
-
250,000,000
-
-
175,000,000
12,499,924
-
187,499,924
As at
31 Dec 2016
$
As at
31 Dec 2015
$
(218,494,610)
(409,994)
(218,904,604)
(216,253,614)
(2,240,996)
(218,494,610)
As at
31 Dec 2016
$
1,973,231
(43,805)
1,929,426
As at
31 Dec 2015
$
1,948,231
-
1,948,231
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
12.
RESERVES (continued)
12.A. OPTION VALUATION RESERVE
At the beginning of the period
Options issued during the period:
- Options issued in lieu of capital raising services(i)
- Options placement – October 2015(ii)
At end of the period
As at
31 Dec 2016
$
1,948,231
As at
31 Dec 2015
$
-
25,000
-
1,973,231
-
1,948,231
1,948,231
(i)
(ii)
12,500,076 options were issued to Cicero Corporate Advisory in lieu of capital raising services with a
deemed value $0.002 based on 5 day VWAP at date of agreement.
175,000,000 unlisted options exercisable @ $0.02 expiring 31 December 2018 were issued for in consideration
of $0.0002 per option with a deemed value of $0.011 per option as determined by Black Scholes model
detailed below. Subsequent to 31 December 2015, the options were Listed.
12.B. OPTION VALUATION
The fair value of 12,500,076 listed options issued during the year ended 31 December 2016, was
determined by the VWAP of the listed option price at the date of issue.
The fair value of 175,000,000 unlisted options granted during the year ended 31 December 2015 was
determined using the following option pricing models and weighted average inputs to the model:
Share price
Volatility
Risk free rate
$0.012
212%
1.82%
12.C. FOREIGN CURRENCY RESERVE
At beginning of the period
Movement during the period
Balance at end of the period
As at
31 Dec 2016
$
As at
31 Dec 2015
$
-
(43,805)
(43,805)
-
-
-
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
13. CASH FLOW INFORMATION
13.A. RECONCILIATION OF NET LOSS AFTER TAX TO THE NET CASH FLOWS FROM OPERATIONS:
Net loss
Non-cash items
Share based payments
Option valuation expense
Foreign currency translation
Settlement of DOCA
Acquisition costs (impairment)/reversal of impairment
Changes in assets and liabilities
Increase/(decrease) in receivables and other assets
Decrease in payables and accruals
Net cash flows from / (used in) operating activities
Reconciliation of cash:
Cash balances comprises
AUD accounts
USD accounts
As at
31 Dec 2016
$
As at
31 Dec 2015
$
(409,994)
(2,240,996)
-
24,875
61,115
-
(131,066)
(207,134)
64,503
(597,641)
50,000
1,913,231
(2,598)
4,149
131,006
(22,257)
(748,362)
(915,827)
256,593
264
256,857
1,442,161
416,833
1,858,944
14.
KEY MANAGEMENT PERSONNEL DISCLOSURES
14.A. REMUNERATION OF DIRECTORS AND EXECUTIVES
Details of remuneration paid to Key Management Personnel have been disclosed in the Directors’
Report.
Aggregate of remuneration paid to Key Management Personnel during the period as follows:
Short term employee benefits
Post-employment benefits
Share-based payments
225,000
-
-
225,000
96,250
-
-
96,250
During the year ended 31 December 2016, Cicero Corporate Pty Ltd, an entity related to Loren King,
received $114,000 exclusive of GST for the provision of company secretarial and accounting work to
the Group. Cicero has been engaged to provide corporate services to the Company.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
15.
SEGMENT INFORMATION
Brookside Energy Limited operates predominantly in one industry being the oil and gas industry in the
USA.
Identification of reportable segments
The Company has identified its operating segments based on the internal reports that are reviewed
and used by the Board of Directors in assessing performance and determining the allocation of
resources.
The Company is managed primarily on the basis of its oil and gas in the USA and its corporate activities.
Operating segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments
are considered to have similar economic characteristics.
Types of reportable segments
(i) Oil and gas exploration: Segment assets, including acquisition cost of exploration licenses and
all expenses related to the projects in the USA are reported on in this segment.
(ii) Corporate, including treasury, corporate and regulatory expenses arising from operating an ASX
listed entity. Segment assets, including cash and cash equivalents, and investments in financial
assets are reported in this segment.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker
with respect to operating segments are determined in accordance with accounting policies that are
consistent to those adopted in the annual financial statements of the Group.
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives
the majority of economic value from the asset. In the majority of instances, segment assets are clearly
identifiable on the basis of their nature and physical location.
Unless indicated otherwise in the segment assets note, deferred tax assets and intangible assets have
not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability
and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to
the Company as a whole and are not allocated. Segment liabilities include trade and other payables.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
15.
SEGMENT INFORMATION (continued)
31 December 2016
(i) Segment performance
Segment revenue
Segment results
Included within segment result:
-
Interest Revenue
- Option valuation expense
Corporate
$
Oil and Gas
& Other US
entities
$
Total
$
6,010
(556,683)
-
6,010
146,689
(409,994)
6,010
(24,875)
-
-
6,010
(24,875)
Segment assets
Segment liabilities
276,055
(261,247)
3,795,629
(199,005)
4,071,684
(460,252)
31 December 2015
(i) Segment performance
Segment revenue
Segment results
Included within segment result:
-
Interest Revenue
- Payment Black Mesa Project
- Option valuation expense
Segment assets
Segment liabilities
Corporate
$
Oil and Gas
& Other US
entities
$
Total
$
29,693
-
29,693
(2,109,624)
(131,372)
(2,240,996)
7,424
-
(1,913,231)
1,928,875
(69,376)
-
7,424
(131,006)
(131,006)
-
-
-
(1,913,231)
1,928,875
(69,376)
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
16.
LOSS PER SHARE
The following reflects the income and share data used in the calculation of basic and diluted loss per
share:
Earnings used in calculation of basic and diluted earnings per
share
As at
31 Dec 2016
$
As at
31 Dec 2015
$
(409,994)
(2,240,996)
Weighted average number of ordinary shares on issue used in
the calculation of basic loss per share (i)
485,204,918
1,099,836,613
(i)
Share options are not considered dilutive, as their impact would be to decrease the net loss per share.
17.
RELATED PARTY DISCLOSURE
Cicero Corporate Pty Ltd, an entity associated with Loren King received $114,000 for the provision of
company secretarial services, office space and office support. Refer Note 14 respecting Key
Management Personnel details.
18. AUDITOR’S REMUNERATION
Amounts received or due and receivable by:
Grant Thornton - Audit or review at half year and financial
year end of the Group.
HLB Mann Judd - Audit or review at half year and
financial year end of the Group.
As at
31 Dec 2016
$
As at
31 Dec 2015
$
-
59,000
29,607
29,607
-
59,000
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
19.
FINANCIAL INSTRUMENTS
Financial risk management and risk policies
The Group’s activities expose it to a variety of financial risks: liquidity risk, market risk (including fair value
interest rate risk, currency risk and price risk) and credit risk.
The Group’s overall risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by the full Board of Directors. The Board identifies and evaluates
financial risks in close co-operation with management and provides written principles for overall risk
management.
The Board meets regularly to analyse and monitor the financial risks associated to the business
operations.
19.A.
INTEREST RATE RISK
The Group is exposed to movements in market interest rates on interest bearing bank accounts. The
policy is to monitor the interest rate yield curve out to 120 days to ensure a balance is maintained
between the liquidity of cash assets and the interest rate return.
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk at balance
date. This sensitivity analysis demonstrates the effect on the current period results and equity which
could result from a change in these risks.
Interest Rate Sensitivity Analysis
At 31 December 2016, if interest rates had been 2% higher or lower than the prevailing rates realised,
with all other variables held constant, the effect on loss and equity as a result of interest rates changes
would be as follows:
Change in loss
Increase in interest rate by 2%:
AUD accounts
USD accounts
Decrease in interest rate by 2%:
AUD accounts
USD accounts
31 Dec 2016
31 Dec 2015
$
Net Change
$
Net Change
(120)
-
(120)
120
-
120
(148)
-
(148)
148
-
148
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
19.
FINANCIAL INSTRUMENTS (continued)
Interest rate risk (continued)
Change in equity
Increase in interest rate by 2%:
AUD accounts
USD accounts
Decrease in interest rate by 2%:
AUD accounts
USD accounts
31 Dec 2016
31 Dec 2015
$
Net Change
$
Net Change
(120)
-
(120)
120
-
120
(148)
-
(148)
148
-
148
The above interest rate sensitivity analysis has been performed on the assumption that all other
variables remain unchanged.
19.B. NET FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
The net fair value of cash and cash equivalent and non-interest bearing monetary financial assets and
financial liabilities of the entity approximate their carrying values due to their short-term maturity.
The net fair value of other monetary financial assets and financial liabilities is based on discounting
future cash flows by the current interest rates for assets and liabilities with similar risk profiles. The
balances are not materially different from those disclosed in the statement of financial position of the
Group.
19.C. CREDIT RISK EXPOSURE
The Group’s maximum exposure to credit risk at each balance date in relation to each class of
recognised financial assets is the carrying amount, net of any provision for doubtful debts, of those
assets as indicated in the statement of financial position.
There were no material external debtors at the year-end following the loss of control of the subsidiary
entity.
19.D.
LIQUIDITY RISK MANAGEMENT
The Group had no interest-bearing liabilities at year end.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
19.
FINANCIAL INSTRUMENTS (continued)
19.E.
FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities measured at fair value in the statement of financial position are
grouped into three levels of the following fair value measurement hierarchy in accordance with AASB
7 Financial Instruments:
Disclosures
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly;
Level 3: unobservable inputs for the asset or liability.
The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair
value on a recurring basis at 31 December 2016 and 31 December 2015:
31 December 2016
Level 1
$
Level 2
$
Level 3
$
Total
$
Financial assets
Cash and cash equivalents
Receivables
Total financial assets
Financial liabilities
Payables
Loans and borrowings
Total financial liabilities
-
256,857
33,017
289,874
(260,252)
(200,000)
(460,252)
31 December 2015
Level 1
$
Level 2
$
Financial assets
Cash and cash equivalents
Receivables
Total financial assets
Financial liabilities
Payables
Loans and borrowings
Total financial liabilities
-
-
59,332
59,332
(39,529)
-
(39,529)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Level 3
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
256,857
33,017
289,874
(260,252)
(200,000)
(460,252)
Total
$
-
-
59,332
59,332
(39,529)
-
(39,529)
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
20. CONTINGENT ASSETS AND LIABILITIES
There are no contingent liabilities or contingent assets.
21.
EMPLOYEE BENEFITS
No benefits were issued during the reporting period and are held by the Key Management Personnel
as at the balance date. Refer to Note 12.A for the terms of these options.
Performance Rights Plan
At the end of the year, there were no performance rights on issue.
22.
SHARE BASED PAYMENT PLANS
Share Options
At 31 December 2016, no share based payment options were on issue.
23. AGREEMENT WITH BLACK MESA PRODUCTIONS LLC
On 7 December 2015, BRK Oklahoma Holdings LLC, a wholly owned subsidiary of the Company,
entered into an agreement investing in the United States focused energy start-up Black Mesa
Production, LLC.
BRK Oklahoma and a Tulsa, Oklahoma based equity group (‘the Tulsa Equity Group”) have executed
an Operating Agreement with Black Mesa. Under this agreement, which is effective 1 December,
2015, BRK Oklahoma will acquire 15% of Black Mesa and the Tulsa Equity Group will acquire 35% (“the
Equity Members”). The Black Mesa management team will earn 50% equity in Black Mesa as Incentive
Members.
The Equity Members have committed US$3.126 million (pro-rata in accordance with their respective
equity positions) in start-up capital to Black Mesa over three years. Black Mesa will leverage its
relationship with Brookside and the Tulsa Equity Group to support and enhance its efforts to identify
potential acquisition and development opportunities and to provide capital for these initiatives as
required.
In accordance with the agreement, as at 31 December 2016, the Company has paid US$303,000
(2015: $131,006 (US$93,780)) with a further US$541,020 payable over the next 12 months.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
24.
PARENT ENTITY DISCLOSURES
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Financial performance
Loss for the period
Other comprehensive income
Total comprehensive income
Contingent liabilities
Year Ended
Dec 2016
$
Year Ended
Dec 2015
$
276,055
3,495,106
3,771,161
1,928,875
-
1,928,875
261,247
261,247
69,376
69,376
220,586,610
(219,049,927)
1,973,231
3,509,914
218,405,878
(218,494,610)
1,948,231
1,859,499
(686,690)
-
(686,690)
(2,240,996)
-
(2,240,996)
As at 31 December 2016 and 2015, the Company had no contingent liabilities.
Contractual Commitments
As at 31 December 2016 and 2015, the Company had no contractual commitments.
Guarantees entered into by parent entity
As at 31 December 2016 and 2015, the Company had not entered into any guarantees.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
25.
SUBSEQUENT EVENTS
On 13 January 2017, the Company announced an update to the activities at the STACK play.
On 25 January 2017, the Company announced a capital raising of $1,980,000 (before costs) via the
issue of 165,000,000 fully paid ordinary shares at an issue price of $0.012 per share with a one free
attaching listed option (Options)(exercisable on or before December 31, 2018 at $0.02) for every two
new shares issued under the Placement.
During the year, the Company entered into a loan agreement with Cicero Advisory Services for a total
of $200,000. Repayment was made on 3 February 2017 including interest. Refer to Note 9.B for further
details.
On 28 March 2017, the Company held a General Meeting of Shareholders where all resolutions put
forward to the meeting were passed by a show hands. As a result of the meeting a total of 27,500,000
Options (exercisable on or before December 31, 2018 at $0.02) were issued to Brokers and Advisers as
part consideration for ongoing capital raising advice and support provided to the Company. In
addition, Mr David Prentice was issued 15,000,000 unlisted options (Unlisted Options) (exercisable on
or before December 31, 2020 at $0.03) with Mr Michael Fry being issued 10,000,000 Unlisted Options.
Refer to the Company’s Notice of General Meeting released to ASX on 22 February 2017 for further
details.
The Directors are not aware of any other matter or circumstance that has arisen since 31 December
2016 which significantly affected, or may significantly affect, the operations of the Company, the
results of those operations, or the state of affairs of the Group, in future financial years.
26. COMMITMENTS FOR EXPENDITURE
Capital Commitments – Black Mesa Productions LLC
Within one year^
After one year but not more than five years*
More than five years
^ Equivalent of 2016: USD288,000 and 2015: USD303,000
* Equivalent of 2016: US253,020 and 2015: USD541,020
398,010
349,668
-
747,678
414,728
740,515
-
1,155,243
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 51
DIRECTORS’ DECLARATION
The Directors declare that:
(a)
(b)
in the Directors’ opinion, there are reasonable grounds to believe that the Group will be able
to pay its debts as and when they become due and payable;
in the Directors’ opinion, the attached financial statements and notes thereto are in
accordance with the Corporations Act 2001, including compliance with Australian
Accounting Standards and International Financial Reporting Standards as disclosed in Note
1 and giving a true and fair view of the financial position and performance of the Group for
the year ended on that date;
(c)
the audited remuneration disclosures set out in the Directors’ Report comply with
Accounting Standard AASB 124 Related Party Disclosures and the Corporations Act and
Regulations 2001; and
(d)
the Directors have been given the declarations required by s.295A of the Corporations Act
2001 for the year ended 31 December 2016.
Signed in accordance with a resolution of the Board of Directors made pursuant to s.295(5) of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for
and on behalf of the Directors by:
David Prentice
Chief Executive Officer
31 March 2017
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
Page 52
INDEPENDENT AUDITOR’S REPORT
To the members of Brookside Energy Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Brookside Energy Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the statement of financial position as at 31 December 2016,
the statement of comprehensive income, the statement of changes in equity and the 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 for the Company and the Group.
In our opinion, the accompanying financial report of Brookside Energy Limited is in accordance with
the Corporations Act 2001, including:
a)
giving a true and fair view of the Company’s and the Group’s financial position as at 31
December 2016 and of their 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 Company and 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 relating to going concern
We draw attention to Note 1.A.3 in the financial report, which indicates that the Group’s incurred a net
loss of $409,994 during the year ended 31 December 2016 and, as of that date, the current liabilities
exceeded its total assets by $170,378. As stated in Note 1.A.3, these events or conditions, along with
other matters as set forth in Note 1.A.3, indicate that a material uncertainty exists that may cast
significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material Uncertainty
relating to Going Concern, we have determined the matters described below to be the key audit
matters to be communicated in our report.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a worldwide organisation of accounting firms and business advisers.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
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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, 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 –R. A Minerals Royalty (Note 7)
During the financial year, the group recorded a
royalty at acquisition cost of $1,202,322.
The royalties’ rights were a key audit matter
due to the fact that the valuation of their
recoverable
significant
judgement in determining the key assumptions
supporting the expected future cash flows of
the royalties.
requires
amount
Investment - Black Mesa (Note 7)
During the year, the Group recorded $748,751
in relation to costs incurred to date for the Black
Mesa share capital earn-in.
The investment was considered a key audit
matter as the costs incurred in earning the
investment had previously been impaired.
We considered the discounted cashflow provided by
management to determine the recoverability of the asset
and if there are any impairment indicators present in
accordance with AASB 136: Impairment of Assets.
We tested the assumptions used to calculate the present
value of
future cashflows and also
performed a +/-5% interest rate sensitivity analysis on the
present value calculation.
the expected
We also considered the accounting treatment of the
royalty rights to ensure that they were classified correctly.
We considered the accounting treatment of the earn-in.
In accordance with AASB 136: Impairment of Assets, we
assessed
indicators
present.
there were any
impairment
if
Stack Acreage Recognition and Disclosure (Note 8)
During the financial year, as part pf a drilling
program agreement, the group acquired stack
acreage worth $1,830,733 at cost.
The stack acreage was a key audit matter as
drilling program agreement costs
incurred
resulted in the recognition of a significant
exploration expenditure balance.
We considered the accounting treatment and valuation of
the stack acreage acquired.
Our procedures included but were not limited to:
to support
considering the costs of the stack acreage and
determined whether
they qualify as exploration
expenditure in accordance with AASB 6: Exploration
for and Evaluation of Mineral Resources.
obtaining evidence that the Group has current rights
to tenure of its area of interest;
obtaining evidence
acquisition;
examining the evidence to support planned ongoing
activities
enquiring with management,
reviewed other
information to ensure that the Group had not decided
to discontinue exploration and evaluation at its area
of interest; and
examining the disclosures made in the financial
report.
the cost of
the
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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 financial report for the year ended 31 December 2016, 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 Group 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 Company
and 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 Company or 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 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.
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
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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 Company’s or 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 Company or 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 in pages 9 to 13 of the directors’ report for the year
ended 31 December 2016.
In our opinion, the remuneration report of Brookside Energy Limited for the year ended 31 December
2016 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
31 March 2017
N G Neill
Partner
BROOKSIDE ENERGY LIMITED | 2016 ANNUAL REPORT
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ADDITIONAL SHAREHOLDERS’ INFORMATION
A.
CORPORATE GOVERNANCE
A statement disclosing the extent to which the Company has followed the best practice
recommendations set by the ASX Corporate Governance Council during the reporting period is
detailed following the Director’s Report.
B.
SHAREHOLDING
Substantial Shareholders
The names of the substantial shareholders listed on the Company’s register as at 29 March 2017.
Name
TRUST CO AUST LTD
TWENTIETH CENTURY MOTOR CENTURY
MOF A/C
TWENTIETH CENTURY
Number of Shares
97,031,578
41,000,000
B.1. Quoted Securities
At the date of this report there were 435,000,000 quoted options over ordinary shares in the Company
were on issue and no options were exercised during the year. The listed options are exercisable at
$0.02 per option and have an expiry date of 31 December 2018.
B.2.
Unquoted Securities
At the date of this report there were 25,000,000 unquoted options over ordinary shares in the Company
were on issue and no options were exercised during the year. The unlisted options are exercisable at
$0.03 per option and have an expiry date of 31 December 2020.
B.3. Number of holders in each class of equity securities and the voting rights attached
There are 2,006 holders of ordinary shares. Each shareholder is entitled to one vote per share held.
On a show of hands every shareholder of ordinary shares present at a meeting in person or by proxy,
is entitled to one vote, and upon a poll each share is entitled to one vote.
B.4. Distribution schedule of the number of holders in each class of equity security as at 29 March
2017.
By Class
1-1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
TOTALS
Holders of
Ordinary Shares
849
401
124
305
327
2,006
Number of
Ordinary Shares
299,754
1,042,754
923,758
14,459,157
773,274,577
790,000,000
%
0.04%
0.13%
0.12%
1.83%
97.88%
100.00%
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ADDITIONAL SHAREHOLDERS’ INFORMATION
B.5. Marketable Parcel
There are 1,478 shareholders with less than a marketable parcel.
B.6.
Restricted Securities
The Company has no restricted securities at the current date.
B.7.
Twenty largest holders of each class of quoted equity security
Fully paid ordinary shares
The names of the twenty largest holders of fully paid ordinary shares, the number of securities each
holds and the percentage of share capital each holds (as at 29 March 2017) is as follows:
Name
TRUST CO AUST LTD
MOF A/C
TWENTIETH CENTURY MOTOR CO
TWENTIETH CENTURY
WILD JONATHAN MARK
SHIELDS MICHAEL
STATION NOM PL
ASPIRE WEST PL
STATION S/F A/C
DONGRAY RICHARD S + J
S/F A/C
JKR SUPER PL
PANDORA PERTH PL
WIMALEX PL
JPR S/F A/C
TRIO S/F A/C
No. of Shares
97,031,578
41,000,000
20,000,000
20,000,000
20,000,000
20,000,000
15,000,000
14,000,000
13,500,000
10,000,000
DELARO HLDGS PL
DONGRAY DISCRE NO4
10,000,000
JA RODGERS SUPER PL
JOHN RODGERS S/F A
10,000,000
HOUSE OF EQUITY A/
10,000,000
RAVENHILL INV PL
THREE ZEBRAS PL
LEETE IAN ALASTAIR + H
LEETE FAM S/F A/C
SACCO DVLMTS AUST PL
SACCO FAM A/C
JBS INV PTNRS LP
AET ACF JBS INV INTNL ADV
INTNL ADVANTAGE FU
WARCZAK ENTPS PL
AJAVA HLDGS PL
TOTAL
WARCZAK S/F A/C
9,500,000
9,166,667
8,333,334
8,333,333
8,333,333
8,019,202
8,000,000
%
12.28%
5.19%
2.53%
2.53%
2.53%
2.53%
1.90%
1.77%
1.71%
1.27%
1.27%
1.27%
1.27%
1.20%
1.16%
1.05%
1.05%
1.05%
1.02%
1.01%
360,217,447
45.59%
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ADDITIONAL SHAREHOLDERS’ INFORMATION
Options
The names of the twenty largest option holders, the number of options each holds and the percentage
of option capital each holds (as at 29 March 2017) is as follows:
Name
No. of Options
%
TWENTIETH CENTURY MOTOR C WALKER FAM S/F A/C
PRENTICE DAVID
TRUST CO AUST LTD
MOF A/C
FRY MICHAEL JOHN
MERCHANT FUNDS MGNT PL
WATEROX PL
TIEN CHAI A/C
STATION NOM PL
STATION S/F A/C
RAVENHILL INV PL
HOUSE OF EQUITY A/
SABRELINE PL
JPR INV A/C
SACCO DVLMTS AUST PL
SACCO FAM A/C
LEETE IAN ALASTAIR + H
LEETE FAM S/F A/C
ETHAN ALLEN INV PL
ETHAN ALLEN INVEST
BELLAIRE CAP PL
BELLAIRE CAP INVES
DEMASIADO PL
DEMASIADO FAM A/C
JBS INV PTNRS LP
SHIELDS MICHAEL
AET ACF JBS INV INTNL ADV
INTNL ADVANTAGE FU
HAWKINS HELEN MARGARET
MIAL ENTPS PL
DASHIAN FAM A/C
WARCZAK ENTPS PL
WARCZAK S/F A/C
60,000,000
40,000,000
28,833,333
26,274,924
25,000,000
20,000,000
20,000,000
20,000,000
19,000,076
8,979,167
7,083,333
7,000,000
5,125,000
5,035,715
4,166,667
4,166,667
4,166,667
4,000,000
4,000,000
3,750,000
13.79%
9.20%
6.63%
6.04%
5.75%
4.60%
4.60%
4.60%
4.37%
2.06%
1.63%
1.61%
1.18%
1.16%
0.96%
0.96%
0.96%
0.92%
0.92%
0.86%
TOTAL
316,581,549
72.80%
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