ANNUAL REPORT
FOR THE FINANCIAL YEAR ENDED
31 DECEMBER 2018
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
12
17
18
19
20
21
22
23
50
51
55
BROOKSIDE ENERGY LIMITED | 2018 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
Automic Registry Services
Level 2, 267 St Georges Terrace
Perth WA 6000
Tel: 1300 288 664 (Local)
Tel: (02) 9698 5414 (International)
Email: www.automic.com.au
SECURITIES EXCHANGE LISTING
Australian Securities Exchange
Level 40, Central Park
152-158 St George's Terrace
Perth WA 6000
ASX CODE
BRK
BRKOA (Options)
(Ordinary Shares)
BROOKSIDE ENERGY LIMITED | 2018 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 2018. 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.
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 oil and gas
projects.
OPERATING RESULT
The after-tax loss for the Group for the financial year ended 31 December 2018 amounted to
$1,217,780 (2017: $1,095,551).
DIVIDENDS
There were no dividends paid or recommended during or subsequent to the financial year ended 31
December 2018 (2017: Nil).
REVIEW OF OPERATIONS
During the full year to 31 December 2018 the Company continued to successfully pursue its strategy
of providing shareholders and investors with a unique opportunity to own part of a world class oil and
gas resource play and be rewarded as oil and gas reserves are established and values per leasehold
acre increase. The Company continues to capitalise on the window in which to build a material
premier asset position in the world-class Anadarko Basin Plays (STACK and SCOOP) in Oklahoma.
During the year the company announced details of its maiden estimate of oil and gas reserves
attributable to STACK Play holdings in the Anadarko Basin confirming the success of the Company’s
acreage acquisition and revaluation strategy with the highlights being;
• Net oil and gas reserves of 3.45 MMboe attributable to ~20% of Brookside’s total Anadarko
Basin holdings
• Proved reserves (PDP and PUD) estimated at 2.83 MMboe (~82% of total reserves), with a further
617 Mboe attributable to the Probable reserve category
• Combined NPV10 (PDP, PUD and Probable) of US$12.5 million with forecast future net revenues
of US$37.75 million
• NPV10 per acre at ~US$30,000 confirms highly successful and scalable acreage acquisition and
revaluation business model
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 3
DIRECTORS’ REPORT
Anadarko Basin Play - Leasing and Acquisition Program
BRK Oklahoma announced a significant expansion of its leasing activity during 2018. BRK Oklahoma,
together with its partner and manager of US operations Black Mesa Production, LLC (Black Mesa),
extended its leasing and acquisition activities across the liquids-rich fairways of the Anadarko Basin in
Oklahoma and in the SCOOP and STACK Plays specifically.
Figure 1. Leasehold focus areas in the Anadarko Basin.
During the year, the Company continued with its ongoing Working Interest leasehold acreage
acquisition program in the world class Anadarko Basin plays. The focus was predominantly within the
SCOOP Play targeting the SWISH AOI where Black Mesa has identified a ~8,000 acre “operated
position” across at least 10 drilling units (with unit sizes ranging from 320 acres to 1,280 acres).
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 4
DIRECTORS’ REPORT
Maiden Oil and Gas Reserves
Brookside’s partner and manager of US operations, Black Mesa Production, LLC (Black Mesa)
prepared an estimate of the oil and gas reserves and future net revenues for certain petroleum
property interests owned by Brookside. These interests consist of non-operated working interests and
royalty interests in Oklahoma. The estimated net reserves and future net revenues for these interests
are detailed in the ASX release dated 6 December 2018.
Acreage Divestment
The Company also announced during the year it had successfully completed the sale of its non-
operated Working Interest leasehold acres in the STACK Play in Oklahoma. This was the first of the
Company’s non-operated development units in the STACK Play that has progressed to “full field”
development, with the operator (a tier-one independent E&P company) to commence drilling eight
proved undeveloped wells within this unit.
The acreage sale achieved US$28,600 per acre, representing a multiple of greater than 10-times on
the average acquisition price paid, reflecting the significant interest in the secondary market for
acreage in the Anadarko Basin Plays. It also highlights the high quality proved undeveloped locations
that are being generated from the initial (or parent) wells being drilled in these plays.
Brookside’s leasehold acreage in this unit was acquired during the last half of calendar 2016 (for an
average consideration of US$2,500 per acre) as part of the Company’s initial leasing campaign in the
STACK Play.
In July 2018, Brookside successfully completed a second acreage sale from its STACK Play holdings in
Oklahoma. The RA Minerals Royalty Acreage package (~96.5 acres) was acquired in March 2016 for
~US$878,000. The acreage package was sold for US$1,475,000 (~US$15,300 per acre for a mix of
partially developed and undeveloped acreage).
This price per acre represents ~80% of the estimated “fully developed” PV10 value per acre compared
to approximately 72% of estimated PV10 value per acre achieved in the previously announced sale
of Working Interest leasehold in STACK.
The sale of this acreage package is another very strong endorsement of how the Company’s business
model is working, generating value for shareholders and providing working capital that can be
leveraged into new holdings with the world class Anadarko Basin.
Anadarko Basin Leasing and Acquisition Activities
During the year the Company continued to focus its attention in the SWISH AOI (located in the SCOOP
Play) in south western Oklahoma. As a result of this ongoing activity, the Company has now secured
an interest (leasehold Working Interest acres) in twenty-three, 640-acre sections (representing ~13,000
total gross acres) within the 35,000-acre SWISH AOI.
In addition, the Company progressed the process of “high-grading” its position by actively managing
its leasehold in the lead up to the filing of regulatory documents to secure operations in a smaller
number of specifically targeted sections/development units.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 5
DIRECTORS’ REPORT
Figure 2. Drilling focus areas within the Anadarko Basin.
Anadarko Basin drilling and completion activity
The Company has now participated in the drilling and completion of sixteen horizontal wells within the
Anadarko Basin Plays (STACK & SCOOP) (see Table 2 below).
Very strong sustained production results for the Bullard #1-18-07UWH well were announced during the
quarter. The Rimrock Resource Operating, LLC. operated Bullard #1-18-07UWH well (Brookside 20.57%
Working Interest) had produced approximately 110,000 BOE (65% oil) in less than three months (~71,000
barrels of oil and 236,000 Mcf gas).
These production results were achieved from a horizontal well bore with a 7,500-foot lateral producing
at a depth of approximately 8,050 feet in the “volatile oil window” of the Woodford Shale formation.
The well is currently producing full open flow through a 64-inch choke on gas lift.
To date, this well has continued to exceed the Company’s pre-drill estimates with expected
production to drive significant reserve growth beyond the Company’s recently announced Maiden
Reserve Report. The Company is estimating up to six additional potential well locations within this
single 960-acre development unit.
The Bullard #1-18-07UWH well provides another very strong “data point” for the reserve potential of
the Woodford Shale in this area and further justification for higher per-acre valuations in the SCOOP
Play generally. Significantly this well is located adjacent to (approximately 5-miles north of) the
Company’s SWISH AOI, which is the focus of the current leasing campaign. These initial production
results provide the Company with further confirmation of the productivity of the Woodford Shale in this
part of the SCOOP Play and validate our SWISH acreage acquisition strategy were the Company is
targeting both the Sycamore and Woodford Formations.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 6
DIRECTORS’ REPORT
In addition, tier-one independent operator Continental Resources, Inc. (NYSE:CLR) announced initial
production results for the Randolph #1-34-27XHM well in the STACK Play (Brookside 0.3% Working
Interest), reporting IP24 production of 560 barrels of oil and 25,710 Mcf gas (4,845BOE/day) for this
7,150’ lateral (30/64 choke).
Table 2. BRK Well Summary.
Note: Working Interest percentages may increase subject the issue of final pooling orders.
Non-Anadarko Basin Exploration & Production Activities
No exploration was conducted during the quarter on the Company’s leasehold interests in Payne
County, Oklahoma.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 7
DIRECTORS’ REPORT
CORPORATE
The Company’s Annual General Meeting was held on 31 May 2018 with all Resolutions put to
Shareholders passed.
During the year the Company announced that its wholly owned subsidiary, Anadarko Leasing, LLC
(Anadarko Leasing) had reached agreement with Tulsa based Oklahoma Energy Consultants, Inc.
(OEC) to increase the Anadarko Leasing Facility (Facility) limit to US$4.0 million.
The maturity date of the facility was also extended to 31 December 2019. All other terms of the Facility
(outlined in our ASX release dated 21 June 2017) remained unchanged.
In July 2018, the Company announced that it had completed a placement of 197,500,000 fully paid
ordinary shares at an issue price of A$0.016 per share (Share), with a 1 for 1 free attaching listed option
(exercisable at A$0.02 on or before 31 December 2018), to raise A$3,160,000 before costs (Placement).
Cicero Advisory Services Pty Ltd acted as Lead Manager and bookrunner to the Placement, which
was heavily oversubscribed and has introduced new institutional and sophisticated investors to
Brookside’s share register. The new Shares were issued under the Company’s placement capacity
pursuant to ASX Listing Rule 7.1.
During the year the Company (together with Cove Capital, and the Advisory Board) continued to
pursue a number of initiatives aimed at raising the profile of Brookside and its “land and leasing”
business model within the Australian investment community and attracting new investors. With the
Company’s maiden reserve report announced and excellent progress made with the consolidation
of acreage in the SWISH AOI.
As at 31 December 2018 Brookside had approximately ~A$2.9 million available to advance its activities
in the Anadarko Basin Plays, including ~A$1.2 million in cash and call deposits; A$1.7 million available
under the Anadarko Leasing Facility.
During the year the Company (via its wholly owned subsidiary BRK Oklahoma Holdings, LLC) (BRK OK)
also confirmed a number of conditional commercial arrangements with LS Operating LLC (LSO) (a
wholly owned subsidiary of Lone Star Energy Limited) under which LSO has a first right to participate in
well bore drilling and or acreage acquisition opportunities presented to BRK under the Drilling Program
Agreement with Black Mesa (Step-in Agreement).
LSO has conditionally exercised its right to participate in two such opportunities under the terms of the
Step-in Agreement. The prospects introduced to date include the Bullard Prospect (a Working Interest,
well bore only drilling opportunity targeting the Woodford Formation in the Anadarko Basin in Garvin
County, Oklahoma) and the STACK Group prospects.
The STACK Group prospects include a well bore only Working Interest in six currently undrilled
development units in the STACK Play in Blaine County, Oklahoma.
Consistent with the Company’s acreage acquisition and re-valuation business model, these
arrangements (provided the relevant conditions precedent are satisfied) will provide Brookside with a
potential partner to assist with the development of its Anadarko Basin holdings and another valuable
source of drilling capital.
SUBSEQUENT EVENTS
The Company announced on 8 January 2019, an Option Prospectus to issue 225,140,625 New Listed
Options at an issue price of $0.00006 each with each New Listed Option exercisable at $0.03 each
and expiring at 5:00pm (WST) on 31 December 2020.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 8
DIRECTORS’ REPORT
On 27 February 2019, the Company announced an update on progress within the Company’s SWISH
area of interest (SWISH AOI) in the world-class SCOOP Play in the Anadarko Basin, Oklahoma.
The Company announced on 7 March 2019, a production update from its first Woodford Well in the
world-class SCOOP Play in the Anadarko Basin, Oklahoma.
A market update was realised to market on 27 March 2019, informing the market that the Company
had secured its first operated SWISH development unit through having its regulatory applications
approved.
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.
INFORMATION ON DIRECTORS
Michael Fry
Qualifications
Experience
Other
Directorships
Non-Executive Chairman
B.Comm, F.Fin
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
Challenger Energy Limited (ASX: CEL) and Technology Metals Australia Limited (ASX:
TMT).
David Prentice Managing Director
Qualifications Grad. Dip BA, MBA
Experience
David is a senior resources executive with 25 plus years domestic and international
in commercial and business
experience. David started his career working
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.
Other
Directorships
David Prentice is currently a Non-Executive Director of Black Mesa Production, LLC
Non-Executive Chairman of Lustrum Minerals Limited (ASX: LRM) and Non-Executive
Director of Comet Resources Limited (ASX: CRL).
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 9
DIRECTORS’ REPORT
Loren King
Qualifications Grad. Dip (Applied Corporate Governance), BSc (Psych), Cert
Non-Executive Director and Company Secretary
IV FinSvcs
Experience
Other
Directorships
(Bookkeeping)
Loren King has worked in finance and back office administration roles with ASX listed
companies, stockbroking and corporate advisory services for the past 13 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) and
Lustrum Minerals Limited (ASX: LRM). Past Non-Executive Directorships include Intiger
Group Limited (resigned 17 August 2016) and Fraser Range Metals Group Limited
(resigned 29 July 2016).
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: BRK). Its wholly owned subsidiaries, BRK Oklahoma Holdings
LLC and Anadarko Leasing LLC, are both Limited Liability Companies 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
Directors Meetings
Meetings Attended
5
5
4
Number Held and Eligible to
Attend
5
5
5
Note: Both David Prentice and Michael Fry attended 12 and 11 Black Mesa Production (BMP) Board
meetings respectively from a total of 12 meetings held for the financial reporting period. The
importance of noting this is that BMP provides the technical and operational inputs for Brookside under
a number of agreements including the Drilling Program Agreement (DPA) and the Acquisition Program
Agreement (APA).
Options
At the date of this report 295,140,625 options over ordinary shares in the Group were on issue and no
options were exercised during the year.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 10
DIRECTORS’ REPORT
As at 31 December 2018, options on issue are as detailed below.
Type
Date of Expiry
Exercise Price
Number on issue
Unlisted option(i)
31 Dec 2020
$0.03
70,000,000
(i) Subsequent to the end of the period, these options were quoted under the ASX ticker code BRKOA.
Directors’ holdings of shares and options during the financial year 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.
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 provided by the external auditors during the year ended 31 December
2018.
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 17 and forms part of this Directors’ Report
for the year ended 31 December 2018.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 11
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 2018.
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
David Prentice
Loren King
Non-Executive Director
Executive Director
Non-Executive Director
Independent Chairman
Managing Director
Non-Executive Director
20 April 2004
20 April 2004
5 June 2015
A.2 Comments on Remuneration Report at Brookside’s most recent AGM
The Company received a 97.76% (98.74% after Chairman’s discretion) of “yes” votes on its
Remuneration Report for the 2017 financial year. The Company did not receive any specific feedback
from shareholders at the 2017 Annual General Meeting on its remuneration practices.
Additional information
The loss of the consolidated entity for the five years to 31 December 2018 are summarised below:
Revenue
EBITDA
EBIT
Loss after income tax
2018
A$’000
99
(1,218)
(1,218)
(1,218)
2017
A$’000
2
(991)
(1,096)
(1,096)
2016
A$’000
6
(416)
(410)
(410)
2015
A$’000
29
(2,248)
(2,240)
(2,240)
2014
A$’000
-
(16)
(16)
(16)
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)
2018
0.011
-
0.13
2017
0.01
-
0.14
2016
0.01
-
0.20
2015
0.01
-
2014
0.01
-
2.13
USD38.40
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 12
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 2018. 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 2018 Reporting Period
As a result of a strategic review conducted during 2015, no STI plan was implemented for the 2018
reporting period.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 13
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 2018.
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
Remuneration of Key Management Personnel is set out below:
Primary
Post- employment
Base Salary
and Fees
$
Bonus
STI
$
Share-
based
Benefits
$
Super-
annuation
Contributions
$
Termination
Payments
$
TOTAL
$
Percentage
Performance
Related
%
31 December 2018
Executive Directors
David Prentice
180,000
Non-Executive Directors
Michael Fry
Loren King(i)
Total 31 Dec 2018
50,000
30,000
260,000
-
-
-
-
-
-
-
-
-
-
-
-
-
180,000
-
-
-
50,000
30,000
260,000
-
-
-
(i) During the year ended 31 December 2018, Cicero Corporate Pty Ltd, an entity related to Loren King, received $114,000 (2017:
$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.
As at 31 December 2018, the Company had accrued outstanding director fees to Mr David Prentice
and Mr Michael Fry for $15,000 and $4,166, respectively, for the month of December 2018 (31
December 2017: $58,766).
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 14
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 2017
Executive Directors
David Prentice
175,000
Non-Executive Directors
Michael Fry
Loren King
Total 31 Dec 2017
49,166
30,000
254,166
-
-
-
-
80,395
53,596
-
133,991
-
-
-
-
-
255,395
-
-
-
102,762
30,000
388,157
-
-
-
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.
Director
David Prentice
Michael Fry
Loren King
Total
Balance at
1 Jan 2018
Shares
Issued
Other(i)
Balance at
31 Dec 2018
1,437,372
3,000,000
-
4,437,372
-
-
-
-
809,900
1,000,000
-
2,247,272
4,000,000
-
1,809,900
6,247,272
(i) Shares acquired are at arms-length transaction.
There have been no changes in holdings as at the date of this report.
(ii)
Options Held by Key Management Personnel
Options held by Key Management Personnel during the reporting period are as follows:
Director
David Prentice
Michael Fry
Loren King
Total
Balance at
1 Jan 2018
Options
Issued
55,000,000
36,274,924
-
91,274,924
Other(i)
(40,000,000)
(26,274,924)
-
Balance at
31 Dec 2018
15,000,000
10,000,000
-
(66,274,924)
25,000,000
-
-
-
-
(i) Options expired unexercised on 31 December 2018.
No shares were issued on the exercise of options during the period.
There have been no changes in holdings as at the date of this report.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 15
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.
(v)
Compensation Options: Granted and vested during and since the financial year ended 31
December 2018
During the financial year ended 31 December 2018 (2017: 25,000,000), no compensation options were
granted or vested to directors.
(vi)
Performance income as a proportion of total income
No performance-based bonuses have been paid to key management personnel during the financial
year.
F.
SERVICE AGREEMENTS
Director
Base Salary
Terms of the Agreement
Notice Period
David Prentice
CEO/Managing Director
Michael Fry
Non-Executive Chairman
Loren King
Non-Executive Director
$15,000 per month
Until termination
6 Months
$50,000 per annum
$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
30 March 2019
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 16
AUDITOR’S INDEPENDENCE DECLARATION
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 2018, I declare that, to the best of my knowledge and belief, there have
been no contraventions of:
(a)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
30 March 2019
N G Neill
Partner
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 17
CORPORATE GOVERNANCE STATEMENT
Brookside Energy Limited (Company) and the Board of Directors are committed to achieving the
highest standards of corporate governance. The Board continues to review the framework and
practices to ensure they meet the interests of shareholders. The Company and its controlled entities
together are referred to as the Group in this statement.
A description of the Group’s main corporate governance practices is set out on the Company’s
website http://brookside-energy.com.au/corporate-governance.
All these practices, unless otherwise stated, were in place for the entire period and comply with the
ASX Corporate Governance Principles and Recommendations and are contained
in the
accompanying Appendix 4G for the period ended 31 December 2018.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 18
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the financial year ended 31 December 2018
Royalty Revenue
Interest revenue
Other revenue
Gain on sale of asset
Other expenses
Director and employee related expenses
Consultants fees
Compliance and registry expenses
Share based payments expense
Interest on financing
(Loss)/gain on foreign exchange movement
Loss before income tax expense
Income tax expense
Net loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit
and loss:
Exchange differences on the translation of foreign
operations
Other comprehensive loss for the year net of taxes
Total comprehensive loss for the year
Notes
For the year
ended
31 Dec 2018
$
For the year
ended
31 Dec 2017
$
2.A
2.A
2.A
2.A
2.B
98,000
1,183
-
810,804
(329,917)
(260,000)
(87,205)
(173,332)
(346,242)
(586,666)
(344,405)
-
1,789
29,020
-
(273,000)
(254,166)
(94,390)
(163,606)
(179,991)
(105,969)
(55,237)
(1,217,780)
(1,095,550)
3
-
(1,217,780)
-
(1,095,550)
1,117,179
(100,601)
(100,601)
(247,322)
(247,322)
(1,342,872)
Loss Per Share
Basic and diluted loss per share (cents)
15
(0.13)
(0.14)
The accompanying notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 19
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2018
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Other receivables
Other assets
Exploration and evaluation assets
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Borrowings
Total Current Liabilities
Non-Current Liabilities
Borrowings
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
As at
31 Dec 2018
$
Notes
Restated
As at
31 Dec 2017
$
4
5
6
7
1,193,306
24,337
1,217,643
51,854
24,366
76,220
-
972,484
10,392,000
11,364,484
12,582,127
12,820
1,994,614
5,993,514
8,000,948
8,077,168
8.A.
8.B.
71,751
4,644,838
4,716,589
371,940
-
371,940
8.B.
-
4,716,589
7,865,538
3,022,744
3
3,394,684
4,682,484
9
11
10
225,354,557
3,728,916
(221,217,935)
7,865,538
222,355,544
2,327,095
(220,000,155)
4,682,484
The accompanying notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 20
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2018
Balance at 1 January 2017
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 2017
Balance at 1 January 2018
Loss for the period
Other comprehensive loss
Total comprehensive loss for the period
Shares issued during the period
Shares issued in lieu of services
Options issued during the period
Capital raising costs
Balance at 31 December 2018
Issued
Capital
$
Accumulated
Losses
$
220,586,610
-
-
-
1,980,000
-
(211,066)
222,355,544
222,355,544
-
-
-
3,160,000
108,350
-
(269,337)
225,354,557
(218,904,604)
(1,095,551)
-
(1,095,551)
-
-
-
(220,000,155)
(220,000,155)
(1,217,780)
-
(1,217,780)
-
-
-
-
(221,217,935)
Share
Based
Payment
Reserve
$
Foreign
Currency
Translation
Reserve
$
1,973,231
-
-
-
-
644,991
-
2,618,222
2,618,222
-
-
-
-
-
284,642
-
2,902,864
(43,805)
-
(247,322)
(247,322)
-
-
-
(291,127)
(291,127)
-
1,117,179
1,117,179
-
-
-
-
826,052
Total
$
3,611,432
(1,095,551)
(247,322)
(1,342,873)
1,980,000
644,991
(211,066)
4,682,484
4,682,484
(1,217,780)
1,117,179
(100,601)
3,160,000
108,350
284,642
(269,337)
7,865,538
The accompanying notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 21
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2018
Cash Flows Used in Operating Activities
Receipts from Customers
Payments to suppliers and employees
Interest received
Net Cash (Used In) Operating Activities
Cash Flows from Investing Activities
Proceeds from disposal of investment
Payments for investments
Payments for acquisition of oil and gas properties
Net Cash (Used In) Investing Activities
Cash Flows from Financing Activities
Proceeds from issue of shares
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
12
For the year
ended
31 Dec 2018
$
Notes
Restated
For the year
ended
31 Dec 2017
$
98,000
(850,534)
1,183
(751,351)
-
(711,356)
1,789
(709,567)
12
2,077,114
-
(3,988,879)
(1,911,765)
-
(329,480)
(3,744,264)
(4,073,744)
3,155,655
(241,560)
743,519
3,657,614
994,498
51,854
146,954
1,193,306
1,980,000
(121,066)
2,716,901
4,575,835
(207,476)
256,857
2,473
51,854
The accompanying notes form part of these consolidated financial statements.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.A.
BASIS OF PREPARATION
These financial statements are general purpose financial statements, which have been prepared in
accordance with the requirements of the Corporations Act 2001, Accounting Standards and
Interpretations and comply with other requirements of the law.
The financial statements comprise the consolidated financial statements for the Group. For the
purposes of preparing the consolidated financial statements, the Company is a for-profit entity.
The accounting policies detailed below have been consistently applied to all of the years presented
unless otherwise stated. The financial statements are for the Group consisting of Brookside Energy
Limited and its subsidiaries.
The financial statements have been prepared on a historical cost basis. Historical cost is based on the
fair values of the consideration given in exchange for goods and services.
The Company is an ASX listed public company, incorporated in Australia and operating in Australia
and USA. The Group’s principal activities during the year were the exploration and appraisal of oil and
gas projects.
The financial report is presented in Australian dollars.
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 31 December 2017 financial statements except for the impact
of the new and revised standards and interpretations as outlined in Note 1.B.
1.A.3. Going Concern
The Group incurred a loss of $1,217,780 for the year ended 31 December 2018. In addition, the Group
has working capital deficiency of $3,498,947. Cash and cash equivalents at the year-end amounted
to $1,193,306.
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 in the following 12 months through issuing additional shares and/or, to secure
further financing facilities or extend the current financing facilities in place, which are due to be repaid
on 31 December 2019.
These factors indicate a material uncertainty exists, 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.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1.B.
ADOPTION OF NEW AND REVISED STANDARDS
1.B.1.
Changes in accounting policies on initial application of Accounting Standards
Standards and Interpretations applicable to 31 December 2018
In the year ended 31 December 2018, the Directors have reviewed all of the new and revised
Standards and interpretations issued by the AASB that are relevant to the Company and effective for
the current reporting periods beginning on or after 1 January 2018.
As a result of this review, the Group has initially applied AASB 9 and AASB 15 from 1 January 2018.
AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and makes changes
to a number of areas including classification of financial instruments, measurement, impairment of
financial assets and hedge accounting model.
Financial instruments are classified as either held at amortised cost or fair value.
Financial instruments are carried at amortised cost if the business model concept can be satisfied.
All equity instruments are carried at fair value and the cost exemption under AASB 139 which was used
where it was not possible to reliably measure the fair value of an unlisted entity has been removed.
Equity instruments which are non-derivative and not held for trading may be designated as fair value
through other comprehensive income (FVOCI). Previously classified available-for-sale investments now
carried at fair value are exempt from impairment testing and gains or loss on sale are no longer
recognized in profit or loss.
The AASB 9 impairment model is based on expected loss at day 1 rather than needing evidence of
an incurred loss, this is likely to cause earlier recognition of bad debt expenses. Most financial
instruments held at fair value are exempt from impairment testing.
The Group has applied AASB 9 at the date of initial application, being 1 January 2018 and has elected
not to restate comparative information. Accordingly, the information presented for 31 December 2017
has not been restated.
AASB 15 Revenue from Contracts with Customers
AASB 15 Revenue from Contacts with Customers is a new Standard introduced by AASB to replace
existing revenue recognition guidance, AASB 111 Construction Contracts, AASB 118 Revenue and
AASB 1004 Contributions. AASB 15 applies to annual periods beginning on or after 1 January 2018. The
new Standard is aimed at improving financial reporting of revenue and comparability to provide
better clarity on revenue recognition on areas where existing requirements unintentionally created
diversity in practice. AASB 15 deals with revenue recognition and establishes principles for reporting
useful information to users of financial statements about the nature, amount, timing and uncertainty
of revenue and cash flows arising from an entity’s contracts with customers. It also introduces new
cost guidance which requires certain costs of obtaining and fulfilling contracts to be recognised as
separate assets when specified criteria are met.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1.B.1. Changes in accounting policies on initial application of Accounting Standards (continued)
The core principle of AASB 15 is that an entity shall recognise revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services.
The Standard introduces a 5-step approach to revenue recognition:
Identify the contract(s) with a customer
Identify the performance obligations
1.
2.
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations
5. Recognise revenue when a performance obligation is satisfied or as a performance obligation
is satisfied over time
Revenue is recognised upon satisfaction of these performance obligations, which occur when control
of goods or services is transferred, rather than on transfer of risks and rewards. Revenue received for a
contract that includes a variable amount is subject to revised conditions for recognition, whereby it
must be highly probable that no significant reversal of the variable component may occur when the
uncertainties around its measurement are removed.
When applying AASB 15 for the first time, an entity shall apply the Standard in full for the current period.
In respect of prior periods, the transition guidance grants entities an option to either apply AASB 15 in
full to prior periods or to retain prior-period figures as reported under the previous standards,
recognising the cumulative effect of applying AASB 15 to all contracts that had not yet been
completed at the beginning of the reporting period as an adjustment to the opening balance of
equity at the date of first-time adoption.
Standards and Interpretations in issue not yet adopted
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 2018. As a result of this review, the Directors have
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 2018 were
approved and authorised for issue on 30 March 2019.
The financial report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that
the financial report, comprising the financial statements and notes thereto, complies with International
Financial Reporting Standards (IFRS).
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1.D.
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of Brookside Energy Limited
and its subsidiaries as at 31 December each year (the Group). Control is achieved where the company
has the power to govern the financial and operating policies of an entity so as to obtain benefits from
its activities.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies. Investments in subsidiaries are accounted for at cost
in the parent entity’s financial statements.
In preparing the consolidated financial statements, all intercompany balances and transactions,
income and expenses and profit and losses resulting from intra-group transactions have been
eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group and cease to be consolidated from the date on which control is transferred out of the
Group. Control exists where the company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities.
The acquisition of subsidiaries has been accounted for using the purchase method of accounting. The
purchase method of accounting involves allocating the cost of the business combination to the fair
value of the assets acquired, and the liabilities and contingent liabilities assumed at the date of
acquisition. Accordingly, the consolidated financial statements include the results of subsidiaries for
the period from their acquisition.
1.E.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The application of accounting policies requires the use of judgements, estimates and assumptions
about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
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 exists.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined by
an external valuer using a Black and Scholes model, using assumptions provided by the Company.
The fair value is expensed over the period until vesting.
1.F.
FOREIGN CURRENCY TRANSLATION
Both the functional and presentation currency of Brookside Energy Limited is Australian dollars. Each
entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1.F.
FOREIGN CURRENCY TRANSLATION (continued)
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the balance date.
All exchange differences in the consolidated financial statements are taken to profit or loss with the
exception of differences on foreign currency borrowings that provide a hedge against a net
investment in a foreign entity. These are taken directly to equity until the disposal of the net investment,
at which time they are recognised in profit or loss.
Tax charges and credits attributable to exchange differences on those borrowings are also recognised
in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and liabilities
carried at fair value are reported as part of the fair value gain or loss.
The functional currency of the foreign operations, BRK Oklahoma Holdings LLC and Anadarko Leasing
LLC is US dollars, “USD”.
2.
REVENUES AND EXPENSES
2.A.
REVENUE
Royalty revenue
Interest received
Other received
Gain on sale of investment
Year ended
31 Dec 2018
$
Year ended
31 Dec 2017
$
98,000
1,183
-
810,804
909,987
-
1,789
29,020
-
30,809
Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third
parties. All revenue is measured at the point in time.
Interest income
Interest income from a financial asset is recognised when it is probable that the economic benefits
will flow to the Group and the amount of revenue can be reliably measured. Interest income is
accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount on initial recognition.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
2.
REVENUES AND EXPENSES (continued)
2.B. OTHER EXPENSES
Administration expenses
Borrowing fees
Promotion and communication costs
Travel expenses
Other expenses
3.
INCOME TAX EXPENSE
The components of tax expense comprise:
Current tax
Deferred tax
Income tax expense reported in statement of profit or loss
and other comprehensive income
3.A.
UNRECOGNISED DEFERRED TAX LIABILITY
Other deferred tax liabilities
Less: Deferred tax assets recognised (tax losses)
3.B.
UNRECOGNISED DEFERRED TAX ASSETS
Unrecognised deferred tax assets at 27.5% (31 December
2017: 27.5%)(i):
Carry forward revenue losses
Provisions and accruals
Capital raising
Less: Deferred tax liabilities
Year ended
31 Dec 2018
$
Year ended
31 Dec 2017
$
95,766
-
56,555
177,596
-
329,917
64,470
10,500
34,075
163,661
294
273,000
Year ended
31 Dec 2018
$
Year ended
31 Dec 2017
$
-
-
-
5,113
(5,113)
-
-
-
-
-
-
-
2,894,309
6,000
119,102
(5,113)
3,014,298
2,561,214
8,250
37,339
-
2,606,803
(i) The corporate tax rate for eligible companies will reduce from 30% to 25% by 30 June 2027 providing certain turnover
thresholds and other criteria are met. Deferred tax assets and liabilities are required to be measured at the tax rate that i s
expected to apply in the future income year when the asset is realised, or the liability is settled. The Directors have determined
that the deferred tax balances be measured at the tax rates stated.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
3.
INCOME TAX EXPENSE (continued)
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;
the company continues to comply with the conditions for deductibility imposed by law; and
(b)
(c) no changes in income tax legislation adversely affect the company in utilising the benefits.
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the statement of financial position
date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only recognised to
the extent that it is probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised
to the extent that it has become probable that future taxable profit will allow the deferred tax asset
to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the balance date. Income taxes relating to items
recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to
the same taxable entity and the same taxation authority.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
3.
INCOME TAX EXPENSE (continued)
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of the
asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities, which is recoverable from, or payable to, the
taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the taxation authority.
4.
CASH AND CASH EQUIVALENTS
Cash at bank
As at
31 Dec 2018
$
As at
31 Dec 2017
$
1,193,306
1,193,306
51,854
51,854
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.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
Cash at bank earns interest at floating rates based on daily bank deposit rates.
5.
TRADE & OTHER RECEIVABLES
Current
Other receivables
Prepayments
As at
31 Dec 2018
$
As at
31 Dec 2017
$
7,295
17,042
24,337
13,158
11,208
24,366
Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days.
There are no receivables that are past due date.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
6.
OTHER ASSETS
At Cost
6.A. MOVEMENT IN CARRYING AMOUNTS
Opening balance
Black Mesa Productions LLC - Earn In
Foreign currency translation
Disposal of RA Minerals - at Cost
Closing balance
As at
31 Dec 2018
$
As at
31 Dec 2017
$
972,484
972,484
1,994,614
1,994,614
Year ended
31 Dec 2018
Year ended
31 Dec 2017
1,994,614
-
154,981
(1,177,111)
972,484
1,951,077
184,615
(141,078)
-
1,994,614
(i) On 7 December 2015, BRK Oklahoma Holdings LLC entered into an agreement investing in the United States focused energy
start-up Black Mesa Production, LLC. Under this agreement, 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.
During the year ended 31 December 2018, Black Mesa Production, LLC. did not request BRK to pay its
earn in for the year, being US$288,000, as per the agreement. In the prior year which ended 31
December 2017, the Company paid US$144,00. As at 31 December 2018, there is a further US$253,020
payable over the next 12 months.
Investment in Subsidiary
Subsidiary
BRK Oklahoma Holdings LLC
Anadarko Leasing LLC
2018
%
100
100
2017
%
100
100
2018
$
366
444
2017
$
366
444
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
7.
EXPLORATION AND EVALUATION
Costs carried forward in respect of areas of interest in:
Exploration and evaluation phases – at cost
Opening Balance
Anadarko Basin Projects (leasehold acquisition)
STACK-A JV(i)
Foreign currency translation on movement
As at
31 Dec 2018
$
Restated
As at
31 Dec 2017
$
10,392,000
5,993,514
5,993,514
4,849,094
-
(450,608)
10,392,000
1,830,733
3,920,157
375,000
(132,376)
5,993,514
(i) In accordance with the STACK-A Joint Venture agreement, the company issued 75,000,000 listed options at $0.02, exercisable
on or before 31 December 2018.
(ii) Refer to Note 24 for details of restatement.
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.
Exploration and evaluation expenditures in relation to each separate area of interest are recognised
as an exploration and evaluation asset in the year in which they are incurred where the following
conditions are satisfied:
the rights to tenure of the area of interest are current; and
•
• at least one of the following conditions is also met:
(i)
the exploration and evaluation expenditures are expected to be recouped through
successful development and exploitation of the area of interest, or alternatively, by its sale;
or
(ii) exploration and evaluation activities in the area of interest have not at the balance date
reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in, or in relation
to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to
explore, studies, exploratory drilling, trenching and sampling and associated activities and an
allocation of depreciation and amortised of assets used in exploration and evaluation activities.
General and administrative costs are only included in the measurement of exploration and evaluation
costs where they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest
that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.
The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to
which it has been allocated being no larger than the relevant area of interest) is estimated to
determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses,
the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but
only to the extent that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset in previous years.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
7.
EXPLORATION AND EVALUATION (continued)
Where a decision has been made to proceed with development in respect of a particular area of
interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then
reclassified to development.
8.
LIABILITIES
8.A.
TRADE AND OTHER PAYABLES
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 2018
$
As at
31 Dec 2017
$
32,585
39,166
71,751
61,742
310,198
371,940
19,166
58,766
(a)
Trade creditors are non-interest bearing and are normally settled on 30-day terms.
Trade payables and other payables are carried at amortised cost and represent liabilities for goods
and services provided to the Group prior to the end of the financial year that are unpaid and arise
when the Group becomes obliged to make future payments in respect of the purchase of these
goods and services. Trade and other payables are presented as current liabilities unless payment is
not due within 12 months.
8.B.
BORROWINGS
Opening balance (Restated)
Oklahoma Energy LLC financing(i)
Repayments – Cicero Advisory Services(ii)
Interest accrued on borrowings
Foreign Currency Translation
Closing balance
Year ended
31 Dec 2018
$
Restated
Year ended
31 Dec 2017
$
3,022,744
743,519
-
586,666
291,909
4,644,838
200,000
3,022,744
(200,000)
-
-
3,022,744
(i) On 1 June 2017, Anadarko Leasing LLC (wholly owned subsidiary) entered into a Drawdown Facility with Oklahoma Energy
Consultants.
(ii) The Company repaid the loan with Cicero Advisory Services in the amount of $200,000 plus borrowing fees of $10,500.
(iii) Refer to Note 24 for details of restatement.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
8.
LIABILITIES (continued)
8.B.
BORROWINGS
Terms of the Drawdown Facility are as follows:
Date of
Agreement
Financing
Facility
1 June 2017
(Amended 22
December
2017 and 16
March 2018)
US$4,000,000
(increase from
$2,000,000 on
22 December
2017)
Terms(i)
Facility is due for repayment on the 31 December 2019. Facility
shall bear interest at a rate per annum of 12%, payable quarterly
in arrears on drawdown amounts.
Facility will be secured by the Borrower’s interest in Working
Interest leasehold acreage that is acquired by the Borrower
pursuant to and subject to the terms of the Drilling Program
Agreement between the Borrower and Black Mesa Production,
LLC.
(i) On 16 March 2018, the terms of the facility agreement were amended. Refer Note 22.
As at 31 December 2018, a total of A$4,644,838 (US$3,275,540) has been drawn down. Included within
the profit and loss statement is $586,666 interest expense for the period.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in profit or loss over the period of the borrowings
using the effective interest method. Fees paid on the establishment of loan facilities are recognised
as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised
as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the statement of financial position when the obligation specified in the
contract is discharged, cancelled or expired. The difference between the carrying amount of a
financial liability that has been extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as
other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting period.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled
or expires.
When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability,
and the difference in the respective carrying amounts is recognised in profit or loss.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
9.
ISSUED CAPITAL
Issued and paid up capital
994,821,875 Ordinary shares
(31 December 2017: 790,000,000)
9.A. MOVEMENTS IN ISSUED CAPITAL
At the beginning of the period
Shares issued during the period:
- Placement @ $0.012
- Placement @ $0.016
- Payment of Broker Fees in Ordinary Shares
- Payment of Advisor Fees in Ordinary Shares
Share issue costs
At end of the period
9.B. MOVEMENTS IN NUMBER OF SHARES ON ISSUE
At the beginning of the period
Shares issued during the period:
- Placement – 3 February 2017
- Placement – 13 and 17 April 2018
- Capital Raising Fees paid in shares in lieu of cash
- Corporate Advisory Fees paid in shares in lieu of cash
At end of the period
9.C.
TERMS AND CONDITIONS OF CONTRIBUTED EQUITY
Voting Rights
As at
31 Dec 2018
$
As at
31 Dec 2017
$
225,354,557
222,355,544
Year ended
31 Dec 2018
Year ended
31 Dec 2017
222,355,544
220,586,610
-
3,160,000
46,750
61,600
(269,337)
225,354,557
1,980,000
-
-
-
(211,066)
222,355,544
Year ended
31 Dec 2018
Number
790,000,000
Year ended
31 Dec 2017
Number
625,000,000
-
197,500,000
2,921,875
4,400,000
994,821,875
165,000,000
-
-
-
790,000,000
Ordinary shares participate in dividends and the proceeds on winding up of the Company in
proportion to the number of shares held and in proportion to the amount paid up on the shares held.
At shareholders meetings, each ordinary share is entitled to one vote in proportion to the paid-up
amount of the share when a poll is called, otherwise each shareholder has one vote on a show of
hands.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
9.
ISSUED CAPITAL (continued)
9.D. OPTIONS
At the end of the reporting period, 70,000,000 options over unissued shares were on issue.
Type
Options
Date of Expiry
31 Dec 2020
Exercise Price
AUD
$0.03
Number of Options
on Issue
70,000,000
9.E. MOVEMENTS IN NUMBER OF OPTIONS ON ISSUE
At the beginning of the period
Shares issued during the period:
- Options free attaching to placement
- Options issued in accordance with drilling agreement
- Options issued to advisors, consultants and/or directors
- Options issued in lieu of capital raising fees
- Options expired during the period
At end of the period
10. ACCUMULATED LOSSES
Balance at the beginning of the period
Net loss for the period
Balance at end of the period
11.
RESERVES
Option valuation reserve
Foreign currency translation reserve
Option valuation reserve
As at
31 Dec 2018
Number
460,000,000
As at
31 Dec 2017
Number
250,000,000
197,500,000
-
85,000,000
2,921,875
(675,421,875)
70,000,000
82,500,000
75,000,000
36,500,000
16,000,000
-
460,000,000
As at
31 Dec 2018
$
As at
31 Dec 2017
$
(220,000,155)
(1,217,780)
(221,217,935)
(218,904,604)
(1,095,551)
(220,000,155)
As at
31 Dec 2018
$
2,902,864
826,052
3,728,916
As at
31 Dec 2017
$
2,618,222
(291,127)
2,327,095
This reserve is used to record the value of equity benefits provided to employees, directors, suppliers
and consultants as part of their remuneration. Refer to Note 20.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
11.
RESERVES (continued)
Foreign Currency Translation Reserve
Foreign currency translation reserve records exchange differences arising on translation of the
subsidiaries’ functional currency (US Dollars) into presentation currency at balance date.
11.A. OPTION VALUATION RESERVE
At the beginning of the period
Options issued during the period:
- Options issued to consultants(i)
- Options issued in directors(ii)
- Options issued in accordance with Drilling agreement(iii)
- Options issued in lieu of capital raising services(iv)
At end of the period
Year ended
31 Dec 2018
$
2,618,222
Year ended
31 Dec 2017
$
1,973,231
284,642
-
-
-
2,902,864
46,000
133,991
375,000
90,000
2,618,222
(i) On 29 March 2017, 11,500,000 listed options were issued to Cicero Corporate Advisory in lieu of corporate advisory services
with a value $0.004 based on 5-day VWAP at date of agreement.
(ii) On 29 March 2017, 15,000,000 unlisted options were issued to David Prentice and 10,000,000 unlisted options to Michael Fry
in recognition of their ongoing commitment and contribution to the company.
(iii) On 29 March 2017, the company issued 75,000,000 listed options in accordance with the Stack-A JV Drilling Facility at a
value of $0.005 per option.
(iv) On 29 March 2017, 16,000,000 listed options were issued to various consultants in lieu of capital raising services with an
average value of $0.005 based on 5-day VWAP at the date of their agreements.
11.B. OPTION VALUATION
The fair value of the listed options issued during the year ended 31 December 2018, was determined
by the VWAP of the listed option price at the date of issue.
11.C. FOREIGN CURRENCY RESERVE
At beginning of the period
Movement during the period
Balance at end of the period
Year ended
31 Dec 2018
$
(291,127)
1,117,179
826,052
Year ended
31 Dec 2017
$
(43,805)
(247,322)
(291,127)
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
12. CASH FLOW INFORMATION
12.A. RECONCILIATION OF NET LOSS AFTER TAX TO THE NET CASH FLOWS FROM OPERATIONS
Net loss
Non-cash items
Gain on disposal
Share based payment expense
Foreign currency translation
Interest on borrowings
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
Year ended
31 Dec 2018
$
Year ended
31 Dec 2017
$
(1,217,780)
(1,095,551)
(810,804)
346,242
344,405
586,666
39,436
(39,156)
(751,351)
-
179,991
55,531
105,969
(5,168)
49,661
(709,567)
8,432
1,184,874
1,193,306
40,417
11,437
51,854
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
12. CASH AND CASH EQUIVALENTS (continued)
12.B. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Balance as at as at 1 January 2017
Loans
$
200,000
Net cash from (used in) financing activities (Restated)
3,022,744
Repayments – Cicero Advisory Services (i)
Balance as at 31 December 2017 (Restated)
(200,000)
3,022,744
Balance as at as at 1 January 2018 (Restated)
3,022,744
Net cash from (used in) financing activities
Interest accrued on borrowings
Exchange differences
Balance as at 30 June 2018
743,519
586,666
291,909
4,644,838
Consolidated
Convertible
notes
Lease
liability
$
$
-
-
-
-
-
-
-
-
-
Total
$
200,000
3,022,744
(200,000)
3,022,744
3,022,744
743,519
586,666
291,909
4,644,838
-
-
-
-
-
-
-
-
-
(i) During the year ending 31 December 2017, the Company repaid the loan with Cicero Advisory
Services in the amount of $200,000 plus borrowing fees of $10,500.
13.
KEY MANAGEMENT PERSONNEL DISCLOSURES
13.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
As at
31 Dec 2018
$
As at
31 Dec 2017
$
260,000
-
-
260,000
254,166
-
133,991
388,157
During the year ended 31 December 2018, Cicero Corporate Services Pty Ltd (Cicero), 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 | 2018 ANNUAL REPORT
Page 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
14.
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 interests in the USA and its corporate
activities in Australia. 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 link 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 | 2018 ANNUAL REPORT
Page 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
14.
SEGMENT INFORMATION (continued)
31 December 2018
(i) Segment performance
Segment revenue
Segment results
Interest Revenue
Included within segment result:
-
- Gain on disposal of investment
- Drawdown facility interest expense
- Share based payments expense
Corporate
$
Oil and Gas
& Other US
entities
$
Total
$
1,183
(1,539,918)
908,804
322,138
909,987
(1,217,780)
1,183
-
-
(346,242)
-
810,804
(586,666)
-
1,183
810,804
(586,666)
(346,242)
Segment assets
Segment liabilities
549,751
(71,751)
12,032,377
(4,644,838)
12,582,128
(4,716,589)
31 December 2017 (Restated)
(i) Segment performance
Segment revenue
Segment results
Interest Revenue
Included within segment result:
-
- Drawdown facility interest expense
- Option valuation expense
Segment assets
Segment liabilities
15.
LOSS PER SHARE
Corporate
$
Oil and Gas
& Other US
entities
$
Total
$
30,809
(921,236)
-
(174,315)
30,809
(1,095,551)
1,789
-
(179,991)
452,030
(110,908)
-
(105,969)
-
1,789
(105,969)
(179,991)
7,579,580
(3,314,438)
8,031,610
(3,425,346)
The following reflects the income and share data used in the calculation of basic and diluted loss per
share:
As at
31 Dec 2018
$
As at
31 Dec 2017
$
Loss used in calculation of basic and diluted loss per share
(1,217,780)
(1,095,551)
Weighted average number of ordinary shares on issue used in
the calculation of basic loss per share
933,943,553
775,041,209
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
15.
LOSS PER SHARE (continued)
Basic earnings per share is calculated as net profit or loss attributable to members of the parent,
adjusted to exclude any costs of servicing equity (other than dividends) and preference share
dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share is calculated as net profit or loss attributable to members of the parent,
adjusted for:
•
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after-tax effect of dividends and interest associated with dilutive potential ordinary
shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would
result from the dilution of potential ordinary shares; divided by the weighted average
number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element.
16.
RELATED PARTY DISCLOSURE
On 5 August 2015, the Group entered into an agreement with Cicero Corporate Services Pty Ltd (an
entity in which Mrs King is shareholder and director) (Cicero) defining the terms of engagement for the
provision of administration services by Cicero as a contractor to the Group. Cicero will provide the
office rent, bookkeeping, company secretarial and administration services to the Company for a
monthly fee of $9,500 plus GST. Fees paid to Cicero for the period ending 30 June 2018 is $114,000
(exc. GST).
17. AUDITOR’S REMUNERATION
The auditor of Brookside Energy Limited is HLB Mann Judd.
Amounts received or due and receivable to the auditor for:
− Audit or reviewing the financial report.
Year ended
31 Dec 2018
$
Year ended
31 Dec 2017
$
49,680
49,680
36,750
36,750
18.
FINANCIAL INSTRUMENTS
The main risks arising from the Group’s financial instruments are market risk, currency risk and interest
rate risk.
This note presents information about the Group’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk, and the management of capital.
The Board has overall responsibility for the establishment and oversight of the risk management
framework. The Board reviews and agrees policies for managing each of these risks and they are
summarised below.
The Group’s principal financial instruments comprise cash and short-term deposits. The main purpose
of the financial instruments is to earn the maximum amount of interest at a low risk to the Group. The
Group also has other financial instruments such as trade debtors, creditors and borrowings which arise
directly from its operations.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
18.
FINANCIAL INSTRUMENTS (continued)
Market Risk
Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and
equity prices will affect the Group’s income or the value of its holdings of financial instruments.
The Group is exposed to movements in market interest rates on short term deposits. 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 does not have short- or long-term debt,
and therefore this risk is minimal.
Currency Risk
Foreign exchange risk arises from future commitments, assets and liabilities that are denominated in a
currency that is not he functional currency of the Group. The Group deposits are denominated in both
US and Australian dollars. At the year end the majority of deposits were held in Australian dollars.
Currently, there are no foreign exchange programs in place. The Group treasury function manages
the purchase of foreign currency to meet operational and budgetary requirements. The impact of
reasonably possible changes in foreign exchange rates for the Group is not material.
Interest Rate Risk
The table below reflects the undiscounted contractual settlement terms for financial instruments of a
fixed period of maturity, as well as management’s expectations of the settlement period for all other
financial instruments. As such, the amounts might not reconcile to the statement of financial position.
Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. The Group has adopted the policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral or other security where appropriate, as a means of
mitigating the risk of financial loss from defaults.
The Group operates in the energy exploration and production sector; it therefore does not supply
products and have trade receivables and is not exposed to credit risk in relation to trade receivables.
The Group does not have any significant credit risk exposure to any single counterparty or any
Company of counterparties having similar characteristics.
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 allowance for doubtful debts, of those
assets as indicated in the statement of financial position. The maximum credit risk exposure of the
Group at 31 December 2018 is Nil (2017: Nil). There are no impaired receivables at 31 December 2018
(2017: Nil).
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
19.
FINANCIAL INSTRUMENTS (continued)
Interest Rate Sensitivity Analysis
At 31 December 2018, 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
Change in equity
Increase in interest rate by 2%:
AUD accounts
USD accounts
Decrease in interest rate by 2%:
AUD accounts
USD accounts
Liquidity Risk
31 Dec 2018
31 Dec 2017
$
Net Change
$
Net Change
(167)
(23,697)
(23,864)
167
23,697
23,864
(167)
(23,697)
(23,864)
167
23,697
23,864
(36)
-
(36)
36
-
36
(36)
-
(36)
36
-
36
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages
liquidity risk by monitoring forecast cash flows on a rolling monthly basis. The Group does not have any
significant liquidity risk as the Group does not have any collateral debts.
Capital Management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going
concern, so it may continue to provide returns for shareholders and benefits for other stakeholders.
Accordingly, the objective of the Group’s capital risk management is to balance the current working
capital position against the requirements to meet exploration programmes and corporate overheads.
This is achieved by maintaining appropriate liquidity to meet anticipated operating requirements, with
a view to initiating appropriate capital raisings as required.
The directors consider that the carrying value of the financial assets and financial liabilities recognised
in the consolidated financial statement approximate their fair value.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
19.
FINANCIAL INSTRUMENTS (continued)
18.A. 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 2018:
31 December 2018
Financial assets
Cash and cash equivalents
Receivables
Total financial assets
Financial liabilities
Payables
Loans and borrowings
Total financial liabilities
Level 1
$
Level 2
$
Level 3
$
Total
$
1,193,306
24,337
1,217,643
(71,751)
(4,644,838)
(4,716,589)
-
-
-
-
-
-
-
-
-
-
-
-
1,193,306
24,337
1,217,643
(71,751)
(4,644,838)
(4,716,589)
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 2017:
31 December 2017 (Restated)
Level 1
$
Level 2
$
Level 3
$
Total
$
Financial assets
Cash and cash equivalents
Receivables
RA Minerals - Royalty Rights acquisition
Total financial assets
Financial liabilities
Payables
Loans and borrowings
Total financial liabilities
51,854
24,366
1,115,388
1,191,608
(371,940)
(3,053,460)
(3,425,400)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51,854
24,366
1,115,388
1,191,608
(371,940)
(3,053,460)
(3,425,400)
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
19.
FINANCIAL INSTRUMENTS (continued)
19.A. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (continued)
Net fair value of financial assets and liabilities
The carrying amount of cash and cash equivalents approximates fair value because of their short-
term maturity.
19. CONTINGENT ASSETS AND LIABILITIES
There are no contingent liabilities or contingent assets.
20.
SHARE BASED PAYMENT PLANS
The following share-based payment arrangements were entered into during the period:
The fair value of the unlisted equity-settled options granted is estimated as at the date of grant using
the Black-Scholes model taking into account the terms and conditions upon which the options were
granted. Listed options are valued using VWAP as at the prevailing share price on the date of grant.
Type
Number
Grant date
Expiry date / vesting date
Exercise Price
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Grant date share price
Fair value of equity instrument at grant
Advisor
Options
Listed options: BRKO
40,000,000
5 June 2018
31 Dec 2018
$0.02
-
-
-
-
$0.013
$0.03
Advisor
Shares
Unlisted options
30,000,000
7 Nov 2018
31 Dec 2020
$0.03
-
-
-
-
$0.014
$0.0036
Advisor
Options
Unlisted options.
15,000,000
7 Nov 2018
31 Dec 2020
$0.03
-
-
-
-
$0.014
$0.0036
The expected life of the options is based on historical data and is not necessarily indicative of exercise
patterns that may occur. The expected volatility reflects the assumption that the historical volatility is
indicative of future trends, which may also not necessarily be the actual outcome. No other features
of options granted were incorporated into the measurement of fair value.
No share options were exercised during the year.
Included in the statement of profit and loss is $346,242 which relates to equity settled share-based
payment transactions which have been brought to account in the year.
The cost of these equity-settled transactions with employees is measured by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by an
external valuer using a Black-Scholes model, using assumptions provided by the Company.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of Brookside Energy Ltd (market conditions), if applicable.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
21.
SHARE BASED PAYMENT PLANS (continued)
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled, ending on the date
on which the relevant employees become fully entitled to the award (the 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 Group’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 statement of
comprehensive income 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 the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. In addition, an expense is recognised for any modification that
increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to
the employee, as measured at the date of modification.
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.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings per share. Refer Note 15.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
21.
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
31 Dec 2018
$
Year Ended
31 Dec 2017
$
174,751
10,639,097
10,813,848
76,220
4,717,172
4,793,392
4,067,509
4,067,509
110,908
110,908
225,354,557
(221,511,082)
2,902,864
6,746,339
222,355,544
(220,291,282)
2,618,222
4,682,484
(1,539,918)
-
(1,539,918)
(1,241,355)
-
(1,241,355)
As at 31 December 2018 and 2017, the Company had no contingent liabilities.
Contractual Commitments
As at 31 December 2018 and 2017, the Company had no contractual commitments.
Guarantees entered into by parent entity
As at 31 December 2018 and 2017, the Company had not entered into any guarantees.
The financial information for the parent entity, Brookside Energy Ltd, has been prepared on the same
basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent
entity’s financial statements.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
22. 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 2018: USD253,020 and 2017: USD253,020
* Equivalent of 2018: nil and 2017: nil
23. CORRECTIONS OF PRIOR PERIOD ERRORS
As at
31 Dec 2018
$
As at
31 Dec 2017
$
358,792
-
-
358,792
324,385
-
-
324,385
Statement of Financial Position
Exploration and evaluation assets
Borrowings
Statement of Cash Flows
Payments for acquisition of oil and gas
properties
Proceeds from borrowings
31 Dec 2017
$
5,521,615
2,550,845
Adjustment
$
Restated
31 Dec 2017
$
471,899
471,899
5,993,514
3,022,744
(3,272,365)
(471,899)
(3,744,264)
2,245,002
471,899
2,716,901
An additional amount of $471,899, drawn down under the Lease Facility Agreement of Oklahoma
Energy Consultants, LLC, was inadvertently not recorded in the Financial Statements for the Year
ending 31 December 2017. This adjustment has been made retrospectively, with updated balances
above.
24.
SUBSEQUENT EVENTS
The Company announced on 8 January 2019, an Option Prospectus to issue 225,140,625 New Listed
Options at an issue price of $0.00006 each with each New Listed Option exercisable at $0.03 each
and expiring at 5:00pm (WST) on 31 December 2020.
On 27 February 2019, the Company announced an update on progress within the Company’s SWISH
area of interest (SWISH AOI) in the world-class SCOOP Play in the Anadarko Basin, Oklahoma.
The Company announced on 7 March 2019, a production update from its first Woodford Well in the
world-class SCOOP Play in the Anadarko Basin, Oklahoma.
A market update was realised to market on 27 March 2019, informing the market that the Company
had secured its first operated SWISH development unit though having its regulatory applications
approved.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 49
DIRECTORS’ DECLARATION
1. In the opinion of the directors of Brookside Energy Limited (the ‘Company’):
a. the financial statements, notes and the additional disclosures are in accordance with the
Corporations Act 2001 including:
i.
ii.
giving a true and fair view of the Group’s financial position as at 31 December
2018 and of its performance for the year then ended; and
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001;
b. there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable; and
c. the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board.
2.
This declaration has been made after reviewing the declarations required to be made to the
directors in accordance with Section 295A of the Corporations Act 2001 for the financial year
ended 31 December 2018.
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
30 March 2019
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 50
INDEPENDENT AUDITOR’S REPORT
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 Group”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 31
December 2018, the consolidated statement of profit and loss and comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 31 December 2018 and of its
financial performance for the year then ended; and
b)
c)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1.A.3 in the financial report, which indicates that a material uncertainty
exists that may cast significant doubt on the entity’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
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
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 51
INDEPENDENT AUDITOR’S REPORT
provide a separate opinion on these matters. In addition to the matter described in the Material
uncertainty related to going concern section, we have determined the matters described below to
be the key audit matters to be communicated in our report.
Key Audit Matter
How our audit addressed the key audit
matter
Stack Acreage Exploration and Evaluation
Note 7
In accordance with AASB 6 Exploration for Evaluation
of Mineral Resources, the Group capitalises all
exploration and evaluation expenditure, including
acquisition costs, and subsequently applies the cost
model after recognition.
Our audit focussed on the Group’s assessment of the
carrying amount of the capitalised exploration and
evaluation asset, as this is one of the most significant
assets of the Group. We planned our work to address
the audit risk that the capitalised expenditure might no
longer meets the addition, we considered it necessary
to assess whether facts and circumstances existed to
suggest that the carrying amount of an exploration and
evaluation asset may exceed its recoverable amount.
Our procedures included but were not
limited to the following:
• We obtained an understanding of the
key processes associated with
management’s review of carrying
values of each area of interest;
• We considered the Directors’
assessment of potential indicators of
impairment;
• We obtained evidence that the Group
has current right to tenure of its areas
of interest;
• We examined the exploration budget
for the year 2019 and discussed with
management the nature of planned
and ongoing activities;
• We enquired with management,
reviewed ASX announcements and
reviewed minutes of Directors’
meetings to ensure that the Group had
not resolved to discontinue exploration
and evaluation at any of its areas of
interest; and
• Ensuring the adequacy of disclosures
made within the financial report
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2018 but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 52
INDEPENDENT AUDITOR’S REPORT
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 53
INDEPENDENT AUDITOR’S REPORT
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
31 December 2018.
In our opinion, the Remuneration Report of Brookside Energy Limited for the year ended 31
December 2018 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
30 March 2019
N G Neill
Partner
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 54
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 2019.
Name
THE TRUST COMPANY (AUSTRALIA) LIMITED
THE TWENTIETH CENTURY MOTOR COMPANY PTY LTD
MR MARK JAMES CASEY
Number of
Shares
112,500,000
57,000,000
50,265,901
B.1. Quoted Securities
At the date of this report 70,000,000 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 $0.03 per option
and have an expiry date of 31 December 2020.
B.2.
Unquoted Securities
At the date of this report there were no unquoted options over ordinary shares in the Company and
no options were exercised during the year.
B.3. Number of holders in each class of equity securities and the voting rights attached
There are 2,182 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
2019
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
865
382
108
356
471
2,182
Number of
Ordinary Shares
295,128
997,048
800,015
17,552,902
979,576,782
999,221,875
%
0.03%
0.10%
0.08%
1.76%
98.03%
100.00%
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 55
ADDITIONAL SHAREHOLDERS’ INFORMATION
B.5. Marketable Parcel
There are 1486 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 2019) is as follows:
Name
The Trust Company (Australia) Limited
The Twentieth Century Motor Company Pty Ltd
Mr Mark James Casey
BNP Paribas Nominees Pty Ltd
Great Southern Flour Mills Pty Ltd
Station Nominees Pty Ltd
Mr Jonathan Mark Wild
Ausepen Pty Ltd
Aspire West Pty Ltd
De Jong Superannuation Pty Ltd
Mr Richard Stuart Dongray & Mrs Joan Dongray
JKR Super Pty Ltd
Domaevo Pty Ltd
Mr Hoai Nam Pham
Pandora Perth Pty Ltd
JJ Wealth Fund Pty Ltd
Mr Paul Simon Dongray
Sabreline Pty Ltd
Mr Owen John Clare & Mrs Rosalind Mary Clare
Mr Ian Alastair Leete & Mrs Helen Leete
No. of
Shares
%
112,500,000
11.26%
57,000,000
50,265,901
34,700,070
33,000,000
25,000,000
25,000,000
22,250,000
20,000,000
16,650,106
15,000,000
15,000,000
14,314,443
14,061,434
13,500,000
12,000,000
12,000,000
10,000,000
9,800,000
9,166,667
5.70%
5.03%
3.47%
3.30%
2.50%
2.50%
2.23%
2.00%
1.67%
1.50%
1.50%
1.43%
1.41%
1.35%
1.20%
1.20%
1.00%
0.98%
0.92%
TOTAL
521,208,621
52.16%
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 56
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 2019) is as follows:
Name
Berry Enterprises Pty Ltd
Ausepen Pty Ltd
No. of
Options
15,000,000
15,000,000
Mr David Prentice & Mrs Mirella Rosanna Prentice 15,000,000
Mr Mark James Casey
Mr Scott Alan Malone
The Trust Company (Australia) Limited
Merchant Funds Management Pty Ltd
Fry Super Pty Ltd
My H & B Pty Ltd
Ravenhill Investments Pty Ltd
BNP Paribas Nominees Pty Ltd
Eastern Capital Group LLC
Cove Capital Pty Ltd
Ausepen Pty Ltd
Mr Kirk Larsen
Mr Ashley William Robin Parker
15,000,000
13,685,082
13,152,882
11,404,233
10,000,000
9,351,471
9,123,387
7,978,360
6,666,667
6,666,667
6,666,667
6,208,850
5,930,201
Dr Daniel George Pechar & Mrs Katrina Jane Pechar
5,000,000
Mr Hoai Nam Pham
Mr Muhammad Asif Malik
Mr Stephen Thomas Jessop
TOTAL
4,561,693
4,561,693
4,331,311
185,289,164
62.78%
%
5.08%
5.08%
5.08%
5.08%
4.64%
4.46%
3.86%
3.39%
3.17%
3.09%
2.70%
2.26%
2.26%
2.26%
2.10%
2.01%
1.69%
1.55%
1.55%
1.47%
BROOKSIDE ENERGY LIMITED | 2018 ANNUAL REPORT
Page 57