CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
DIRECTORS' REPORT
Your Directors submit their report for the year ended 30 June 2018.
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 this entire period unless otherwise stated.
Current Directors
John Horsburgh BSc, MSc, FAIMM (Non‐Executive Chairman) (Appointed 1 April 1999)
Mr John Horsburgh, a graduate of the Royal School of Mines, has over 40 years industry experience including 11
years with Solomon Pacific Resources NL. Prior to this he gained extensive experience in Australia and overseas
with Getty Oil Development Co., Billiton and RTZ Group. Mr Horsburgh was a co‐founder and Non‐Executive
Chairman of AIM and TSX listed public company Mariana Resources Limited, prior to its takeover by Sandstorm
Gold Ltd. Mr Horsburgh has had no other directorships of ASX listed companies in the last three years.
Dr Chris Ringrose BSc, PhD, MBA, MAIMM, MAICD (Managing Director) (Appointed 19 June 2003)
•
Dr Chris Ringrose has been an exploration geologist based mainly in Western Australia since he completed his
geology degrees in Scotland in 1982. His career has included experience with EZ, Chevron and Aztec, and prior to
joining Cullen, he was Exploration Manager with Troy Resources Limited for nine years. Dr Ringrose has also
completed an MBA at Deakin University and brings to the Company significant management, exploration and
project evaluation experience gained both in Australia and overseas. Dr Ringrose has had no other directorships
of listed companies in the last three years.
Wayne John Kernaghan BBus, ACA, FAICD, ACIS (Non‐Executive Director and Company Secretary)
(Appointed 11 November 1997)
Mr Wayne Kernaghan is a member of the Institute of Chartered Accountants in Australia with a number of years
experience in various areas of the mining industry. He is also a Fellow of the Australian Institute of Company
Directors. During the past three years Mr Kernaghan has held, and is currently a director and holds, the following
listed company directorships:
‐
‐
Gulf Industrials Limited (from 30 June 2005 to present)
South American Ferro Metals Limited (from 26 June 2013 to 24 April 2015)
Former Directors
•
Dr Denis Clarke BSc, BA, PhD, FAIMM (Non‐Executive Chairman) (Appointed 1 April 1999) (Resigned 21 November
2017)
Dr Denis Clarke has more than 40 years’ experience in exploration and mining operations. Over 15 years with
Plutonic Resources (“Plutonic”), he contributed significantly at the General Manager level to its success as it
developed from a small explorer in 1983 to one of Australia’s largest gold miners prior to its take‐over in 1998 in
a transaction which valued Plutonic at $1 billion. Dr Clarke at various times managed the exploration, finance,
administration and corporate divisions. He subsequently was a director and consultant to Troy Resources Limited
for eleven years as it developed from explorer to a successful international gold miner.
12
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Grahame Hamilton BSc, MSc, MAIG (Non‐Executive Director) (Appointed 1 April 1999)
(resigned 21 November 2017)
Mr Grahame Hamilton, a graduate of the University of NSW, has extensive experience over 40 years in exploration,
corporate and project management. He has wide ranging expertise in project evaluation. Between 1994 and 1996
he managed the Brocks Creek exploration, environmental impact statement, feasibility study, mine development
and construction for Solomon Pacific Resources NL. Before Solomon, Mr Hamilton worked with Getty Oil
Development Co. ‐ Minerals Division as Queensland Manager.
Principal Activities
The principal activity for the Consolidated Entity comprising Cullen Resources Limited ("the Company") and its
controlled entities (together "the Consolidated Entity") during the course of the financial year was mineral
exploration. There was no significant change in the nature of the Consolidated Entity's activities during the year.
Results
The loss attributable to the Consolidated Entity for the financial year was $ 918,006 (2017: loss $918,042). No
income tax was attributable to this result (2017: $Nil).
Dividends
The directors do not recommend the payment of a dividend for this financial year. No dividend has been declared
or paid by the Company since the end of the previous financial year.
Significant Changes in the State of Affairs
In the opinion of the directors there were no significant changes in the state of affairs of the Consolidated Entity
that occurred during the financial year under review not otherwise disclosed in this report or the consolidated
financial statements.
Review of Operations
Cullen is a mineral exploration company seeking deposits of gold, nickel, copper, zinc and cobalt, either in its own
right, or managed by other partners in Joint Ventures.
During the year under review, the Company continued its mineral exploration activities including: project
generation, database reviews, field mapping, geochemical surveying, and drilling programmes. Company
exploration activities, including joint operations, were focused in Western Australia with additional activities in
Finland as follows:
Ashburton Province, WA (Paraburdoo JV iron ore projects)
North Eastern Goldfields, WA (Gunbarrel/Mt Eureka and Irwin Bore, gold and nickel projects)
Eastern Goldfields, WA (Killaloe JV, gold and nickel project)
Murchison, WA (North Tuckabianna , copper and gold project)
Wongan Hills (Gold and base metals)
Forrestania, WA (Forrestania JV, gold project)
Finland (Project generation for copper‐cobalt, and gold)
Drilling by Cullen during the year to 30 June 2018 focussed on programmes for gold deposits in the Mt Eureka
project area. Other exploration field work has included: field reconnaissance, geochemical sampling and
evaluations of new project opportunities and project generation. The Company continued to market projects as
potential farm‐out opportunities and also progressed the development of a portfolio of exploration projects in
Finland.
A total of $590,873 (2017: $410,661) was spent on exploration by Cullen during the year, with Joint Venture
Partners contributing further exploration funds on Cullen tenements.
13
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
On 12 April 2017 the Consolidated Entity sold its 30% contributing interest in the Mt Stuart Iron Ore Joint Venture,
and all of the other rights and interests in the Joint Venture tenements for the following consideration:
a lump sum cash payment of $1million on the completion of the Sale (received);
a further lump sum cash payment of $1million payable on making an unconditional final investment
decision to proceed with development of an iron ore mine on the tenements; and
an uncapped 1% FOB royalty on all iron ore extracted from the area of the Tenements.
The directors have determined the fair value of the consideration received is approximately the same as the
carrying value of the exploration assets disposed and have therefore recognised no gain or loss from the sale.
Cullen will continue to identify and evaluate both advanced and "grass roots" opportunities throughout Australia
and in selected overseas locations. Cullen’s portfolio is under continual evaluation to focus on projects likely to
result in discovery of an economic mineral deposit.
Corporate
At 30 June 2018 available cash totalled $431,497 (2017: $770,780). Refer note 1 (c) for discussion on going concern
basis of preparation.
After Balance Date Events
There has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect the operations
of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity in the
subsequent financial years.
Likely Developments and Future Results
Other than as referred to in this report, further information as to likely developments in the operations of the
Consolidated Entity and the expected results of those operations would, in the opinion of the directors, be
speculative and not in the best interests of the Consolidated Entity.
Environmental Regulation
The exploration activities of the Consolidated Entity in Australia are subject to environmental regulation under the
laws of the Commonwealth and the States in which those exploration activities are conducted. The environmental
laws and regulations generally address the potential impact of the Consolidated Entity's activities in the areas of
water and air quality, noise, surface disturbance and the impact upon flora and fauna. The directors are not aware
of any environmental matter which would have a materially adverse impact on the overall business of the
Consolidated Entity.
Options
As at the date of this report the Company has 20,000,000 (2017: 20,000,000) options which were outstanding.
During the year 20,000,000 (2017: nil) options were issued and 20,000,000 (2017: nil) options expired. Refer to
Note 12 of the financial statements for further details of the options outstanding.
During the year no fully paid ordinary shares were issued by virtue of the exercise of options (2017: Nil). Since the
end of the financial year no shares have been issued by virtue of the exercise of options (2017: Nil).
Directors’ Interest
At the date of this report, the interest of the directors in the shares and options of the company were:
2018
J. Horsburgh
C. Ringrose
W. Kernaghan
Direct
Fully Paid Shares
8
26,835,342
3,428,574
Options
‐
20,000,000
‐
Indirect
Fully Paid Shares
61,437,149
‐
29,275,417
Options
‐
‐
‐
14
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Directors' Meetings
During the year the Company held four meetings of directors. The attendance of the directors at meetings of the
Board were:
D. Clarke
C. Ringrose
G. Hamilton
J. Horsburgh
W. Kernaghan
No. of meetings
attended
2
4
2
4
4
Maximum possible
eligible to attend*
2
4
2
4
4
*Number of meetings eligible to attend while a director.
Indemnification and insurance of Directors and Officers
The Company has entered into deeds of indemnity with the Directors indemnifying them against certain liabilities
and costs to the extent permitted by law. The Company has paid premiums totalling $10,316 (2017: $7,643) in
respect of Directors and Officers Liability Insurance and Company reimbursement policies, which covers all
Directors and Officers of the Company. The policy conditions preclude the Company from any detailed disclosures.
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
Employees
The Consolidated Entity employed one employee as at 30 June 2018 (2017: two).
Corporate Governance
In recognising the need for the highest standard of corporate behaviour and accountability, the directors of Cullen
Resources Limited support and have adhered to the principles of good corporate governance. The Company’s
corporate governance statement is on page 22.
Auditor Independence
The directors have received the auditor’s independence declaration for the year ended 30 June 2018 which is on
page 21 and forms part of this directors’ report. For the year Ernst & Young have provided non‐audit services to
the Consolidated Entity in the amount of $Nil (2017: $Nil).
The directors are satisfied that non‐audit services are compatible with the independence requirements of the
Corporations Act 2001. The nature and scope of the non‐audit services provided has meant that auditor
independence was not compromised.
Rounding
The amounts contained in this report and in the financial report have been rounded to the nearest Australian
Dollar (unless otherwise stated) under the option available to the Company under the ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191. The Company is an entity to which the
instrument applies.
15
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each director of Cullen Resources Limited.
This remuneration report outlines the director and executive remuneration arrangements of the Consolidated
Entity in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of
this report, key management personnel (KMP) of the Consolidated Entity are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Consolidated Entity,
directly or indirectly, including any director (whether executive or otherwise) of the parent company. Only
directors of the Consolidated Entity meet the definition of key management personnel as the executive role is
performed by the executive director.
Details of key management personnel:
Directors
J. Horsburgh
C. Ringrose
W. Kernaghan
D. Clarke
G. Hamilton
Chairman (Non‐Executive) from 21 November 2017
Managing Director
Director (Non‐Executive)
Chairman (Non‐Executive) (Resigned 21 November 2017)
Director (Non‐Executive) (Resigned 21 November 2017)
Remuneration Policy
The remuneration policy of Cullen Resources Limited has been designed to align director objectives with
shareholder and business objectives by providing a fixed remuneration component and offering specific long‐term
incentives. The board of Cullen Resources Limited believes the remuneration policy to be appropriate and effective
in its ability to attract and retain the best executives and directors to run and manage the Company as well as
create goal congruence between directors and shareholders.
The Board’s policy for determining the nature and amount of remuneration for Board members is as follows.
The remuneration policy, setting the terms and conditions for the executive director was developed by the Board.
The executive receives a base salary on factors such as length of service and experience, superannuation, options
and incentives. The Board reviews executive packages annually by reference to executive performance and
comparable information from industry sectors and other listed companies in similar industries.
The Board policy is to remunerate non‐executive directors at market rates for comparable companies for time,
commitment and responsibilities. The Board determines payments to the non‐executive directors and reviews
their remuneration annually, based on market practice, duties and accountability. Independent external advice is
sought when required. The maximum aggregate amount of fees that can be paid to non‐executive directors is
subject to approval by shareholders at the Annual General Meeting. Fees for non‐executive directors are not linked
to either long term or short term performance of the Consolidated Entity. However, to align directors’ interest
with shareholder interests, the directors are encouraged to hold shares in the Company. There is a specified
aggregate directors fees of $250,000 for non‐executive directors which was approved by shareholders at a general
meeting of the Company. The $250,000 excludes other services outside of non‐executive directors' fees. No
remuneration consultants have been engaged during the current and prior years.
Remuneration Incentives
Director and executive remuneration is currently not linked to either long term or short term performance
conditions. The Board feels that the expiry date and exercise price of options when issued to the directors and
executives are sufficient to align the goals of the directors and executives with those of the shareholders to
maximise shareholder wealth, and as such, has not set any performance conditions for the directors or the
executives of the Company. The Board will continue to monitor this policy to ensure that it is appropriate for the
Company in future years.
16
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Group performance and shareholder wealth
Below is a table summarising key performance and shareholder wealth statistics for the Consolidated Entity over
the last five years.
Financial Year
30 June 2014
30 June 2015
30 June 2016
30 June 2017
30 June 2018
Loss After Tax
$
1,880,593
1,414,969
955,336
918,042
918,006
EPS
Cents
(0.21)
(0.13)
(0.06)
(0.05)
(0.04)
Share Price
Cents
1.7
0.4
0.3
0.1
0.1
Employment Contract ‐ Managing Director
Pursuant to an agreement Dr Ringrose will provide managing director services to the Company. The term of this
arrangement is from 1 November 2006 and will continue thereafter unless terminated on not less than three
months' notice given at any time. Effective from 1 April 2011 Dr Ringrose’s salary is $265,000pa and from 1 April
2017 this has been reduced to $180,000 pa. The position of the director will become redundant under this
agreement in the limited circumstances where the employment of the Managing Director is terminated as a result
of a takeover or merger of the Company. The Company will pay the Managing Director the equivalent of four
weeks per year of service or part thereof of his base salary as a redundancy payment.
As part of Dr Ringrose's employment package he was issued with 20,000,000 options on 1 December 2017 with
the following terms. The options will expire on the earlier of the date which is one month after the Director to
whom the options are issued ceases to be a Director of the Company (or such longer period as determined by the
Board of Directors) or at 5.00 pm on 30 November 2020 ("the Expiry Date") with an exercise price of $0.003 which
vested on issue. This is contained in the notice of meeting which was approved by shareholders. Dr Ringrose had
also been issued with 10,000,000 options on 1 December 2014 with an exercise price of $0.016 each. These options
expired on 30 November 2017.
During the year the Board paid a discretionary bonus of Nil (2017: Nil) to Dr Ringrose.
Non Executive Directors
The non executive directors have been issued with 2,500,000 options each on 1 December 2014 with an exercise
price of $0.016 each and a fair value at grant date of $0.0061. These options all expired on 30 November 2017.
Directors’ and Executives’ Remuneration
Details of remuneration provided to directors for the year ended 30 June 2018 are as follows:
Directors
Short Term
Salary/
Consulting
$
Bonus
$
Non
Monetary
Benefits
$
Director
Fees
$
9,139
Post
Employ‐
ment
Super‐
annuation
$
Long
Term
Long
Service
Leave
$
Share
Based
Payments
Options
$
‐
‐
868
‐
‐
D. Clarke
C. Ringrose
‐
180,000
G. Hamilton
7,833
J. Horsburgh
22,028
‐
‐
W. Kernaghan
20,000
30,000**
Total
59,000
210,000
‐
‐
‐
‐
‐
‐
* 5,417
17,100
3,556
11,200
217,273
‐
‐
‐
744
2,093
1,900
‐
‐
‐
‐
‐
‐
8,577
24,121
51,900
5,417
22,705
3,556
11,200
311,878
Total
$
10,007
Perfor‐
mance
Related
%
‐
5.1
‐
‐
‐
‐
* This relates to the provision of a motor vehicle.
**Consultancy payments were made to Mosman Corporate Services Pty Ltd totalling $30,000 which is a company controlled
by Mr W Kernaghan. There was $1,000 outstanding at 30 June 2018.
17
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Details of remuneration provided to directors for the year ended 30 June 2017 are as follows:
Directors
Short Term
Director
Fees
$
Salary/
Consulting
$
32,083
‐
‐
256,283
27,500
27,500
‐
‐
27,500
33,250**
D. Clarke
C. Ringrose
G. Hamilton
J. Horsburgh
W. Kernaghan
Total
114,583
289,533
Bonus
$
‐
‐
‐
‐
‐
‐
Post
Employ‐
ment
Super‐
annuation
$
Long
Term
Long
Service
Leave
$
3,048
‐
Non
Monetary
Benefits
$
‐
Share
Based
Payments
Options
$
‐
Total
$
35,131
* 5,417
28,707
2,063
‐
‐
‐
2,613
2,613
2,613
‐
‐
‐
5,417
39,594
2,063
‐
‐
‐
‐
‐
292,470
30,113
30,113
63,363
451,190
Perfor‐
mance
Related
%
‐
‐
‐
‐
‐
‐
* This relates to the provision of a motor vehicle.
**Consultancy payments were made to Mosman Corporate Services Pty Ltd totalling $33,250 which is a company
controlled by Mr W Kernaghan. There was $1,750 outstanding at 30 June 2017.
Shares issued on exercise of remunerated options
During the financial year nil (2017: Nil) remunerated options were exercised. During the financial year 20,000,000
(2017: 6,000,000) options expired. The directors exercised nil (2017: Nil) options during the year.
Options granted as part of remuneration for the year ended 30 June 2018
There were no options granted as a part of remuneration for the year ended 30 June 2018 other than the issue of 20 million
options to Dr C Ringrose, The options have an exercise price of $0.003 and an expiry date of 30 November 2020. (2017: Nil)
Directors
D. Clarke
C. Ringrose
G. Hamilton
J. Horsburgh
W. Kernaghan
Value of options
granted during the
year
$
‐
11,200
‐
‐
‐
Value of options
exercised during the
year
$
‐
‐
‐
‐
‐
Value of options
expired during the year
$
Total value of options
granted, exercised and
expired during the year
$
11,200
Options granted as part of remuneration for the year ended 30 June 2017
There were no options granted as a part of remuneration for the year ended 30 June 2017.
Directors
D. Clarke
C. Ringrose
G. Hamilton
J. Horsburgh
W. Kernaghan
Value of options
granted during the
year
$
‐
‐
‐
‐
‐
Value of options
exercised during the
year
$
‐
‐
‐
‐
‐
Value of options
expired during the year
$
‐
‐
‐
‐
‐
Total value of options
granted, exercised and
expired during the year
$
‐
‐
‐
‐
‐
18
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Option holdings of directors
Balance at
beginning of
year 1 July 2017
Number
Options
issued
Number
Options
lapsed
Number
Directors
D Clarke
C Ringrose
G Hamilton
J Horsburgh
W Kernaghan
Total
2,500,000
‐
10,000,000 20,000,000
‐
‐
‐
2,500,000
2,500,000
2,500,000
(2,500,000)
(10,000,000)
(2,500,000)
(2,500,000)
(2,500,000)
Balance at end
of year
30 June 2018
Number
‐
20,000,000
‐
‐
‐
Vested and
exercisable at
30 June 2018
Number
‐
20,000,000
‐
‐
‐
Total
Number
‐
20,000,000
‐
‐
‐
20,000,000 20,000,000
20,000,000
The outstanding options are exercisable at $0.003 and have an expiry date of 30 November 2020.
These options had a weighted average exercise price of $0.003 and a weighted average remaining contractual life
of 2.42 years.
20 million options with an exercise price of $0.016 and an expiry date of 30 November 2017 lapsed during the
year.
(20,000,000)
20,000,000
20,000,000
Balance at
beginning of
year
1 July 2016
Number
Options
issued
Number
Options
lapsed
Number
Balance at end
of year
30 June 2017
Number
Total
Number
Vested and
exercisable at
30 June 2017
Number
Directors
D Clarke
C Ringrose
G Hamilton
J Horsburgh
W Kernaghan
Total
2,500,000
10,000,000
2,500,000
2,500,000
2,500,000
20,000,000
2,500,000
10,000,000
2,500,000
2,500,000
2,500,000
20,000,000
The outstanding options were exercisable at $0.016 and have an expiry date of 30 November 2017.
These options had a weighted average exercise price of $0.016 and a weighted average remaining contractual life
of 1.42 years. These options were outstanding as at 30 June 2017.
2,500,000
10,000,000
2,500,000
2,500,000
2,500,000
20,000,000
2,500,000
10,000,000
2,500,000
2,500,000
2,500,000
20,000,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Shareholdings of directors
Directors
D Clarke
C Ringrose
G Hamilton
J Horsburgh
W Kernaghan
Total
Balance
1 July 2017
Number
17,428,513
11,835,342
30,517,714
33,437,157
17,703,991
110,922,717
*Number of shares at date of resignation.
Options
Exercised
Number
‐
‐
‐
‐
‐
‐
Net Change
Purchase
Number
(17,428,513)*
15,000,000
(30,517,714)*
28,000,000
15,000,000
10,053,773
Balance
30 June 2018
Number
‐
26,835,342
‐
61,437,157
32,703,991
120,976,490
19
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Directors
D Clarke
C Ringrose
G Hamilton
J Horsburgh
W Kernaghan
Total
Balance
1 July 2016
Number
17,428,513
11,835,342
30,517,714
33,437,157
17,703,991
110,922,717
Options
Exercised
Number
Net Change
Purchase
Number
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Balance
30 June 2017
Number
17,428,513
11,835,342
30,517,714
33,437,157
17,703,991
110,922,717
The directors' shareholdings are held directly and indirectly.
End of Remuneration Report
Signed in accordance with a resolution of the directors
C. Ringrose
Director
Perth, WA
3 September 2018
20
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Cullen Resources
Limited
As lead auditor for the audit of Cullen Resources Limited for the financial year ended 30 June 2018, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Cullen Resources Limited and the entities it controlled during the financial
year.
Ernst & Young
V L Hoang
Partner
3 September 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
MH:KG:CULLEN:008
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
CORPORATE GOVERNANCE STATEMENT
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of
Cullen Resources Limited have adhered to the principles of corporate governance and this statement outlines the
main corporate governance practices in place throughout the financial year. The ASX Corporate Governance
Council released revised Corporate Governance Principles and Recommendations on 27 March 2014. Having
regard to the size of the Company and the nature of its enterprise, it is considered that the Company complies as
far as possible with the spirit and intentions of the ASX Corporate Governance Council's Corporate Governance
Principles and Recommendations. Unless otherwise stated, the practices were in place for the entire year.
Board of Directors
The Board of Directors of the Company is responsible for the corporate governance of the Company. The Board
guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are
elected and to whom they are accountable.
As the Board acts on behalf of shareholders, it seeks to identify the expectations of shareholders, as well as other
ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant
business risk and ensuing arrangements are in place to adequately manage those risks.
The primary responsibility of the Board includes:
formulation and approval of the strategic direction, objectives and goals of the Company;
monitoring the financial performance of the Company, including approval of the Company’s financial
statements;
ensuring that adequate internal control systems and procedures exists and that compliance with these
systems and procedures is maintained;
the identification of significant business risks and ensuring that such risks are adequately managed;
the review of performance and remuneration of executive directors; and
the establishment and maintenance of appropriate ethical standards.
The responsibility for the operation and administration of the Company is carried out by the directors, who
operate in an executive capacity, supported by senior professional staff. The Board ensures that this team is
suitably qualified and experienced to discharge their responsibilities, and assesses on an ongoing basis the
performance of the management team, to ensure that management’s objectives and activities are aligned with
the expectations and risks identified by the Board.
The Directors of the Company are as follows:
John Horsburgh
Dr Chris Ringrose
Wayne Kernaghan
Dr Denis Clarke (Resigned 21 November 2017)
Grahame Hamilton (Resigned 21 November 2017)
For information in respect to each director refer to the Directors' Report.
22
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Independent Directors
Under ASX guidelines, two of the current Board of three directors are considered to be independent directors.
Dr Ringrose is the executive director and under the ASX guidelines deemed not to be independent by virtue of his
position. The Board is satisfied that the structure of the Board is appropriate for the size of the Company and the
nature of its operations and is a cost effective structure for managing the Company.
Board Composition
When the need for a new director is identified, selection is based on the skills and experience of prospective
directors, having regard to the present and future needs of the Company. Any director so appointed must then
stand for election at the next Annual General Meeting of the Company.
Terms of Appointment as a Director
The constitution of the Company provides that a Director, other than the Managing Director, may not retain office
for more than three calendar years or beyond the third annual general meeting following his or her election,
whichever is longer, without submitting for re‐election. One third of the Directors must retire each year and are
eligible for re‐election. The Directors who retire by rotation at each annual general meeting are those with the
longest length of time in office since their appointment or last election.
Board Committees
In view of the size of the Company and the nature of its activities, the Board has considered that establishing
formally constituted committees for audit, board nominations and remuneration would contribute little to its
effective management. Accordingly audit matters, the nomination of new Directors and the setting, or review, of
remuneration levels of Directors and senior executives are reviewed by the Board as a whole and approved by
resolution of the Board (with abstentions from relevant Directors where there is a conflict of interest). Where the
Board considers that particular expertise or information is required, which is not available from within their
number, appropriate external advice may be taken and reviewed prior to a final decision being made by the Board.
Remuneration
Remuneration and other terms of employment of executives, including executive directors, are reviewed
periodically by the Board having regard to performance, relevant comparative information and, where necessary,
independent expert advice. Remuneration packages are set at levels that are intended to attract and retain
executives capable of managing the Company’s operations.
The terms of engagement and remuneration of executive directors is reviewed periodically by the Board, with
recommendations being made by the non‐executive directors. Where the remuneration of a particular executive
director is to be considered, the director concerned does not participate in the discussion or decision making.
Make Timely and Balanced Disclosure
The board has in place written policies and procedures to ensure the Company complies with its obligations under
the continuous disclosure rule 3.1 and other ASX Listing Rule disclosure requirements.
Independent Professional Advice
Directors have the right, in connection with their duties and responsibilities as directors, to seek independent
professional advice at the Company’s expense. Prior approval of the Chairman is required, which will not be
unreasonably withheld.
23
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Code of Conduct
In view of the size of the Company and the nature of its activities, the Board has considered that an informal code
of conduct is appropriate to guide executives, management and employees in carrying out their duties and
responsibilities.
Diversity Policy
The Company is in the process of establishing a diversity policy having regard to the size of the company and the
nature of its business.
As at 30 June 2018, 100 % (2017: 50%) of the workforce is male with no females at board or senior management
level. There is only one employee who is male.
Communication to Market & Shareholders
The Board of Directors aims to ensure that the shareholders, on behalf of whom they act, are informed of all
information necessary to assess the performance of the directors and the Company. Information is communicated
to shareholders and the market through:
the Annual Report which is available to all shareholders;
other periodic reports which are lodged with ASX and available for shareholder scrutiny;
other announcements made in accordance with ASX Listing Rules;
special purpose information memoranda issued to shareholders as appropriate;
the Annual General Meeting and other meetings called to obtain approval for board action as appropriate;
and,
The Company's website.
Share Trading
Dealings are not permitted at any time whilst in the possession of price sensitive information not already available
to the market. In addition, the Corporations Act 2001 prohibits the purchase or sale of securities whilst a person
is in possession of inside information.
External Auditors
The external auditor is Ernst and Young. The external auditors are invited to attend the annual general meeting
and be available to answer shareholder questions about the conduct of the audit and the preparation and content
of the auditor's report.
Full details of the company’s corporate governance practices can be viewed at its website
www.cullenresources.com.au.
24
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Consolidated Statement of Financial Position
as at 30 June 2018
Current Assets
Cash and cash equivalents
Receivables
Total Current Assets
Non Current Assets
Other financial assets
Plant & equipment
Exploration & evaluation
Intangible assets
Total Non Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Share based payment reserve
Accumulated losses
Total Equity
Note
22(i)
5
6
7
8
9
10
11
12
13
14
Consolidated
2018
$
431,497
19,544
451,041
‐
484
13,349
4,747,995
4,761,828
5,212,869
45,186
69,149
114,335
2017
$
770,780
8,456
779,236
10,000
3,148
17,518
4,747,995
4,778,661
5,557,897
80,756
68,801
149,557
114,335
149,557
5,098,534
5,408,340
44,265,213
1,470,925
(40,637,604)
5,098,534
43,668,213
1,459,725
(39,719,598)
5,408,340
These financial statements should be read in conjunction with the accompanying notes.
25
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Consolidated Statement of Changes in Equity
for the year ended 30 June 2018
Note
Issued
Capital
$
Share Based
Payment
Reserve
$
Accumulated
Losses
$
Total
Equity
$
At 1 July 2016
43,482,463
1,459,725
(38,801,556)
6,140,632
Loss for the year
Other comprehensive income
Total comprehensive
income/(loss) for the year
Issue of share capital
Share issue costs
‐
‐
‐
200,000
(14,250)
Share based payments
13
‐
‐
‐
‐
‐
‐
‐
(918,042)
(918,042)
‐
‐
(918,042)
(918,042)
‐
‐
‐
200,000
(14,250)
‐
At 30 June 2017
43,668,213
1,459,725
(39,719,598)
5,408,340
Note
Issued
Capital
$
Share Based
Payment
Reserve
$
Accumulated
Losses
$
Total
Equity
$
At 1 July 2017
43,668,213
1,459,725
(39,719,598)
5,408,340
Loss for the year
Other comprehensive income
Total comprehensive
income/(loss) for the year
‐
‐
‐
Issue of share capital
597,000
Share issue costs
Share based payments
13
‐
‐
‐
‐
‐
‐
‐
11,200
(918,006)
(918,006)
‐
‐
(918,006)
(918,006)
‐
‐
‐
597,000
‐
11,200
At 30 June 2018
44,265,213
1,470,925
(40,637,604)
5,098,534
These financial statements should be read in conjunction with the accompanying notes.
26
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2018
Note
3
8
4
Revenues
Rent
Salaries and consultants' fees
Compliance expenses
Share based payments
Impairment of exploration expenditure
Depreciation
Other expenses
Loss before income tax
Income tax
Net loss attributable to members of
Cullen Resources Limited after tax
Consolidated
2018
$
2017
$
84,605
126,891
(37,110)
(191,030)
(86,474)
(11,200)
(595,042)
(2,664)
(79,091)
(38,262)
(339,840)
(77,627)
‐
(456,465)
(2,458)
(130,281)
(918,006)
(918,042)
‐
‐
(918,006)
(918,042)
Other Comprehensive Income:
‐
‐
Total comprehensive loss
for the period
Basic (loss) per share
(cents per share)
Diluted (loss) per share
(cents per share)
(918,006)
(918,042)
(0.04)
(0.05)
(0.04)
(0.05)
23
23
These financial statements should be read in conjunction with the accompanying notes.
27
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Consolidated Statement of Cash Flows
for the year ended 30 June 2018
Note
Consolidated
2018
$
2017
$
Cash flows from operating activities
Sale of tenements
Cash payments in the course of operations
GST refunded
Sundry income
Interest received
80,727
(1,068,844)
37,956
609
3,269
120,000
(1,126,701)
53,369
4,795
2,096
Net operating cash flows
22(ii)
(946,283)
(946,441)
Cash flows from investing activities
Proceeds from sale of Joint Venture
Refund of Security Deposit
Net investing cash flows
Cash flows from financing activities
Proceeds from issue of shares
Share issue costs
Net financing cash flows
Net (decrease)/increase in cash
and cash equivalents
Cash and cash equivalents at the
beginning of the financial year
Cash and cash equivalents at the end
of the financial year
‐
10,000
1,000,000
‐
10,000
1,000,000
597,000
‐
200,000
(14,250)
597,000
185,750
(339,283)
239,309
770,780
531,471
22(i)
431,497
770,780
These financial statements should be read in conjunction with the accompanying notes.
28
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Notes to the Financial Statements
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
(a)
The financial statements of Cullen Resources Limited (“Consolidated Entity” or “The Company”) are general purpose financial
statements, which have been prepared in accordance with the requirements of the Corporations Act 2001, and Australian
Accounting Standards. The financial statements have also been prepared in accordance with the historical cost convention
using the accounting policies described below.
Statement of compliance
(b)
The financial statements comply with Australian Accounting Standards as issued by the Australian Accounting Standards Board
and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Accounting policies and disclosures
(c)
The Consolidated Entity has adopted all new and amended Australian Accounting Standards and AASB interpretations which
were applicable as of 1 July 2017. Adoption of other new and amended Australian Accounting Standards and AASB interpretations
did not have any effect on the financial position or performance of the Consolidated Entity.
The Consolidated Entity has not elected to early adopt any new standards or amendments.
Going Concern
The accounts have been prepared on the going concern basis, which contemplates continuity of normal business activities
and the realisation of assets and liabilities in the normal course of business.
The Consolidated Entity had cash and cash equivalents of $431,497 at 30 June 2018. The directors acknowledge that
continued exploration and development of the consolidated group’s mineral exploration projects will necessitate further
capital raisings.
The Consolidated Entity remains dependent on its ability to raise funding in volatile capital markets. However, the directors
continue to believe that the going concern basis of accounting by the Consolidated Entity is appropriate as the Consolidated
Entity has successfully completed a capital raising during the year to 30 June 2018, notwithstanding the challenging
conditions in equity markets.
In consideration of the above matters, the directors have determined that it is reasonably foreseeable that the Consolidated
Entity will continue as going concern and that it is appropriate that the going concern method of accounting be adopted in the
preparation of the financial statements. In the event that the Consolidated Entity is unable to continue as a going concern (due
to inability to raise future funding requirements), it may be required to realise its assets at amounts different to those currently
recognised, settle liabilities other than in the ordinary course of business and make provisions for other costs which may arise as
a result of cessation or curtailment of normal business operations.
Accordingly, the financial statements do not include adjustments relating to the recoverability and classification of assets
amount or to the amounts and classification of liabilities that might be necessary if the Consolidated Entity does not continue
a going concern.
Principles of consolidation
(d)
The consolidated financial statements include the financial statements of Cullen Resources Limited and the results of all of its
controlled entities which are referred to collectively throughout these financial statements as the “Consolidated Entity”. The
results of controlled entities are prepared for the same reporting period as the parent, using consistent accounting policies. All
inter‐entity balances and transactions, and unrealised profits arising from intra‐economic entity transactions, have been
eliminated in full.
Taxes
(e)
Income tax
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
29
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
where the deferred income tax liability arises from the initial recognition of goodwill or 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
in respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in joint
venture, where the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
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:
where 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
in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in
joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences
will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be
utilised.
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 sheet date.
The carrying amount of deferred income tax assets is reviewed at each reporting 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.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the Consolidated Statement of
Comprehensive Income.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
where 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 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 Consolidated Statement of Financial Position. Cash flows are included in the Consolidated 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.
Provision for employee benefits
(f)
Provision has been made in the financial statements for benefits accruing to employees in relation to annual leave and long
service leave. Annual leave provisions expected to be settled within twelve months are measured at their nominal amounts.
Long service leave provisions are measured at the present value of the estimated future cash outflow to be made in respect
of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the
interest rates attaching to Australian corporate bond securities which have terms to maturity approximating the terms of the
related liabilities are used.
Investments in controlled entities
(g)
Investments in controlled entities are carried in the company’s financial statements at the lower of cost and recoverable
amount. Dividends and distributions are brought to account when they are proposed by the controlled entities.
Exploration and Evaluation Expenditure
Expenditure is deferred
(h)
(i)
Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest' method. Exploration and
evaluation expenditure is capitalised provided the rights to tenure of the area of interest is current (or in the process of being
re‐applied for) and either:
30
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
the exploration and evaluation activities are expected to be recouped through successful development and exploitation
of the area of interest or, alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not at the reporting date reached a stage that permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or relating to, the area of interest are continuing.
When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then any
capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior to reclassification,
capitalised exploration and evaluation expenditure is assessed for impairment.
Impairment
The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at the area of interest level
whenever facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount.
An impairment exists when the carrying amount of an area of interest exceeds its estimated recoverable amount. The area of
interest is then written down to its recoverable amount. Any impairment losses are recognised in the Consolidated Statement
of Comprehensive Income.
Foreign currency
(i)
Both the functional and presentation currency of Cullen Resources Limited and its Australian subsidiaries is Australian dollars
($A).
Foreign currency transactions are translated to Australian currency at the rate of exchange ruling at the date of the
transactions. Monetary items in foreign currencies at balance date are translated at the rates of exchange ruling on that date.
Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account in the
Consolidated Statement of Comprehensive Income in the financial year in which the exchange rates change, as exchange gains
or losses.
(j)
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Plant and equipment
Depreciation is calculated on a straight‐line basis over the estimated useful life of the assets as follows:
Plant and equipment – over 3 to 8 years.
The assets residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate at each financial
year end.
Intangible Asset
(k)
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets
are carried at cost less amortisation and any impairment losses. Intangible assets with finite lives are amortised over their
useful life and tested for impairment whenever there is an indication that they may be impaired. The amortisation period and
method is reviewed at each financial year‐end.
The Consolidate Entity’s intangible assets represent the deferred consideration payable by the acquirer on the unconditional
final investment decision to proceed and royalties on all iron ore extracted from the area of the tenements of the Mt Stuart
Iron Ore Joint Venture.
These, although entitling the Consolidated Entity to cash upon the unconditional final investment decision to proceed and the
commencement of production, are not considered to fall within the definition of financial assets in accordance with AASB 139
Financial Instruments: Recognition and Measurement (“AASB 139”). The Consolidated Entity considers, amongst the
characteristics listed in AASB 139 that they do not contain an absolute right to receive cash as the Consolidated Entity cannot
force the owner to make the investment decision to proceed and to produce and, furthermore, the counterparty can avoid
the payment of cash by deciding not to proceed.
The useful life of the intangible assets will be determined by reference to planned development schedule and mine life on
commencement of mining and the cost of the royalty contract will be amortised on a systematic basis over the life of the mine.
Amortisation rates are adjusted on a prospective basis for all changes to estimates of the life of mine. At 30 June 2018, the
decision to proceed has not been made and hence the assets remain unamortised.
Revenue
(l)
Other revenue includes interest revenue on short term deposit received. It is brought to account using the effective interest
rate method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the
31
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of the financial asset.
Refundable research and development tax offset is brought to account when the funds are received.
Joint Operations
(m)
The Consolidated Entity undertakes a number of activities through joint arrangements. A joint arrangement is an arrangement
over which two or more parties have joint control. Joint control is the contractually agreed sharing of control over an
arrangement which exists only when the decisions about the relevant activities (being those that significantly affect the returns
of the arrangement) require the unanimous consent of the parties sharing control. The Consolidated Entity’s joint
arrangements are in the form of joint operations.
A joint operation is a type of joint arrangement in which the parties with joint control of the arrangement have rights to the
assets and obligations for the liabilities relating to the arrangement.
The Consolidated Entity recognises in relation to its joint operations:
‐
‐
‐
‐
‐
Assets, including its share of any assets held jointly
Liabilities, including its share of any liabilities incurred jointly
Revenue from the sale of its share of the output arising from the joint operation
Share of the revenue from the sale of the output by the joint operation
Expenses, including its share of any expenses incurred jointly
Payables
(n)
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in
the future for goods and services received, whether or not billed to the Consolidated Entity.
Cash and cash equivalents
(o)
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short‐term deposits with an original
maturity of three months or less 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 Consolidated Statement of Cash Flows, cash includes cash on hand and in
banks, and money market investments readily convertible to cash within two working days.
Leases
(p)
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires
an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.
Operating lease payments are recognised as an expense in the Consolidated Statement of Comprehensive Income on a
straight‐line basis over the lease term.
Issued capital
(q)
Issued and paid up capital is recognised at the fair value of the consideration received by the Consolidated Entity. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds
received.
Earnings per share (EPS)
(r)
Basic EPS is calculated as net profit/(loss) attributable to members, adjusted to exclude costs of servicing equity, divided by
the weighted average number of ordinary shares, adjusted for any bonus element. Diluted EPS is calculated as net profit/ (loss)
attributable to members, adjusted for:
costs of servicing equity;
the after tax effect of interest associated with dilutive potential ordinary shares that have been recognised as expenses;
other non‐discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares; and
divided by the weighted average number of ordinary shares, adjusted for the effects of all dilutive potential ordinary
shares.
(s)
The accounting policies adopted are consistent with those of the previous year, except as noted at Note 1(c).
Change in accounting policies
Share based payments
(t)
At each subsequent reporting date until vesting, the cumulative charge to the Consolidated Statement of Comprehensive
Income is the product of:
(i)
The grant date fair value of the option.
32
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
(ii)
The current best estimate of the number of options that will vest, taking into account such factors as the likelihood of
employee turnover during the vesting period and the likelihood of non‐market performance conditions being met.
The expired portion of the vesting period.
(iii)
The charge to the Consolidated Statement of Comprehensive Income for the period is the cumulative amount as calculated
above less the amounts already charged in previous periods. There is a corresponding entry to equity.
The company may also issue options that do not have any vesting conditions.
Until an option has vested, any amounts recorded are contingent and will be adjusted if more or fewer options vest than were
originally anticipated to do so. Any option subject to a market condition is considered to vest irrespective of whether or not
that market condition is fulfilled, provided that all other conditions are satisfied.
If the terms of an equity‐settled option are modified, as a minimum an expense is recognised as if the terms had not been
modified. An additional 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 option is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the option is recognised immediately. However, if a new option is substituted for the cancelled option and
designated as a replacement option on the date that it is granted, the cancelled and new option are treated as if they were a
modification of the original option, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings
per share.
Investment and other financial assets
(u)
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial
assets at fair value through profit or loss, loans and receivables, held‐to‐maturity investments, or available‐for‐sale investments,
as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at
fair value through profit or loss, directly attributable transactions costs. The Consolidated Entity determines the classification of
its financial assets after initial recognition and, when allowed and appropriate, re‐evaluates this designation at each financial
year‐end.
Impairment of non‐financial assets
(v)
Non‐financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are
largely independent of the cash inflows from other assets or groups of assets (cash‐generating units). Non‐financial assets other
than goodwill that suffered impairment are tested for possible reversal of the impairment whenever events or changes in
circumstances indicate that the impairment may have reversed.
33
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
(w)
New accounting standards and interpretations
New accounting standards and interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Company for the annual reporting period ended 30 June 2018. The Company’s assessment
of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Company, are set out
below.
Reference
Title
Summary
Application
date of
standard
Application
date for CUL
AASB 9, and
relevant
amending
standards
Financial
Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and
Measurement.
1 January 2018
1 July 2018
Except for certain trade receivables, an entity initially measures a
financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs.
Debt instruments are subsequently measured at fair value through
profit or loss (FVTPL), amortised cost, or fair value through other
comprehensive income (FVOCI), on the basis of their contractual
cash flows and the business model under which the debt instruments
are held.
There is a fair value option (FVO) that allows financial assets on initial
recognition to be designated as FVTPL if that eliminates or
significantly reduces an accounting mismatch.
Equity instruments are generally measured at FVTPL. However,
entities have an irrevocable option on an instrument‐by‐instrument
basis to present changes in the fair value of non‐trading instruments
in other comprehensive income (OCI) without subsequent
reclassification to profit or loss.
For financial liabilities designated as FVTPL using the FVO, the
amount of change in the fair value of such financial liabilities that is
attributable to changes in credit risk must be presented in OCI. The
remainder of the change in fair value is presented in profit or loss,
unless presentation in OCI of the fair value change in respect of the
liability’s credit risk would create or enlarge an accounting mismatch
in profit or loss.
All other AASB 139 classification and measurement requirements for
financial liabilities have been carried forward into AASB 9, including
the embedded derivative separation rules and the criteria for using
the FVO.
The incurred credit loss model in AASB 139 has been replaced with
an expected credit loss model in AASB 9.
The requirements for hedge accounting have been amended to more
closely align hedge accounting with risk management, establish a
more principle‐based approach to hedge accounting and address
inconsistencies in the hedge accounting model in AASB 139.
Based on the Company’s initial assessment, there will be no
significant change from the current measurement of the Company’s
financial instruments.
34
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Reference
Title
Summary
AASB 15,and
relevant
amending
standards
Revenue from
Contracts with
Customers
AASB 16
Leases
AASB 2016‐5
Amendments to
Australian
Accounting
Standards –
Classification
and
AASB 15 replaces all existing revenue requirements in Australian
Accounting Standards (AASB 111 Construction Contracts, AASB
118 Revenue, AASB Interpretation 13 Customer Loyalty
Programmes, AASB Interpretation 15 Agreements for the
Construction of Real Estate, AASB Interpretation 18 Transfers of
Assets from Customers and AASB Interpretation 131 Revenue –
Barter Transactions Involving Advertising Services) and applies to
all revenue arising from contracts with customers, unless the
contracts are in the scope of other standards, such as AASB 117
(or AASB 16 Leases, once applied).
The core principle of AASB 15 is that an entity recognises revenue
to depict the transfer of promised goods or services to customers
in an amount that reflects the consideration to which an entity
expects to be entitled in exchange for those goods or services. An
entity recognises revenue in accordance with the core principle
by applying the following steps:
► Step 1: Identify the contract(s) with a customer
► Step 2: Identify the performance obligations in the contract
► Step 3: Determine the transaction price
► Step 4: Allocate the transaction price to the performance
obligations in the contract
► Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation.
AASB 16 requires lessees to account for all leases under a single on
balance sheet model in a similar way to finance leases under AASB
117 Leases. The standard includes two recognition exemptions for
lessees – leases of ’low‐value’ assets (e.g., personal computers) and
short‐term leases (i.e., leases with a lease term of 12 months or less).
At the commencement date of a lease, a lessee will recognise a
liability to make lease payments (i.e., the lease liability) and an asset
representing the right to use the underlying asset during the lease
term (i.e., the right‐of‐use asset).
Lessees will be required to separately recognise the interest expense
on the lease liability and the depreciation expense on the right‐of‐
use asset.
Lessees will be required to remeasure the lease liability upon the
occurrence of certain events (e.g., a change in the lease term, a
change in future lease payments resulting from a change in an index
or rate used to determine those payments). The lessee will generally
recognise the amount of the remeasurement of the lease liability as
an adjustment to the right‐of‐use asset.
Lessor accounting is substantially unchanged from today’s
accounting under AASB 117. Lessors will continue to classify all
leases using the same classification principle as in AASB 117 and
distinguish between two types of leases: operating and finance
leases.
The Group is currently reviewing its operating leases and service
agreements to assess the impact of IFRS 16 on its financial
performance and financial position upon its adoption and the
expected impact of adopting IFRS 16 will not be material. As set out
in note 18, the Group has operating lease commitments at 30 June
2018 of $64,281.
This Standard amends AASB 2 Share‐based Payment, clarifying how
to account for certain types of share‐based payment transactions.
The amendments provide requirements on the accounting for:
-
The effects of vesting and non‐vesting conditions on the
measurement of cash‐settled share‐based payments
Share‐based payment transactions with a net settlement
-
Application
date of
standard
Application
date for CUL
1 January 2018
1 July 2018
1 January 2019
1 July 2019
1 January 2018
1 July 2018
35
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Reference
Title
Summary
Application
date of
standard
Application
date for CUL
Measurement
of Share‐based
Payment
Transactions
-
feature for withholding tax obligations
A modification to the terms and conditions of a share‐based
payment that changes the classification of the transaction from
cash‐settled to equity‐settled.
Interpretation
23
Uncertainty
over Income
Tax Treatments
Based on the Company’s initial assessment, there will be no
significant change from the current measurement of the Company’s
share‐based payment transactions.
The Interpretation clarifies the application of the recognition and
measurement criteria in AASB 12 Income Taxes when there is
uncertainty over income tax treatments. The Interpretation
specifically addresses the following:
- Whether an entity considers uncertain tax treatments
separately
The assumptions an entity makes about the examination of tax
treatments by taxation authorities
How an entity determines taxable profit (tax loss), tax bases,
unused tax losses, unused tax credits and tax rates
How an entity considers changes in facts and circumstances.
-
-
-
1 January 2019
1 July 2019
The Company is in the process of determining the impact of the above on its financial statements. The Company has not
elected to early adopt any new Standards or Interpretations.
2.
SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS
In applying the Consolidated Entity’s accounting policies management continually evaluates estimates and assumptions based
on experience and other factors, including expectations of future events that may have an impact on the Consolidated Entity.
All estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available
to management. Actual results may differ from the estimates and assumptions. Significant estimates and assumptions made
by the management in the preparation of these financial statements are outlined below:
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts
of certain assets and liabilities within the next annual reporting period are:
Impairment of capitalised exploration and evaluation expenditure
(a)
The future recoverability of capitalised exploration expenditure is dependent on a number of factors, including whether the
Consolidated Entity decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration
and evaluation asset through sale. Factors that could impact the future recoverability include the level of reserves and
resources, future technological changes, which could impact the cost of mining, future legal changes (including changes to
environmental restoration obligations) and changes to commodity prices. To the extent that capitalised exploration and
evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period
in which this determination is made. In addition, exploration and evaluation is capitalised if activities in the area of interest
have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves. To the extent it is determined in the future that this capitalised expenditure should be written off, profits and net
assets will be reduced in the period in which this determination is made.
Share‐based payment transactions
(b)
The Consolidated Entity 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 either a
binomial or Black‐Scholes model, with the assumptions detailed in Note 17. The accounting estimates and assumptions relating
to equity‐settled share‐based payments would have no impact on the carrying amount of assets and liabilities within the next
annual reporting period but may impact expenses and equity.
36
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Intangibles
(c)
The recoverable amount of intangible assets is estimated on the basis of the discounted value of future cash flows. The
estimates of future cash flows are based on significant assumptions including:
timing of the unconditional investment decision to proceed;
estimates of the quantities of ore reserves and mineral resources for which there is a high degree of confidence of
economic extraction and the timing of access to these reserves and resources;
future iron ore prices and exchange rates based on forecasts by a range of recognized economic forecasters as well
as recent spot prices and rates;
construction and production timetable and production rates; and
the discount rate used.
Refer to notes 1(k) and 9 for more information.
37
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
3. REVENUE AND EXPENSES
(Loss) after crediting the following revenues:
Other Revenues
Interest received
Sundry income
Sale of tenements
Included in expenses:
Consolidated
2018
$
2017
$
3,269
609
80,727
84,605
2,096
4,795
120,000
126,891
Auditors remuneration in respect of the Audit or review of the financial
statements
26,499
31,944
Operating lease payments
Superannuation
4.
INCOME TAX
The major components of income tax expenses
are:
Income Statement
Current Income Tax
Current income tax charge/(benefit)
Deferred Income Tax
Relating to origination and reversal of
temporary differences
Income tax expense/(benefit) reported in the
statement of comprehensive income
Operating loss before income tax
Prima facie income tax (benefit)
calculated at 27.5% (2017: 27.5%)
Non‐deductible expenses
Non‐assessable income
Income tax losses recognised
37,110
38,262
26,585
39,343
‐
‐
‐
‐
‐
‐
(918,006)
(918,042)
(252,452)
(252,462)
1,173
12,867
‐
‐
251,279
239,595
Total income tax (expense)/benefit
‐
‐
Cullen Resources Limited and its 100% owned Australian subsidiaries have entered the tax consolidation regime
from 1 July 2002. The head entity of the tax consolidation group is Cullen Resources Limited.
The entity has adopted the stand alone taxpayer method for measuring current and deferred tax amounts. The
members of the income tax consolidated group have entered into a tax funding agreement.
38
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Consolidated
Deferred Tax Liabilities
Statement of Financial
Position
Statement of Comprehensive
Income
2018
$
2017
$
2018
$
2017
$
Exploration
(3,671)
(4,817)
(1,146)
(12,596)
Deferred Tax Assets
Provisions
Accruals
19,016
4,744
18,920
5,500
96
(756)
(10,779)
(605)
Deferred tax assets used to
offset deferred tax liabilities/(not recognised) (i)
(20,089)
(19,603)
486
1,212
Net Deferred Tax Recognised
in the Statement of Financial Position
‐
‐
‐
‐
(i)
As at 30 June 2018 future income tax benefits were available to the Consolidated Entity in respect of
operating losses and prospecting and exploration expenditure incurred. The directors estimate the
potential income tax benefit at 30 June 2018 in respect of tax losses not brought to account is $9,952,329
(2017: $9,701,040) and there is no expiry date. The benefit of these losses has only been brought to account
to the extent needed to offset deferred tax liabilities. The remaining benefit will only be obtained if:
(a)
(b)
the Consolidated Entity derives future assessable income of a nature and of sufficient amount to
enable the benefit to be realised.
the Consolidated Entity continues to comply with the conditions for deductibility imposed by the
law; and
(c) no changes in tax legislation adversely affect the Consolidated Entity in realising the benefit.
5. RECEIVABLES
Current
Other debtors
Consolidated
2018
$
2017
$
19,544
8,456
Other debtors includes GST receivable which is non‐interest bearing. All other debtors are not past due and are not
impaired.
The carrying amount of other debtors is a reasonable approximation of fair value.
6. OTHER FINANCIAL ASSETS
Non current
Security deposits
‐
‐
10,000
10,000
The security deposits are non‐interest bearing and relate to mining tenements.
39
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
7. PLANT & EQUIPMENT
Plant & Equipment at cost
Opening balance
Additions
Disposals
Closing balance
Plant & Equipment – Accumulated depreciation
Opening balance
Depreciation
Disposals
Closing balance
Total written down amount
(a) Reconciliation
Plant & Equipment
Carrying amount at beginning
Additions
Disposals
Depreciation expense
8. EXPLORATION & EVALUATION
Costs carried forward in respect of
areas of interest in the exploration
and evaluation phase
Opening balance
Expenditure incurred during the year
Less
Write off (refer to below)
Sale of 30% interest in Mt Stuart Iron Ore JV (Note 9)
Closing balance net of write off
Consolidated
2018
$
2017
$
115,812
‐
‐
115,812
(112,664)
(2,664)
‐
(115,328)
115,812
‐
‐
115,812
(110,206)
(2,458)
‐
(112,664)
484
3,148
3,148
‐
‐
(2,664)
484
5,606
‐
‐
(2,458)
3,148
17,518
590,873
608,391
5,811,317
410,661
6,221,978
(595,042)
‐
(456,465)
(5,747,995)
13,349
17,518
Mining tenements are carried forward in accordance with the accounting policy set out in Note 1.
As discussed in the Directors Report, during the financial year, the Company continued its mineral exploration activities
including: project generation, database reviews, field mapping, geochemical surveying, and drilling programmes.
Company exploration activities, including joint operations, were focused in Western Australia with additional activities
in Finland.
A total of $590,873 (2017: $410,661) of exploration expenditure was capitalised by Cullen during the year. The
Directors have reviewed all exploration projects for indicators of impairment in light of approved budgets. Where
substantive expenditure is neither budgeted nor planned the area of interest has been written down to its fair value
less costs to dispose. In determining fair value less cost of disposal the Directors had regard to the best evidence of
what a willing participant would pay in an arms length transaction (Level 3 fair value hierarchy). Where no such
evidence was available, areas of interest were written down to nil pending the outcome of any future farm‐out
arrangement. The Company will continue to look to attract farm‐in partners and/or recommence exploration should
circumstances change.
40
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
The ultimate recoupment of the book value of deferred costs relating to areas of interest in the exploration and
evaluation phase is dependent upon the successful development and commercial exploitation or, alternatively, sale of
the respective areas of interest and the Consolidated Entity’s ability to continue to meet its financial obligations to
maintain the areas of interest.
9.
INTANGIBLE ASSETS
Deferred consideration (a) and royalty
stream(b)
Consolidated
2018
$
4,747,995
2017
$
4,747,995
4,747,995
4,747,995
On 12 April 2017, the consolidated entity sold its 30% contributing interest in the Mt Stuart Iron Ore Joint
Venture and all of its other rights and interests in the Joint Venture tenements. Part of the consideration
includes:
(a) A deferred consideration of $1 million payable on the making of an unconditional final investment
decision to proceed with the development of an iron ore mine on the tenements which were previously
the Mt Stuart Joint Venture.
(b) An uncapped 1% FOB royalty on all iron ore extracted from the area of the Joint Venture tenements.
At the disposal date, the above consideration was recognised as an intangible asset. Its carrying value was
determined based on a Net Present Value calculation using a discounted cash flow model with a number of
assumptions including timing of unconditional investment decisions to proceed, future iron ore prices, exchange
rate, timing for the development and production, future product volumes and discount rates (Level 3 fair value
hierarchy).
As at 30 June 2018, the directors have adopted a similar Net Present Value calculation with the updated key
assumptions to reflect changes in the market environment to determine the recoverable amount of the
intangible asset as part of their impairment assessment of the carrying value of the asset. In their opinion, this
assessment supports the carrying value of the assets and supports the conclusion that no impairment of the
intangible asset is required as at 30 June 2018.
In July 2015 the Consolidated Entity sold its interest in the Wyloo project tenements to its partner Fortescue
Metals Group Limited and the deferred consideration is a 1.5 % F.O.B. royalty up to 15 Mt of iron ore production
from Wyloo project tenements, and will receive $900,000 cash if and when a decision is made to commence
mining on a commercial basis – E47/1649, 1650, ML 47/1490, and ML 08/502.
10. TRADE AND OTHER PAYABLES
Current
Trade creditors ‐ unsecured
45,186
80,756
Trade creditors are non‐interest bearing and are normally settled on 30 day terms. The carrying amount of trade creditors
is a reasonable approximation of fair value.
41
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
11.
PROVISIONS
Current
Employee benefits
12. CONTRIBUTED EQUITY
Issued capital
2,598,560,131 ordinary shares
(2017: 2,001,560,131)
Movement in issued shares for the year:
Consolidated
2018
$
2017
$
69,149
68,801
44,265,213
43,668,213
2018
2017
Number of
Shares
$
Number of
$
Beginning of the financial year:
Issued at 0.1 cents each (i)
Issued at 0.2 cents each(ii)
Less share issue expenses
End of financial year:
2,001,560,131
597,000,000
‐
‐
2,598,560,131
43,668,213
597,000
‐
‐
44,265,213
(i) Issued under a shareholder share purchase plan
(ii) Issued under a placement
Shares
1,901,560,131
‐
100,000,000
‐
2,001,560,131
43,482,463
‐
200,000
(14,250)
43,668,213
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to
participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid
upon shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Options
As at 30 June 2018 there are 20,000,000 (2017: 20,000,000) unissued shares in respect of which options were
outstanding and the details of these are as follows:
Number
Grant Date
Vesting Date
Exercise Price
Expiry Date
20,000,000
1/12/17
Nil Vesting
Conditions
0.003
30 November
2020
The options have no rights until they are exercised and become ordinary shares.
During the year 20,000,000 (2017: nil) options lapsed.
Fair Value at
Grant Date
0.00056
During the year 20,000,000 (2017:nil) options were issued to the Managing Director to align his interest with
shareholders.
Since the end of the financial year no shares have been issued by virtue of the exercise of options.
42
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
13. SHARE BASED PAYMENT RESERVE
The share based payment reserve represents the cost of share‐based payments to directors, employees and third
parties.
Beginning of the year
Share based payments (Note 17)
End of the year
14. ACCUMULATED LOSSES
Accumulated losses at the beginning of the year
Net loss
Accumulated losses at the end of the year
Consolidated
2018
$
2017
$
1,459,725
11,200
1,459,725
‐
1,470,925
1,459,725
(39,719,598)
(918,006)
(40,637,604)
(38,801,556)
(918,042)
(39,719,598)
15. PARTICULARS IN RELATION TO CONTROLLED ENTITIES
The consolidated financial statements at 30 June 2018 include the following controlled entities. The financial years
of all controlled entities are the same as that of the parent entity.
Place of
Incorporation
Interest
%
Name
Cullen Minerals Pty Limited
Cullen Exploration Pty Ltd
Bearmark Investments Pty Ltd
Cullen Finland OY
Australia
Australia
Botswana
Finland
16. KEY MANAGEMENT PERSONNEL
June
2018
100
100
100
100
June
2017
100
100
100
100
Investment
$
June
2018
June
2017
‐
‐
‐
‐
‐
‐
‐
‐
Consolidated
2018
$
2017
$
274,417
22,705
3,556
11,200
311,878
409,533
39,594
2,063
‐
451,190
2018
$
2017
$
11,200
‐
11,200
‐
‐
‐
Compensation for key management personnel
Short‐term employee benefits
Post‐employment benefits
Other long‐term benefits
Share‐based payments
Total compensation
17. SHARE BASED PAYMENTS
(a)
Recognised share based payment expenses
Director options
Employee options
43
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Employee Options
(b)
For details/movements around the director options, please refer to note 12.
No employee options other than director options noted within the Remuneration Report were issued or lapsed
during the year. (2017: 6,000,000 lapsed)
(c) Weighted average remaining contractual life
Options ‐ Employee
Options ‐ Directors
(d) Range of exercise prices
Options ‐ Employee
Options ‐ Directors
(e) Weighted average fair value at date of issue
Options ‐ Employee
Options ‐ Directors
2018
Years
‐
2.42
2018
cents
‐
0.3
2018
cents
‐
0.056
2017
Years
‐
0.42
2017
cents
‐
1.6
2017
cents
‐
‐
(f) Option pricing model
The fair value of the equity settled share options granted are estimated as at the date of allocation using a
Binomial Model taking into account the terms and conditions upon which they were granted.
The following table lists the inputs to the models used at the date of allocation for employee and directors’
options:
2018
2017
125%
Expected volatility (i)
1.90%
Risk free interest rate
$0.003
Exercise price
Share price at measurement date
$0.001
Expected dividend yield 0.00%
‐
‐
‐
‐
‐
(i)
The expected volatility was based on the historical volatility of the underlying shares over a period
equivalent to the expected life of the option.
18. JOINT OPERATIONS
The Consolidated Entity has interests in the following joint operations as at 30 June 2018:
(a) Paraburdoo
Exploration
Fortescue Mining Group Limited (Fortescue)
Principal Activity
Other Participant
(b) Forrestania
Exploration
Hannans Limited (Hannans)
(c) Killaloe
Exploration
Matsa Resources Limited (Matsa)
a)
b)
c)
Fortescue can earn up to 80% in the iron ore rights, Cullen has a 100% interest.
Hannans has an 80% interest; Cullen is 20% free carried.
Matsa has an 80% interest; Cullen is 20% free carried.
The joint operations are not separate legal entities. They are contractual arrangements between the participants for the
sharing of costs and any outputs and do not, in themselves, generate revenue and profit. The net contribution of any joint
operations to the operating profit before income tax is $nil (2017: $nil). The Consolidated Entity’s assets employed in the
jointly controlled assets, are included in the balance sheet of the Consolidated Entity as follows:
44
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Current Assets
Receivables
Non‐Current Assets
Exploration and expenditure
Current Liabilities
Trade and other payables
19. COMMITMENTS
Minimum exploration work
Consolidated
2018
$
2017
$
‐
‐
‐
‐
‐
‐
The Consolidated Entity has certain obligations to perform minimum exploration work and expend minimum amounts of
money on mineral exploration tenements. The Consolidated Entity is required to expend a minimum of $577,000 over the next
year to keep its current tenements in good standing.
20. RELATED PARTIES
Payments to director related companies
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated. Consultancy payments were made to Mosman Corporate Services Pty Ltd
totalling $30,000(2017: $33,250) which is a company controlled by Mr W Kernaghan. There was $1,000 (2017: $1,750)
outstanding at 30 June 2018.
21. OPERATING SEGMENTS
Identification of Reportable Segments
The Consolidated Entity has based its operating segment on the internal reports that are reviewed and used by the executive
management team in assessing performance and in determining the allocation of resources.
The Consolidated Entity currently does not have production and is only involved in exploration. As a consequence, activities in
the operating segment are identified by management based on the manner in which resources are allocated, the nature of the
resources provided and the identity of the manager and country of expenditure. Discrete financial information about each of
these areas is reported to the executive management team on a monthly basis.
Based on this criteria, the Consolidated Entity has only one operating segment, being exploration, and the segment operations
and results are the same as the Consolidated Entity’s results.
45
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
22. STATEMENT OF CASH FLOWS
(i) Reconciliation of cash
For the purposes of the Consolidated Statement of Cash Flows, cash includes cash at bank and short term deposits at call. Cash
at the end of the financial year as shown in the Consolidated Statement of Cash Flows is reconciled to the related items in the
Consolidated Statement of Financial Position as follows:
Cash on hand
(ii) Reconciliation of operating (loss)
after income tax to net cash used in operating activities
Operating (loss) after income tax
Add/(less) non cash items
Impairment of exploration
Depreciation
Share based payments
(Decrease) / Increase in provisions for employee benefits
(Decrease) / Increase in trade and other payables
Decrease / (Increase) in receivables
Net operating cashflows
Consolidated
2018
$
2017
$
431,497
770,780
(918,006)
(918,042)
4,169
2,664
11,200
348
(35,570)
(11,088)
45,804
2,458
‐
(39,198)
(72,978)
35,515
(946,283)
(946,441)
23.
EARNINGS/(LOSS)PER SHARE
Consolidated
2018
2017
Basic (loss) per share (cents per share)
Diluted (loss) per share (cents per share)
The following reflects the income and share data used
in the calculations of basic and diluted (loss) per share
Net (loss)
Weighted average number of ordinary shares used in
the calculation of basic and diluted earnings per share
Options on issue at year end are not dilutive and hence
not used in the calculation of diluted EPS
24. FINANCIAL INSTRUMENTS
(0.04)
(0.04)
(0.05)
(0.05)
(918,006)
(918,042)
2,353,217,665
1,943,751,912
20,000,000
20,000,000
The Group's financial instruments comprise receivables, payables, and cash and short‐term deposits.
The Group manages its exposure to key financial risks, including interest rate risk in accordance with the Group's financial risk
management policy. The objective of the policy is to support the delivery of the Group's financial targets whilst protecting
future financial security.
The Board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Board of Directors. Due to the size and
nature of the company's operations, and as the company does not use derivative instruments or debt, the directors do not
believe the establishment of a risk management committee is warranted.
46
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
Interest Rate Risk
(a)
The Group's exposure to market interest rates relates primarily to the Group's cash and cash equivalents.
The Group's exposure to interest rate risk for each class of financial assets and financial liabilities is set out below.
Financial Instruments
Financial Assets
Cash and cash equivalents
Total Financial Assets
Consolidated
Floating
interest rate
Floating
interest rate
2018
$
2017
$
431,497
770,780
431,497
770,780
Cash gives rise to interest rate risk because the interest rate is variable.
The following summarises the effect on loss and equity of financial instruments held at balance date as a result of a 0.5%
movement in interest rates, with all other variables remaining constant.
Interest rate +0.5%
Interest rate ‐0.5%
Consolidated
(Decrease)/Increase in loss/equity
2018
$
(2,157)
2,157
2017
$
(3,853)
3,853
The selection of 0.5% sensitivity check was based on recent interest rate adjustments. The same basis was adopted in 2017.
(b) Currency Risk
The Consolidated Entity has limited exposure to foreign currency risk as it pays for its overseas exploration activities from
Australia in various overseas currencies.
(c) Credit Risk
Credit risk arises from the financial assets of the Consolidated Entity, namely trade and other receivables. The Consolidated
Entity's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to its carrying
amount. Exposure at balance date is addressed in each applicable note.
The Consolidated Entity does not hold any credit derivatives to offset its credit exposure.
Receivable balances are monitored on an ongoing basis with the result that the Consolidated Entity's exposure to bad debts is
not significant. Receivables are due from the Australian Taxation Office and other government bodies which have very low default
risk.
There are no significant concentrations of credit risk within the Consolidated Entity and cash and cash equivalents are spread
amongst two of the big four Australian Banks.
(d) Liquidity Risk
The liquidity position of the Consolidated Entity is managed to ensure sufficient liquid funds are available to meet the
Consolidated Entity's financial commitments in a timely and cost‐effective manner. The Consolidated Entity funds its activities
through capital raisings in order to limit its liquidity risk which is monitored on a monthly basis.
Contractual maturity of the trade payables is within 30 day terms.
The Consolidate Entity manages its liquidity risk by monitoring the total cash inflows and outflows expected on a monthly basis.
The Consolidated entity has established comprehensive risk reporting covering its business units that reflect expectations of
management of the expected statement of financial assets and liabilities.
(e) Capital Management
Management controls the capital of the Consolidated Entity in order to provide the shareholders with adequate returns and
ensure that the group can fund its operations and continue as a going concern.
47
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
There are no externally imposed capital requirements.
Management effectively manages the group's capital by assessing the Consolidated Entity's financial risks and adjusting its capital
structure in responses to include the management of debt levels, distributions to shareholders and share issues.
The Consolidated Entity uses cash flow forecasts to manage and adjust its capital management.
There have been no changes in the strategy adopted by management to control the capital of the Consolidated Entity since the
prior year.
Capital managed by the Consolidated Entity consists of shareholders equity.
Shareholders equity
Consolidated
2018
$
2017
$
5,098,534
5,408,340
25. AUDITOR'S REMUNERATION
Consolidated
Amounts received or due and receivable
by Ernst and Young
‐
‐
an audit or review of the financial report of the
entity and any other entity in the Consolidated
Entity
taxation services provided to the Consolidated
Entity
26. PARENT ENTITY INFORMATION
Information relating to Cullen Resources Limited:
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Accumulated losses
Share based payment reserve
Total shareholders' equity
Loss of the parent entity
Total comprehensive income of the parent entity
2018
$
2017
$
26,499
31,944
‐
26,499
‐
31,944
2018
$
2017
$
398,314
5,119,394
20,860
20,860
44,265,213
40,637,604
1,470,925
5,098,534
727,059
5,443,193
34,853
34,853
43,668,213
39,719,598
1,459,725
5,408,340
918,006
918,006
918,042
918,042
The parent entity has no contingent liabilities, nor does it have any contractual commitments for the acquisition of property,
plant or equipment.
27. SUBSEQUENT EVENTS
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or
event of a material and unusual nature likely, in the opinion of the directors, to affect the operations of the Consolidated
Entity, the results of those operations or the state of affairs of the Consolidated Entity in the subsequent financial years.
48
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
28. CORPORATE INFORMATION
The financial report of Cullen Resources Limited for the year ended 30 June 2018 was authorised for issue in accordance with
a resolution of the directors on 3 September 2018.
Cullen Resources Limited is a for profit company limited by shares incorporated in Australia whose shares are publicly traded
on the Australian Stock Exchange.
49
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
DIRECTORS' DECLARATION
In accordance with a resolution of the directors of Cullen Resources Limited, I state that:
In the opinion of the directors:
(a)
the financial statements and notes of the Consolidated Entity are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2018 and
of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in Note 1(b).
subject to the achievement of the matters in Note 1(c), there are reasonable grounds to believe that
the Company will be able to pay its debts as and when they become due and payable.
this declaration has been made after receiving the declaration required to be made to the directors
in accordance with section 295A of the Corporations Act 2001 for the financial year ended
30 June 2018.
(b)
(c)
(d)
On behalf of the Board
C. Ringrose
Director
Perth, WA
3 September 2018
50
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Cullen Resources
Limited
Report on the audit of the financial report
Qualified opinion
We have audited the financial report of Cullen Resources Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2018, the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion section of
our report, 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 consolidated financial position of the Group as at 30 June 2018
and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for qualified opinion
As detailed in Note 9 to the financial statements, on 12 April 2017, the Group sold its 30% contributing
interest in the Mt Stuart Iron Ore Joint Venture (‘MSIOJV’) and recognised a royalty intangible asset of
$4,747,995 being the estimated fair value of the consideration receivable at the disposal date. In
estimating the fair value of the consideration receivable, the Directors used a discounted cash flow model
with a number of assumptions as to the timing, quantum and discounting of cash flows. At 30 June 2018,
the Directors have adopted a similar net present value calculation with updated market assumptions to
determine the recoverable amount of the intangible asset as part of their impairment assessment of the
carrying value of the royalty intangible asset. Management have determined that the net present value
calculation supports that the recoverable amount of the intangible asset is higher than its carrying value.
For the audit of the Group’s financial report for the year ended 30 June 2018, we have been unable to
obtain sufficient appropriate audit evidence to assess the reasonableness of the Directors’ assumptions
adopted in determining the recoverable value of the intangible asset as part of the asset’s impairment
assessment. Consequently, we are unable to determine the accuracy and appropriateness of the carrying
value of the intangible asset and related disclosures as disclosed in the financial report.
Our audit report for the year ended 30 June 2017, dated 18 September 2017, was qualified as we were
unable to obtain sufficient appropriate audit evidence to assess the reasonableness of the Directors’
assumptions adopted in determining the fair value of the consideration receivable and therefore the fair
value of the royalty intangible asset recognised at the disposal date.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
MH:KG:CULLEN:007
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
qualified opinion.
Materiality uncertainty related to going concern
We draw attention to Note 1 in the financial report, which describes the principal conditions that raise
doubt about the Group’s ability to continue as a going concern. These events or conditions indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. Except for the matters described in the Basis for Qualified
Opinion and Material Uncertainty Related to Going Concern sections of our report, we have determined
that there are no other key audit matters to be communicated in our 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 Company’s 2018 Annual Report, 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 with the exception of the Remuneration Report and our
related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters relating 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 the 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
judgment 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.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year 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 audit of the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2018.
In our opinion, the Remuneration Report of Cullen Resources Limited for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
V L Hoang
Partner
Perth
3 September 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
SHAREHOLDER INFORMATION
CAPITAL STRUCTURE
As at 31 August 2018, the company had the following securities on issue:
Issued Capital
Top 20 Shareholders
Total holding of twenty largest shareholders
% of total shares on issue
Distribution of shareholders
1 ‐ 1,000 shares
1,001 ‐ 5,000 shares
5,001 ‐ 10,000 shares
10,001 ‐ 100,000 shares
100,001 and over
Total
Fully paid
Ordinary shares
2,598,560,131
1,178,292,841
45.34%
163
166
317
1,327
1,011
2,984
Unmarketable Parcels as at 15 September 2018
Minimum $500.00
2,479
OPTIONS
As at 31 August 2018, 20,000,000 unissued shares in respect of options were outstanding.
These are as follows:
Number
20,000,000
Exercise Price
Expiry Date
$0.003
30 November 2020
SUBSTANTIAL SHAREHOLDERS
The company has one Substantial Shareholder as at 31 August 2018
Name
Perth Capital Pty Ltd, Wythenshawe Pty
Ltd & Associates
%
22.54
No. of shares
585,763,940
55
CULLEN RESOURCES LIMITED ‐ ANNUAL REPORT 2018
TWENTY LARGEST SHAREHOLDERS
The names of the twenty holders of the fully paid shares at 31 August 2018 are listed below:
Name
Perth Capital Pty Ltd
Perth Capital Pty Ltd
Aquila Resources Ltd
Warramboo Holdings Pty Ltd
Bellarine Gold Pty Ltd
Innerleithen Pty Ltd
Glyde Street Nominees Pty Ltd
Chiatta Pty Ltd
Dr Mark Anthony Bennett
Kitchsmith Pty Ltd
W L Houghton Pty Ltd
C Y T Investments Pty Ltd
Lindglade Enterprises Pty Ltd
Warramboo Holdings Pty Ltd
Wythenshawe Pty Ltd
WJK Investments Pty Ltd
Mr Christopher Robert Ringrose
Mr Bruce James Forge
327TH P&C Nominees Pty Ltd
A N Superannuation Pty Ltd
Total
No. of Shares
% Held
Rank
240,000,000
118,603,398
102,343,426
88,433,080
70,446,950
57,662,499
56,661,655
55,000,000
52,000,000
44,999,998
35,000,000
32,750,000
32,428,513
32,409,595
30,933,429
29,275,417
26,835,342
26,086,198
23,975,971
22,447,370
9.24
4.56
3.94
3.40
2.71
2.22
2.18
2.12
2.00
1.73
1.35
1.26
1.25
1.25
1.19
1.13
1.03
1.00
0.92
0.86
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
1,178,292,841
45.34
VOTING RIGHTS
Every member present in person or by representative shall on a show of hands have one vote, and on a poll every
member present in person or by representative, proxy or attorney shall have one vote in respect of each fully paid
share held by him.
56