ABN 68 064 120 896
A N N U A L F I N A N C I A L R E P O R T
3 0 J U N E 2 0 1 8
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
The Directors of Global Petroleum Limited present their report together with the consolidated financial statements of
the Group comprising of Global Petroleum Limited (“the Company” or “Global” or “Parent”) and the entities it controlled
at the end of, or during, the year ended 30 June 2018 (“Consolidated Entity” or “Group”).
Contents
Directors’ Report
Letter to shareholders
Operating and financial review .................................................................................................................. 3
1.
Directors ...................................................................................................................................................... 6
2.
Company secretary ..................................................................................................................................... 7
3.
Directors' meetings……………………… …………………………………………………………………………8
4.
Directors' interests ..................................................................................................................................... 8
5.
Discretionary grant of shares and share options .................................................................................... 8
6.
Principal activities, likely developments and dividends .......................................................................... 9
7.
Significant changes to the state of affairs ................................................................................................ 9
8.
Events subsequent to reporting date ........................................................................................................ 9
9.
Indemnification insurance of officers ....................................................................................................... 9
10.
Non-audit services ...................................................................................................................................... 9
11.
Remuneration report - audited ................................................................................................................. 10
12.
Corporate governance statement ............................................................................................................ 15
13.
Auditor’s independence declaration ....................................................................................................... 16
14.
Directors' resolution ................................................................................................................................. 16
15.
Lead Auditor’s Independence Declaration .............................................................................................................. 17
Consolidated statement of profit or loss and other comprehensive income ....................................................... 18
Consolidated statement of financial position .......................................................................................................... 19
Consolidated statement of changes in equity ......................................................................................................... 20
Consolidated statement of cashflows ...................................................................................................................... 21
Notes to the consolidated financial statements ...................................................................................................... 22
Directors’ Declaration…………... .............................................................................................................................. 44
Independent Auditor’s Report…………………………………………………..……………………………………………45
Additional information…………………………………………………………………………….………………...…………49
Corporate directory .…………………………………………………………………………………………………………..52
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
26 September 2018
Dear Shareholders
We are pleased to present to you the Global Petroleum 2018 Annual Report. Since we wrote to you a year ago in
the last Annual Report, Global has continued to make good progress with its offshore Namibian acreage, and the
hearings of the appeals against the first two Environmental Decrees in respect of our Italian Adriatic Sea licence
applications are expected to take place in Q4 2018.
In terms of the wider economic picture during the last financial year, commodity prices have significantly improved
with the Brent oil price averaging $63 per barrel during the reporting year to 30 June 2018, compared to $51 in the
preceding year to end June 2017. Consequently, there has been increased operational and commercial activity
within the upstream industry generally, and two wells are scheduled to spud during the second half of 2018 offshore
Namibia one of which is marginally outside the Walvis Basin, where our acreage is located. Attracting capital for
exploration activities remains challenging, however financing is available for the right opportunities, as particularly
demonstrated within the London capital markets.
During the reporting period the Company completed a 2D seismic acquisition programme over its two operated
blocks held under Petroleum Exploration Licence 0029 (“PEL 0029”) in Namibia. Processing and interpretation of
the data was completed in October 2017 with the new information indicating significantly improved prospectivity
across the blocks.
Accordingly, the Company commissioned a Competent Persons Report (“CPR”) in respect of its acreage from
consultants AGR TRACS, which was completed in the reporting period. Prospective resources have been
calculated on three prospects: the Company’s primary structure, Gemsbok, as well as Dik-Dik and Lion. The
results of the CPR are set out in more detail in the Company’s announcement dated 15 January 2018.
In late 2017 the Company negotiated and agreed with the Namibian Ministry of Mines and Energy (“MME”) an
extension of the First Renewal Exploration Period (Phase 2) of PEL 0029 for a period of 12 months until December
2018. In addition, the MME has agreed entry into the Second Renewal Period (Phase 3) effective from December
2018 for a period of two years.
Following the release of the CPR, the Company appointed Stellar Energy Advisors, a specialised independent
advisor providing acquisition and divestment services to upstream companies in the oil and gas business to
provide support to the farm-out process. The farm-out process of the Company’s Namibian acreage is designed
with a view to seeking a partner to fund future operations on the blocks, commencing with the acquisition of 3D
seismic data in accordance with the extension work programme agreed with the MME.
In the period since 30 June 2018, the Company was pleased to announce that it signed a Petroleum Agreement
to acquire Block 2011A offshore Namibia via its wholly owned subsidiary Global Petroleum Namibia Limited.
Block 2011A is located in the northern Walvis Basin, immediately to the east of the Company’s current licence,
PEL 0029. The combination of the two licences increases the Company’s presence in the region to 11,607 square
kilometres offshore Namibia, making Global one of the largest net acreage holders within the region.
The Company believes that Block 2011A contains the same plays as those outlined in the CPR for PEL 0029.
Regarding the Repsol operated Welwitschia-1 well drilled in the western part of Block 2011A in 2014, Global
believes that there is significant prospectivity, similar to that in PEL 0029 – in the deeper Albian Carbonates, which
Welwitschia-1A did not reach. (See Note 7.3 Subsequent Event for further detail).
In Italy, as previously reported, various local authorities and interest groups appealed against the Environmental
Decrees in relation to applications d 82 F.R-GP and d 83 F.R-GP, which were published in October 2016.
Publication of Environmental Decrees is the final administrative stage before grant of the Permits, and the
Company has been notified that the appeals will be heard by the Latium Administrative Tribunal (Rome) in
October 2018.
The Company announced in October 2017 that the remaining two Environmental Decrees in relation to the Permit
Applications, designated d 80 F.R-GP and 81 F.R-GP, had been published by the Italian authorities.
As with the previous two Environmental Decrees, a number of appeals by various interested parties against the
later Environmental Decrees have been made. The Company has been notified that these further appeals will be
heard by the Latium Tribunal in November 2018.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 1
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
The Company remains confident of the prospectivity of the application areas despite the continued delays with
the granting of the licences and is encouraged by the calibre of companies with similar applications and or licences
within the Southern Adriatic region.
Financial
During the year ended 30 June 2018, the Group recorded a loss after tax of US$1,965,570 (2017: loss
US$1,856,463). Cash balances at 30 June 2018 amounted to US$4,928,998 (2017: US$7,807,605). The Group
has no debt.
Strategy and Outlook
The Company continues to monitor further exploration opportunities which may complement the Company’s existing
exploration assets offshore Namibia and remains encouraged by the recent increase in exploration activity both
within the region and beyond. In Namibia, wells are scheduled to be drilled by both Tullow Oil and Chariot Oil &
Gas in 2H 2018 – the Tullow well spudded and completed in September.
We look forward to meeting Shareholders at the Company’s Annual General Meeting later in 2018.
John van der Welle
Non-Executive Chairman
Peter G. Hill
Chief Executive Officer
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 2
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
1.
OPERATING AND FINANCIAL REVIEW
Namibian Project
The Namibian Project consists of (a) an 85% participating interest in PEL 0029 (“Licence”) covering Blocks 1910B
and 2010A in the Republic of Namibia and (b) Block 2011A in the Walvis Basin granted during the period
subsequent to 30 June 2018.
PEL 0029
PEL 0029, issued on 3 December 2010, originally covered 11,730 square kilometres and is located offshore
Namibia in water depths ranging from 1,300 metres to 3,000 metres (Figure 1).
The Company’s wholly owned subsidiary, Global Petroleum Namibia Limited, is the operator of the Licence, with
an 85% interest in the two blocks. Partners NAMCOR and Bronze Investments Pty Ltd (Bronze) hold 10% and
5% respectively, both as carried interests.
In December 2015, the Company entered into the First Renewal Exploration Period (Phase 2) of the Licence with
a reduced Minimum Work Programme, making a mandatory relinquishment of 50% of the Licence Area. Phase
2 originally had a duration of 24 months.
Following reprocessing and evaluation of historic 2D data - as previously reported, the Company entered into a
contract with Seabird Exploration of Norway in order to acquire 834 km of full fold 2D seismic data over its Blocks,
which was shot in June/July 2017. Processing and interpretation of the new 2D seismic data was completed early
in Q4 2017.
The new information significantly improved the prospectivity across PEL 0029 in general and the Gemsbok
prospect in particular. Better imaging from the new 2D data revealed that the known source rock intervals are
likely to be within the oil generative window and this, combined with data showing repeating oil seeps along the
faulted flanks of Gemsbok, greatly improves the chance of a major oil discovery.
Consequently, the Company commissioned a CPR in respect of its acreage from consultants AGR TRACS, which
was completed within the reporting period. Prospective resources have been calculated on three prospects: the
Company’s primary structure, Gemsbok, as well as Dik Dik and Lion. The results of the CPR are set out in more
detail in the Company’s announcement on 15 January 2018.
In late 2017, the Company also negotiated and agreed with the MME an extension of the First Renewal
Exploration Period (Phase 2) of the Company’s Licence of 12 months to 3 December 2018. In addition, the MME
has agreed entry into the Second Renewal Period (Phase 3) effective from 3 December 2018 for a period of two
years.
The Minimum Work Programme for the one-year extension of Phase 2 is the acquisition of 600 square kilometres
of 3D seismic data, contingent upon Global concluding a farm-out agreement with a third party to fund the
acquisition of the 3D data. If the 3D acquisition is not completed during the Phase 2 extension period, it may be
carried over into Phase 3. During Phase 3, the commitment is to drill one well (depth and location to be agreed)
unless the MME and Global agree that circumstances dictate otherwise.
Following the release of the CPR, the Company appointed Stellar Energy Advisors, a specialised, independent
advisor providing acquisition and divestment services to upstream companies in the oil and gas business. Stellar
launched a structured farm-out process of the Company’s Namibian acreage with a view to seeking a partner to
fund future operations on the block, commencing with 3D seismic data in accordance with the extension work
programme agreed with the MME. It is believed that potential farminees have decided to await the results of the
drilling being carried out in Q3 and Q4 2018 by operators nearby.
Block 2011A
In September 2018 the Company was pleased to announce that it signed a Petroleum Agreement to acquire Block
2011A offshore Namibia via its wholly owned subsidiary Global Petroleum Namibia Limited.
Block 2011A is located in the northern Walvis Basin, immediately to the east of the Company’s current licence,
PEL 0029. The combination of the two licences increases the Company’s presence in the region to 11,607 square
kilometres offshore Namibia, making Global one of the largest net acreage holders within the region.
The Company believes that Block 2011A contains the same plays as those outlined in the CPR for PEL 0029.
Regarding the Repsol operated Welwitschia-1 well drilled in the western part of Block 2011A in 2014, Global
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 3
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
1. OPERATING AND FINANCIAL REVIEW (continued)
believes that there is significant prospectivity, similar to that in PEL 0029 – in the deeper Albian Carbonates, which
Welwitschia-1A did not reach. (See Note 7.3 Subsequent Event for further detail).
The Company also believes that there is additional prospectivity in shallower Upper Cretaceous/Tertiary
reservoirs on the eastern flank of the Welwitschia structure. These reservoirs have been proven by wells to the
north-east and south-east of Block 2011A, and the Cretaceous is a target in both of the wells being drilled in
Q3/Q4 2018 by other industry operators nearby.
Tullow Well -
Cormorant Prospect
Chariot Well -
Prospect S
FIGURE 1 - Map of Namibia showing Global Licence.
Permit Applications in the Southern Adriatic, Offshore Italy
In August 2013, the Company submitted an application and proposed work programme and budget to the Italian
Ministry of Economic Development for four exploration areas offshore Italy (the “Permit Applications” – Figure 2).
As previously reported, various local authorities and interest groups appealed against the Environmental Decrees
in relation to applications d 82 F.R-GP and d 83 F.R-GP, which were published in October 2016. Publication of
Environmental Decrees is the final administrative stage before grant of the Permits, and the Company has been
notified that the appeals will be heard by the Latium Administrative Tribunal (Rome) in October 2018.
The Company announced in October 2017 that the remaining two Environmental Decrees in relation to the Permit
Applications, designated d 80 F.R-GP and 81 F.R-GP, had been published by the Italian authorities.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 4
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
1. OPERATING AND FINANCIAL REVIEW (continued)
As with the previous two Environmental Decrees, a number of appeals by various interested parties against the
later Environmental Decrees have been made. The Company has been notified that these further appeals will be
heard by the Latium Tribunal in November 2018.
Global understands that recent appeals against other Environmental Decrees in the Southern Adriatic have been
rejected by the same tribunal.
Permit Applications in the Southern Adriatic, Offshore Italy (continued)
The Southern Adriatic and adjacent areas continue to be the focus of industry activity. Most notably, in
Montenegro, offshore concessions were awarded in 2016 /2017 to Eni/Novatek (the latter just 35 km from the
nearest of the Applications). The four Application blocks are contiguous with the Italian median lines abutting
Croatia, Montenegro and Albania respectively (Figure 2).
FIGURE 2 - Map of Southern Adriatic showing Italian permit applications.
Business Development
Global remains in a strong financial position from which to fund work activity on its Namibian acreage, its Italian
application interests (subject to award), and to acquire complementary assets with particular focus on Namibia
where exploration activity has increased. The Company is encouraged by planned wells which are scheduled to
be drilled by both Tullow Oil and Chariot Oil & Gas in Q3 and Q4 2018.
Presentation Currency
The financial information in this annual report is presented in United States dollars (US$).
Results of operations
2018
US$
2017
US$
Loss from continuing operations before tax
(1,965,570)
(1,856,463)
Income tax benefit (expense)
Net profit (loss)
-
-
(1,965,570)
(1,856,463)
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 5
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
1. OPERATING AND FINANCIAL REVIEW
The results of the Group include revenue from interest income of US$79,813 (2017: US$48,814).
Review of financial condition
As at 30 June 2018, the Group had cash of US$4,928,998 (2017: US$7,807,605) and had no debt.
2.
DIRECTORS
The names of Directors in office at any time during the financial year or since the end of the financial year are as
follows:
Unless otherwise disclosed, Directors held their office from 1 July 2017 until the date of this report.
Mr John van der Welle B.Sc.
ACA, FCT, CTA
Chairman
Mr Peter Hill MA Law (Oxon)
Managing Director
Chief Executive Officer
Mr Peter Blakey B.Sc CEng
Non-Executive Director
Mr van der Welle is a Chartered Accountant with over 30 years’ experience
in the oil and gas industry and is currently a Non-Executive Director of AIM
listed exploration companies Hurricane Energy Plc and Lekoil Limited,
both of which had IPO’s on AIM in 2013-2014. Mr van der Welle has
previously been a senior executive with, or Director of, a number of UK
listed upstream oil and gas companies – Enterprise Oil, Hardy Oil and Gas,
Premier Oil, First Calgary Petroleums and Stratic Energy Corp.
Mr van der Welle was appointed as Non-Executive Chairman on 10
February 2014.
Mr Hill has extensive experience in the energy sector as a senior executive
with a significant track record worldwide in high-level M&A and business
development roles, primarily in the oil industry. Most recently Mr Hill was
the global head of Corporate M&A for Statoil ASA, where he was
responsible for several large transactions, being a key member of the team
responsible for Statoil’s merger with Norsk Hydro Oil & Gas in December
2006 and leading the acquisition of EnCana’s Gulf of Mexico deepwater
assets in 2005. Prior to agreeing to join Global, Mr Hill was responsible for
supervising execution of the IPO of Statoil’s Energy & Retail division in the
latter part of 2010.
Previously Mr Hill set up the international business of Waterous & Co as
Managing Director in the UK, and before that worked for Enterprise Oil for
many years, latterly as Head of International New Ventures. Mr Hill started
in the energy industry with Total Oil Marine and is a UK qualified solicitor,
having commenced his career with Clifford Chance. He holds an MA in
Law from Oxford University.
Mr Hill was appointed as Managing Director and Chief Executive Officer of
the Company on 1 September 2011. Mr Hill has not held any other
directorships of publicly listed companies in the last three years.
Peter Blakey has worked in the oil and gas industry for over 50 years
including positions with ICI, Shell and BP/Union Carbide. After a spell with
PA Management Consultancy he and Peter Taylor formed T M Services,
an international oil and gas consultancy which was awarded the Queens
Award for Export Achievement in 1985. He co-founded and was a Director
of TM Oil Production which later became Dana Petroleum. Dana grew to
become one of the leading UK oil and gas exploration companies and was
taken over by KNOC for £1.8bn in 2010. He also co-founded Consort
Resources, a significant North Sea gas transportation and production
company, and Planet Oil International which acquired various interests in
Mauritania, Guyana (formally French Guiana) and Uganda, and
subsequently reversed into Hardman Resources in 1998.
Peter Blakey was also a founding member with Peter Taylor of Star
Petroleum, Jupiter Petroleum and Neptune Petroleum. Star Petroleum
was incorporated into Global Petroleum in 2002. Jupiter Petroleum, with
assets in offshore Namibia, was acquired by Global Petroleum in
2011. Neptune Petroleum, with interests in Namibia and Uganda, was
reversed into AIM listed Tower Resources Plc in 2005.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 6
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
2.
DIRECTORS (continued)
Mr Damien Cronin MAICD
MQLS
Independent Non-Executive
Director and Company
Secretary
Mr Andrew Draffin (CA)
Independent Non-Executive
Director
Mr Garrick Higgins
Independent Non-Executive
Director
Mr Peter Taylor B.Sc CEng
Non-Executive Director
Mr Cronin is a solicitor who has over 30 years’ experience in the oil and
gas and resources sectors and has held senior legal and commercial roles
with Rio Tinto, Shell, Duke Energy and Incitec Pivot. He has previously
served as Company Secretary to a number of listed public companies in
the oil and gas sector including Sunshine Gas and Blue Energy and as
secretary to the operating committee of a number of mining joint ventures,
including that for the Sonoma Coal Mine.
Mr Cronin was appointed Director and Company Secretary on 31
December 2011 and resigned as Director and Company Secretary on 31
December 2017.
Mr Draffin is a Chartered Accountant with over 17 years’ experience in
financial reporting, treasury management and corporate advisory services.
He currently provides services as a Director, Company Secretary and CFO
to ASX listed, OTCQX listed and private companies operating in renewable
energy, exploration and mining and the investment sectors.
Mr Draffin is a Director of EnviroMission and Gladiator Resources.
Mr Draffin was appointed Company Secretary on 1 January 2018.
Mr Higgins was appointed a Director on 9 October 2017.
Mr Higgins is a Melbourne based lawyer and a principal of Grillo Higgins a
firm that practices in energy and resources law and in corporate and
securities law, including mergers and acquisitions, takeovers, capital
raisings, project finance, corporate governance and joint ventures. Mr
Higgins is a director of the public companies Escala Partners Limited and
Laguna Gold Limited, the latter as an alternate Director.
Peter Taylor has over 40 years’ experience in the oil and gas industry. He
co-founded T M Services, an international oil and gas consulting company,
in 1980 and became involved in the upstream exploration and production
sectors in 1990. He co-founded and was a Director of TM Oil Production
which later became Dana Petroleum. Dana grew to become one of the
leading UK oil and gas exploration companies and was taken over by
KNOC for £1.8bn in 2010. He also co-founded Consort Resources, a
significant North Sea gas transportation and production company, and
Planet Oil International which acquired various interests in Mauritania,
Guyana (formally French Guiana) and Uganda, and subsequently
reversed into Hardman Resources in 1998.
Peter Taylor was also a founding member with Peter Blakey of Star
Petroleum, Jupiter Petroleum and Neptune Petroleum. Star Petroleum
was incorporated into Global Petroleum in 2002. Jupiter Petroleum, with
assets in offshore Namibia, was acquired by Global Petroleum in
2011. Neptune Petroleum, with interests in Namibia and Uganda, was
reversed into AIM listed Tower Resources Plc in 2005.
3.
COMPANY SECRETARY
Mr Damien Cronin was appointed to the position of Company Secretary on 31 December 2011 and resigned on
31 December 2017. Mr Andrew Draffin was appointed to the role on 1 January 2018. Mr Draffin acts as Company
Secretary to a number of publicly listed companies in the mining, oil and gas sectors, investment and childcare
sectors.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 7
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
4.
DIRECTORS’ MEETINGS
The number of Directors’ meetings and the number of meetings attended by each of the Directors of the Company
during the financial year are:
Board Meetings
Number Eligible to Attend
Board Meetings
Number Attended
Mr J van der Welle
Mr P Hill
Mr P Blakey
Mr D Cronin (resigned 31 December 2017)
Mr A Draffin
Mr G Higgins (appointed Non-Executive
Director 9 October 2017)
Mr P Taylor
7
7
7
4
7
4
7
7
7
7
4
7
4
7
The Company does not currently have separate committees of the Board, given the current size of the Board.
Matters that would otherwise be within the charter of such committees are considered by the Board at its meetings.
5.
DIRECTORS' INTERESTS
The following table sets out each Director's relevant interest, including related parties, in shares and options of
the Company as at the date of this report:
Directors
Mr J van der Welle
Mr P Hill
Mr P Blakey
Mr D Cronin
Mr A Draffin
Mr G Higgins
Mr P Taylor
Interest in Securities at the Date of this Report
Ordinary Shares(1)
Incentive Options (2)
291,151
2,744,472
39,840,133
N/A(3)
-
-
41,629,071
2,000,000
12,000,000
-
N/A(3)
500,000
500,000
-
Notes
(1)
(2)
(3)
6.
Ordinary Shares means fully paid ordinary shares in the capital of the Company.
Incentive Options means an option over ordinary shares exercisable at various amounts and dates – see
below.
Mr D Cronin resigned as Director on 31 December 2017.
DISCRETIONARY GRANTS OF SHARES AND SHARE OPTIONS
On 14 November 2017, following AGM approval, a total of 8,000,000 options were issued to some of the Directors.
They were valued at AU$0.021 (US$0.016) per option, determined by the Binomial pricing model. They are
exercisable on or before 13 November 2022 with an exercise price of AU$0.0318/option. No options were issued
in the year to 30 June 2017.
During year ended 30 June 2017, the Company made a discretionary grant of shares, following shareholder
approval at the AGM on 17 November 2015, to Directors. 838,842 shares were issued and fully paid with a fair
value of US$22,347. The fair values of the shares were determined as the ASX market value on the day of issue.
No shares were issued during the year to 30 June 2018.
Since 30 June 2018, no shares have been issued as a result of the exercise of options and no further options or
shares have been granted.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 8
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
7.
PRINCIPAL ACTIVITIES, LIKELY DEVELOPMENTS AND DIVIDENDS
The principal activities of the Group during the year consisted of oil and gas exploration, and there has been no
change in the nature of those activities.
The Company expects to continue as an oil and gas explorer with a specific focus of enhancing of shareholder
value by the identification and commercialisation of oil and gas assets.
No dividends were paid during the financial year ended 30 June 2018 (2017: Nil).
8.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Company and Group during the financial
year.
9.
EVENTS SUBSEQUENT TO REPORTING DATE
On 18 September the Group signed a Petroleum Agreement to acquire Block 2011A offshore Namibia. via its
wholly owned subsidiary Global Petroleum Namibia Limited.
The new block is immediately to the east of the Company’s current licence PEL 0029 and comes with the following
commitments.
• Under a work programme, the Company will carry out various studies and reprocess all existing seismic
in the licence area which includes 3D seismic shot in Western part of the licence during the first two
years;
• At the conclusion of two years, the Company has the option to either shoot a new 2,000 square kilometre
3D seismic data survey in the eastern part of Block 2011A, or alternatively opt to relinquish the licence.
10.
INDEMNIFICATION INSURANCE OF OFFICERS
The Constitution of the Company requires the Company, to the extent permitted by law, to indemnify any person
who is or has been a Director or officer of the Company or Group for any liability caused as such a Director or
officer and any legal costs incurred by a Director or officer in defending an action for any liability caused as such
a Director or officer. During or since the end of the financial year, no amounts have been paid by the Company or
Group in relation to these indemnities. During the financial year, an indemnity insurance premium of US$28,060
(2017: US$26,944) was paid by the Company.
11. NON-AUDIT SERVICES
During the year KPMG, the Group’s auditor, has performed certain other services in addition to their statutory
duties.
The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the
provision of those non-audit services during the year by the auditor is compatible with, and did not compromise,
the auditor independence requirements of the Corporations Act 2001, for the following reasons:
The non-audit services provided do not undermine the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or
auditing the auditor’s own work, acting in a management or decision-making capacity for the Group, acting
as an advocate for the Group or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of the Group, KPMG and its related practices, for audit and non-audit
services provided during the reporting year are set out below.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 9
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
Audit services:
Auditors of the Group, KPMG Australia
– audit and review of financial reports
Other services:
Auditors of the Group, KPMG Australia
- taxation services
Total audit and other services
2018
US$
2017
US$
38,878
38,878
39,925
39,925
4,157
4,157
43,035
6,700
6,700
46,625
12.
REMUNERATION REPORT - AUDITED
12.1 Principles of compensation – audited
The Group’s remuneration policy for its key management personnel (KMP) has been developed by the Board
taking into account the size of the Group, the size of the management team for the Group, the nature and stage
of development of the Group’s current operations, and market conditions and comparable remuneration levels for
companies of a similar size and operating in similar sectors.
In addition to considering the above general factors, the Board has also placed emphasis on the following specific
issues in determining the remuneration policy for KMP:
(i)
(ii)
the Group is currently focused on undertaking exploration, appraisal and development activities;
risks associated with developing oil and gas companies while exploring and developing projects; and
(iii) measures other than profit which may be generated from asset sales, as the Group is currently undertaking
new project acquisition, exploration and development activities with the result it does not expect to be
undertaking profitable operations until sometime after the commencement of commercial production on
any of its projects.
These principles were reflected in the discretionary grant of options in 2018, approved by shareholders on 14
November 2017, and the grant of shares in financial year 2017.
12.2 Directors’ and executive officers’ remuneration – audited
Executive Director remuneration
The Group’s remuneration policy is to provide a fixed remuneration component and a performance-based
component (short term incentive and long-term incentive) – see details below. The Board believes that this
remuneration policy is appropriate given the considerations discussed in the Section above and aims to align
executives’ objectives with shareholder and business objectives.
Currently, given the size and nature of the Group’s operations, there is only one executive, Mr Peter Hill, who is
also a Director.
Mr P Hill, Managing Director and Chief Executive Officer, has a Contract of Employment with Global Petroleum
Limited dated 1 August 2011 (amended, with effect, 1 August 2014). The contract specifies the duties and
obligations to be fulfilled by the Managing Director and Chief Executive Officer. The contract has a rolling annual
term and provides for termination by either party on twelve months’ notice. Upon notice, Mr Hill will be entitled to
his remuneration and related benefits up to the end of the notice period. The Contract of Employment does not
provide for any additional termination payout. His base remuneration under the terms of the contract is set at
GBP 250,000 (US$333,748) plus health insurance. GBP 10,487 (US$13,619).
(i)
Fixed remuneration
Fixed remuneration consists of a base remuneration, as well as an employer contribution to a
superannuation fund and other non-cash benefits. Non-cash benefits may include provision of motor
vehicles and healthcare benefits.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 10
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
12.
REMUNERATION REPORT – AUDITED (continued)
The fixed remuneration is reviewed annually by the Board in the absence of a Remuneration and
Nomination Committee. The process consists of a review of Company and individual performance, relevant
comparative remuneration externally where appropriate, external advice on policies and practices, noting
external advice was sought during October 2017 – refer section 12.5.
(ii)
Performance based remuneration – short term incentive
The executive is entitled to an annual cash bonus upon achieving various key performance indicators
(“KPI’s”), as set by the Board. Having regard to the current size, nature and opportunities of the Company,
the Board has determined that these KPI’s will include measures such as successful completion of
exploration activities (e.g. completion of exploration programmes within budgeted timeframes and costs),
development activities (e.g. completion of feasibility studies), corporate activities (e.g. recruitment of key
personnel) and business development activities (e.g. project acquisitions and capital raisings).
During the 2018 financial year, no cash bonuses were paid or are payable (2017: Nil).
(iii) Performance based remuneration – long term incentive
The Board may issue incentive options to the executive as a key component of the incentive portion of their
remuneration, in order to attract and retain the services of the executive and to provide an incentive linked
to the performance of the Group. The Board has a policy of granting incentive options to the executive with
exercise prices at or above market share price (at the time of agreement). As such, incentive options
granted to the executive will generally only be of benefit if the executive performs to the level whereby the
value of the Group increases sufficiently to warrant exercising the incentive options granted. Options were
granted as remuneration during the 2018 financial year see section 12.3 (2017: Nil).
There are no vesting or performance criteria on the incentive options granted to executives, as given the
speculative nature of the Group’s activities and the small management team responsible for its running, it
is considered the performance of the executive and the performance and value of the Group are closely
related.
Share awards to UK Directors are subject to UK Income Tax and National Insurance deduction under the Pay as
You Earn scheme (PAYE). UK Directors were allocated part of their share-based payment made in the 2017
financial year as cash in order to pay these PAYE obligations. There were no share allocations to Directors in
the 2018 financial year. The value of the shares issued to Mr Hill was US$Nil (2017: US$13,788) and
corresponding PAYE was US$Nil (2017: US$9,754).
Non-Executive Director remuneration
The Board’s policy is for fees to Non-Executive Directors to be no greater than market rates for comparable
companies for time, commitment and responsibilities. Given the current size, nature and risks of the Group,
incentive options have been used to attract and retain certain Non-Executive Directors. The Board determines
payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice,
duties and accountability. Independent external advice is sought when required, however no external advice has
been sought in relation to remuneration paid during the reporting period (2017: obtained). The maximum
aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at
a General Meeting. Fees for Non-Executive Directors are not linked to the performance of the Group. However,
to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the
Company and Non-Executive Directors may in limited circumstances receive unlisted incentive options in order
to secure their initial or ongoing services. Options issued during the year are disclosed in sections 12.3 and 12.4.
Share awards to UK Directors are subject to UK Income Tax and National Insurance deduction under the Pay as
You Earn scheme (PAYE). UK Directors were allocated part of their share-based payment in the 2017 financial
year as cash in order to pay these PAYE obligations. There were no share allocations to Directors in the 2018
financial year. The value of the shares issued to Mr J van der Welle was US$Nil (2017: US$2,495) and
corresponding PAYE tax was US$Nil (2017: US$709), for Messrs Blakey and Taylor the value of the shares
issued was US$Nil (2017: US$1,299) and corresponding PAYE tax was US$Nil (2017: US$848). Australian based
Directors’ shares were valued as follows: Mr Cronin US$Nil (2017: US$3,466) and Mr Draffin US$Nil (2017: $Nil).
There was no cash element paid to Australian Directors.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 11
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
12. REMUNERATION REPORT – AUDITED (continued)
Non-Executive Director fees for the reporting period for Messrs Blakey and Taylor were set at GBP35,000
(US$47,325 and US$47,133 respectively) (2017: GBP34,269 (US$43,506) each). Mr van der Welle’s fees were
set at GBP32,500 (US$43,532) (2017: GBP31,823 (US$40,386)). Messrs Cronin, Draffin and Higgins fees were
set at AU$34,500, AU$34,500 and AU$36,000 respectively (US$26,924, US$26,924 and US$28,094 respectively)
- (2017: AU$29,375 (US$22,158), AU$30,000 (US$22,795) and Nil respectively). These fees relate to
responsibilities as a Director only. Non-Executive Directors can rescind their position at any time by submitting
their resignation in writing. A Non-Executive Director’s appointment can be terminated by a shareholder vote. The
Non-Executive Directors are not entitled to any pay-outs on termination.
The Board has no retirement scheme in place. Directors who retire from the Board of Directors are not entitled to
any retirement payment. The Group will make contributions to superannuation funds where required - in 2018
contributions to Messrs Cronin, Draffin and Higgins were US$1,187, US$2,534 and US$1,836 respectively (2017:
US$2,136, US$2,163 and US$Nil respectively).
Relationship between remuneration of KMP, shareholder wealth and earnings
During the Group’s project identification, acquisition, exploration and development phases of its business, the
Board anticipates that the Group will retain earnings (if any) and other cash resources for the exploration and
development of its resource projects. Accordingly, the Group does not currently have a policy with respect to the
payment of dividends and returns of capital. Therefore, there was no relationship between the Board’s policy for
determining the nature and amount of remuneration of KMP and dividends paid and returns of capital by the
Group during the current and previous four financial years.
The Board did not determine the nature and amount of remuneration of the KMP by reference to changes in the
price at which shares in the Company traded between the beginning and end of the current and the previous four
financial years. However, as noted above, a number of KMP have received or are entitled to receive incentive
options which generally will only be of value to the individual should the value of the Company’s shares increase
sufficiently to warrant exercising the incentive options.
Relationship between remuneration of KMP and earnings
As discussed above, the Group is currently undertaking new project acquisition, exploration and development
activities, and does not expect to be undertaking profitable operations (other than by way of material asset sales),
until sometime after the successful commercialisation, production and sales of commodities from one or more of
its projects. Accordingly, the Board does not consider earnings during the current and previous four financial years
when determining the nature and amount of remuneration of KMP.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 12
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
12. REMUNERATION REPORT – AUDITED (continued)
Currently the Company only employs one executive KMP, Mr P Hill. Details of his contract are shown above.
Details of the nature and amount of each element of the remuneration of the Directors and key management personnel of the Group for the
financial year are as follows:
Short-Term(1)
Post-Employment
Share- Based
Payments
Total
Proportion of
Remuneration
Performance
Related
Remuneration (7)
Directors’
Fees(7)
Superannuation
and other benefits
Shares(2)/
Options (3)
Director
Executive officers
Mr P Hill
Sub-total executive
officers remuneration
Non-Executive Directors
Mr J van der Welle
Mr P Blakey
Mr D Cronin (4) (5)
Mr A Draffin(6)
Mr G Higgins(8)
Mr P Taylor
Sub-total Non-Executive
Directors’ remuneration
Total Directors’ and
executive officers’
remuneration
Notes on following page
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
US$
US$
333,748
320,8907
333,748
320,8907
-
-
-
-
-
-
-
-
-
-
-
-
-
-
333,748
320,890
-
-
-
-
43,532
41,0957
47,325
44,3547
12,325
22,158
26,924
22,795
19,327
-
47,133
44,3547
195,566
174,756
196,566
174,756
US$
13,619
12,226
13,619
12,226
-
-
-
-
1,187
2,136
2,534
2,163
1,836
-
-
-
5,557
4,299
19,176
16,525
US$
96,126
13,7882
96,126
13,7882
16,021
2,4952
-
1,2992
-
3,4662
8,010
-
8,010
-
-
1,2992
32,041
8,558
128,167
22,3472
US$
443,493
346,904
443,493
346,904
59,553
43,590
47,325
45,653
13,512
27,760
37,468
24,958
29,173
-
47,133
45,653
234,164
187,614
677,657
534,518
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 13
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
12. REMUNERATION REPORT - AUDITED (continued)
Notes in relation to the table of Directors' and executive officers' remuneration:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
There was no short-term cash bonus paid during the year.
Shares, refer to 12.3 and 12.4 below. Amounts paid in cash to UK Directors relating to PAYE deductions
have been included in remuneration and Directors’ fees.
Options, refer to 12.3 and 12.4 below.
Mr D Cronin was remunerated US$18,536 (2017: US$26,671) as Company Secretary, separate to his role
as Director and thus not included in the table above.
Mr D Cronin resigned as Director and Company Secretary on 31 December 2017.
Mr A Draffin was appointed Company Secretary on 1 January 2018. He was remunerated US$13,746 (2017:
Nil) as Company Secretary, separate to this role as Director and thus not included in this table.
In 2017, the UK Directors received part of their share-based payments in cash in order to meet their UK
Income Tax and National Insurance obligations on the issue of discretionary shares This amount is included
in the remuneration/Directors’ fee figures above.
Mr G Higgins was appointed a Non-Executive Director on 9 October 2017.
12.3 Equity instruments – audited
Shares or Options granted to Directors and Key Management Personnel – audited
On 14 November 2017, following AGM approval, a total of 8,000,000 options were issued to some of the Directors.
(refer section 12.4). The options were granted for no consideration and are not subject to any vesting conditions.
The fair value at grant date was AU$0.021 (US$0.016) per option. The fair value of the options was determined
using the Binomial options pricing model. They are exercisable on or before 13 November 2022 with an exercise
price of AU$0.0318/option. No options were issued in the year to 30 June 2017.
Fair value at grant date
Share price
Exercise price
Expected volatility
Expected option life
Expected dividends
Risk-free interest rate (based on
government bonds)
Year ended 30 June 2018
AU$0.0210 (US$0.0160)
AU$0.0310 (US$0.0236)
AU$0.0318 (US$0.01910)
85%
5 years
Nil
2.24%
There were no share allocations to Directors in the 2018 financial year.
During the year ended 30 June 2017, the Company made a discretionary grant of shares, following shareholder
approval at the AGM on 17 November 2015, to Directors. 838,842 shares were issued and fully paid with a fair
value of US$22,347. The fair values of the shares were determined as the ASX market value on the day of issue.
12.4 Directors and Key Management Personnel transactions-audited
Loans to Directors
There have been no loans to any Director or key management personnel or their related parties during the period.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 14
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
12. REMUNERATION REPORT - AUDITED (continued)
Movement in Shareholdings
2018
Directors
Mr J van der Welle
Mr P Hill
Mr P Blakey
Mr D Cronin
Mr G Higgins
Mr P Taylor1
Held at 1 July 2017(1)
Shares granted
Held at 30 June
2018(1)
291,151
2,744,472
39,840,133
478,015
-
41,629,071
-
-
-
-
-
-
291,151
2,744,472
39,840,133
N/A(2)
-
41,629,071
Notes
(1)
(2)
Includes shares held by related parties.
Mr D Cronin retired as a director during the financial year.
Movement in options
2018
Directors
Held at 1
July 2017
Granted as
compensation
Exercised
Other changes
Held at 30 June
2018
Mr J van der Welle
1,000,000
1,000,000
Mr P Hill
Mr P Blakey
Mr D Cronin
Mr A Draffin
Mr G Higgins
Mr P Taylor
6,000,000
6,000,000
-
300,000
-
-
-
-
-
500,000
500,000
-
(1)
Mr Cronin retired as a director during the financial year.
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
12,000,000
-
N/A(1)
500,000
500,000
-
Options held by Directors at 1 July 2017 are vested and exercisable at AU$0.065 each on or before 23 December
2019. New options granted are vested and exercisable at AU$0.0318 each on or before 13 November 2022.
Other transactions
A number of Directors, or their related parties, hold positions in other entities that result in them having control or
significant influence over the financial or operating policies of those entities. A number of these entities transacted
with the Company or its controlled entities in the reporting period.
During the year the Company paid Damien Cronin Pty Ltd trading as Law Projects, a company controlled by Mr D
Cronin, US$18,536 (2017: US$26,671) for company secretarial services, DW Accounting and Advisory Pty Ltd, a
company controlled by Mr A Draffin US$13,746 for company secretarial services and Northlands Advisory Services
Limited, a company controlled by Mr J van der Welle, US$44,066 (2017: US$40,838) for consulting services.
Included in the above are the following amounts payable to related parties at 30 June 2018. All payable in full within
30 days of invoice, have standard industry terms and conditions and none of the amounts are secured on any
assets. Amount owed to DW Accounting and Advisory Pty Ltd US$15,290 and Northlands Advisory Services
US$10,732 (2017: US$10,586) and Law Projects US$Nil (2017: UD$2,303).
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 15
DIRECTORS’ REPORT
For the year ended 30 JUNE 2018
12. REMUNERATION REPORT - AUDITED (continued)
12.5 Voting at the 2017 & 2016 AGM – First Strike & Second Strikes
At the 2016 AGM held on 8 November 2016, the Company failed to secure 75% of the votes cast in favour of the
audited Remuneration Report for the year ended 30 June 2016 when the Company received votes against its
remuneration report representing a percentage slightly greater than 25% of the votes cast by persons entitled to
vote, as such a “first strike” was recorded against the Remuneration Report.
The Board considered the impact of the first strike and noted that remuneration as disclosed in the 2016 Annual
Report was significantly less than the previous corresponding period. Notwithstanding this, the Board acknowledged
shareholders’ concerns concerning Board remuneration, however it remained of the opinion that the level of
remuneration paid is and was reasonable for the Company given its stage of development and its level of activities
which was independently supported by remuneration consultants Godfrey Remuneration Group Pty Limited who
provided remuneration benchmarking advice further reinforcing this view.
A “second strike” was received against the audited Remuneration Report at the Company’s 2017 AGM which
resulted in a conditional spill motion being put to the meeting. The spill resolution was subsequently defeated with
the majority of votes cast against the resolution. As a result of the spill resolution defeat, the Company moves
forward to this year’s AGM with the effect of having no strikes recorded.
The Board remains mindful of the level of remuneration granted and has continued to monitor the level paid against
that of its peers and the industry in general.
13. CORPORATE GOVERNANCE STATEMENTS
In accordance with Australia Securities Exchange (“ASX”) Listing Rules, the Company's Annual Corporate
at
Governance
www.globalpetroleum.com.au/investors/announcements and released separately to ASX Announcements in the
form of an Appendix 4G.
Company's
Statement
available
website
the
on
is
The London Stock Exchange (LSE) has recently introduced a requirement in AIM Rule 26 for AIM companies to
comply with a recognised corporate governance code. The Company has its primary listing on the ASX and as such
follows the principles and recommendations of the 3rd addition of the Corporate Governance Principles and
Recommendations as published by the ASX Corporate Governance Council. The Company sets out within its
Annual Corporate Governance Statement where it meets best practice recommendations, and identifies and
explains where it hasn't met best practice recommendations.
14. AUDITOR’S INDEPENDENCE DECLARATION
The auditor's independence declaration is on Page 17, and forms part of the Directors’ Report for the financial year
ended 30 June 2018.
15. DIRECTORS’ RESOLUTION
This report is made in accordance with a resolution of the Directors made pursuant to Section 298(2) of the
Corporations Act 2001.
ANDREW DRAFFIN
DIRECTOR and COMPANY SECRETARY
26 September 2018
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 16
Lead Auditor’s Independence Declaration under Section 307C
of the Corporations Act 2001
To the directors of Global Petroleum Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year
ended 30 June 2018 there have been:
i.
no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
KPM_INI_01
KPMG
Jason Adams
Partner
Brisbane
26 September 2018
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
17
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Continuing operations
Salaries and employee benefits expense
Administrative expenses
Notes
2018
US$
2017
US$
(416,647)
(421,502)
(1,085,932)
(1,039,363)
Exploration and business development expenses
3.1
(208,622)
Other expenses
Foreign exchange gain (loss)
Equity based remuneration
(192,646)
(13,369)
(128,167)
(198,243)
(212,031)
(11,791)
(22,347)
Results from operating activities before income tax
(2,045,383)
(1,905,277)
Finance income
Net finance income
79,813
79,813
48,814
48,814
Profit (loss) from continuing operations before tax
(1,965,570)
(1,856,463)
Income tax benefit (expense)
Profit (loss) from continuing operations after tax
Profit (loss) for the year
Other comprehensive income
6.2
-
-
(1,965,570)
(1,856,463)
(1,965,570)
(1,856,463)
Items that may be reclassified subsequently to profit or loss
Transfer from foreign exchange reserve on dissolution of a controlled entity
Other comprehensive income (loss) for the year, net of tax
-
-
(16,417)
(16,417)
Total comprehensive income (loss) for the year
(1,965,570)
(1,872,880)
Earnings per share
Basic earnings (loss) per share (cents)
Diluted earnings (loss) per share (cents)
6.3
6.3
(0.970)
(0.917)
(0.970)
(0.917)
The Notes on pages 22 to 43 are an integral part of these consolidated financial statements.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 18
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2018
Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Total current assets
Plant and equipment
Exploration assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Current tax payable
Provisions
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
Notes
2018
US$
2017
US$
4.1
4,928,998
7,807,605
97,416
68,502
131,972
50,352
5,094,916
7,989,929
4,755
3.1
1,988,145
1,992,900
7,087,816
4.3.9
267,511
6.2
7.1
-
141,095
408,606
-
408,606
5,943
1,109,115
1,115,058
9,104,987
444,555
-
143,819
588,374
-
588,374
6,679,210
8,516,613
5.1
5.2
39,221,112
1,535,305
39,221,112
1,407,138
5.2.3
(34,077,207)
(32,111,637)
6,679,210
8,516,613
The Notes on pages 22 to 43 an integral part of these consolidated financial statements.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 19
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Attributable to owners of the Company
Share
Capital
Option
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Total Equity
US$
US$
US$
US$
US$
2018
Balance at 1 July 2017
39,221,112
Issue of options
Issue of shares
Total comprehensive (loss) for the
year:
Profit (loss) for the year
Other comprehensive profit (loss) for
the year:
Transfer of foreign exchange reserve
on dissolution of a controlled entity
Total comprehensive income (loss)
for the year
-
-
-
-
-
836,728
128,167
-
-
-
-
570,410
(32,111,637)
8,516,613
-
-
-
-
-
-
-
128,167
-
(1,965,570)
(1,965,570)
-
-
(1,965,570)
(1,965,570)
Balance at 30 June 2018
39,221,112
964,895
570,410
(34,077,207)
6,679,210
2017
Balance at 1 July 2016
39,198,764
836,728
586,827
(30,255,174)
10,367,145
Issue of options
Issue of shares
-
22,348
Total comprehensive profit (loss)
for the year:
Profit (loss) for the year
Other comprehensive profit (loss) for
the year:
Transfer of foreign exchange reserve
on dissolution of a controlled entity
Total comprehensive income (loss)
for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,348
(1,856,463)
(1,856,462)
(16,417)
-
(16,417)
(16,417)
(1,856,463)
(1,872,880)
Balance at 30 June 2017
39,221,112
836,728
570,410
(32,111,637)
8,516,613
Amounts are stated net of tax
Notes on pages 22 to 43 are an integral part of these consolidated financial statements.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 20
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2018
Cash flows from operating activities
Cash paid to suppliers and employees
Interest received
GST/VAT refunds received
Tax (paid)/refund
Notes
2018
US$
2017
US$
(2,062,758)
(1,572,858)
79,813
48,814
215,212
178,230
-
-
Net cash from (used in) operating activities
4.2
(1,767,733)
(1,345,814)
Cash flows from investing activities
Exploration and business development expenditure
Net cash from (used in) investing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 July
(1,087,652)
(1,020,692)
(1,087,652)
(1,020,692)
(2,855,385)
(2,366,506)
7,807,605
10,172,598
Effects of exchange rate fluctuations on cash and cash equivalents
(23,222)
1,513
Cash and cash equivalents at 30 June
4.1
4,928,998
7,807,605
Notes on pages 22 to 43 are an integral part of these consolidated financial statements.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 21
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
1. CORPORATE AND GROUP INFORMATION
Global Petroleum Limited (“Global”, the “Company”) is a company domiciled in Australia. Global is a company limited
by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange (“ASX”)
and the AIM market of the London Stock Exchange (“AIM”). The consolidated financial statements of the Company
as at, and for the twelve months ended, 30 June 2018 comprises the Company and its controlled entities (together
referred to as the “Group”). The Group is a for-profit entity and is primarily involved in oil and gas exploration and
development.
The consolidated annual financial statements of the Group as at, and for the year ended, 30 June 2018 are available
upon request from the Company’s registered office at C/- DW Accounting and Advisory Pty Ltd, Level 4, 91 William
Street, Melbourne, Victoria, 3000, Australia or at www.globalpetroleum.com.au.
All controlled entities are included in the consolidated financial statements. The financial year-end of the controlled
entities is the same as that of the parent entity.
Country of
incorporation
Ownership interest
2018
%
2017
%
Parent entity
Global Petroleum Limited
Australia
Subsidiaries
Global Petroleum UK Limited
Global Petroleum Exploration Ltd (1)
United Kingdom
United Kingdom
Global Petroleum Namibia Limited(2)
British Virgin Islands
Jupiter Petroleum Juan De Nova Limited (3)
British Virgin Islands
100
100
100
-
100
100
100
-
(1) Formerly Jupiter Petroleum Limited, effective 8 February 2018.
(2) Formerly Jupiter Petroleum Namibia Limited, effective 23 February 2018.
(3) Jupiter Petroleum Juan De Nova was dissolved in prior year – effective 30 April 2017.
STATEMENT OF COMPLIANCE
The consolidated financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (“AASBs”) adopted by the Australian Accounting Standards
Board (“AASB”) and the Corporations Act 2001. The consolidated statements comply with International Financial
Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board of Directors on 26 September 2018.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
2.1 BASIS OF PREPARATION
2.1.1 Overview
The consolidated financial statements have been prepared on an accrual and historical cost basis.
The financial information in this report has been presented in United States dollars (“US$”) which is also the
Company’s functional currency.
Revenues, expenses and assets are recognised net of the amount of GST/VAT except:
(i) where the GST/VAT incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST/VAT is recognised as part of the cost of acquisition of the asset or as part of
the expense item as applicable; and
(ii) receivables and payables are stated with the amount of GST/VAT included.
The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the Consolidated Statement of Financial Position.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 22
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis and the GST/VAT
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.
2.2 BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company as at
30 June 2018 and the results of all subsidiaries for the year then ended.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. The financial statements of the subsidiaries are included in the consolidated financial statements
from the date on which control commences until the date on which control ceases.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
2.2.1 Interest in joint operations
A joint operation exists when the Group has rights to the assets and obligations for the liabilities relating to the
arrangement. The Group recognises the assets, liabilities, expenses and income in respect of its interest in the joint
operation.
2.2.2 Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for
each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities
incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree.
Acquisition-related costs are recognised in profit or loss as incurred.
2.2.3 Loss of control
Upon loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests
and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is
recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is
measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted
investee or as an available-for-sale financial asset depending on the level of influence retained.
2.2.4 Transactions eliminated on consolidation
Intra-group transactions and balances, and any unrealised income or expenses arising from intra-group transactions
are eliminated in preparing the consolidated financial statements. Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the asset transferred.
2.3 SIGNIFICANT ACCOUNTING POLICIES
2.3.1 Impairment
Financial assets
A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated cash flows discounted at the original effective
interest rate.
Financial assets are tested for impairment on an individual basis.
All impairment losses are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment
loss was recognised. For financial assets measured at amortised cost the reversal is recognised in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 23
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Non-Financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists then the recoverable amount is estimated. For
intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at
each reporting date.
The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell.
An impairment loss is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income
if the carrying amount of an asset exceeds its recoverable amount.
2.3.2 Foreign Currency
Foreign currency transactions
Foreign currency transactions are translated into the Company’s functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange
rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the
transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair
values were determined.
Exchange differences arising on the translation of monetary items are recognised in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income, except where deferred in equity as a qualifying cash flow or net
investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent
that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in the
Consolidated Statement of Profit or Loss and Other Comprehensive Income.
Foreign operations
The financial results and position of foreign operations whose functional currency is different from the Group's
presentation currency are translated as follows:
(i) assets and liabilities are translated into US$ at year-end exchange rates prevailing at that reporting date;
(ii) income and expenses are translated into US$ at the date of transaction. For practical reasons, a rate that
approximates the US$ exchange rate at the date of the transaction is used, for example average US$
exchange rate for the period.
Exchange differences arising on translation of foreign operations are transferred directly to the Group's foreign
currency translation reserve in the Consolidated Statement of Financial Position. These differences are recognised
in the Consolidated Statement of Profit or Loss and Other Comprehensive Income in the period in which the
operation is disposed.
2.4 USE OF ESTIMATES AND JUDGEMENTS
The preparation of the consolidated financial statements in conformity with IFRSs requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
Information about critical judgements in applying accounting policies that have the most significant effect on the
amounts recognised in the financial statements is included in the following Notes:
•
•
Note 3.1 – Exploration assets
Note 6.2 – Taxes
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 24
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
2.4.1 Fair value estimation
The fair value of financial instruments in the Group approximates their carrying amounts at the year-end. The
Group’s financial instruments consist mainly of trade and other receivables, trade and other payables, cash and
term deposits.
2.4.2 Determination of fair value
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial
and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure
purposes based on the following methods.
Short-term receivables and payables
These are recorded at their carrying amount which is a reasonable approximation of fair value. The Group does not
hold any financial instruments which are measured using level 2 or 3 in the fair value hierarchy.
Share-based payment transactions
The fair value of options granted is measured using the Black-Scholes or the Binomial option pricing formula.
Measurement inputs include the share price on the grant date, the exercise price of the instrument, expected
volatility (based on an evaluation of the Company’s historic volatility), expected term of the instruments (based on
historical experience and general option holder behaviour), expected dividends, and risk-free interest rate (based
on government bonds). Service and non-market performance conditions attached to the transactions are not taken
into account in determining fair value. The fair value is measured at grant date and recognised over the period
during which option holders become unconditionally entitled to the options.
When applicable, further information about the assumptions made in determining fair values is disclosed in the
Notes specific to that asset or liability.
2.5 NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
The following standards, amendments to standards and interpretations will apply to the Group in future years. They
are available for early adoption but have not been applied by the Group in this financial report:
•
AASB 9 Financial Instruments (December 2014), AASB 2014-7 Amendments to AAS arising from AASB 9
(December 2014), AASB 2014-8 Amendments to AAS arising from AASB 9 (December 2014) (effective 1
January 2018). The new AASB 9 Financial Instruments includes revised guidance on the classification and
measurement of the financial instruments, a new expected credit loss model for calculating impairment on
financial assets and new general hedge accounting requirements. It also carried forward the guidance on
recognition and derecognition of financial instruments from AASB 139.
The changes are not expected to materially impact the Group, apart from some minor classification and
disclosure changes in the financial statements.
•
•
AASB 15 Revenue from Contracts with Customers - AASB 15 establishes a comprehensive framework for
determining whether, how much and when revenue is recognised. It replaces existing revenue recognition
guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and IFRIC 13 Customer Loyalty
Programmes. AASB 15 is effective for annual reporting periods beginning on or after 1 January 2018.
Currently AASB15 does not have any impact given the Group has no revenue.
AASB 16 Leases - AASB 16 removes the classification of leases as either operating leases or finance leases
for the lessee - effectively treating all leases as finance leases. AASB 16 is effective for annual reporting
periods beginning on or after 1 January 2019 with early adoption permitted for entities that also adopt AASB
15 Revenue from Contracts with Customers. The Group currently plans to apply AASB 16 initially on 1 July
2019 and the extent of the impact has not been determined.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 25
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
3. INVESTED CAPITAL
3.1 EXPLORATION ASSETS
Balance at beginning of year
Expenditure capitalised during the period
Balance at end of year
2018
US$
1,109,115
879,030
2017
US$
286,667
822,448
1,988,145
1,109,115
At 30 June 2018, the balance of the Group’s exploration assets relates solely to its interests in Namibia.
During the year, the Group also incurred exploration and evaluation expenditure of US$107,379 (2017: US$ Nil)
which has been expensed as business development as it did not meet the criteria for recognition as exploration
assets under the Group’s accounting policy - refer below.
In addition, an amount of US$101,243 (2017: US$198,243) was spent on business development, which relates to
the Group’s activities in assessing opportunities in the oil and gas sector.
Namibia
In November 2017, Global Petroleum Namibia Limited (“GPB”) agreed with The Ministry of Mines and Energy
(“MME”) an extension to the First Renewal Exploration Period of 12 months to 3 December 2018. In addition, the
MME has agreed entry into the Second Renewal Period effective from 3 December 2018. Exploration commitments
on this exploration tenement are documented in 3.2.2.
it is expected that the expenditure will be recouped through successful exploitation of the area of interest,
Exploration and evaluation expenditure - accounting policy
Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest' method and
with AASB 6 Exploration for and Evaluation of Mineral Resources, which is the Australian equivalent of IFRS 6
Exploration for and Evaluation of Mineral Resources.
Exploration and evaluation costs are capitalised as intangible assets and assessed for impairment where facts
and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed the
recoverable amount. Exploration and evaluation costs are capitalised if the rights to tenure of the area of interest
are current and either:
the expenditure relates to an exploration discovery that, at balance date, activities have not yet reached
(i)
a stage which permits an assessment of the existence or otherwise of economically recoverable reserves and
active and significant operations in, or in relation to, the area of interest are continuing; or
(ii)
or alternatively, by its sale.
Costs incurred before the Group has obtained the legal rights to explore an area are expensed.
Each potential or recognised area of interest is reviewed every six months to determine whether economic
quantities of reserves have been found or whether further exploration and evaluation work is underway or
planned to support the continued carry forward of capitalised costs.
Where a determination is made that there is no further value to be extracted from the data licenses then any
unamortised balance is written off.
Once management has determined the existence of economically recoverable reserves for an area of interest,
deferred costs are tested for impairment and then reclassified from exploration assets to oil and gas assets on
the Consolidated Statement of Financial Position.
The recoverability of the carrying amount of the exploration assets is dependent on successful development and
commercial exploitation, or alternatively, sale of the respective areas of interest.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 26
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
3. INVESTED CAPITAL (continued)
3.2 COMMITMENTS
3.2.1 Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum
exploration work to meet the minimum expenditure requirements specified by various foreign governments where
exploration tenements are held. These obligations are subject to renegotiation when application for a tenement is
made and at other times. These obligations are not provided for in the financial statements. Financial commitments
for subsequent periods can only be determined at future dates, as the success or otherwise of exploration
programmes determines courses of action allowed under options available in tenements. The Group’s only
exploration expenditure commitments relate to its interest in joint ventures – refer 3.2.2.
3.2.2 Joint venture commitments
Global Petroleum Namibia Limited, a 100% owned subsidiary of the Group, holds prospective oil and gas exploration
interests offshore Namibia. In order to maintain current rights of tenure to the exploration licences, Global is required to
perform minimum exploration work to meet the minimum expenditure requirements specified in the Namibian Petroleum
Exploration Agreement.
The obligations include:
(a) First Renewal Exploration Period (Two years from 3 December 2015 to 3 December 2017 – with
subsequent extension to 3 December 2018):
• Following the completion of the minimum required exploration expenditure for the 2 year period, in
November 2017, Global agreed with the MME an extension to the First Renewal Exploration Period of
12 months to 3 December 2018.
• The Minimum work programme for the one year extension is the acquisition of 600 square kilometres
of 3D seismic data, contingent upon Global concluding a farm-out agreement with a third party to fund
the acquisition of the 3D data. If the 3D acquisition is not completed during the 12 month extension
period, it may be carried over into the Second Renewal Period.
(b) Second Renewal Period (Two years from 3 December 2018):
• During the Second Renewal Period, effective from 3 December 2018 for a period of two years, the
commitment is to drill one well (depth and location to be agreed) unless the Ministry and Global agree
that circumstances dictate otherwise.
Global Petroleum Namibia Limited has an 85% interest in the Petroleum Exploration Licence, however, it is
responsible for 100% of the expenditure requirements with its joint venture partners holding a total of 15% free
carried interest.
4. WORKING CAPITAL AND FINANCIAL RISK MANAGEMENT
4.1 CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Term deposits
Cash and cash equivalents
2018
US$
2017
US$
4,928,998
7,807,605
-
-
4,928,998
7,807,605
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 27
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
4. WORKING CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
4.2 RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities
Profit (loss) for the year
(1,965,570)
(1,856,463)
Adjustments for items classified as investing/financing activities:
208,622
198,243
2018
US$
2017
US$
Adjustments for non-cash items:
Depreciation of fixtures and fittings
Unrealised net foreign exchange (gain) loss
Equity based remuneration
Changes in operating assets and liabilities, net of effects of purchase
of controlled entities during the financial year:
Decrease (increase) in receivables and prepayments
(Decrease) increase in payables
(Decrease) increase in provisions
1,188
23,222
128,167
16,406
(177,044)
(2,724)
6,399
(17,929)
22,347
5,311
251,012
45,266
Net cash from (used in) operating activities
(1,767,733)
(1,345,814)
Credit standby arrangements with banks
At the balance sheet date, the Company had no used or unused financing facilities.
Non-cash financing and investing activities
There were no significant non-cash financing or investing activities in the current or prior year.
4.3 FINANCIAL INSTRUMENTS
4.3.1 Overview
The Group's principal financial instruments comprise trade and other receivables, trade and other payables, cash
and term deposits. The main risks arising from the Group's financial instruments are interest rate risk, foreign
currency risk, credit risk and liquidity risk.
This note presents information about the Group's exposure to each of the above risks, its objectives, policies and
processes for measuring and managing risk, and the management of capital. Other than as disclosed, there have
been no significant changes since the previous financial year to the exposure or management of these risks.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. Given the nature and size of the business, no formal risk management committees have been
established, however responsibility for control and risk management is delegated to the appropriate level of
management with the Chairman, CEO and Company Secretary (or their equivalent) having ultimate responsibility
to the Board for the risk management and control framework.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities.
Arrangements put in place by the Board to monitor risk management include regular reporting to the Board in respect
of the operations and financial position of the Group. The Board also reviews risks that relate to operations and
financial instruments as required, at least every six months.
Given the uncertainty as to the timing and amount of cash inflows and outflows, the Group has not implemented
any additional strategies to mitigate the financial risks and no hedging has been put in place. As the Group's
operations change, the Directors will review this policy periodically going forward.
4. WORKI NG CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 28
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
4.3 FINANCIAL INSTRUMENTS
4.3.2 Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. This arises principally from cash and cash equivalents and trade and other
receivables.
There are no significant concentrations of credit risk within the Group with exception of cash on deposit as described
below. The carrying amount of the Group's financial assets represents the maximum credit risk exposure, as
represented below:
Cash and cash equivalents
Trade and other receivables
2018
US$
4,928,998
97,416
5,026,414
2017
US$
7,807,605
131,972
7,939,577
Trade and other receivables comprise accrued interest, GST, VAT and other tax refunds due. Where possible the
Group trades only with recognised, creditworthy third parties. It is the Group's policy that all customers who wish to
trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on
an ongoing basis with the result that the Group's exposure to bad debts is not significant. At 30 June 2018, none
(2017: none) of the Group's receivables are past due. No impairment losses have been recognised in the
Consolidated Statement of Profit or Loss and Other Comprehensive Income.
With respect to credit risk from cash and cash equivalents the Group’s exposure to credit risk arises from default of
the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
4.3.3 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board's
approach to managing liquidity is to ensure, as far as possible, that the Group will always have sufficient liquidity to
meet its liabilities when due. At 30 June 2018, the Group has sufficient liquid assets to meet its financial obligations.
The contractual maturities of financial liabilities are provided below. There are no netting arrangements in respect
of financial liabilities.
2018 Financial liabilities
Trade and other payables
2017 Financial liabilities
Trade and other payables
≤6 months
US$
6-12 months
US$
1-5 years
US$
≥5 years
US$
Total
US$
267,511
267,511
444,555
444,555
-
-
-
-
-
-
-
-
-
-
-
-
267,511
267,511
444,555
444,555
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 29
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
4. WORKING CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
4.3 FINANCIAL INSTRUMENTS
4.3.4 Interest rate risk
The Group's exposure to the risk of changes in market interest rates relates primarily to the cash at bank and term
deposits with a floating interest rate.
These financial assets with variable rates expose the Group to cash flow interest rate risk. All other financial assets
and liabilities, in the form of receivables and payables, are non-interest bearing.
Interest bearing financial instruments
Cash at bank and on hand
Term deposits
2018
US$
2017
US$
4,928,998
7,807,605
-
-
4,928,998
7,807,605
The Group's cash at bank and on hand and short term deposits had a weighted average floating interest rate at
year end of 1.29% (2017: 0.56%).
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
4.3.5 Interest rate sensitivity
A sensitivity of 50 basis points (“bp”) increase or decrease to the existing floating rate has been selected as this is
considered reasonable given the current level of both short term and long term interest rates.
A change of 50 basis points in interest rate at the reporting date would have increased (decreased) profit or loss
and equity by the amount shown below. The analysis assumes that all other variables, in particular foreign currency
rates, remain constant.
2018
Cash and cash equivalents
2017
Cash and cash equivalents
4.3.6 Foreign currency risk
Profit or Loss
50bp
Increase
50bp
Decrease
30,080
30,080
44,510
44,510
The Company and its subsidiaries in the Group have a functional currency of US$. The Group is exposed to foreign
currency risk from transactional currency exposure. Such exposure arises from transactions denominated in
currencies other than the functional currency of the entities in the Group.
As at 30 June 2018, the Group had foreign denominated deposits of AU$119,564 (US$88,513) and GBP111,102
(US$146,755). The Group had current liabilities of AU$96,802 (US$71,707), GBP134,944 (US$178,248) and Euro
15,000 (US$17,556) and prepayments and other debtors of AU$12,672 (US$9,382) and GBP106,157
(US$140,223) and provisions of GBP106,816 (US$141,094).
As at 30 June 2017, the Group had foreign denominated deposits of AU$131,466 (US$100,934) and GBP171,635
(US$223,245). The Group had current liabilities of AU$65,008 (US$49,911), GBP66,362 (US$86,318) and Euro
27,100 (US$30,924) and prepayments and other debtors of AU$14,093 (US$10,821) and GBP119,581
(US$155,539) and provisions of GBP110,570 (US$143,819).
The Group currently does not engage in any hedging or derivative transactions to manage foreign currency risk.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 30
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
4. WORKING CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
4.3 FINANCIAL INSTRUMENTS
4.3.7 Sensitivity analysis for currency risk
A sensitivity of 10% has been selected as this is considered reasonable given historic and potential future changes
in foreign currency rates. This sensitivity analysis is prepared as at the balance sheet date.
30 June 2018
A 10% strengthening of the US$ against the AU$ and GBP at 30 June 2018 would have decreased equity for the
year for the Group by US$79,348. This analysis assumes that all other variables, in particular interest rates and
equity prices, remain constant. No material effect on profit or loss.
A 10% weakening of the US$ against the AU$ and GBP at 30 June 2018 would have increased equity for the year
for the Group by US$79,348 on the basis that all other variables remain constant. No material effect on profit or
loss.
30 June 2017
A 10% strengthening of the US$ against the AU$ and GBP at 30 June 2018 would have decreased equity for the
year for the Group by US$80,462. This analysis assumes that all other variables, in particular interest rates and
equity prices, remain constant. No material effect on profit or loss.
A 10% weakening of the US$ against the AU$ and GBP at 30 June 2018 would have increased equity for the year
for the Group by US$79,842 on the basis that all other variables remain constant. No material effect on profit or
loss.
4.3.8 Capital management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. Given the stage of development of the Group, the Board's
objective is to minimise debt and to raise funds as required through the issue of new shares.
There were no changes in the Group's approach to capital management during the year.
The Group is not subject to externally imposed capital requirements.
4.3.9 Trade and other payables
Current
Trade payables
Accrued expenses
Balance at 30 June
2018
US$
2017
US$
169,827
97,684
267,511
49,339
395,216
444,555
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 31
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
4. WORKING CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Financial instruments - accounting policy
The Group classifies its financial assets in the following category: loans and receivables. Management
determines the classification of its financial assets at initial recognition and re-evaluates this designation at each
reporting date. The classification depends on the purpose for which the financial assets were acquired.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of 3 months or less, and bank overdrafts. Bank overdrafts are shown within
short-term borrowings in current liabilities on the Consolidated Statement of Financial Position.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less an
allowance for doubtful debts. Trade receivables are due for settlement no more than 30 days from the date of
recognition. An estimate of doubtful debts is made and taken to a provision account when collection of the full
amount is no longer probable. Bad debts are written off as incurred.
Trade and other payables
Liabilities for trade creditors and other amounts are carried at amortised cost. The amounts are unsecured and
are usually paid within 30 days.
5. CAPITAL AND RELATED PARTIES DISCLOSURE
5.1 SHARE CAPITAL
Issued and paid up capital
On issue at 1 July
Issued during the year
In issue at 30 June
2018
2017
Number of shares
2018
US$
2017
US$
202,652,927
201,814,085
39,221,112
39,198,764
-
838,842
-
22,348
202,652,927
202,652,927
39,221,112
39,221,112
Terms and conditions of ordinary shares
The rights attaching to fully paid ordinary shares (“ordinary shares”) arise from a combination of the Company's
Constitution, statute and general law. The shares have no par value and are fully paid ordinary shares.
Copies of the Company's Constitution are available for inspection during business hours at the Company's
registered office. They should be read in conjunction with the Corporations Act 2001 and the ASX and AIM Listing
Rules.
Shares
The issue of shares in the capital of the Company and options over unissued shares by the Company is under the
control of the Directors, subject to the Corporations Act 2001, ASX Listing Rules and any rights attached to any
special class of shares.
Issued capital - accounting policy
Ordinary shares are classified as equity. Issued and paid up capital is recognised at the fair value of the
consideration received by the Company.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 32
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
5. CAPITAL AND RELATED PARTIES DISCLOSURE (continued)
5.2 RESERVES
Option reserve
Foreign currency translation reserve
Total reserves
5.2.1 Option reserve
2018
US$
964,895
570,410
2017
US$
836,728
570,410
1,535,305
1,407,138
The option reserve comprises the cumulative grant date fair value of options issued to Directors, other personnel
and consultants over the vesting period.
5.2.2 Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of
the financial statements of foreign operations where their functional currency is different to the presentation currency
of the Parent Entity. As a result of the change in functional currency of the Company and several of its subsidiaries
on 1 July 2014, no further foreign currency translation differences were recognised as all entities in the Group have
a US$ functional currency.
On 30 April 2017 Jupiter Petroleum Juan De Nova Limited was dissolved and is no longer part of the Group. On
consolidation any foreign exchange gains/losses relating to translation of this company’s financial statements, which
was previously recorded in foreign currency translation reserves, was transferred to the Consolidated Statement of
Profit and Loss and Other Comprehensive Income.
Balance at 1 July
Transfer from foreign exchange reserve on dissolution of a controlled
entity
Balance at 30 June
5.2.3 Accumulated losses
Balance at 1 July
Loss for the year
Total accumulated (losses)
5.2.4 Dividends
2018
US$
2017
US$
570,410
586,827
-
570,410
(16,417)
570,410
2018
US$
2017
US$
(32,111,637)
(30,255,174)
(1,965,570)
(1,856,463)
(34,077,207)
(32,111,637)
No dividends have been declared, provided for or paid in respect of the years ended 30 June 2018 and 30 June
2017. With respect to the payment of dividends by Global Petroleum in subsequent reporting periods (if any), no
franking credits are currently available.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 33
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
5. CAPITAL AND RELATED PARTIES DISCLOSURE (continued)
5.3 SHARE BASED PAYMENTS
From time to time, the Group may provide shares or incentive options to Directors, officers, employees, consultants
and other key advisors as part of remuneration and incentive arrangements. The number of shares and options
granted, and the terms of the options granted are determined by the Board. Shareholder approval is sought where
required.
Options and Shares granted to Directors
On 14th November 2017, following AGM approval, a total of 8,000,000 options were issued to some of the Directors
for no consideration. They were valued at AU$0.021 (US$0.016) per option. The fair value of the options was
determined using the Binomial options pricing model. They are exercisable on or before 13 November 2022 with
an exercise price of AU$0.0318/option. There were no vesting or performance conditions. No options were issued
during the year to 30 June 2017.
Fair value at grant date
Share price
Exercise price
Expected volatility
Expected option life
Expected dividends
Risk-free interest rate (based on
government bonds)
Year ended 30 June 2018
AU$0.0210 (US$0.0160)
AU$0.0310 (US$0.0236)
AU$0.0318 (US$0.01910)
85%
5 years
Nil
2.24%
During year ended 30 June 2017, the Company made a discretionary grant of shares, following shareholder
approval at the AGM on 17 November 2015, to Directors. 838,842 shares were issued and fully paid with a fair
value of US$22,347. The fair values of the shares were determined as the ASX market value on the day of issue.
No shares were issued in the year to 30 June 2018.
Since 30 June 2018, no shares have been issued as a result of the exercise of options and no further options or
shares have been granted.
Directors
Mr J van der Welle
Mr P Hill
Mr P Blakey
Mr D Cronin (resigned 31 December 2017)
Mr A Draffin
Mr G Higgins (appointed 1 January 2018)
Mr P Taylor
Shares granted in year ended
30 June 2018
Shares granted in year
ended 30 June 2017
-
-
-
-
-
-
-
93,629
517,545
48,771
130,126
-
-
48,771
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 34
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
5. CAPITAL AND RELATED PARTIES DISCLOSURE (continued)
5.3.1 Reconciliation of outstanding share options
The number and weighted average exercise prices of the share options under the share option scheme are as
follows:
Number of options
2018
Weighted
average exercise
prices 2018
AU$
Number of
options
2017
Weighted average
exercise price
2017
Outstanding at 1 July
7,600,000
0.0650
7,600,000
Cancelled during the period
-
Granted during the period
8,000,000
-
0.0318
-
-
-
-
-
-
-
-
15,600,000
15,600,000
0.048
0.048
7,600,000
7,600,000
Options exercised during
the period
Options expired during the
period
Outstanding at 30 June
Exercisable at 30 June
AU$
0.065
-
-
-
-
0.065
0.065
Share based payments – accounting policy
The fair value of options granted (determined using the Black-Scholes or the Binomial pricing model) is
recognised as an expense with a corresponding increase in equity. The fair value is measured at grant date and
recognised over the period during which option holders become unconditionally entitled to the options.
Share based payments vest only if non-market performance criteria are met, the value of the share based
payment is recognised only when it is likely that such criteria may be met, and the expense recognised is adjusted
to reflect the number of awards that ultimately vest.
5.4 RELATED PARTIES
5.4.1 Ultimate parent
Global Petroleum Limited is the ultimate parent entity of the Group.
5.4.2 Key management personnel
The key management personnel of the Group during or since the end of the financial year were as follows:
Directors
Mr John van der Welle
Mr Peter Hill
Mr Peter Blakey
Mr Damien Cronin
Mr Andrew Draffin
Mr Garrick Higgins
Mr Peter Taylor
Non-Executive Chairman
Managing Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director and Company Secretary (resigned 31 December 2017)
Non-Executive Director and Company Secretary (appointed 1 January 2018)
Non-Executive Director (appointed 9 October 2017)
Non-Executive Director
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 35
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
5. CAPITAL AND RELATED PARTIES DISCLOSURE (continued)
Key management personnel compensation
Short-term employee benefits **
Share based payments *
Post-employment benefits
Total compensation
2018
US$
530,314
128,167
19,176
677,657
2017
US$
495,646
22,347
16,525
534,518
*This represents the value of the rights and shares issued respectively.
** in 2017, this includes the cash element paid to the UK based Directors to cover the cost of PAYE income tax due
on share issues.
Other key management personnel transactions
A number of Directors, or their related parties, hold positions in other entities that result in them having control or
significant influence over the financial or operating policies of those entities. A number of these entities transacted
with the Company or its controlled entities in the reporting period.
During the year the Company paid Damien Cronin Pty Ltd trading as Law Projects, a company controlled by Mr D
Cronin, US$18,536 (2017: US$26,671) for company secretarial services, DW Accounting and Advisory Pty Ltd, a
company controlled by Mr A Draffin US$13,746 (2017: Nil) for company secretarial services and Northlands
Advisory Services Limited, a company controlled by Mr J van der Welle, US$44,066 (2017: US$40,838) for
consulting services.
Included in the above are the following amounts payable to related parties at 30 June 2018. All payable in full within
30 days of invoice, have standard industry terms and conditions and none of the amounts are secured on any
assets. Amount owed to DW Accounting and Advisory Pty Ltd US$15,290 (2017: US$Nil), Northlands Advisory
Services US$10,732 (2017: US$10,568) and Law Projects US$Nil (2017: US$2,303).
6. RESULTS FOR THE YEAR
6.1 OPERATING SEGMENTS
6.1.1 Information about reporting segments
The Group operates in the oil and gas exploration, development and production segments as described below:
The Group currently holds prospective oil and gas exploration interests offshore Namibia.
6.1.2 Segment results
The following is an analysis of the Group’s results by reportable segment. The Group had no revenue during the
period (2017: Nil)
Africa
Consolidated
2018
US$
2017
US$
Segment results
Interest income
Net foreign exchange gain (loss)
Corporate and administration costs
Equity based remuneration
Profit (loss) before income tax
Income tax (expense) benefit for
continuing operations
Profit (loss) for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2018
US$
79,813
(13,369)
2017
US$
48,814
(11,791)
(1,903,847)
(1,871,139)
(128,167)
(22,347)
(1,965,570)
(1,856,463)
-
-
(1,965,570)
(1,856,463)
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 36
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
6. RESULTS FOR THE YEAR (continued)
6.1.3 Segment assets and liabilities
Segment assets
Assets
Africa
Consolidated
2018
US$
2017
US$
2018
US$
2017
US$
2,004,324
1,125,077
2,004,324
1,125,077
Total segment assets
2,004,324
1,125,077
Unallocated assets
Consolidated assets
Segment liabilities
Liabilities
Total segment liabilities
Unallocated liabilities
Consolidated liabilities
Acquisition of non-current assets,
including capitalised exploration
assets
Segment reporting – accounting policy
87,282
87,282
277,397
277,397
2,004,324
5,083,492
1,125,077
7,979,910
7,087,816
9,104,987
87,282
87,282
321,324
408,606
277,397
277,397
310,976
588,373
879,030
822,448
879,030
822,448
Segment results that are reported to the CEO include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, head office
expenses, and income tax assets, liabilities and tax expense.
6.2 TAXES
2018
US$
2017
US$
Reconciliation between profit (loss) before tax and tax
expense
Profit (loss) of continuing operations before tax expense
(1,965,570)
(1,856,463)
Prima facie tax expense (benefit) at 19%
(2017: 19.75%)
Increase (decrease) in income tax expense due to:
Expenditure not allowable for income tax purposes
Adjustment for different tax rates and consequences of
changing tax domicile
Deferred tax assets not recognised
Income tax (benefit) expense on pre-tax net profit (loss)
(373,458)
(366,651)
6,550
38,622
328,286
-
10,667
50,483
305,501
-
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 37
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
6. RESULTS FOR THE YEAR (continued)
6.2.1 Current tax payable
The Group has no current tax payable (2017: Nil)
On 1 April 2014, Global Petroleum Limited changed its tax domicile from Australia to the United Kingdom. However
it must be noted that under Australian tax law, Global Petroleum Limited remains an Australian tax resident. As a
result, Global Petroleum Limited is a tax resident of both Australia and the United Kingdom. Under the terms of the
Australia-United Kingdom Double Tax Treaty Global Petroleum Limited will be a dual resident company deemed to
be a resident in the UK for the purposes of allocating taxing rights.
6.2.2 Deferred income tax
Deferred tax assets
Tax losses available to offset future taxable income
Tax benefit not brought to account
2018
US$
1,911,890
(1,911,890)
-
2017
US$
1,583,604
(1,583,604)
-
Deferred tax assets have not been recognised in respect of tax losses because there is no convincing other
evidence that future taxable profit will be available against which the Group can utilise the benefits which amount to
US$1,911,890 (2017: US$1,583,604).
The amount of UK tax losses carried forward is US$9.43m as at 30 June 2018 (2017: US$8.03m). A corresponding
deferred tax asset, calculated using the rate of 17%, of US$1.6m (2017: US$1.36m) has not been recognised due
to insufficient certainty regarding the availability of future profits against which the losses can be utilised. The
reduction in the main rate of corporation tax rate to 17% from 2020 was enacted in September 2016. It is not
expected that the tax losses will be utilised before 2020 therefore a potential deferred tax asset has been calculated
using this rate.
In addition, the Group has a pool of pre-trading expenditure of US$0.77m (2017: US$0.36m) arising in the overseas
subsidiaries for which no deferred tax asset has been recognized due to insufficient certainty regarding the
availability of future profits against which the costs can be utilised.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 38
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
6. RESULTS FOR THE YEAR (continued)
Tax - accounting policy
The income tax expense or revenue for the period is the tax payable on the current period's taxable income
based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised using the balance sheet method for temporary differences at
the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates
which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the
cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.
An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability.
No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either accounting
profit or taxable profit or loss.
Deferred tax assets are recognised using the balance sheet method for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
the tax bases of investments in controlled entities where the parent entity is able to control the timing of the
reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable
future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
directly in equity.
In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax
positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax
liabilities are adequate based on its assessment of many factors, including interpretations of tax law and prior
experience. This assessment relies on estimates and assumptions and may involve a series of judgments about
future events. New information may become available that causes the Group to change its judgement regarding
the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expenses in the period that
such a determination is made.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority in the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets in a net basis or their tax assets
and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
6.3 EARNINGS PER SHARE
Basic earnings (loss) per share
Diluted earnings (loss) per share
2018
US Cents per
share
2017
US Cents per
share
(0.970)
(0.970)
(0.917)
(0.917)
The following reflects the income and share data used in the calculations of basic and diluted earnings per share:
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 39
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
6. RESULTS FOR THE YEAR (continued)
Net profit (loss) used in calculating basic and diluted earnings per
share
(1,965,570)
(1,856,463)
2018
US$
2017
US$
Weighted average number of ordinary shares used in calculating
basic earnings per share
Effect of dilutive securities
Adjusted weighted average number of ordinary shares and
potential ordinary shares used in calculating basic and diluted
earnings per share
Number of
shares
2018
Number of
shares
2017
202,652,927
202,519,632
-
-
202,652,927
202,519,632
Earnings per share - accounting policy
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares
and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
7. OTHER
7.1 PROVISIONS
Current
Make good provision
Employee benefits
2018
US$
2017
US$
-
141,095
141,095
26,764
117,055
143,819
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 40
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
7. OTHER (continued)
Provisions - accounting policy
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognised as a finance cost.
Employee benefits – accounting policy
Liabilities for wages, salaries and remuneration, including non-monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12 months of the reporting date are recognised in provisions in respect
of employees' services up to the reporting date and are measured at the amounts expected to be paid when the
liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and
measured at the rates paid or payable. Employee benefits payable later than one year are measured at the
present value of the estimated future cash flows to be made for those benefits.
7.2 CONTINGENCIES
7.2.1 Indemnities
Indemnities have been provided to Directors and certain executive officers of the Company in respect of liabilities
to third parties arising from their positions, except where the liability arises out of conduct involving a lack of good
faith. No monetary limit applies to these agreements and there are no known obligations outstanding at 30 June
2018 and 30 June 2017.
7.2.1 Joint operations
In accordance with normal industry practice the Group has entered into joint ventures with other parties for the
purpose of exploring for and developing petroleum interests. If a party to a joint venture defaults and does not
contribute its share of joint venture obligations, then the other joint venture participants may be liable to meet those
obligations. In this event the interest in the permit held by the defaulting party may be redistributed to the remaining
joint venturers.
7.3 SUBSEQUENT EVENTS
On 18 September the Group signed a Petroleum Agreement to acquire Block 2011A offshore Namibia. via its wholly
owned subsidiary Global Petroleum Namibia Limited.
The new block is immediately to the east of the Company’s current licence PEL 0029 and comes with the following
commitments.
• Under a work programme, the Company will carry out various studies and reprocess all existing seismic in
the licence area which includes 3D seismic shot in Western part of the licence during the first two years;
• At the conclusion of two years, the Company has the option to either shoot a new 2,000 square kilometre
3D seismic data survey in the eastern part of Block 2011A, or alternatively opt to relinquish the licence.
As at the date of this report, there are no other matters or circumstances which have arisen since 30 June 2018 that
have significantly affected or may significantly affect:
(i)
(ii)
the operations, in financial years subsequent to 30 June 2018, of the Group;
the results of those operations, in financial years subsequent to 30 June 2018, of the Group; or
(iii)
the state of affairs, in financial years subsequent to 30 June 2018, of the Group.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 41
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
7. OTHER (Continued)
7.4 AUDITOR’S REMUNERATION
Audit services:
Auditors of the Group, KPMG Australia
– audit and review of financial reports
Other services:
Auditors of the Group, KPMG Australia
- assurance, taxation and due diligence services
2018
US$
38,878
38,878
4,157
4,157
43,035
2017
US$
39,925
39,925
6,700
6,700
46,625
7.5 PARENT ENTITY DISCLOSURES
As at and throughout the financial year ended 30 June 2018, the parent entity of the Group was Global Petroleum
Limited.
(a) Financial position of parent entity
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Option premium reserve
Accumulated losses
Total equity
(Loss) for the year
Total comprehensive gain (loss)
At 30 June 2018, the parent entity has no capital commitments (2017: Nil).
2018
US$
2017
US$
5,078,738
2,559,643
7,638,381
321,323
-
321,323
7,317,058
7,973,968
1,094,850
9,068,818
310,976
-
310,976
8,757,842
39,221,112
39,221,112
964,895
836,728
(32,868,949)
(31,299,998)
7,317,058
(1,568,951)
(1,568,951)
8,757,842
(1,715,822)
(1,715,822)
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 42
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
7. OTHER (Continued)
7.6
INTERESTS IN JOINT OPERATIONS
The Group holds interests in various joint ventures, whose principal activities are in petroleum exploration and
production - refer 3.2.2
Costs incurred attributable to joint operations have been capitalised based on accounting policies in 3.1.
Included in the assets and liabilities of the Group are the following assets and liabilities:
Current assets
Trade and other receivables
Total current assets
Non-current assets
Exploration asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Net assets
2018
US$
16,179
16,179
1,988,145
1,988,145
2,004,324
87,282
87,282
87,282
1,917,042
2017
US$
15,961
15,961
1,109,115
1,109,115
1,125,076
277,397
277,397
277,397
847,679
The parent entity does not guarantee to pay the deficiency of its controlled entities in the event of a winding up of
any controlled entity.
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 43
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2018
DIRECTORS’ DECLARATION
(1)
(a)
(i)
(ii)
(b)
(2)
(3)
In the opinion of the Directors of Global Petroleum Limited:
the Consolidated financial statements and Notes that are set out on pages 18 to 43 and the Remuneration
Report in Section 12 in the Directors’ Report, are in accordance with the Corporations Act 2001, including:
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the
financial year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become
due and payable.
The Directors draw attention to Note 2 to the consolidated financial statements, which include a statement of
compliance with International Financial Reporting Standards.
The Directors have been given a declaration required by Section 295A of the Corporations Act 2001 from
the Chief Executive Officer for the financial year ended 30 June 2018.
Signed in accordance with a resolution of the Directors of Global Petroleum Limited
ANDREW DRAFFIN
DIRECTOR and COMPANY SECRETARY
26 September 2018
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 44
Independent Auditor’s Report
To the shareholders of Global Petroleum Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Global Petroleum Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
• giving a true and fair view of the
Group’s financial position as at 30
June 2018 and of its financial
performance for the year ended on
that date; and
•
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2018;
• Consolidated statement of profit or loss and other
comprehensive income, consolidated statement of
changes in equity, and consolidated statement of
cash flows for the year then ended;
• Notes including a summary of significant accounting
policies; and
• Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 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 fulfilled our other ethical responsibilities in accordance with the Code.
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 period.
These matters were addressed in the context of our audit of the Financial Report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
45
Exploration assets ($1,988,145)
Refer to Note 3.1 ‘Exploration assets’
The key audit matter
How the matter was addressed in our audit
Exploration and evaluation expenditure
capitalised as exploration assets (E&E) is a key
audit matter due to:
•
•
the significance of the activity to the Group’s
business and the balance (being 28% of total
assets); and
the greater level of audit effort to evaluate
the Group’s application of the requirements
of the industry specific accounting standard
AASB 6 Exploration for and Evaluation of
Mineral Resources, in particular the
conditions allowing capitalisation of relevant
expenditure and presence of impairment
indicators. The presence of impairment
indicators would necessitate a detailed
analysis by the Group of the value of E&E.
In assessing the conditions allowing capitalisation
of relevant expenditure, we focused on:
•
the determination of the areas of interest;
and
• documentation available regarding rights to
tenure, via licensing, and compliance with
relevant conditions, to maintain current rights
to an area of interest and the Group’s
intention to continue the relevant E&E
activities.
In assessing the presence of impairment
indicators, we focused on considering the
existence of any matters that may draw into
question the commercial continuation of E&E
activities for the Namibian area of interest, which
is the Group’s only area of interest where
capitalised E&E exists.
Our audit procedures included:
• Evaluating the Group’s accounting policy to
recognise exploration and evaluation assets
using the criteria in the accounting standard;
• We assessed the Group’s determination of its
Namibian area of interest for consistency with
the definition in the accounting standard. This
involved analysing the license in which the
Group holds an interest and the exploration
programmes planned for consistency with
documentation such as license related technical
conditions and planned work programmes;
• We assessed the Group’s current rights to
tenure of its Namibian area of interest by
checking the ownership of the license to the
agreement with the Namibian government
registry. We also tested for compliance with
conditions such as minimum expenditure
requirements;
• We tested the Group’s additions to E&E for the
year by evaluating a statistical sample of
recorded expenditure for consistency to
underlying records, the capitalisation
requirements of the Group’s accounting policy
and the requirements of the accounting
standard;
• We evaluated Group documents, such as
minutes of Board meetings, for consistency with
their stated intentions for continuing E&E
activities in the Namibian area of interest. We
corroborated this through interviews with key
personnel;
• We analyzed the Group’s assessment of
impairment indicators for its Namibian area of
interest for consistency with the requirements
of the accounting standard by:
− checking the status of the right to tenure in
the agreement with the Namibian
government registry; and
− evaluating the Group’s documentation of the
results of recent exploration activities and
planned future activities, including work
programmes and budgets.
46
Other Information
Other Information is financial and non-financial information in Global Petroleum Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor's Report. The Directors
are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or 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. In doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001;
•
implementing necessary internal control to enable the preparation of a Financial Report that gives
a true and fair view and is free from material misstatement, whether due to fraud or error;
• assessing the Group and Company’s ability to continue as a going concern and whether the use
of the going concern basis of accounting is appropriate. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless they
either intend to liquidate the Group and Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They 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 the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
Auditor’s Report.
47
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report
of Global Petroleum Limited for the year
ended 30 June 2018 complies with
Section 300A of the Corporations Act
2001.
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 responsibilities
We have audited the Remuneration Report included in
Section 12 of the Directors’ Report for the year ended
30 June 2018.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Jason Adams
Partner
Brisbane
26 September 2018
48
ADDITIONAL INFORMATION
The shareholder information set out below was applicable as at 19 September 2018.
1.
TWENTY LARGEST SHAREHOLDERS
As at the date of this Report, the names of the twenty largest holders of securities listed on the Company’s Australian
Share Register are listed below. Certain other interests may be held in the Depository Interests Register maintained
in the United Kingdom by Computershare UK Limited on behalf of the Company. Directors’ total shareholdings as
at 30 June 2018 are given in Section 5 and 12 of the Remuneration Report.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
COMPUTERSHARE CLEARING PTY LTD
MR PETER BLAKEY
MR PETER TAYLOR
MRS SANDRA ANNE DAVID
COSMOS NOMINEES PTY LTD
MR THOMAS PATRICK CROSS + MS LINDA CROSS
J P MORGAN NOMINEES AUSTRALIA LIMITED
I P M PERSONAL PENSION TRUSTEES LIMITED
MR BRIAN CRAWSHAW
PIAT CORP PTY LTD
MR TERRENCE PETER WILLIAMSON + MS JONINE MAREE JANCEY
ARREDO PTY LTD
MANLE PTY LTD
PIAT CORP PTY LTD
TOLTEC HOLDINGS PTY LTD
MR ROBERT HASTINGS SMYTHE
MILLSY PTY LTD
MR JOHN MEGARRITY
TCH HOLDINGS PTY LTD
MR PETER GERARD HILL
Total Top 20
Others
Total Ordinary Shares on Issue
Ordinary Shares
Number
Percentage
69,484,892
39,099,318
37,543,319
6,845,660
3,450,000
2,776,400
1,678,923
1,556,000
1,500,000
1,500,000
1,500,000
1,430,000
1,000,000
1,000,000
891,449
871,800
850,000
760,000
750,000
710,000
34.29
19.29
18.53
3.38
1.70
1.37
0.83
0.77
0.74
0.74
0.74
0.71
0.49
0.49
0.44
0.43
0.42
0.38
0.37
0.35
175,197,761
27,455,166
86.45
13.55
202,652,927
100.00%
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 49
ADDITIONAL INFORMATION
2.
DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of shareholders by size of holding:
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001
and over
Ordinary Shares
Number of
Shareholders
824
604
183
332
75
Number of
Shares
361,904
1,562,193
1,426,038
10,558,013
188,744,779
2,064
202,652,927
The number of shareholders holding less than a marketable parcel
of shares (minimum AU$ 500.00 parcel at AU$ 0.0440 per unit)
are:
1,640
3,658,496
3.
VOTING RIGHTS
See Note 5 of the Notes to the Financial Statements.
4.
SUBSTANTIAL SHAREHOLDERS
The last Substantial Shareholder notices have been received previously from the following (current for the number
of voting rights as at the date of the notices). Messrs Blakey and Taylors’ total shareholdings (listed on the
Company’s Australian Share Register and held in the Depository Interests Register maintained in the United
Kingdom) as at 30 June 2018 are given in Sections 5 and 12 of the Remuneration Report:
Substantial Shareholder
Peter Blakey
Peter Taylor
5.
UNQUOTED SECURITIES
Number of Votes
39,840,133
41,629,071
The names of the security holders holding more than 20% of an unlisted class of security are listed below:
Options
Peter Hill - A$0.0650 incentive options expiring 27 November 2019
Peter Hill – A$0.0318 incentive options expiring 13 November 2022
Total Peter Hill incentive options
Total unquoted securities in issue
Incentive Options
6,000,000
6,000,000
12,000,000
15,600,000
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 50
ADDITIONAL INFORMATION
6.
ON-MARKET BUY BACK
There is currently no on-market buyback programme for any of Global Petroleum Limited's listed securities.
7.
EXPLORATION/PROJECT INTERESTS
As at 19 September 2018 the Company has an interest in the following projects, via its wholly owned subsidiary,
Global Petroleum Namibia Limited.
,:
Project
Namibia
Petroleum Exploration Licence No.0029
Petroleum Agreement to acquire Block 2011A
Interest
85% WI
85% WI
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 51
CORPORATE DIRECTORY
Directors
Managing Director and Chief Executive Officer
Mr Peter Hill
Mr John van der Welle Non-Executive Chairman
Non-Executive Director
Mr Peter Blakey
Mr Damien Cronin
Non-Executive Director
Mr Andrew Draffin Non-Executive Director
Non-Executive Director
Mr Peter Taylor
Company Secretary
Mr Andrew Draffin
Registered and Principal Office
UK Office
Website
Email
Solicitors
Auditor
Bankers
Stock Exchange Listing
ASX/AIM Code
Share Register
C/o DW Accounting & Advisory Pty Ltd
Level 4, 91 William Street
Melbourne, Victoria, 3000
Australia
Telephone
+61 3 8611 5333
Facsimile +61 3 9620 0070
111 Buckingham Palace Rd
London SW1W OSR, United Kingdom
Telephone
Facsimile
+44 20 7495 6802
+44 20 7340 8501
www.globalpetroleum.com.au
info@glo-pet.com
McCullough Robertson
KPMG, Brisbane
Barclays Bank Limited
Australian Securities Exchange
Home Exchange – Sydney Office
Australia Square
Level 6, 123 George Street
Sydney NSW 2000, Australia
AIM of the
London Stock Exchange
10 Paternoster Square
London EC4M 7LS, United Kingdom
GBP – Fully paid ordinary shares
Computershare Investor Services Pty Ltd
117 Victoria Street
West End QLD 4101, Australia
Telephone
Facsimile
+61 7 3237 2100
+61 7 3237 2152
Computershare Investor Services PLC
The Pavilions, Bridgewater Road
Bristol BS99 7NH, United Kingdom
Telephone
Facsimile
+44 870 889 3105
+44 870 703 6106
Global Petroleum Limited ANNUAL FINANCIAL STATEMENTS 52