Grand Gulf Energy Limited
ABN 22 073 653 175
Annual Financial Report
for the financial year ended
30 June 2019
CONTENTS
Corporate Directory
1
Managing Directors Letter ……………………………………………………………………2
Operating and Financial Review
Directors’ Statutory Report
Auditor’s Independence Declaration
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report
Corporate Governance Statement
Australian Stock Exchange Information
3-9
10-18
19
20-23
24-45
46
47-49
50-56
57-58
CORPORATE DIRECTORY
DIRECTORS
Mr Craig Burton – Chairman
Mr Mark Freeman - Managing Director
Mr Chris Bath – Non-Executive Director
COMPANY SECRETARY
Mr Mark Freeman
REGISTERED AND PRINCIPAL OFFICE
Grand Gulf Energy Limited
1A/ 1 Alvan Street, Subiaco WA 6008
Telephone: +61 (0) 8 6102 4826
Email: info@grandgulf.net
Website: www.grandgulfenergy.com
AUDITORS
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Telephone: +61 8 6382 4600
Facsimile: +61 8 6382 4723
LEGAL ADVISORS
Steinepreis Paganin
GPO Box 2799
PERTH WA 6001
Telephone: +61 8 9321 4000
Facsimile: +61 8 9321 4333
SHARE REGISTRY
Advanced Share Registry Services
110 Stirling Hwy
Nedlands WA 6009
Australia
Telephone: +61 8 9389 8033
Facsimile: +61 8 9262 3723
BANKERS
National Australia Bank
1232 Hay Street
Perth WA 6005
ASX CODE
GGE
ABN
22 073 653 175
1
MANAGING DIRECTOR’S LETTER TO SHAREHOLDERS
Dear Shareholder,
The Company’s two producing fields, Desiree and Dugas & Leblanc, have continued to produce above
expectations. The Desiree Field’s Hensarling well produced over 71,000 barrels of oil whilst Dugas &
Leblanc’s, D&L#3 well, produced over 25,600 barrels of oil this year. Net cash flow from production after
costs was $1.7m.
A significant milestone during the year was the distribution of $1.92m (383.75 million shares) in Whitebark
Energy Ltd (WBE) to shareholders, which equated to 0.25 cents per GGE share.
Since GGE completed the distrubtion WBE shares have risen from 0.5 cents to 0.9 cents representing an
significant additional return
to review
www.whitebarkenergy.com for Wizard Lake updates. The GGE Board believes the development of that
project will likely unlock significant value for WBE and its shareholders.
Shareholders are encouraged
to GGE shareholders.
During the year the Company diversified its interests and acquired various working interests in 355 net
acres in Weld County in Colorado in the DJ Basin.
I would like to thank the shareholders for their continuing support of the Company over the past year, and
look forward to an exciting future in identifying and commercialising new opportunities.
Yours faithfully,
Mark Freeman
Managing Director
2
OPERATING AND FINANCIAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2019
Summary Overview
Grand Gulf Energy Limited (“Grand Gulf”/the “Company”) has concluded the 2019 financial year (“FY19”
or “the year”). This makes the 9th year in a row that the Company has not required any equity or debt
funding. During the current year the Company returned $1.92m to shareholders through a shareholder
distribution of WBE shares.
Grand Gulf continues to have a sound financial position with no debt, and solid production that generated
gross revenues of over AUD $1.7m pa of net cash inflow after costs.
Business Strategies and Projects
Existing Oil and Gas Fields
Fields
WI
Daily
(bbl/d)
Desiree
D&L
Total
39.65%
55.50%
138
75
Monthly
Net Rev
(AUD$)
$86,000
$50,000
$136,000
Years of
Reserves
Left (2P) *
2.8 yrs
2.5 yrs
2P
Reserves
142,000
70,000
212,000
* Assumes Production continues at the current rates. Typically wells decline production over time. A
detailed summary of each well is provided below to be used in conjunction with this table when analysing
the Company’s producing assets.
2019 Production
BBLS
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Sept Qtr
Dec Qtr
Mar Qtr
Jun Qtr
Oil (bbls)
Gas (mcf)
MCF
25,000
20,000
15,000
10,000
5,000
0
Desiree Field
Desiree, Assumption Parish, Louisiana, Non-Operator (39.65%WI - 30.96% NRI)
The Hensarling #1 well (Desiree Field) has produced 71,019 barrels of oil this year. The well is presently
producing at ~138 bopd and has produced 583,351 barrels in total to 30 June 2019.
Remaining proved and probable reserves as at 30 June 2019 are estimated at 142,000 bo net to the
Company after royalties. Desiree remains a substantial asset to the Company with significant long-term
reserves and cash flow.
The Hensarling #1 well produces from the Cris R3 sands. Production will move to the Cris R2 sand once
the Cris R3 has depleted. The Hensarling well has 3P reserves of 158,000 bbls of oil. When the well is
recompleted in the Cris R2 production rates may rise to approximately 400 barrels of oil per day due to
the fact there will be limited initial water production, substantially increasing production revenues. The
Hensarling #1 well produced at over 400 bopd for the first 2 years of production from the Cris R3 interval.
3
OPERATING AND FINANCIAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2019
Dugas & Leblanc Field
Dugas & Leblanc #3 Well, Assumption Parish, Louisiana, Non-Operator (55.5% WI – 43.20% NRI)
The D&L#3 well (Dugas & Leblanc Field) produced 25,655 barrels of oil this year. The well is presently
producing at an average of 80 bopd and has produced over 314,302 barrels of oil. The D&L #3 well
continues to outperform previous reserve estimates. Remaining proved and probable reserves as at 30
June 2019 are estimated at 70,000 boe.
In addition to the production from D&L#3, the structure of the D&L Field has the potential to yield an
additional 1.5 BCF of gas from an updip attic well.
DJ Basin, Colorado (66% WI*) – 355 net acres
In October 2018, Grand Gulf secured working interests in 355 net acres in the highly productive
Wattenberg Field of the DJ Basin in Colorado, USA.
Subsequently in mid-April 2019, Colorado’s governor signed a law increasing regulatory authority over oil
and natural gas developments. As a result of the legislative changes the ability for the Joint Venture to
operate wells has been restricted to working interest parties owning greater than or having secured
consent from more than 45% WI in a Drilling Spacing Unit (DSU). In September 2019, The major working
interest owner in our acreage, Noble Energy, filed a Comprehensive Drilling Plan ("CDP") covering much
of our DJ acreage.
Noble has used CDPs in the past to get pre-approval for large scale drilling programs. In addition to laying
out their overall plan for the development of an area, Nobel is also designating the creation of multiple
DSUs within the CDP for drilling. At this stage the Company has not seen any specific well proposals.
Backin rights of the Vendor may reduce Grand Gulf’s interests to 49.5% in the event the vendor elects to
participate in drilling activities. Grand Gulfs interests in any DSU will be dependent on its direct interest
in any DSU created by Noble or another operator. The Company’s likely working interest is expected to
be between 0.5-5% WI.
East Texas Prospect (40-50% WI) – 1,238 acres in the Eagle Ford
The Company owns a 40-50% interest in 1,238 net
acres of 1,319 gross acres in Burleson County, Texas.
towards the end of 2019 the JV renewed a 200 acres
lease. GGE did not participate in this renewal which
resulted in a dilution of its interests from 50% to 40%
in the Burns area whilst retaining a 50% WI in the
Hooker Creek acreage. The proposed units have the
potential for up to 6 Eagle Ford and 1 Austin Chalk
locations each with horizontal wells within the 5,000ft
- 8,000ft range. Well costs (drilled, fracced and
completed) are anticipated to be US$4,500,000 each.
The strategy is to attract a third party to partially fund
and operate the drilling and fracking program with
GGE farming down to a ~10% working interest.
4
OPERATING AND FINANCIAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2019
Abita Field
Plaquemines Parish, Louisiana, Non-Operator 20%WI
The Company disposed of its interests in the Abita field post during the year for US$100,000 net cash.
West Klondike Field
Wilbert Sons LLC #1 well, West Klondike, Iberville Parish, Louisiana, Non-Operator 11.925% WI
In October 2018 the Company entered into a Quit Claim with Oleum, the operator of The Wilbert Sons
LLC #1 well.
Net Reserves
Competent Persons Statement
The information in this report has been reviewed and signed off by Kevin Kenning (Registered Reservoir Engineer)
with over 37 years relevant experience within oil and gas sector. This report contains forward looking statements that
are subject to risk factors associated with resources businesses. It is believed that the expectations reflected in these
statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions
which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual
demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition,
environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market
conditions in various countries and regions, political risks, project delay or advancement, approvals and cost
estimates.
5
2019 Reserves and Resources SummaryReserves and Resources as of 30 June 2019Net to Grand Gulf Energy LtdNET REVLIQUIDSGASOIL EQUIV(1)LIQUIDSGASOIL EQUIV(1)LIQUIDSGASOIL EQUIV(1)FILED (LICENCE)INTERESTMBBLMMCFMBOEMBBLMMCFMBOEMBBLMMCFMBOEReservesUSADugas & Leblanc #343.20%25 235 65 31 235 70 43 235 82 Desiree30.96%78 - 78 142 - 142 158 - 158 Total Reserves103 235 143 173 235 212 201 235 240 CONTINGENT RESOURCESReservesUSADugas & Leblanc #343.20%- 216 36 - 324 54 - 648 108 Desiree30.96%- - - - - - - - - Total Contingent Resources- 216 36 - 324 54 - 648 108 Total Reserves and Resources103 451 179 173 559 266 201 883 348 (1) Oil equivalent conversion factor: 6MSCF per BBL. PROVED, PROBABLE, POSSIBLE (3P)1C3C2C PROVED(1P)PROVED + PROBABLE (2P)
OPERATING AND FINANCIAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2019
Financial Performance
Grand Gulf Energy recorded a statutory loss after tax of $188,500 for the financial year which compares
with the loss after tax of $543,000 recorded in the 2018 financial year. The 2019 statutory loss includes a
number of items which adversely affected the loss after tax by a total of $800,000. These items principally
comprise exploration expenses.
Financial Performance
FY19
FY18
Change
Sales revenue
Cost of Sales
Gross Profit (before amortisation)
Gross Profit/Sales Revenue
Amortisation
Gross Profit
Operating Cash Flow
Reported Loss
Underlying Ebitdae* (Non – IFRS)
$
$
$
%
$
$
$
$
%
-9%
-5%
2,403,597
2,629,657
(226,060)
(696,856)
(734,087)
37,231
1,706,741
1,895,570
(188,829)
-10%
71%
72%
(237,783)
(383,016)
1,468,958
1,512,554
145,233
(43,596)
-38%
-3%
256,653
(235,127)
491,780
-209%
(188,496)
(543,093)
354,597
866,463
1,198,159
(311,697)
-65%
-28%
* Earnings before interest, tax, depreciation, amortisation and exploration
Calculation of underlying EBITDAE (Non-IFRS) is not a defined measure under International Financial
Reporting Standards and is not audited.
The underlying EBITDAE (Non-IFRS) for the year ended 30 June 2019 was $866,463 compared with an
underlying EBITDAE (Non-IFRS) of $1,198,159 for the year ended 30 June 2018. The most significant
factor which contributed to the movement between the periods was the lower sales revenue (a decrease
of $226,060 from 30 June 2018) as a result of lower oil prices.
Financial Position
Financial Position
Total Assets
Total Liabilities
Total Equity
Cash & cash equivalents
FY19
FY18
Change
%
$
$
$
2,862,549
4,594,996
(1,732,447)
(38%)
414,571
448,715
(34,145)
(8%)
2,447,978
4,146,281
(1,698,303)
(41%)
During May 2019 the Company completed an in-specie distribution of $1.92m (383.75 million shares) in
Whitebark Energy Ltd (WBE) to shareholders. At 30 June 2019 the Company held cash balances of
$162,000 and no debt.
Total Equity
Total equity has decreased by $1,698,303 from $4.15 million to $2.45 million. In comparing equity for the
period to the prior corresponding period, the key movement was the Company’s distribution of $1.92m
(383.75 million shares) in Whitebark Energy Ltd (WBE) to shareholders, which equates to 0.25 cents per
GGE share.
Outlook
Grand Gulf Energy anticipates net production after royalties of approximately 28,300 bbl’s oil from its
operations in FY 2020. Most of the Company’s revenue is forecast to come from Desiree’s oil production
of approximately 15,600 bbl’s oil. The Company continues to manage general and administration costs
tightly. The new management remuneration has resulted in an annual reduction of $300,000.
6
OPERATING AND FINANCIAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2019
Funding and Capital Management
Grand Gulf seeks to manage its capital with the objective of providing shareholders with the optimal risk-
weighted return from the application of its expertise in the exploration, development, production and sale
of hydrocarbons.
At 30 June 2019 the Company had cash of $162,000.
Risk Management
The Company manages risks in accordance with its risk management policy with the objective of ensuring
all risks inherent in oil and gas exploration and production activities are identified, measured and then
managed or kept as low as reasonably practicable. The Board performs risk assessments on a regular
basis.
Key risks which may materially impact the execution and achievement of the business strategies and
prospects for Grand Gulf are summarised below and are risks largely inherent in the oil and gas industry.
This should not be taken to be a complete or exhaustive list of risks nor are risks disclosed in any particular
order. Many of the risks are outside the control of the Company and its officers.
Appropriate policies and procedures are continually being developed and updated to manage these risks.
Risk
Exploration
1
2
Development
and
Production
3
Regulatory
Description
Exploration is a speculative activity with an associated risk of discovery to find
any oil and gas in commercial quantities and a risk of development. If Grand
Gulf is unsuccessful in locating and developing or acquiring new reserves and
resources that are commercially viable, this may have a material adverse
effect on future business, results of operations and financial conditions.
Grand Gulf utilises established methodologies and experienced personnel to
evaluate prospects and manage the risk associated with exploration. The
Company also ensures that all major decisions are subjected to assurance
reviews which includes external experts and contractors where appropriate.
Development and production of oil and gas projects may be exposed to low
side reserve outcomes, cost overruns, production decrease or stoppage,
which may result from facility shutdowns, mechanical or technical failure and
other unforeseen events. Grand Gulf undertakes technical, financial, business
and other analysis in order to determine a project’s readiness to proceed from
an operational, commercial and economic perspective. Even if Grand Gulf
Energy recovers commercial quantities of oil and gas, there is no guarantee
that a commercial return can be generated.
Grand Gulf has a project risk management and reporting system to monitor
the progress and performance of material projects and is subject to regular
review by senior management and the Board. All major development and
investment decisions are subjected to assurance reviews which includes
experts and contractors where appropriate.
Grand Gulf operates in a highly regulated environment. Grand Gulf
endeavours to comply with the regulatory authorities requirements. There is a
risk that regulatory approvals are withheld, take longer than expected or
unforeseen circumstance arise where requirements are not met and costs
may be incurred to remediate non compliance and/or obtain approval(s).
Changes in Government, monetary, taxation and other laws in Australia or the
USA or internationally may impact the Company’s operations.
Grand Gulf monitors legislative and regulatory developments and works to
ensure that all stakeholder concerns are addressed fairly and managed.
Policies and procedures are independently reviewed and audited to help
ensure they are appropriate and comply with all regulatory requirements.
7
OPERATING AND FINANCIAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2019
4
Market
The oil market are subject to the fluctuations of supply and demand and price.
To the extent that future actions of third parties contribute to demand
destruction or there is an expansion of alternative supply sources, there is a
risk that this may have a material adverse effect on price for the oil and gas
produced and the Company’s business, results of operations and financial
condition.
Grand Gulf monitors developments and changes in the international oil
market and conducts regular risk assessments.
5
Oil and Gas
Prices
Future value, growth and financial condition are dependent upon the prevailing
prices for oil and gas. Prices for oil and gas are subject to fluctuations and are
affected by numerous factors beyond the control of Grand Gulf.
Grand Gulf monitors and analyses the oil and gas markets and seeks to
reduce price risk where reasonable and practical. The Company has policies
and procedures for entering into hedging contracts to mitigate against the
fluctuations in oil price and exchange rates. The Company has no hedging in
place at present.
6
Operating
There are a number of risks associated with operating in the oil and gas
industry. The occurrence of any event associated with these risks could result
in substantial losses to the Company that may have a material adverse effect
on Grand Gulf’s business, results of operations and financial condition.
To the extent that it is reasonable to do so, Grand Gulf mitigates the risk of
loss associated with operating events through insurance contracts. Grand Gulf
operates with a comprehensive range of operating and risk management
plans and an HSEC management system to ensure safe and sustainable
operations.
7
Counterparties The ability of the Company to achieve its stated objectives will depend on the
performance of the counterparties under various agreements it has entered
into. If any counterparties do not meet their obligations under the respective
agreements, this may impact on operations, business and financial conditions.
8
Reserves
Grand Gulf monitors performance across material contracts against
contractual obligations to minimise counterparty risk and seeks to include
terms in agreements which mitigate such risks.
Oil and gas reserves are expressions of judgement based on knowledge,
experience and industry practice. These estimates may alter significantly or
become uncertain when new information becomes available and/or there are
material changes of circumstances which may result in Grand Gulf altering its
plans which could have a positive or negative effect on Grand Gulf’s
operations.
Reserve management is consistent with the definitions and guidelines in the
Society of Petroleum Engineers 2007 Petroleum Resources Management
Systems. The assessment of Reserves and Resources is also subject to
independent review from time to time.
9
Environmental Grand Gulf’s exploration, development and production activities are subject to
state, national and international environmental laws and regulations. Oil and
gas exploration, development and production can be potentially
environmentally hazardous giving rise to substantial costs for environmental
rehabilitation, damage control and losses.
Grand Gulf has a comprehensive approach to the management of risks
associated with health, safety, environment and community which includes
standards for asset reliability and integrity, as well as technical and operational
competency and requirements.
8
OPERATING AND FINANCIAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2019
10
Funding
11
Abandonment
Liabilities
Grand Gulf must undertake significant capital expenditures in order to conduct
development appraisal and exploration activities. Limitations on the accessing
to adequate funding could have a material adverse effect on the business,
results from operations, financial condition and prospects. Grand Gulf’s
business and, in particular development of large scale projects, relies on
access to debt and equity funding. There can be no assurance that sufficient
debt or equity funding will be available on acceptable terms or at all.
Grand Gulf endeavours to ensure that the best source of funding to maximise
shareholder benefits and having regard to prudent risk management is
obtained and is supported by economic and commercial analysis of all
business undertakings
Grand Gulf has certain obligations in respect of decommissioning of its fields,
production facilities and related infrastructure. These liabilities are derived
from legislative and regulatory requirements concerning the decommissioning
of wells and production facilities and require Grand Gulf to make provisions
for such decommissioning and the abandonment of assets. Provisions for the
costs of this activity are informed estimates and there is no assurance that the
costs associated with decommissioning and abandoning will not exceed the
amount of long term provisions recognised to cover these costs.
Grand Gulf recognises restoration provisions after the construction of faciliiesy
and conducts a review on an annual basis. Any changes to the estimates of
the provisions for restoration are recognised in line with accounting standards.
9
DIRECTOR’S STATUTORY REPORT
FOR THE YEAR ENDED 30 JUNE 2019
The Directors of Grand Gulf Energy Limited submit herewith the annual financial report of the Group consisting of
Grand Gulf Energy Limited and the entities it controlled at the end of, or during the year ended 30 June 2019
(referred to hereafter as the group).
REVIEW AND RESULTS OF OPERATIONS
For the financial year ended 30 June 2019, the loss attributable to members of the Group is $188,496 (2018: loss
$543,093).
DIRECTORS
The names and details of the directors of the Company in office during the financial year and until the date of this
report, unless otherwise stated, are:
Mr Craig Burton
Executive Chairman
Appointed 5 March 2019
Experience and Expertise
Mr Burton is an experienced investor in emerging companies, projects
and businesses. He has a track record of providing financial backing
and strategic advice to successful technical teams and business
managers. He is an active investor in the oil and gas sector with an
in-house technical and project generation team.
Responsibilities
Mr Burton is Chairman of the Board of Directors. Mr Burton is
responsible for guiding Company strategy and for reviewing and
providing guidance on finance, corporate, acquisition, exploration and
production activities.
Former and current directorships in last 3 years
Mr Burton is currently Chairman of Cradle Resources Limited and a
Director of Hutton Energy Limited. In the past three years Mr Burton
has been a Non-Executive Director of Capital Drilling Limited
(resigned 31 August 2018).
Mr Mark Freeman
B.com, CA, F.Fin
Managing Director –
Appointed 27 October 2010
and Company Secretary -
Appointed 22 April 2010
Experience and Expertise
Mr Freeman is a Chartered Accountant and has more than 20 years'
experience in corporate finance and the resources industry. He has
experience
in project acquisitions and management, strategic
planning, business development, M&A, asset commercialisation, and
project development. Prior experience with Mirabela Nickel Ltd, Exco
Resources NL, Panoramic Resources Ltd and Matra Petroleum Plc.
Responsibilities
Mr Freemam
finance, corporate,
acquisition, exploration and production activities and the day to day
management of Grand Gulf Energy.
is responsible
for strategy,
Former and current directorships in last 3 years
Mr Freeman is currently a director of Frontier Diamonds Limited.
Mr Chris Bath
CA, MAICD
Non- Executive Director
Appointed 5 March 2019
Experience and Expertise
Mr Bath is a Chartered Accountant with significant experience in the
energy and resource sectors in both Australia and Asia. Previous
positions include CFO and General Manager for Tap Oil Limited, CFO
for Oilex Limited and prior to that CFO for Buru Energy Limited.
Former and current directorships in last 3 years
Mr Bath is currently a director of Cradle Resources Limited.
10
DIRECTOR’S STATUTORY REPORT
FOR THE YEAR ENDED 30 JUNE 2019
Mr Charles Morgan
Executive Chairman -
Appointed 19 January 2006
Resigned 5 March 2019
Experience and Expertise
Mr Morgan has been involved in the oil and gas industry since 1995.
He has been involved in oil and gas assets in South East Asia, USA,
Africa and Europe.
Former and current directorships in last 3 years
Current: Whitebark Energy Ltd (formerly Transerv Energy Limited)
(appointment 9 October 2016).
Experience and Expertise
Mr Keenihan is a geologist with more than 40 years’ of experience in
the upstream oil and gas industry and extensive international
experience. Previous positions include exploration manager for
Apache Australia and LASMO, regional managers Australia for Novus
Petroleum and WMC Resources Petroleum Division. He has
managed exploration, development, operations, commercial and
marketing activities in the energy industry
Former and current directorships in last 3 years
Current: Whitebark Energy Ltd (formerly Transerv Energy Limited)
(appointed 23 March 2011).
Experience and Expertise
Mr Boss is a Houston-based banker and lawyer with 30 years’
experience providing legal services and representations to the oil and
gas industry and was lead counsel to NiSource Inc, a Fortune 500
energy utility.
Former and current directorships in last 3 years
None
Mr Stephen Keenihan
B.Sce (Hons Geology)
Non-Executive Director
Appointed 13 November
2006
Resigned 5 March 2019
Mr Allan Boss
B. Com
Doctor of Jurisprudence
Executive Director
Appointed 13 November
2006
Resigned 5 March 2019
CORPORATE INFORMATION
Corporate Structure
Grand Gulf Energy Limited is a company limited by shares that is incorporated and domiciled in Australia. Grand
Gulf Energy Limited has prepared a consolidated financial report incorporating the entities that it controlled during
the financial year.
Nature of Operations and Principal Activities
The principal activity of the Group during the financial year was the production, exploration and evaluation of oil
and gas leases. There has been no significant change in the nature of these activities during the year. As at 30
June 2019 the consolidated cash position was $162,391 (2018: $1,686,664).
EVENTS SINCE THE END OF FINANCIAL YEAR
No matters or circumstances have arisen since the end of the financial period which significantly affected or may
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group
in future financial years.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Change of Management
On 5 March 2019, the Company announced the appointment of two new directors Craig Burton and Chris Bath and
the resignation of Charles Morgan, Stephen Keenihan and Allan Boss.
Mr Burton is an experienced investor in emerging companies, projects and businesses. He has a track record of
providing financial backing and strategic advice to successful technical teams and business managers. He is an
active investor in the oil and gas sector with an in-house technical and project generation team.
Mr Bath is a Chartered Accountant with significant experience in the energy and resource sectors in both Australia
and Asia. Most recently he was CFO and Company Secretary for Tap Oil Limited and prior to that for Buru Energy
Limited.
11
DIRECTOR’S STATUTORY REPORT
FOR THE YEAR ENDED 30 JUNE 2019
$1.92M SHARE SUBSCRIPTION IN WBE AND IN-SPECIE DISTRIBUTION
During May 2019 the Company completed the in-specie distribution of $1.92m (383.75 million shares) in Whitebark
Energy Ltd (WBE) to shareholders, which equates to 0.25 cents per GGE share.
The in-specie distribution comprised one WBE share for every two GGE shares held. Total WBE shares distributed
to Shareholders was 383,749,392, of which 8,861,371 WBE shares were sold on behalf of foreign shareholders
who were ineligible to participate in the process, with the proceeds distributed. GGE retained 6,250,608 WBE
shares which were sold on 5 September 2019 at $0.009/share for the amount of $55,637.
In the opinion of the Directors, other than those referred to in the review of operations, there were no matters that
significantly affected the state of affairs of the Group during the financial year.
DIVIDENDS
The Directors recommend that no amount be paid by way of dividend. No dividend has been paid or declared
since the start of the financial year (2018: nil).
ENVIRONMENTAL REGULATION
The group holds various exploration licences to regulate its exploration activities in the USA. These include
conditions and regulations with respect to the rehabilitation of areas disturbed during the course of its exploration
activities. So far as Directors are aware, all exploration activities have been undertaken in compliance with all
relevant environmental regulations in all jurisdictions in which the group operates.
NGER ACT
The Directors consider the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces
a single national reporting framework for the reporting and dissemination of information about the greenhouse gas
emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage of
development, the Directors have determined that the NGER Act will have no effect on the Company for the current
nor subsequent financial year. The Directors will reassess this position as and when the need arises.
SHARE OPTIONS
As at the date of this report, there were a total of nil listed options (2018: nil listed options) and 65,000,000 unlisted
options (2018: 92,000,000). Refer to note 25 of the financial statements for further details of the options
outstanding.
Option holders do not have any right, by virtue of an option, to participate in any share issue of the Company or
any related body corporate or in the interest issue of any other registered scheme. During the financial year, the
Company did not issue any employee options. Details regarding the issue of share options under this plan are
provided in the directors’ report. There were no shares issued on the exercise of options during the year.
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE
Securities
As at the date of this report the interests of the Directors in the shares and options of Grand Gulf Energy Limited
were as follows:
12
DIRECTOR’S STATUTORY REPORT
FOR THE YEAR ENDED 30 JUNE 2019
Ordinary Shares
Holder
Balance at
Beginning of
Year/Date of
Appointment
Other
Purchases/Sales
Other changes during
the year/Resignation
Balance at the date of
report
Mr C I Burton**
186,060,003
14,251,733
-
200,311,736
Mr C Morgan*
167,600,476
(15,000,000)
(152,600,476)
-
-
-
-
(3,917,229)
-
-
(2,481,720)
-
-
-
-
-
360,059,428
(748,267)
(158,999,425)
200,311,736
Mr S Keenihan*
3,917,229
-
-
2,481,720
Mr M Freeman
Mr C Bath**
Mr A Boss*
Total
* Resigned 5 March 2019
** Appointed 5 March 2019
Options
Holder
Balance at
beginning of
year/Date of
Appointment
Other
Expired
Balance as at
date of report
Vested and
exercisable
Mr C I Burton**
10,000,000
-
Mr C Morgan*
15,000,000
(15,000,000)
Mr M Freeman
28,000,000
Mr C Bath**
-
-
-
Mr S Keenihan*
13,000,000
(10,000,000)
(3,000,000)
Mr A Boss*
15,000,000
(10,000,000)
(5,000,000)
-
-
10,000,000
10,000,000
-
-
(8,000,000)
20,000,000
20,000,000
-
-
-
-
-
-
-
Total
81,000,000
(35,000,000)
(16,000,000)
30,000,000
30,000,000
* Resigned 5 March 2019
** Appointed 5 March 2019
13
DIRECTOR’S STATUTORY REPORT
FOR THE YEAR ENDED 30 JUNE 2019
REMUNERATION REPORT (Audited)
Details of key management personnel
Mr C I Burton – Chairman (appointed 5 March 2019)
Mr M Freeman – Managing Director
Mr C Bath – Non-Executive Director (appointed 5 March 2019)
Mr Charles Morgan – Executive Chairman (resigned 5 March 2019)
Mr S Keenihan – Non-Executive Director (resigned 5 March 2019)
Mr A Boss – Executive Director (resigned 5 March 2019)
This report outlines the remuneration arrangements in place for Directors and Executives of Grand Gulf Energy
Limited. The report has been set out under the following main headings:
A.
B.
C.
D.
Principles Used to Determine the Nature and Amount of Remuneration
Service Agreements
Details of Remuneration
KMP Interest in Securities
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
A.
Principles Used to Determine the Nature and Amount of Remuneration
The Remuneration Committee of the Board of Directors is responsible for determining and reviewing compensation
arrangements for the Directors and Executive Officers. The Board has determined due to the size and nature of
the Company the functions of the remuneration committee will be performed by the Board. The Board will assess
the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to
relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from
the retention of a high quality Board and executive team. Such officers are paid their base remuneration in cash
only.
To assist in achieving these objectives, the Board will link the nature and amount of executive Directors’ and
officers’ emoluments to the Company’s financial and operational performance.
Executive Officers are those directly accountable for the operational management and strategic direction of the
Company and the Group. The following table shows key performance indicators for the group over the last five
years:
2019
2018
2017
2016
2015
Restated* profit / (loss) for the year
188,496
(543,093)
(2,223,633)
(560,508)
(2,145,306)
Restated basic earnings/(loss) per
share (cents per share)
Dividend payments
Dividend payment ratio (%)
Increase/(decrease) in share price (%)
(0.025)
-
-
50%
(0.071)
-
-
Nil
(0.297)
-
-
(33%)
(0.075)
-
-
(17%)
(0.287)
-
-
(25%)
The Corporate Governance Statement provides further information on the role of the Board.
*Balance at 30 June 2015 and prior years restated as a result of change in accounting policy disclosed.
Non-executive Directors
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of,
the Directors. Non-executive Directors’ fees and payments are reviewed annually by the Board. The Chairman’s
fees are determined independently to the fees of non-executive Directors based on comparative roles in the
external market. The Chairman is not present at any discussions relating to determination of his own remuneration.
14
DIRECTOR’S STATUTORY REPORT
FOR THE YEAR ENDED 30 JUNE 2019
Fixed remuneration
Fixed remuneration consists of a base remuneration package, which includes directors’ fees (in the case of
Directors), salaries, consulting fees and employer contributions to superannuation funds.
Fixed remuneration levels for Directors and executive officers are reviewed annually by the Board through a
process that considers the employee’s personal development, achievement of key performance objectives for the
year, industry benchmarks wherever possible and CPI data. Key performance indicators (KPIs) are individually
tailored by the Board for each director and executive officer each year and reflect an assessment of how that
employee can fulfil their particular responsibilities in a way that best contributes to Company performance and
shareholder wealth in that year.
Performance-linked remuneration
All employees may receive bonuses and/or share options as part of a package to retain their services and/or based
on achievement of specific goals related to performance against individual KPIs and to the performance of the
Company as a whole as determined by the Directors, based on a range of factors. These factors include traditional
financial considerations such as operating performance, cash consumption and deals concluded and also industry-
specific factors relating to the advancement of the Company’s exploration and development activities and
relationships with third parties and internal employees.
The plan rules contain a restriction on removing the ‘at risk’ aspect of the instruments granted to executives. Plan
participants may not enter into any transaction designed to remove the ‘at risk’ aspect of an instrument before it
vests.
The Board determines the total amount of performance-linked remuneration payable as a percentage of the total
annualised salaries for all employees employed as at the end of the financial year (with pro rata reductions to the
annualised salary made for any employee not employed for the entire financial year). Once the Board has
determined the total performance-linked remuneration payable across the Company, Board Members assess the
performance of each individual staff member within their department, relative to that staff member’s KPIs and
decide how much performance-linked remuneration should be paid to that person.
The Company did not engage with remuneration consultants during the year.
Voting and comments made at the Company’s 2018 Annual General Meeting
GGE received more than 99.9% of “yes” votes (excluding director’s votes) on its remuneration report for the 2018
financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
B.
Service Agreements
Remuneration and other terms of employment for the Executive Director is formalised in a service agreement. The
agreement provides for the provision of performance-related cash bonuses, determined and paid on the basis of
the Company’s performance reflected through increase in the market capitalisation of the Company and upon
successful capital raisings, other benefits including health insurance, car allowances, and participation when
eligible, in the Grand Gulf Energy Limited Employee Option Plan.
Other major provisions of the agreements relating to remuneration are set out below. The contract may be
terminated early by the Company with reason or by the executive, with three months’ notice, or by the Company
without reason, giving 3 months’ notice, subject to termination payments as detailed below:
Name
Term of agreement
Base salary including
superannuation
Termination benefit
Mr C I Burton
Commencing 5 March 2019
$30,000
Nil
Mr M Freeman*
Commencing 1 March 2016
$120,000
3 months base salary
Mr C Bath
Commencing 5 March 2019
Mr C Morgan
Resigned 5 March 2019
Mr S Keenihan
Resigned 5 March 2019
$30,000
$72,000
$48,000
Nil
3 months base salary
3 months base salary
Mr A Boss
Resigned 5 March 2019
US$120,000 (AU$154,800)
3 months base salary
* Mr Freemans remuneration was reduced from $200,000 to $120,000 effective 30 June 2019
15
DIRECTOR’S STATUTORY REPORT
FOR THE YEAR ENDED 30 JUNE 2019
C.
Details of Remuneration
Details of the remuneration of the Directors and the key management personnel of Grand Gulf Energy Limited
consolidated group are set out in the following tables. The key management personnel of Grand Gulf Energy
Limited consolidated group during the year ended 30 June 2019 includes the following Directors and executives:
•
•
•
•
•
•
Mr C I Burton (Executive Chariman) (appointed 5 March 2019)
Mr M Freeman (Managing Director)
Mr C Bath (Non-Executive Director) (appointed 5 March 2019)
Mr C Morgan (Executive Chairman) (resigned 5 March 2019)
Mr A Boss (Executive Director) (resigned 5 March 2019)
Mr S Keenihan (Non-Executive Director) (resigned 5 March 2019)
Remuneration packages contain the following key elements:
a)
b)
c)
d)
Primary benefits – salary / fees and bonuses;
Post-employment benefits – including superannuation;
Equity – share options granted under the Employee Share Option Plan as disclosed in Note 24 to the
financial statements; and
Other benefits.
The following tables disclose the detailed remuneration of the Directors of Grand Gulf Energy Limited and controlled
entities within the Group:
2019
Directors
Mr CI Burton
Mr C Bath
Mr C Morgan
Mr S Keenihan
Mr A Boss
Mr M Freeman
Total
2018
Directors
Mr C Morgan
Mr S Keenihan
Mr A Boss
Mr M Freeman
Total
Short term
benefits
Post-
employment
Equity
Total
Salary and
fees
Bonus
Super-annuation Options
Shares
$
$
$
10,000
10,000
64,774
39,733
146,820
200,012
471,339
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
$
-
-
-
-
-
-
-
10,000
10,000
64,774
39,733
146,820
200,012
471,339
Short term
benefits
Post-
employment
Equity
Total
Salary
and fees
$
72,000
48,000
154,800
200,000
474,800
Bonus
Super-annuation
Options
Shares
$
-
-
-
-
-
$
-
-
-
-
-
$
-
-
-
-
-
$
-
-
-
-
-
$
72,000
48,000
154,800
200,000
474,800
16
DIRECTOR’S STATUTORY REPORT
FOR THE YEAR ENDED 30 JUNE 2019
D.
KMP Interest in Securities
The number of options over ordinary shares in the Company held during the financial year by each Director of
Grand Gulf Energy Limited and other key management personnel of the group, including their personally related
parties, are set out below.
Options
The number of options over ordinary shares held by Key Management Personnel during the financial year is as
follows:
30 June 2019
Directors & KMP
Mr C I Burton
Mr M Freeman
Mr C Bath
Mr A Boss*
Mr C Morgan*
Mr S Keenihan*
Total
Balance at
start of the
year/Date of
appointment
Other
Lapsed/
Expired/
Forfeited
Balance
at the end
of the
year
Vested and
Exercisable
at end of
year
Unvested at
end of year
No.
No.
No.
No.
No.
No.
10,000,000
28,000,000
-
15,000,000
15,000,000
13,000,000
81,000,000
-
-
-
(10,000,000)
(15,000,000)
(10,000,000)
(35,000,000)
- 10,000,000
(8,000,000) 20,000,000
-
-
-
-
(16,000,000) 30,000,000
-
(5,000,000)
-
(3,000,000)
10,000,000
20,000,000
-
-
-
-
30,000,000
-
-
-
-
-
-
-
*Resigned 5 March 2019
Shareholdings
The number of ordinary shares in Grand Gulf Energy Limited held by Key Management Personnel during the
financial year is as follows:
30 June 2019
Directors & KMP
Mr CI Burton
Mr C Morgan**
Mr M Freeman
Mr C Bath
Mr A Boss**
Mr S Keenihan**
Total
Balance at start
of the year/Date
of appointment
Received during
the year on
exercise of
options
Other changes
during the year
Balance at end
of the year
No.
No.
No.
No.
186,060,003
167,600,476
-
-
2,481,720
3,917,229
360,059,428
-
-
-
-
-
-
-
14,251,733
(167,600,476)
-
-
(2,481,720)
(3,917,229)
(159,747,692)
200,311,736
-
-
-
-
-
200,311,736
*Mr S Keenihan Held 1 million shares directly and 2.9 million shares indirectly through his superannuation fund.
** Resigned 5 March 2019
This the end of the audited remuneration report.
17
DIRECTOR’S STATUTORY REPORT
FOR THE YEAR ENDED 30 JUNE 2019
Shares issued on the exercise of options
There were no ordinary shares of Grand Gulf Energy Limited issued during the year ended 30 June 2019 on the
exercise of options granted under the Grand Gulf Energy Limited Employee Option Plan. No amounts are unpaid
on any of the shares.
Indemnification and Insurance of Directors and officers
During the financial period, the Company maintained an insurance policy which indemnifies the Directors and
Officers of Grand Gulf Energy Limited in respect of any liability incurred in connection with the performance of their
duties as Directors or Officers of the Company. The Directors made a personal contribution toward the premium
to satisfy Section 199B of the Corporations Act 2001. The Company's insurers have prohibited disclosure of the
amount of the premium payable and the level of indemnification under the insurance contract.
DIRECTORS' MEETINGS
The following table sets out the number of Directors’ meetings held during the financial year and the number of
meetings attended by each Director (while they were a director or committee member).
Mr C I Burton
Mr M Freeman
Mr C Bath
Mr C Morgan
Mr A Boss
Mr S Keenihan
Board of Directors
Held
Attended
1
5
1
5
5
5
1
5
1
5
5
5
The Company did not have committee meetings in the year.
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Company and/or the group are important.
No non-audit services were provided during the year.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included
on the following page.
Dated at Perth 25 September 2019, and signed in accordance with a resolution of the Directors.
Mr Mark Freeman
Managing Director
18
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF GRAND GULF ENERGY LIMITED
As lead auditor of Grand Gulf Energy Limited for the year ended 30 June 2019, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Grand Gulf Energy Limited and the entities it controlled during the
period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 25 September 2019
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Notes
2019
$
2018
$
Revenue from continuing operations
Other income
Cost of sales
Amortisation of oil and gas properties
Interest income
Loss on investment
Sale of Asset
Corporate office expenses
Employee benefits expense
Exploration and evaluation expenditure
Foreign exchange
Professional and statutory fees
Depreciation
Other expenses
Loss before income tax
Income tax (expense)/ benefit
Loss from continuing operations
Loss after income tax
Items that may be reclassified to profit or loss
Foreign currency translation
Total comprehensive profit/(loss) for the year
Earnings/(loss) per share for the year
Attributable to the members of Grand Gulf
Energy Ltd
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
2
3(a)
3(b)
10
4
3(a)
3(b)
3(b)
3(b)
5
22
22
2,403,597
3,405,197
629
288
(696,856)
(237,783)
32
(195,000)
71,876
(92,241)
(437,870)
(836,237)
(15,780)
(127,779)
(971)
(24,114)
(188,496)
-
(1,509,627)
(383,016)
517
-
-
(119,643)
(431,053)
(1,355,098)
-
(97,743)
(3,656)
(49,259)
(543,093)
-
(188,496)
(543,093)
(188,496)
(543,093)
217,065
28,569
159,934
(383,159)
(0.025)
(0.025)
(0.071)
(0.071)
The above consolidated statement of profit or loss and other comprehensive Income should be read in
conjunction with the accompanying notes to the financial statements.
20
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Asset held for sale
Investment
Total Current Assets
Non-Current Assets
Investment
Property plant & equipment
Oil & gas properties
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Total Current Liabilities
Non-Current Liabilities
Restoration provision
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
Notes
16(a)
7
7
8
9
10
11
12
13
14
15
2019
$
162,391
419,024
36,535
-
28,127
646,077
2
636
2,215,834
2,216,472
2,862,549
125,445
125,445
289,126
289,126
414,571
2018
$
1,686,664
497,449
36,240
65,574
-
2,285,927
2
1,541
2,307,526
2,309,069
4,594,996
128,206
128,206
320,509
320,509
448,715
2,447,978
4,146,281
40,377,570
5,382,016
42,104,442
5,164,951
(43,311,608)
(43,123,112)
2,447,978
4,146,281
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes to the financial statements
21
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Contributed
Equity
Foreign
currency
translation
reserve
Share
Option
Reserve
Option
premium
reserve
Accumulated
losses
Total
$
$
$
$
$
$
Balance at 1 July 2018
42,104,442
2,471,814
2,016,337
676,800
(43,123,112)
4,146,281
Profit/(loss) attributable to
members of the parent entity
Foreign currency translation
adjustment
Total comprehensive
income/(loss) for the year
Transactions with owners in
their capacity of owners
In-specie distribution
Shares issued, net of issue
costs
Share based payment
Balance at 30 June 2019
-
-
-
-
217,065
217,065
(1,726,872)
-
-
-
-
-
-
-
-
-
(188,496)
(188,496)
-
217,065
(188,496)
28,569
-
(1,726,872)
-
-
40,377,570
-
-
2,688,879
-
-
2,016,337
-
-
676,800
-
-
(43,311,608)
-
-
2,447,978
Balance at 1 July 2017
42,104,442
2,311,880
2,016,337
676,800
(42,580,019)
4,529,440
Profit/(loss) attributable to
members of the parent entity
Foreign currency translation
adjustment
Total comprehensive
income/(loss) for the year
Transactions with owners in
their capacity of owners
Shares issued, net of issue
costs
Share based payment
Balance at 30 June 2018
-
-
-
-
159,934
159,934
-
-
-
-
-
-
(543,093)
(543,093)
-
159,934
(543,093)
(383,159)
-
-
42,104,442
-
-
2,471,814
-
-
2,016,337
-
-
676,800
-
-
(43,123,112)
-
-
4,146,281
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes to the financial statements.
22
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Insurance pre-payment (refundable)
Other Payments Received
Production costs
Payments for exploration and evaluation
2019
2018
Notes
$
$
2,933,824
3,411,493
(504,972)
(741,558)
378
-
256
517
(29,004)
-
(1,230,274)
(1,535,749)
(942,558)
(1,340,826)
Net cash inflow/(outflow) from operating activities
16(b)
256,653
(235,127)
Cash flows from investing activities
Payment for property, plant and equipment
Proceeds from sale of oil & gas properties
Payments for development of oil & gas properties
Purchase of Whitebark Shares
Net cash (outflows) from investing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the
financial year
Effects of exchange rate changes on the balance of cash
and cash equivalents in foreign currencies
Cash and cash equivalents at the end of the financial
year
-
138,101
(14,874)
(1,950,000)
(1,826,773)
29
-
(2,694)
-
(2,665)
(1,570,120)
(237,792)
1,686,664
1,859,399
45,847
65,057
16 (a)
162,391
1,686,664
The above consolidated statement of cash flows should be read in conjunction with the
accompanying notes to the financial statements.
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Notes to the Consolidated Financial Statements
REPORTING ENTITY
Grand Gulf Energy Ltd (the ‘Parent Entity’) is a company listed on the Australian Securities Exchange, limited
by shares, incorporated and domiciled in Australia. The consolidated financial statements of the Group for
the financial year ended 30 June 2019 comprises the Parent Entity and its subsidiaries (together referred to
as the ‘Group’).
The financial statements were authorised for issue by the Board of Directors on 25 September 2019.
GOING CONCERN
The financial statements have been prepared on a going concern basis, which contemplates continuity of
normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course
of the business.
The net loss after tax for the Group for the year ended 30 June 2019 amounts to a loss of ($188,496) (30
June 2018: $543,093 loss). At 30 June 2019 the Group had a cash balance of $162,391 (30 June 2018:
$1,686,664). At 30 June 2019, the Group had a net asset position of $2,447,978 (30 June 2018: $4,146,281).
The ability of the Group to both meet its debt repayments and continue to fund its working capital
requirements are dependent upon:
•
•
the Group achieving profitable operations with positive operating cash flows, and
Fund Raising
These conditions indicate a material uncertainty that may cast a significant doubt about the Group’s ability to
continue as a going concern and, therefore, it may be unable to realise its assets and discharge its’ liabilities
in the normal course of business.
Management have reasonable grounds to believe that the Group will continue as a going concern.
Should the Group be unable to continue as a going concern it may be required to realise its assets and
discharge its liabilities other than in the normal course of business and at amounts different to those stated
in the financial statements. This financial report does not include any adjustments relating to the recovery
and classification of recorded asset amounts or the amounts or classification of liabilities and appropriate
disclosure that may be necessary should the Group be unable to continue as a going concern.
BASIS OF PREPARATION
(a)
Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with
Australian Accounting Standards (‘AASBs’) (including Australian Interpretations) adopted by the Australian
Accounting Standards Board (‘AASB’) and the Corporations Act 2001. The financial statements of the Group
also complies with International Financial Reporting Standards and interpretations adopted by the
International Accounting Standards Board. Grand Gulf Energy Limited is a for-profit entity for the purpose of
preparing the financial statements.
New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for ended
30 June 2019 reporting periods and have not been early adopted by the Company. The Company’s
assessment of the impact of these new standards and interpretations is set out below.
AASB 16 Leases
to
leases
replace
When effective, this Standard
the current
will
requirements
accounting
in
applicable
and
AASB117: Leases
related Interpretations.
AASB 16 introduces a single
lessee accounting model that
eliminates
the requirement
for leases to be classified as
operating or finance leases.
Annual
reporting periods
beginning on or after 1
January 2020.
that
the Directors
Although
anticipate
the
adoption of AASB 16 will
impact
the Group’s
financial statements, it is
antipated that the impact
will not be material as
currently the Group does
not have any leases.
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A number of new or amended standards became applicable for the current reporting period for which the
Company has adopted
• AASB 15 Revenue from Contracts with Customers; and
• AASB 9 Financial Instruments.
The new accounting policies are disclosed below.
Basis of preparation and changes to the Group’s accounting policies
AASB 15 Revenue from contracts with Customers
AASB 15 Revenue from contracts with Customers replaces AASB 118 Revenue. AASB 15 was adopted by
the Group on 1 July 2018. AASB 15 provides a single, principles-based five-step model to be applied to all
contracts with customers.
The Group has considered AASB 15 in detail and determined that the impact on the Group’s sales revenue
is that revenue from the sale of produced hydrocarbons is to be presented net of royalties rather than gross
of royalties. There is nil impact as a result of this change on the profit or loss for the Group for the year ended
30 June 2019.
The Group’s new revenue accounting policy is detailed below:
Revenue is recognised when or as the Group transfers control of goods or services to a customer at the
amount to which the Group expects to be entitled. If the consideration promised includes a variable
component, the Group estimates the expected consideration for the estimated impact of the variable
component at the point of recognition and re-estimated at every reporting period.
Revenue from the sale of produced hydrocarbons is recognised at a point in time when control of the product
is transferred to the customer, which is typically on delivery. Revenue recognised is recorded net of royalties
representing the net revenue interest which is receipted by the Group as non-operator of its producing wells.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces the provisions of AASB 139 Financial Instruments: Recognition and
Measurement that relate to the recognition, classification and measurement of financial assets and financial
liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.
The adoption of AASB 9 Financial Instruments from 1 July 2018 did not give rise to any material transitional
adjustments. The new accounting policies (applicable from 1 July 2018) are set out below.
In accordance with the transitional provisions in AASB 9(7.2.15) and (7.2.26), comparative figures have not
been restated.
Classification and measurement
Except for certain trade receivables the Group initially measures a financial asset at its fair value plus, in the
case of a financial asset not at fair value through profit or loss, transaction costs.
Under AASB 9 financial assets are subsequently measured at fair value through profit or loss (FVPL),
amortised cost, or fair value through other comprehensive income (FVOCI). The classification is based on
two criteria: the Group’s business model for managing the assets; and whether the instruments’ contractual
cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding (the
‘SPPI criterion’).
Impairment
From 1 July 2018 the group assesses on a forward looking basis the expected credit losses (ECLs)
associated with its debt instruments carried at amortised cost and FVOCI. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that the Group
expects to receive. The shortfall is then discounted at an approximation to the asset’s original effective
interest rate.
The Group assesses at each balance date whether there is objective evidence that a financial asset or group
of financial assets is impaired. For trade and other receivables, the Group applies the simplified approach
permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the
receivables. The expected credit losses on these financial assets are estimated using a provision matrix
based on the Group’s historical credit loss experience.
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Significant accounting estimates and judgements
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting
period are:
Share-based payment transactions
The cost of share-based payments to employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined using the Black-Scholes
model, taking into account the terms and conditions upon which the options were granted.
Rehabilitation obligations
The Group estimates its share of the future removal and remediation costs of oil and gas production facilities,
wells and pipelines at the time of acquisition or installation of the assets. In most instances, removal of assets
occurs many years into the future. This requires judgemental assumptions regarding removal date, future
environmental legislation, the extent of remediation activities required, the engineering methodology for
estimating cost, future removal technologies in determining the removal cost, and asset specific discount
rates to determine the present value of these cash flows. For more detail regarding the policy in respect of
provision for rehabilitation refer to note 1(h). As at 30 June 2019 rehabilitation obligations have a carrying
value of $289,126 (2018: $320,509).
Impairment of oil and gas properties
In the absence of readily available market prices, the recoverable amounts of assets are determined using
estimates of the present value of future cash flows using asset-specific discount rates. For oil & gas
properties, these estimates are based on assumptions concerning reserves, future production profiles and
costs. As at 30 June 2019, the carrying value of oil & gas properties is $2,215,834 (2018: $2,307,526). Refer
to Note 10 for further details.
Reserves estimates
Estimation of reported recoverable quantities of Proven and Probable reserves include judgemental
assumptions regarding commodity prices, exchange rates, discount rates and production and transportation
costs for future cash flows. It also requires interpretation of complex geological and geophysical models in
order to make an assessment of the size, shape, depth and quality of reservoirs and their anticipated
recoveries. These factors used to estimate reserves may change from period to period.
Reserve estimates are used to calculate depletion of producing assets and therefore a change in reserve
estimates impacts the carrying value of assets and the recognition of deferred tax assets due to the changes
in expected future cash flows.
Depletion and depreciation
In relation to the depletion, depreciation and amortisation of capitalised expenditure related to producing oil
and gas properties, the Group uses a unit of production reserve depletion model to calculate depletion,
depreciation and amortisation. This method of depletion, depreciation and amortisation necessitates the
estimation of the oil and gas reserves over which the carrying value of the relevant assets will be expensed
to the profit or loss. The calculation of oil and gas reserve is complex and requires management to make
judgements about commodity prices, future production costs and geological structures. The nature of
reserves estimation is such that reserves are not intended to be 100% accurate but rather provide a
statistically probable outcome in relation to the economically recoverable reserve. As the actual reserve can
only be accurately determined once production has ceased, depletion, depreciation and amortisation
expensed during the production may not on a year to year basis accurately reflect the actual percentage of
reserve depleted. However, over the entire life of the producing assets all capitalised costs will be expensed
to the profit or loss.
(b)
Income Tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable
or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by
the reporting date.
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax is accounted for using the liability method in respect of temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred
income tax will be recognised from the initial recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised
or liability is settled. Deferred tax is credited in the statement of profit or loss and other comprehensive income
except where it relates to items that may be credited directly to equity, in which case the deferred tax is
adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be
available against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption
that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive
sufficient future assessable income to enable the benefit to be realised and comply with the conditions of
deductibility imposed by the law.
(c)
Property, Plant and Equipment
Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated
depreciation and impairment losses.
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess
of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the
expected net cash flows which will be received from the assets’ employment and subsequent disposal. The
expected net cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing
costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to
the profit or loss during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a straight-line
basis over their useful lives to the Group commencing from the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated
useful lives of the improvements. The major categories of assets are depreciated as follows:
• Oil and gas properties are amortised over the useful lives of the asset on a unit of production basis
once a reserve has been established.
• Motor Vehicles are depreciated based on diminishing value at 22.5%.
• Plant and equipment and drilling parts are depreciated based on diminishing value at 25% to 40%.
• Office equipment is depreciated based on diminishing value at 25% to 40%.
• Currently there are no buildings owned by the Group.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
gains or losses are included in profit or loss.
(d)
Non-operator interests in oil & gas properties
Exploration and evaluation expenses
The Group expenses all exploration and evaluation expenditure as incurred in respect of each identifiable
area of interest until a time where an asset is in development.
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Prepaid drilling and completion expenses
Where the Company has a non-operator interest in an oil and gas property, or has outsourced certain
development processes of an operated interest in an oil and gas property, it may periodically be required to
make a cash contribution for its share of the operator’s/contractors estimated drilling and/or completion costs,
in advance of these operations taking place.
Where these contributions relate to a prepayment for exploratory or early stage drilling activity, prior to a
decision on the commerciality of a well having been made, the costs are capitalised as prepaid drilling costs.
Where these contributions relate to a prepayment for well completion, these costs are capitalised as prepaid
completion costs within current assets.
As the operator/contractor notifies the Company as to how funds have been expended, the costs are
reclassified from prepaid costs to the appropriate expenditure or capitalised category.
Producing projects
Producing projects are stated at cost less accumulated amortisation and impairment charges. Producing
projects include construction, installation or completion of production and infrastructure facilities such as
pipelines, development wells and the provisions for restoration.
Amortisation and depreciation of producing projects
The Group uses the “units of production” (“UOP”) approach when amortising and depreciating field-specific
assets. Using this method of amortisation and depreciation requires the Consolidated Entity to compare the
actual volume of production to the reserves end then to apply this determined rate of depletion to the carrying
value of depreciable asset.
Capitalised producing projects costs relating to commercially producing wells are depreciated/amortised
using the UOP basis once commercial quantities are being produced within an area of interest. The reserves
used in these calculations are the Proved plus Probable reserves and are reviewed at least annually.
(e)
Financial Instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the
related contractual rights or obligations exist. Subsequent to initial recognition these instruments are
measured as set out below.
Trade and Other Receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, using
the effective interest rate method, less Expected Credit Loss. Trade receivables are generally due for
settlement between thirty (30) and ninety (90) days from the date of recognition. They are presented as
current assets unless collection is not expected for more than 12 months after reporting date.
Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The
movement in the provision is recognised in profit or loss.
Expected credit losses of financial asset at amortised cost
Loss allowances for financial assets are based on assumptions about risk of default and expected loss rates.
The Group uses judgement in making these assumptions and selecting the inputs to the impairment
calculation, based on the Group’s past history, existing market conditions as well as forward looking
estimates at the end of each reporting period.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are stated at amortised cost using the effective interest rate method.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are
applied to determine the fair value for all unlisted securities, including recent arm’s length transactions,
reference to similar instruments and option pricing models.
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Impairment
From 1 July 2018 the group assesses on a forward looking basis the expected credit losses (ECLs)
associated with its debt instruments carried at amortised cost and FVOCI. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that the Group
expects to receive. The shortfall is then discounted at an approximation to the asset’s original effective
interest rate.
The Group assesses at each balance date whether there is objective evidence that a financial asset or group
of financial assets is impaired. For trade and other receivables, the Group applies the simplified approach
permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the
receivables. The expected credit losses on these financial assets are estimated using a provision matrix
based on the Group’s historical credit loss experience.
(f)
Impairment of Assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use,
is compared to the assets carrying value. Any excess of the asset’s carrying value over its recoverable
amount is expensed to the profit or loss. Impairment testing is performed annually for goodwill and intangible
assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
(g)
Foreign Currency Transactions and Balances
Transaction and balances
Foreign currency(USD) transactions are translated into presentational currency(AUD) 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 profit or loss, except
where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to
the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is
recognised in the in consolidated statement of profit or loss and other comprehensive income.
Group companies
The financial results and position of foreign operations whose functional currency is different from the group’s
presentation currency are translated as follows:
- assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; and
- income and expenses are translated at average exchange rates for the period.
Exchange differences arising on translation of foreign operations are transferred directly to the Group’s
foreign currency translation reserve in the statement of financial position. These differences are recognised
in the profit or loss in the period in which the operation is disposed.
(h)
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, the future
sacrifice of economic benefits is probable and the amount of the obligation can be reliably estimated.
When some or all of the economic benefits required to settle a provision are expected to be recovered from
a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received
and the amount of the receivable can be measured reliably.
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where
a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount
is the present value of those cash flows.
An onerous contract is considered to exist where the Group has a contract under which the unavoidable cost
of meeting the contractual obligations exceed the economic benefits estimated to be received. Present
obligations arising under onerous contracts are recognised as a provision to the extent that the present
obligation exceeds the economic benefits estimated to be received.
Provision for restoration and rehabilitation
Provision is made in the statement of financial position for restoration of operating locations. The estimated
restoration and rehabilitation costs are initially recognised as part of the capitalised cost of the relevant project
which gave rise to the future obligation. During the production phase of the project the capitalised restoration
costs is amortised using the units of production method. Any actual costs incurred by the Group are allocated
against the provision.
The provision for restoration and rehabilitation are based on the latest estimated future costs, determined on
a discounted basis, which are re-assessed regularly and exclude any allowance for potential changes in
technology or material changes in legislative requirements.
(i)
Inventories
Inventories consist of hydrocarbon stocks. Inventories are valued at the lower of cost and net realisable value.
Cost is determined on a weighted average basis and includes direct costs and an appropriate portion of fixed
and variable production overheads where applicable.
(j)
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are
shown within short-term borrowings in current liabilities on the statement of financial position.
(k)
Revenue Recognition
The Company/Group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018
which has no material impact to the amounts recognised in the financial statements.
(i)
Oil & Gas Sale
Revenue from the sale of oil/condensate, gas and natural gas liquids produced is recognised when the
Consolidated Entity has transferred to the buyer and the costs incurred or to be incurred in respect of the
transaction can be measured reliably.
- Dry Gas – upon transfer to third party, typically upon entry to a third party sale pipeline;
- Natural Gas Liquids (NGL’s) – upon transfer to a third party, typically upon entry to a third party sales
pipeline; or
- Oil/Condensate – upon transfer of product to purchasers’ transportation mode, either truck or pipeline.
(ii)
Other revenue
Dividend revenue is recognised on a receivable basis. Interest revenue is recognised on a time proportionate
basis that takes into account the effective yield on the financial asset.
All revenue is stated net of the amount of goods and services tax (GST).
(l) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as
part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in
the statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(m) Trade and Other Creditors
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition. They are recognised initially at fair value and subsequently at amortised cost.
(n)
Dividends
Provision is made for the amount of any dividend declared, determined, or publicly recommended by the
Directors on or before the end of the financial year, but not distributed at reporting date.
(o)
Options
The fair value of options in the shares of the Company issued to Directors and other parties is recognised as
an expense in the financial statements in relation to the granting of these options.
(p)
Employee Benefits
(i) Wages, salaries and annual leave
Liabilities for wages, salaries and annual leave expected to be settled within 12 months of the reporting date
are recognised 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.
Employee benefits payable later than one year
(ii)
Employee benefits payable later than one year have been measured at the present value of the estimated
future cash outflows to be made for those benefits.
Superannuation
(iii)
Contributions are made by the Group to superannuation funds as stipulated by statutory requirements and
are charged as expenses when incurred.
Employee benefit on costs
(iv)
Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities
and costs when the employee benefits to which they relate are recognised as liabilities.
Options
(v)
The fair value of options granted is recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant date.
The fair value at grant rate is independently determined using the Black-Scholes option pricing model that
takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact
of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility
of the underlying shares.
(q)
Earnings Per Share
Basic earnings per share
(i)
Basic earnings per share is determined by dividing the net profit after income tax attributable to members of
the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary
shares issued during the year.
Diluted earnings per share
(ii)
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
(r)
Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement
or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and
trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted
market price used for financial assets held by the Group is the current bid price; the appropriate quoted
market price for financial liabilities is the current ask price.
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes
assumptions that are based on market conditions existing at each reporting date. Quoted market prices or
dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such
as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to
approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current market interest rate that is available to the Group
for similar financial instruments.
(s)
Segment reporting
Operating segments are now reported in a manner that is consistent with the internal reporting provided to
the chief operating decision maker. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of operating segments, has been identified as the Board of Directors.
AASB 8 requires a ‘management approach’ under which segment information is presented on the same basis
as that used for internal reporting purposes. In addition, the segments are reported in a manner that is
consistent with the internal reporting provided to the chief operating decision makers.
The Board of Directors review internal management reports on a monthly basis that is consistent with the
information provided in the Statement of Profit or Loss and Other Comprehensive Income, statement of
financial position and statement of cash flows. As a result no reconciliation is required, because the
information as presented is used by the Board to make strategic decisions.
(t)
Parent entity financial information
The financial information for the parent entity, Grand Gulf Energy Ltd, disclosed in note 27 has been prepared
on the same basis as the consolidated financial statements, except as set out below.
Investment in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associated and joint venture entities are accounted for at cost in the financial
statements of Grand Gulf Energy Ltd. Dividends received from associated are recognised in the parent
entity’s profit or loss, rather than being deducted from the carrying amount of these investments.
Tax consolidation legislation
Grand Gulf Energy Ltd and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation.
The head entity, Grand Gulf Energy Ltd, and the controlled entities in the tax consolidated group account for
their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a stand-alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, Grand Gulf Energy Ltd also recognised the current
tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits
assumed from controlled entities in the tax consolidation group.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully
compensate Grand Gulf Energy Ltd for any current tax payable assumed and are compensated by Grand
Gulf Energy Ltd for any current tax receivable and deferred tax assets relating to unused tax losses or unused
tax credits that are transferred to Grand Gulf Energy Ltd under the tax consolidation legislation. The funding
amounts are determined by reference to the amount recognised in the wholly-owned entities’ financial
statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice
from the head entity, which is issued as soon as practicable after the end of each financial year. The head
entity may also require payment of interim funding amounts to assist with its obligation to pay tax instalments.
Assets or liabilities arising under tax funding agreements with the tax consolidation entities are recognised
as current amounts receivable from or payable to other entities in the group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial guarantees
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries
for no compensation, the fair values of these guarantees are accounted for as contributions and recognised
as part of the cost of the investment. No such guarantees have been provided at this time.
(u)
Contributed Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from proceeds.
(i)
In-specie distribution
The share capital of the Company is reduced by the fair value of the investment that was returned to the
shareholders.
(v) Assets held for sale
Non-current assets and liabilities that are expected to be recovered primarily through sale rather than through
continuing use are classified as held for sale. Immediately before classification as held for sale the assets
are re-measured in accordance with the Consolidated Group’s accounting policies. Thereafter generally the
assets are measured at the lower of their carrying amount and fair value less cost to sell. Impairment losses
on initial classification as held for sale and subsequent gains or losses on re-measurement are recognised
in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. Once classified as
held for sale or distribution, assets are not amortised or depreciated.
2. Revenue
Sale of oil and gas
Royalties
Total revenues from ordinary activities
2019
2018
$
$
3,106,464
(702,867)
2,403,597
3,405,197
(775,540)
2,629,657
Revenue is recognised when or as the Group transfers control of goods or services to a customer at the
amount to which the Group expects to be entitled. The impact of the adoption of AASB 15 is disclosed in
note 17.
3. Profit/ (loss) from operations
(a) Other Income
Other
Profit on sale of Abita
Total other income
(b) Expenses
Loss before income tax includes the following specific expenses:
Cost of sales
Operating Costs
Total cost of sales
2019
2018
$
629
71,876
72,505
$
288
-
288
2019
2018
$
$
696,856
696,856
734,087
734,087
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Depreciation
Plant and equipment
Total depreciation
Corporate Office Expenses
Insurance
Office Rent
Legal Services
Telephones
IT Expenses
Website
Subscriptions
Other
Total corporate office expenses
Foreign exchange gains and losses
Net foreign exchange losses/(gains)
4. Loss on investment
390,000,000 Whitebark Shares Issued @ $0.005
390,000,000 Whitebark Shares Traded @ $0.045
Loss on Investment
971
971
3,656
3,656
15,152
23,605
19,993
4,349
3,264
2,849
2,849
20,181
92,241
26,277
38,662
18,181
2,857
13,120
1,435
1827
17,283
119,642
15,780
-
2019
2018
$
1,950,000
1,755,000
195,000
$
-
-
-
During May 2019 the Company completed the in-specie distribution of $1.92m (383.75 million shares)
in Whitebark Energy Ltd (WBE) to shareholders, which equates to 0.25 cents per GGE share.
5.
Income tax
(a) Income tax expense
Current tax
Deferred tax
Under (over) provided in prior years
(b) Reconciliation of income tax benefit to prima facie tax payable
Profit/(loss)from ordinary activities before
income tax expense
Prima facie tax benefit on gain from ordinary
activities at 27.5% (2018: 27.5%)
Adjustment for foreign jurisdiction tax rate
differential
2019
$
-
-
-
-
2019
$
2018
$
-
-
-
-
2018
$
(587,368)
(543,093)
161,526
149,350
30,864
(7,167)
192,390
142,183
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Add tax effect of non-temporary adjustments
Tax effect of current year tax losses for which
no deferred tax asset has been
recognised/(Recoupment of prior period tax
losses)
Timing differences previously not recognised
Income tax expense / (benefit)
(c) Unrecognised temporary differences
Unused tax losses for which no deferred tax
asset has been recognised – Overseas
Unused tax losses for which no deferred tax
asset has been recognised - Australia
7,869
7,869
(292,105)
91,846
-
(179,673)
29,621
-
2019
$
2018
$
9,543,710
10,498,006
4,134,510
3,842,406
The ability of the group to use tax losses in the future is subject to the group entities satisfying the relevant
taxation laws applicable at the time of submitting the return.
6. Dividends paid or provided for on ordinary shares
No dividend has been declared or paid during the current financial year or the prior financial year. The Group
does not have any franking credits available for current or future years as the Group is not in a tax paying
position.
7. Trade and other receivables
Current
Trade and other receivables (i)
Insurance claim receivables
2019
2018
$
$
419,024
36,535
455,559
497,449
36,240
533,689
(i)
Other receivables include, sales revenue amounts outstanding for goods & services tax (GST). GST
amounts are non-interest bearing and have repayment terms applicable under the relevant government
authorities.
Refer to note 25 for the Group’s financial risk management policies. The Group has estimated the expected
credit loss to be nil. Due to the short-term nature of the current receivables, their carrying amount is assumed
to be the same as their fair value.
8. Asset held for sale
Opening Balance
Transferred from Oil and Gas Properties(i)
Transferred from asset retirement obligation
Asset sold
Foreign exchange differences
2019
$
65,574
-
-
(71,876)
6,302
-
2018
$
-
133,042
(67,468)
-
-
65,574
(i)
The Company disposed of its interests in the Abita field for US$100,000 net cash to the Company.
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9. Property, Plant and Equipment
Plant and equipment
At cost
Accumulated depreciation
10. Oil and Gas Properties
Producing oil & gas assets
Provision for impairment and amortisation
Capitalised oil and gas properties
Carrying amount at beginning of period
Expenditure during the year
Foreign exchange differences
Amortisation
Transferred to Asset held for sale
Carrying amount at end of year
2019
2018
$
$
20,674
(20,038)
636
20,674
(19,133)
1,541
2019
$
2018
$
7,956,432
(5,740,598)
2,215,834
7,810,341
(5,502,815)
2,307,526
2,307,526
14,874
131,217
(237,783)
-
2,215,834
2,736,479
2,695
84,410
(383,016)
(133,042)
2,307,526
The Company recorded no impairment of oil and gas properties for the year ended 30 June 2019 (30 June
2018: impairment of Nil).
The recoverable amount of Oil and Gas Properties is estimated on the basis of the discounted value of future
cash flows (i.e. value in use model). The estimates of future cash flows are based on significant assumptions
including:
-
-
-
Estimates of the quantities of oil and gas reserves for which there is a high degree of confidence of
economic extraction and the timing of access to these reserves;
Future oil and gas prices based on consensus forecasts by economic forecasters; and
The asset specific discount rate applicable to the cash generating unit.
Future changes in assumptions upon which these estimates are based may give rise to a material adjustment
by impairing Oil and Gas Properties.
11. Trade and other payables
Current
Trade creditors
2019
$
2018
$
125,445
125,445
128,206
128,206
Risk exposure: Information about the Group’s exposure to foreign exchange risk is provided in note 25.
Due to the short-term nature of the current payable, their carrying amount is assumed to be the same as their
fair value.
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. Provisions
Non-Current
Asset retirement obligation
(a) Reconciliations
Asset retirement obligation
Carrying amount at beginning of year
Additional provisions recognised/recalculated
Foreign exchange differences
West Klondike sold
Transferred to asset held for sale
Carrying amount at end of year
13. Contributed equity
(a) Issued and paid up share capital
2019
$
2018
$
289,126
320,509
320,509
(3,089)
13,815
(42,109)
-
289,126
361,342
14,272
12,363
-
(67,468)
320,509
2019
2018
Number of
Shares
$
Number of
Shares
$
Balance at the beginning of the year
Capital reduction 28 May 2019
767,498,870
-
42,104,442 767,498,870 42,104,442
-
(1,726,872)
-
767,498,870
40,377,570 767,498,870 42,104,442
(b) Terms and conditions of contributed equity
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number
of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
Company. Refer note 25 for details of the Group’s capital management policy.
(c) Share options
As at 30 June 2019 the Company has on issue 65,000,000 (30 June 2018: 92,000,000) options over
unissued ordinary shares. Movement of options during the period are summarised below:
Exer-
cise
price
Expiry
date
Balance at
beginning
of year
Issued
during
the year
Exercised
during the
year
Cancelled
during the
year
Balance at
end of year
Number
Number
Number
Number
Number
Unlisted options
1.4 c
30/11/18
27,000,000
Unlisted options
0.65 c
30/06/20
65,000,000
92,000,000
-
-
-
-
-
-
(27,000,000)
-
-
65,000,000
(27,000,000)
65,000,000
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. Reserves
Foreign currency translation (a)
Share option reserve (b)
Option premium reserve (c)
(a)
Foreign currency translation reserve
2019
2018
$
$
2,688,879
2,016,337
676,800
2,471,814
2,016,337
676,800
5,382,016
5,164,951
The foreign currency translation reserve is used to record exchange differences arising from the
translation of the financial statements of self-sustaining foreign operations.
Balance at beginning of year
Gain on translation of foreign
controlled entities
Balance at end of year
(b)
Share option reserve
2019
2018
$
$
2,471,814
2,311,880
217,065
159,934
2,688,879
2,471,814
The share option reserve is used to recognise the value of options issued to employees, Directors,
consultants, and external finance companies.
Balance at beginning of year
Share based payment expense
Balance at end of year
(c)
Option premium reserve
2019
2018
$
$
2,016,337
-
2,016,337
2,016,337
-
2,016,337
The option premium reserve is used to recognise the options issued under a rights issue at 1 cent per
option.
Balance at beginning of year
Balance at end of year
2019
$
676,800
676,800
2018
$
676,800
676,800
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. Accumulated losses
Balance at beginning of year
Net profit/(loss) attributable to members of the
Company
Balance at end of year
16. Notes to the statement of cash flows
(a)
Reconciliation of cash and cash equivalents
2019
2018
$
$
(43,123,112)
(42,580,019)
(188,496)
(543,093)
(43,311,608)
(43,123,112)
For the purposes of the statement of cash flows, cash includes cash on hand and in banks and
investments in money market instruments. Cash at the end of the financial year as shown in the
statement of cash flows is reconciled to the related items in the statement of financial position as
follows:
Cash on hand
2019
2018
$
$
162,391
1,686,664
The Group’s exposure to interest rate risk is discussed in note 25. The above figures are reconciled
to cash at the end of the financial year as shown in the statement of cash flows as follows:
(b)
Reconciliation of profit after related income tax to net cash outflows from operating activities
Profit/(loss) for the year
Depreciation
Amortisation
Loss on investment
Exchange rate differences on assets/liabilities held
in foreign currencies
Changes in net assets and liabilities
(Increase)/decrease in assets:
Trade and other receivables
(Decrease) in liabilities:
Trade and other creditors
Net cash (outflows) from operating activities
2019
2018
$
(188,496)
971
237,783
195,000
$
(543,093)
3,656
383,016
-
(64,269)
-
78,425
(15,869)
(2,761)
(256,653)
(62,837)
(235,127)
17. CHANGES IN ACCOUNTING POLICIES
The company adopted AASB 9 with no impact on the accounts.
This note explains the impact of the adoption of AASB 15 Revenue from Contracts with Customers on the
group’s financial statements and also discloses the new accounting policies that have been applied from 1 July
2018, where they are different to those applied in prior periods.
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17(a) Impact on the financial statements
The Company assessed the impact of adoption of new accounting standards. The cumulative method has
been adopted, therefore comparatives are not restated.
If AASB15 had been applied in the 2018 financial year, there would have been a presentation impact of the
statement of profit or loss and other comprehensive income of a decrease in revenue of $775,540 to
$2,629,657 and an decrease in cost of sales of $775,540 to $734,087. The total impact on the loss would have
been $nil.
18. Expenditure commitments
Lease commitments
There were no commitments as at 30 June 2019.
19. Non-cash investing and financing activities
Options issued to employees, consultants, Directors and financiers for no cash consideration are shown in
Directors’ Report and note 25.
There were no other non-cash investing or financing activities during the period.
20. Contingent liabilities
The Group had no contingent liabilities as at 30 June 2019 other than as stated below.
Napoleonville Well control
The JV partners continue to remain obligated to complete the remaining remediation of the land affected by
the blowout. As most of the location has been remediated and handed back to the farmer the Company
believes that the remaining remediation will be no more than US$250,000 in respect of the existing 40.5%
WI the Company held prior to the acquisition of the additional 15.3% from Mustang Resources Limited. The
Company confirms that the blowout insurances from Mustang are substantial and adequate to cover the cost
of additional 15.3% WI of likely remaining remediation costs.
During the 12 months ended 30 June 2019, the Company incurred US$43,912 in respect of an annual
department fee of which US$23,009 is recoverable from our insurers, leaving the Company liable for
US$25,319.
21. Events occurring after reporting date
No matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly
affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state
of affairs in future financial years.
22. Loss per share
The Company has no options or other convertible securities, accordingly the based and diluted earnings per
share are the same. The following reflects the gain and share data used in the calculation of basic and diluted
gain per share:
Basic/diluted earnings/(loss) per share
2019
$
2018
$
Profit/(loss) used in calculating basic loss per share
Weighted average number of ordinary shares used in calculating
basic earnings per share
Basic/Diluted earnings/(loss) per share (cents per share)
(188,496)
(543,093)
767,498,870
(0.025)
767,498,870
(0.071)
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. Auditor’s remuneration
2019
$
49,388
49,388
2018
$
44,164
44,164
Audit and review of financial reports
The auditor of Grand Gulf Energy Limited is BDO Audit (WA) Pty Ltd.
24. Segment information
Operating segments
The consolidated entity is organised into one operating segment, being oil & gas production and exploration
operations. This operating segment is based on internal reports that are reviewed and used by the Board of
Directors, who are identified as the Chief Operating Decision Makers (‘CODM’), in assessing performance
and in determining the allocation of resources. The principle products and services of this operating segment
are the production and exploration operations in the United States.
As noted above, the board only considers one segment to be a reportable segment for its reporting purposes.
As such, the reportable information the CODM reviews is detailed throughout the financial statements.
25. Financial instruments
FINANCIAL RISK MANAGEMENT
The Group’s policies with regard to financial risk management are clearly defined and consistently applied.
They are a fundamental part of the Group’s long term strategy covering areas such as foreign exchange risk,
interest rate risk, commodity price risk, credit risk and liquidity risk and capital management. The natural
hedges provided by the relationship between commodity prices and the US currency reduces the necessity
for using derivatives or other forms of hedging. The Group does not issue derivative financial instruments,
nor does it believe that it has exposure to such trading or speculative holdings through its investments in
wholly owned subsidiaries. Risk management is carried out by the Board as a whole, which provides written
principles for overall risk management, as well as policies covering specific areas such as foreign exchange
risk, interest rate risk, credit risk and liquidity risk. The group uses different methods to measure different
types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate,
foreign exchange and other price risks and aging analysis for credit risk.
Market Risk
(i)
Foreign exchange risk
There is no foreign currency exposure on a group or company level. Such exposure arises from sales or
purchases by an operating unit in currencies other than the unit’s functional currency. The Group currently
does not engage in any hedging or derivative transactions to manage foreign currency risk.
The only occasion in which there is an exposure on a group or company level to foreign exchange risk is
when the Company is raising capital on ASX. As its domicile is Australia it must raise equity capital in
Australian $. As its primary currency is the US$ due to its assets, operations and commodities being priced
in US$ the Company has taken the view that while it is raising US$ to finance US$ operations that it might
from time to time hedge its currency for the time period over which it has received funds via an equity raising
but has not issued the equity securities which have been subscribed for.
(ii)
Commodity price risk
Due to the nature of the Group’s principal operations being oil & gas exploration and production the Group
is exposed to the fluctuations in the price of oil & gas. Although the Group is economically exposed to
commodity price risk of the abovementioned inputs, this is not a recognised market risk under the accounting
standards as the risk is embedded within normal purchase and sales and are therefore not financial
instruments.
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(iii)
Interest rate risk
Interest rate risk relates to the statement of financial position values of the consolidated cash at bank at 30
June 2019 and 30 June 2018.
(iv)
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. The Group is not significantly exposed to credit risk from its operating
activities, however the Board constantly monitors customer receivables. The maximum exposure to credit
risk at the reporting date is the carrying value of each class of financial asset. The Group does not hold
collateral as security. No material exposure is considered to exist by virtue of the possible non-performance
of the counterparties to financial instruments and cash deposits. Credit rating of cash is A+; all funds are held
by Frost Bank and NAB which have government guarantees on deposits.
The maximum exposure to credit risk at the reporting date is the carrying amount of the assets as
summarised below, none of which are impaired or past due.
Cash and cash equivalents
Insurance claim
CARRYING AMOUNT
2019
$
2018
$
162,391
1,686,664
36,535
36,240
(v)
Capital Risk and Liquidity Risk Management
The Group’s total capital is defined as shareholder’s funds, plus net debt and amounted to $2,447,978 at 30
June 2019 (2018: $4,146,281). The Group’s overriding objectives when managing capital are to safeguard
the business as a going concern; to maximise returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure in order to reduce the cost of capital. Prudent liquidity risk
management implies maintaining sufficient cash and marketable securities and the availability of funding
through an adequate credit facility. The Group manages liquidity risk by continuously monitoring forecast and
actual cash flows. Surplus funds are generally only invested in instruments that are tradeable in highly liquid
markets.
Financing Arrangements
The Group did not have access to the borrowing facilities during the year.
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities and relevant maturity groupings based on the
remaining period at reporting date to the contractual maturity date. The amounts disclosed are the contractual
undiscounted cash flows.
At 30 June
2019
Less than
6 months
6-12
months
Between
1 and 2
years
Between 2
and 5 years
Over 5
years
Total
contractual
cash flows
Carrying
amount
liabilities
Non-
derivatives
Trade
creditors
Total
125,445
125,445
-
-
-
-
-
-
-
-
125,445
125,445
125,445
125,445
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At 30 June
2018
Less than
6 months
6-12
months
Between
1 and 2
years
Between 2
and 5 years
Over 5
years
Total
contractual
cash flows
Carrying
amount
liabilities
Non-
derivatives
Trade
creditors
Total
128,206
128,206
-
-
-
-
-
-
-
-
128,206
128,206
128,206
128,206
26. Share Based Payments
Employee Option Plan
The Grand Gulf Energy Limited Employee Option Plan was approved at the general meeting held on 26 June
2007. Options which are granted under the plan and under the discretion of the board to executives and
consultants of the Company are for no consideration. Options granted under the plan carry no dividend or
voting rights and have varied contractual lives.
Grand Gulf Energy Limited – 2019
Grant date
Expiry
date
Exercise
price
Balance at
start of
the year
Granted
during
the year
Cancelled
during the
year
Balance at
end of the
year
Exercisable at
end of the year
20 Nov 14
7 Dec 16
Total
Number
Number
Number
Number
Number
30 Nov 18
30 Jun 20
$0.014
$0.0065
27,000,000
65,000,000
-
-
(27,000,000)
-
-
65,000,000
-
65,000,000
92,000,000
-
(27,000,000)
65,000,000
65,000,000
Weighted Average Exercise price
0.87 c
0.65 c
Grand Gulf Energy Limited – 2018
Grant date
Expiry date
Exercise
price
Balance at
start of the
year
Granted
during the
year
Cancelled
during the
year
Balance at
end of the
year
Exercisable at
end of the year
20 Nov 14
7 Dec 16
Total
30 Nov18
30 Jun 20
$0.014
$0.0065
Weighted Average Exercise price
Number
Number
Number
Number
Number
27,000,000
65,000,000
92,000,000
0.87 c
-
-
-
-
-
-
27,000,000
65,000,000
27,000,000
65,000,000
92,000,000
92,000,000
0.87c
43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27. Parent Entity Financial Information
(i)
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of Financial Position
Current assets
Non-current assets
Total assets
Total liabilities
Net assets
Shareholders’ equity
Issued capital
Reserves
Accumulated losses
Loss for the year
2019
$
2018
$
154,166
658,270
812,436
111,117
701,322
149,295
3,395,003
3,544,298
53,911
3,490,387
40,377,569
2,693,138
(42,369,386)
701,322
42,104,442
2,693,135
(41,307,190)
3,490,387
(1,062,196)
(679,104)
(ii)
Contingent Liabilities and Commitments
The Parent Company has no contingent liabilities or commitments other than as those disclosed in the notes.
28. Related Party Transactions
(i)
Parent entity
The ultimate parent entity within the group is Grand Gulf Energy Limited (the legal parent).
(ii)
Subsidiaries
Interests in subsidiaries are set out below.
(iii)
Investments in controlled entities
The consolidated entity financial statements incorporate the assets, liabilities and results of the following
subsidiaries in accordance with the accounting policy described in note 1.
Investments in controlled entities held by Grand Gulf Energy Limited
Alto Energy Limited
GG Oil & Gas 1, INC
GG Oil & Gas 2, INC
GG Oil & Gas, INC
Birdwood Louisiana LLC
Country of
incorporation
Australia
USA
USA
USA
USA
2019
%
100
100
100
100
100
2018
%
100
100
100
100
100
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Investments in controlled entities held by Alto Energy Limited
Grand Gulf Energy Inc
USA
Country of incorporation
2019
%
100
2018
%
100
(iv) Key management personnel compensation
Short-term employee benefits
Share-based payments
2019
$
451,339
-
451,339
2018
$
474,800
-
474,800
Detailed remuneration disclosures are provided in the Remuneration Report on pages 14-17
(v)
Other transactions with key management personnel
The Company entered in to a loan facility of $300,000 with Skye Equity Pty Ltd to fund GGE’s short-term
working capital requirements and to complete its $1.95m obligation to acquire 390m shares in White Bark
(WBE). The loan attracted interest of 8% per annum calculated and accrued monthly. If the loan and interest
were not fully repaid by the 1 November 2019 the interest rate would have increased to 12% per annum.
The Company did not draw down on the facility and the facility was cancelled. Craig Burton director of GGE,
is also the sole director of Skye Equity.
45
DIRECTORS’ DECLARATION
Directors’ Declaration
1.
2.
3.
4.
The financial statements, comprising the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of financial position, consolidated statement of
cash flows and consolidated statement of changes in equity and accompanying notes, are in
accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standards and the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
(b) give a true and fair view of the consolidated financial position as at 30 June 2019 and of its
performance for the year ended on that date.
In the Directors’ opinion, there are reasonable grounds to believe that the company will be able
to pay its debts as and when they become due and payable.
The Directors have been given the declarations by the chief executive officer and chief financial
officer required by s295A.
Note 1(a) confirms that the financial standards also comply with the International Financial
Reporting Standards as issued by the International Accounting Standards Board
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and
on behalf of the Directors by:
Mr Mark Freeman
Director
Perth, 25 September 2019
46
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Grand Gulf Energy Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Grand Gulf Energy Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Recoverability of oil and gas properties
Key audit matter
How the matter was addressed in our audit
The Group’s carrying value of oil and gas
We evaluated management’s assessment of impairment indicators
properties as disclosed in Note 10 is a key
at 30 June 2019 in accordance with AASB 136: Impairment of
audit matter as the assessment of carrying
Assets. Our work included but was not limited to the following
value requires management to exercise
procedures:
judgement in identifying indicators of
impairment for the purposes of
determining whether the assets need to be
tested for impairment.
·
Obtaining and reviewing the reserve report from
management’s external expert to determine whether
they indicate a significant change that would impact the
value of the asset. This included assessing the
competency and objectivity of management’s expert;
·
Benchmarking and analysing management’s oil price
assumptions against external market data and assessing
the reasonableness of the discount rate applied to
determine whether there is an indication a significant
change would impact the carrying value of the asset;
·
Reviewing the Director’s minutes and ASX announcements
for evidence of consistency of information with
management’s assessment of the carrying value;
·
Considering whether there were any other facts and
circumstances that existed to indicate impairment testing
was required; and
·
Assessing the adequacy of the related disclosures in Note
10 to the financial statements.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 17 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Grand Gulf Energy Limited, for the year ended 30 June
2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 25 September 2019
CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2019
Grand Gulf Energy's Board and Corporate Governance
Introduction
Since the introduction of the ASX Corporate Governance Council’s Principles of Good Corporate
Governance and Best Practice Recommendations ("ASX Guidelines" or “the Recommendations”), Grand
Gulf Energy Limited ("Company") has made it a priority to adopt systems of control and accountability as
the basis for the administration of corporate governance. Some of these policies and procedures are
summarised in this report. Commensurate with the spirit of the ASX Guidelines, the Company has followed
each Recommendation where the Board has considered the Recommendation to be an appropriate
benchmark for corporate governance practices, taking into account factors such as the size of the
Company, the Board, resources available and activities of the Company. Where, after due consideration,
the Company's corporate governance practices depart from the Recommendations, the Board has offered
full disclosure of the nature of, and reason for, the adoption of its own practice.
The Company has adopted systems of control and accountability as the basis for the administration of
corporate governance. The Board of the Company is committed to administering the policies and
procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate
with the Company's needs.
Further information about the Company's corporate governance practices is set out on the Company's
website at www.grandgulfenergy.net. In accordance with the recommendations of the ASX, information
published on the Company's website includes:
•
•
•
•
•
•
•
•
Board Charter;
Code of Conduct;
Communications Strategy Policy;
Continuous Disclosure Policy;
Securities Trading Policy;
Risk Policy;
Remuneration Policy; and
Remuneration Committee Charter.
Explanation for Departures from Best Practice Recommendations
During the Company's 2014 financial year the Company has complied with the Corporate Governance
Principles and the corresponding Best Practice Recommendations as published by the ASX Corporate
Governance Council ("Corporate Governance Principles and Recommendations") and has adopted the
revised Principles and Recommendations taking effect from reporting periods beginning on or after 1
January 2008. Significant policies and details of any significant deviations from the principles are specified
below.
Corporate Governance Council Recommendation 1
Lay Solid Foundations for Management and Oversight
The Role of the Board and the Board Charter
The Board's Duties
As the Board acts on behalf of and is accountable to the shareholders, the Board seeks to identify the
expectations of the shareholders, as well as other regulatory and ethical expectations and obligations and
strives to meet those expectations. In addition, the Board is responsible for identifying areas of significant
business risk and ensuring arrangements are in place to adequately manage those risks.
The role of the Board is to oversee and guide the management of Grand Gulf Energy with the aim of
protecting and enhancing the interests of its shareholders and taking into account the interests of other
stakeholders including employees and the wider community.
In complying with Recommendation 1.1 of the Corporate Governance Council, the Company has adopted
a formal Board Charter which clearly establishes the relationship between the Board and management
and describes their functions and responsibilities. A summary of the Board Charter has been posted on
the corporate governance section of the Company’s website.
The Board is responsible for setting the strategic direction of the Company, establishing goals for
management and monitoring the achievement of those goals. The Executive Director is responsible to
the Board for the day to day management of the Company.
50
CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2019
Corporate Governance Council Recommendation 2
Structure the Board to Add Value
The Composition of Grand Gulf Energy's Board
The composition of the Board is determined in accordance with the following principles and guidelines:
•
•
•
the Board should comprise at least 3 directors;
the Board should comprise directors with an appropriate range of qualifications and expertise; and
the Board shall meet regularly and follow meeting guidelines set down to ensure all directors are
made aware of, and have available all necessary information, to participate in an informed
discussion of all agenda items.
As at the date of this report, the Board comprises an executive chairperson, two executive directors and
one non-executive director. Details of the Directors are set out in the Directors’ Report.
Independence of Directors
The Board has reviewed the position and associations of each of the four Directors in office at the date of
this report and considers that one of the directors is independent. In considering whether a director is
independent, the Board has regard to the independence criteria in ASX Best Practice Recommendations
Principle 2 and other facts, information and circumstances that the Board considers relevant. The Board
assesses the independence of new directors upon appointment and reviews their independence, and the
independence of other directors, as appropriate.
The Board considers that Mr Keenihan meets the criteria in Principle 2. He has no material business or
contractual relationship with the Company, other than as a director and no conflicts of interest which could
interfere with the exercise of independent judgement.
The Board considers that Mr Morgan does not meet the criteria in Principle 2 as he is deemed to be a
substantial shareholder of the Company as outlined by the Corporations Act 2001.
Mr Freeman and Mr Boss are employed in an executive capacity by the Company and so cannot be
considered to be independent.
The Grand Gulf Energy Board did not have a majority of independent directors throughout the entire
financial year, and therefore was not in compliance with Best Practice Recommendation 2.1 for the entire
period. The Board considered that given the Company's stage of development and resources available
that it was not in the best interests of maximising the efficiency of the Board and developing the Company's
business to have a majority independent Board.
The directors will continue to monitor the composition of the Board to ensure its structure remains
appropriate and consistent with effective management and good governance.
Independent Chairman
The Chairman is not considered to be an independent director and as such Recommendation 2.2 of the
Corporate Governance Council has not been complied with. However, the Board believes that Mr Morgan
is the most appropriate person for the position as Chairman because of his industry experience and proven
track record as a public company director.
Roles of Chairman and Chief Executive Officer
The roles of Chairman and Chief Executive Officer are exercised by different individuals, and as such the
Company complies with Recommendation 2.3 of the Corporate Governance Council.
Nomination and Appointment of New Directors
The Board does not have a separate Nomination Committee as the selection and appointment process
for Directors is carried out by the full Board in accordance with the Company’s Constitution. The Company
is not of a sufficient size to warrant a separate committee.
The Constitution of the Company requires one third of the directors, other than the Executive Director, to
retire from office at each Annual General Meeting. Directors who have been appointed by the Board are
required to retire from office at the next Annual General Meeting and are not taken into account in
determining the number of directors to retire at that Annual General Meeting.
51
CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2019
Grand Gulf Energy's Board Meetings
The Board met 3 times between 1 July 2017 and 30 June 2018.
The Board meets formally at least 4 times each year, and from time to time meetings are convened outside
the scheduled dates to consider issues of importance.
Directors’ attendance at Board and Committee meetings is in the directors’ report.
Performance Review
The Board's policy with respect to performance evaluation is to review its performance and that of its
Committees and executive management at least annually. The Chairman discusses with each director,
on a one on one basis, their contribution to the Board.
The method of the assessment is to be set by the Board.
Due to the changes in Board structure and strategic direction of the business the Board has not undertaken
a performance evaluation of itself or each director before the date of this annual report.
The Board will continue to review the need for a performance evaluation to be conducted.
Board Members' Rights to Independent Advice
The Board has procedures to allow directors, in the furtherance of their duties as directors or members of
a Committee, to seek independent professional advice at the Company's expense, subject to the prior
written approval of the Chairman.
Education
All Directors are encouraged to attend professional education courses relevant to their roles.
Corporate Governance Council Recommendation 3
Promote Ethical and Responsible Decision Making
The Board actively promotes ethical and responsible decision making.
Code of Conduct
The Board has adopted a Code of Conduct that applies to all employees, executives and Directors of the
Company. This code covers a broad range of issues and refers to those practices necessary to maintain
confidence in Grand Gulf Energy's integrity, including procedures in relation to:
•
•
•
•
•
•
•
•
•
•
compliance with the law;
financial records;
contributions to political parties, candidates or campaigns;
occupational health and safety;
confidential information;
conflict of interest;
efficiency;
equal opportunity;
corporate bribery; and
membership to industry and professional associations.
The Code directs individuals to report any contraventions of the Code to their superior or the Executive
Director.
The Company is committed to the highest level of integrity and ethical standards in all business practices.
Directors and employees must conduct themselves in a manner consistent with current community and
corporate standards and in compliance with all legislation. In addition, the Board subscribes to the
Statement of Ethical Standards as published by the Australian Institute of Company Directors.
All Directors and employees are expected to act with the utmost integrity and objectivity, striving at all
times to enhance the reputation and performance of the Company.
52
CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2019
Diversity Policy
The Board has adopted a Diversity Policy as per Recommendation 3.2. The Diversity Policy addresses
equal opportunities in the hiring, training and career advancement of directors, officers and employees.
The Diversity Policy outlines the processes by which the Board will set measurable objectives to achieve
the aims of its Diversity Policy, with particular focus on gender diversity within the Company.
The Company is committed to ensuring a diverse mix of skills and talent exists amongst its directors,
officers and employees and is utilised to enhance the Company’s performance.
The Board is responsible for monitoring Company performance in meeting the Diversity Policy
requirements, including the achievement of diversity objectives.
Gender Diversity
The Company is focusing on the participation of women on its Board and within senior management. The
Board is in the process of determining appropriate measurable objectives for achieving gender diversity.
Women Employees, Executives and Board Members
The Company and its consolidated entities have two (2) female employees/executives:
Its financial controller; and
its office manager;
which represent approximately 33% of the total employees, executives and/or board members of the
Company and its consolidated entities. There are currently no female members of the Board of the
Company.
Based on the above information the Company believes it is fully compliant with Recommendations 3.
Securities Trading by Grand Gulf Energy Directors and Employees
The Grand Gulf Energy Securities Trading Policy summarises the law relating to insider trading and sets
out the policy of the Company on directors, officers, employees and consultants dealing in securities of
Grand Gulf Energy.
A summary of the Securities Trading Policy has been posted to the corporate governance section of the
Company’s website. This policy is provided to all directors and employees and compliance with it is
reviewed on an ongoing basis in accordance with the Company’s risk management systems.
Corporate Governance Council Recommendation 4
Safeguarding Integrity in Financial Reporting
Financial Reporting
Consistent with ASX Principle 4.1, the Company's financial report preparation and approval process for
the financial year ended 30 June 2018 involved both the Executive Director and the Company Secretary
providing detailed representations to the Board covering:
•
•
•
•
compliance with Grand Gulf Energy's accounting policies and relevant accounting standards;
the accuracy of the financial statements and that they provide a true and fair view;
integrity and objectivity of the financial statements; and
effectiveness of the system of internal control.
Audit and Compliance Committee
The Board reviews the performance of the external auditors on an annual basis and meets with them
during the year to review findings and assist with Board recommendations.
53
CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2019
The Board no longer has a separate Audit Committee with a composition as suggested in the best practice
recommendations. The full Board carries out the function of an audit committee.
The Board believes that the Company is not of a sufficient size to warrant a separate committee and that
the full board is able to meet objectives of the best practice recommendations and discharge its duties in
this area.
The Board is directly responsible for the appointment, reappointment or replacement (subject, if
applicable, to shareholder ratification), remuneration, monitoring of effectiveness, and independence of
the external auditors, including resolution of disagreements between management and the auditor
regarding financial reporting.
Corporate Governance Council Recommendation 5
Make Timely and balanced disclosure
Continuous Disclosure
Grand Gulf Energy has established policies and procedures in order to comply with its continuous and
periodic disclosure requirements under the Corporations Act 2001 (Cth) and the ASX Listing Rules. The
Grand Gulf Energy Board has adopted a formal Continuous Disclosure Policy, a summary of which is
available from the corporate governance section of the Company’s website.
The Company Secretary has primary responsibility for the disclosure of material information to ASIC and
ASX and maintains a procedural methodology for disclosure, as well as for record keeping.
Grand Gulf Energy's Continuous Disclosure Policy requires all management to notify the Executive
Director, or the Company Secretary in his absence, of any potentially material information as soon as
practicable. The Policy also sets out what renders information material.
Corporate Governance Council Recommendation 6
Respect the Rights of Shareholders
Shareholder Communications
The Board's formal policy on communicating with shareholders, its Communications Strategy Policy, is
available from the corporate governance section of the Company’s website and supplements Grand Gulf
Energy's Continuous Disclosure Policy.
The aim of the Communications Strategy Policy is to make known Grand Gulf Energy's methods for
disclosure to shareholders and the general public. The Policy details the steps between disclosure to
ASIC and ASX and communication to shareholders, with the Company's website playing an important role
in Grand Gulf Energy's communications strategy.
The Board reviews this policy and compliance with it on an ongoing basis.
To add further value to Grand Gulf Energy's communications with shareholders, the external auditor will
be requested to attend the Company's AGM and be available to answer shareholders' questions about
the conduct of the audit and the preparation of the auditor's report.
Corporate Governance Council Recommendation 7
Recognise and manage risk
Risk Identification and Management
The Grand Gulf Energy Board accepts that taking and managing risk is central to building shareholder
value. The Board manages Grand Gulf Energy's level of risk by adhering to a formal Risk Policy
statement. The Grand Gulf Energy Risk Policy statement is available from the corporate governance
section of the Company’s website.
The Board has primary responsibility for oversight of the financial risks of the Company with particular
emphasis on Grand Gulf Energy's accounting, financial and internal controls. The Board will receive
regular reports from the external auditor on critical policies and practices of the Company and in relation
to alternative treatments of financial information.
The Company employs executives and retains consultants each with the requisite experience and
qualifications to enable the Board to manage the risks to the Company. The Board reviews risks to the
Company at regular Board meetings.
Key identified risks to the business are monitored on an ongoing basis as follows:
54
CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2019
• Business risk management
The Company manages its activities within budgets and operational and strategic plans.
•
Internal controls
The Board has implemented internal control processes typical for the Company’s size and stage
of development. It requires the senior executives to ensure the proper functioning of internal
controls and in addition it obtains advice from the external auditors as considered necessary.
•
Financial reporting
Directors approve an annual budget for the Company and regularly review performance against
budget at Board Meetings.
• Operations review
Members of the Board regularly visit the Company’s exploration project areas, reviewing both
geological practices, and environmental and safety aspects of operations.
• Environment and safety
The Company is committed to ensuring that sound environmental management and safety
practices are maintained on its exploration activities.
The Company’s risk management strategy is evolving and will be an ongoing process and it is recognised
that the level and extent of the strategy will develop with the growth and change in the Company’s
activities.
Risk Reporting
As the Board has responsibility for the monitoring of risk management it has not required a formal report
regarding the material risks and whether those risks are managed effectively therefore not complying with
Recommendation 7.2 of the Corporate Governance Council. The Board believes that the Company is
currently effectively communicating its significant and material risks to the Board and its affairs are not of
sufficient complexity to justify the implementation of a more formal system for identifying, assessing
monitoring and managing risk in the Company.
The Company does not have an internal audit function.
Executive Director and Chief Financial Officer Written Statement
The Board requires the Executive Director and the Company Secretary provide a written statement that
the financial statements of company present a true and fair view, in all material aspects, of the financial
position and operational results and have been prepared in accordance with Australian Accounting
Standards and the Corporation Act. The Board also requires that the Executive Director and Company
Secretary provide sufficient assurance that the declaration is founded on a sound system of risk
management and internal control, and that the system is working effectively.
The declarations have been received by the Board, in accordance with Recommendation 7.3 of the
Corporate Governance Council.
Corporate Governance Council Recommendation 8
Remunerate Fairly and Responsibly
Remuneration for directors and executives
A brief discussion on the Company's remuneration policies and retailed disclosure of the remuneration
paid to directors and executives is set out on in the directors’ report.
Remuneration paid to the Company's directors and executives is determined with reference to the market
level of remuneration for other listed oil and gas companies both in Australia and the USA. This
assessment is undertaken with reference to advice and comment provided by various search executive
firms operating in the sector.
55
CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2019
Bonuses which may be paid to the Company's directors and executives will be determined and paid on
the basis of the Company’s performance reflected through increases in the market capitalisation of the
Company and upon successful capital raisings.
Share options are awarded under the Employee Share Option Plan to the Company's directors and
executives and are determined on the individuals’ performance against milestones, the level of
involvement in achieving the corporate milestones and goals and to an extent the relativity between
executives.
Distinguish Between Executive and Non-Executive Remuneration
Total remuneration for non-executive directors is determined by resolution of shareholders. The Board
determines actual payments to directors and reviews their remuneration annually, based on independent
external advice, relativities and the duties and accountabilities of the directors. The maximum available
aggregate remuneration approved for non-executive directors is $200,000.
Non-executive directors may provide specific consulting advice to the Company upon direction from the
Board. Remuneration for this work is made at market rates.
Non-executive directors do not receive any other retirement benefits other than a superannuation
guarantee contribution required by government regulation, which is currently 9% of their fees. Non-
executive directors do participate in the Company's Employee Share Option Plan, given the Company's
size and stage of development and the necessity to attract the highest calibre of professionals to the role,
whilst maintaining the Company's cash reserves.
The equity based executive remuneration is made under the Company's Employee Share Option Plan
(“Plan”).
Remuneration Committee
The Board determines all compensation arrangements for Directors. It is also responsible for setting
performance criteria, performance monitors, share option schemes, incentive performance schemes,
superannuation entitlements, retirement and termination entitlements and professional indemnity and
liability insurance cover.
The Board has determined that a separate Remuneration Committee is not warranted due to the size and
nature of the Company.
The Board ensures that all matters of remuneration are in accordance with Corporations Act requirements,
by ensuring that none of the Directors participates in any deliberations regarding their own remuneration
or related issues.
Additional information included in accordance with the Listing Rules of the Australian Stock Exchange
Limited. The information is current as at.
56
ASX INFORMATION
FOR THE YEAR ENDED 30 JUNE 2019
1.
a)
b)
c)
Statement of issued capital
Distribution of fully paid ordinary shares as at 20 September 2019
Size of Holding
1
1,001
5,001
10,001
-
-
-
-
100,001 and
1,000
5,000
10,000
100,000
Over
Number of
Shareholders
66
16
14
198
382
─────────
676
═════════
Shares
Held
6,710
51,489
116,150
11,566,319
755,758,202
─────────
767,498,870
═════════
There are 361 shareholders holding unmarketable parcels represented by shares.
There are no restrictions on voting rights attached to the ordinary shares. On a show of hands
every member present in person shall have one vote and upon a poll, every member present or by
proxy shall have one vote for every share held.
2.
Substantial shareholders
The names of substantial shareholders who had notified the Company in accordance with section
671B of the Corporations Act 2001 are:
Craig Ian Burton
Charles Morgan
3. Quotation
26.10%
19.88%
Listed securities in Grand Gulf Energy Limited are quoted on the Australian Stock Exchange.
57
ASX INFORMATION
FOR THE YEAR ENDED 30 JUNE 2019
Top Twenty Shareholders as at 20 September 2019
The twenty largest shareholders hold 71.10% of the total issued ordinary shares in the Company as at 20
September 2019
Name
CHARLES WAITE MORGAN
1
ALBA CAPITAL PTY LTD
2
SKYE EQUITY PTY LTD
3
SACHA INVESTMENTS PTY LTD
4
MR THOMAS ZDUN
BNP PARIBAS NOMINEES PTY LTD
MR GABRIEL HEWITT
ALBA CAPITAL PTY LTD
20
8
CRAIG BURTON
MRS ELISA BRUNACCI
9 MR STUART CHARLES GRACE + MR TRENT CHRISTIAN GARDNER
10
MR DOUGAL JAMES FERGUSON
MR LEI DA TAO
KANGSAV PTY LIMITED
CRIMSON HOLDINGS PTY LTD
11
15
MR PAUL WILLIAM ATKINS
LIFWARD PTY LIMITED
MR KRISHNA RAVICHANDRAN & MR SRINIVASAN
RAVICHANDRAN
MR
KRISHN
A
RAVICH
NDRAN
&
MR JAMES STEELE MEEKE
MR RAYMOND PHILIP JEPP + MRS KATE MARY SHAW
19
Number
of Shares
% of Issued Shares
152,600,476
109,660,669
67,917,114
37,598,974
30,125,000
29,219,646
24,961,334
14,251,733
8,482,220
8,000,000
7,800,000
7,000,000
6,700,000
6,541,768
6,400,000
6,362,800
6,047,594
19.88
14.29
8.85
4.90
3.93
3.81
3.25
1.86
1.11
1.04
1.02
0.91
0.87
0.85
0.83
0.83
0.79
6,000,000
0.78
5,000,000
5,000,000
0.65
0.65
545,69,328
71.10
58