IEC Electronics Corp.
Annual Report 2020

Plain-text annual report

Intra Energy Corporation Limited (ABN 65 124 408 751) Annual Financial Report For the year ended 30 June 2020 For personal use onlyContents Corporate Directory Chairman’s Report Review of Operations Directors’ Report Remuneration Report Auditor’s Independence Declaration Directors’ Declaration Independent Auditor’s Report Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Notes to the Financial Statements ASX Additional Information Page 2 Page 3 4 6 9 14 22 23 24 29 30 31 32 33 71 For personal use onlyCorporate Directory DIRECTORS Graeme Robertson (Chairman) Troy Wilson Alan Fraser Marc Schwartz (appointed 31 July 2019) James Shedd (Managing Director) COMPANY SECRETARY Rozanna Lee REGISTERED OFFICE - AUSTRALIA Level 40, 2 Park Street Sydney NSW 2000 Email: info@intraenergycorp.com.au REGISTERED OFFICE - TANZANIA Amverton Tower Plot No 1127 Chole Road, Masaki PO Box 23059 Dar es Salaam, Tanzania REGISTERED OFFICE - MALAWI Room number 15 Africana Complex City Centre Lilongwe, Malawi SHARE REGISTRY Link Market Service Limited Level 12, 680 George Street Sydney NSW 2000 Telephone: (02) 8280 7111 Facsimile: (02) 9287 0309 AUDITORS Hall Chadwick Level 40, 2 Park Street Sydney NSW 2000 Telephone: (02) 9263 2600 Facsimile: (02) 9263 2800 INTERNET ADDRESS www.intraenergycorp.com.au ABN 65 124 408 751 ASX CODE (IEC) Page 3 For personal use onlyChairman’s Report On behalf of the Board of Directors of Intra Energy Corporation Limited ("IEC", "Intra Energy" or "the Company"), it is my pleasure to present my comments on the operations and the future directions of the Company for this Annual Financial Report for 2020. Intra Energy Corporation Limited has established Intrafrican Resources Limited (Intrafrican) as a wholly-owned subsidiary of IEC, registered in Mauritius, to diversify the Company’s activities away from the production of coal in Tanzania and into the development of gold resources in Mozambique. The reasons for this strategic move are manifold. Thermal coal as a fuel is becoming increasingly unpopular in the world and prices are very low and funding very difficult. The ability to return anything to shareholders has become impossible in Tanzania due to declining markets and to Government imposts considered by the Company to be arbitrary and unfair, and a partner intent on increasing its equity in Tancoal Energy Limited (Tancoal), the 70% owned subsidiary of IEC Tanzania, without payment or any meaningful contribution. On the other hand, Intrafrican has invested in an attractive gold concession in Mozambique, a nation mainly unexplored but with huge mineral resources and a regulatory framework conducive to the realities of mining. Intrafrican currently owns 15% of Intra Minerals Limited (IML), a company registered in Mauritius which owns 95% of the exciting Minas Do Lurio Gold Project in central/northern Mozambique. Intrafrican has entered into an Investment Agreement with IML to buy an additional 30% of shares in IML for the investment of US$1.3 Million, all of which will be used for exploration to determine the best areas for development. This is in addition to US$700,000 spent over the Financial Year 2020 by IML to establish proof of concept which is referred to in the following Directors Report. Intrafrican has the right of first refusal over a further 15% of shares. IML has engaged an Operations Consultant with “hands on” experience in establishing gold mining operations in Southern Africa in conditions similar to the Minas Do Lurio project to assist Winston Theler, the COO. Intrafrican has mandated Bellhouse Capital, an UK-based Financial Advisor to prepare a Presentation and advise on a capital raising route for Intrafrican. A Listing Advisor has been engaged to handle the potential IPO of Intrafrican on the Second Board (DEM) of the Stock Exchange of Mauritius (SEM). A format is being researched to allow IEC Shareholders to participate in the IPO of Intrafrican at a discounted rate. IEC’s 70% ownership of Tancoal Energy Limited (“Tancoal”) which operates the Ngaka coal mine in south west Tanzania which is also 30% owned by the National Development Corporation of Tanzania (“NDC”) is the dominant coal supplier to industrial energy users in the Eastern African region, the mine is the largest operational coal mine in Tanzania and East Africa, and is manned exclusively by Tanzanians. Tancoal’s Sales were down by 34% in 2020 due to the effect of Covid-19 on the business of both domestic and export customers and competition from small miners as sales were 532,057 (2019: 788,702) tonnes. Sales revenue for 2020 was A$37.770 million (2019: A$52.277 million). Sales were mainly to customers in Tanzania (69%), with the remainder to customers in Kenya (19%) and Rwanda and Uganda (12%). 51% of sales were made to the cement industry, 36% to the ceramic industry and 13% to textile manufacturers and other industries. Tancoal’s 2020 production was 496,393 tonnes (2019: 748,874) tonnes. Stocks were maintained sufficiently for the demand during the year. The closed Malawi operations were held for sale during the year but there were no serious buyers and when the mining licence was up for renewal it was relinquished with the companies holding these assets expected to be wound up. IEC recorded a loss after tax and before minorities of (A$17,186,000 (2019: profit of A$4,535,000). The loss included A$15,484,000 for the assessment by the Ministry of Minerals in Tanzania of US$10.4 million (US$6.93m royalty and inspection fee and US$3.47m penalty) for past charges for royalty on transport to customers' business premises from 2011 to 2019 to be paid over four years. As Tancoal does not transport any coal as it is sold and taken by customers at the Tancoal stockpile using their own trucking contractors, this can only be a mechanism to receive royalties from mining companies. Discussions continue with the Ministry of Minerals for a moratorium on the assessment until cash flow improves. The loss also included A$877,000 for other tax assessments for prior years and A$457,000 for doubtful debts. The remaining loss for the 2020 year of A$368,000 reflects the difficult operating conditions during the year and includes A$2,658,000 (US$1,783,000) for the cost of royalty and Page 4 For personal use onlyChairman’s Report clearance fees which were paid on behalf of customers for their cost of transportation during the year. Operating cash flow was very tight during the year. The final three payments to the former contractor Caspian are under discussion to extend the payment plan due to the tight cash flow. IEC continued to maintain its active presence in community development through the Government approved Local Content Plan and Tancoal’s partnership with the local Women's Group and various other projects and support given to the local communities. Tancoal’s motto has always been “Tanzanian Coal for Tanzanian Development” and is proud to be supporting the Government’s industrialisation agenda both through domestic supply and also the creation of export markets to benefit Tanzania with foreign sourced revenue. However, with new royalty on road transport, Tanzania is likely to lose its export revenue. IEC is pleased to see the development of the Tancoal Mine to be entirely managed by Tanzanians, one of very few mining operations in Tanzania to be run by Tanzanians for Tanzania. IEC has been a substantial contributor to sustainable development of the Tanzanian economy and the following chart shows. The taxes, royalties and imposts paid in Tanzania for FY 2020 A$7.0m (FY 2019: A$9.3 m). The conditions being imposed on Tancoal and the impact of covid-19 have contributed to a difficult year for Tancoal. The development of Intrafrican and gold exploration interest through IML promises to be the sustainable future for IEC. Sincerely Graeme Robertson Chairman – Intra Energy Corporation Limited Page 5 For personal use onlyReview of Operations MOZAMBIQUE GOLD IEC’s fully owned subsidiary Intrafrican Resources Limited (“Intrafrican”), registered in Mauritius, has invested in Intra Minerals Limited (“IML“), a company registered in Mauritius. Intrafrican currently owns 15% of IML which is the 95% owner of the Minas Do Lurio Gold Project in Mozambique. The exploration project currently comprises a 168.56 km2 large prospecting license (8416L) in the historically underexplored Lúrio Belt, an initial trenching and sampling program has been completed at Savane, a prospective area within the prospecting license. A new gold bearing area has been located approximately 2.5 kilometres from the original Savanne Area. Samples of quartz and soil have been taken, crushed, washed and processed indicating grades between 4 and 6 g/t. Samples from Savanne are being collected to be sent to SGS in South Africa for analysis. An independent expert, Benedikt Steiner (CGeol EurGeol), has been retained by IML to advise on the project and has completed a non-JORC technical report summarising and evaluating the exploration activities on the project from 2016 to 2020. Mr Steiner’s initial observations confirmed the validity of the exploration project, which is currently considered to be a potential open-cut mining target, and represents an encouraging first-mover opportunity into a much larger prospective area. IEC has engaged Mr Kim Stanton-Cook, an exploration/development geologist with 45 years’ experience in mineral exploration industry. Mr Stanton-Cook expertise covered a wide region from Australia to the Americas, Asia to Africa and carried the responsibility for the development of well- known Australian mining operations as a Chief Geologist and Exploration Manager. His upcoming role is to act as its consultant in the development of the Lurio Gold Project. Mr Stanton-Cook has reviewed work done to date and has advised that the Project has merit and should move into the drilling stage which gives solid reason why the area should be considered as highly prospective. MINING OPERATIONS IEC’s 100% owned subsidiary, Intra Energy Tanzania Limited (“IETL”), owns a 70% interest in Tancoal Energy Limited (“Tancoal”), a joint venture with the National Development Corporation of Tanzania (“NDC”), which holds the remaining 30% interest. Tancoal was granted a Mining Licence (“ML”) by the Tanzanian Government on 18 August 2011 and commenced mining and supply of coal to domestic and regional industrial customers in Tanzania, Kenya, Uganda, Rwanda, Zambia and Malawi. IEC’s flagship project, the Tancoal Mine, is a project of national significance, and remains the major operating coal mine in Tanzania. Overburden Stripped (BCM) Coal mined (tonnes) Coal Sold (tonnes) FY20 2,297,569 496,393 523,057 FY19 3,344,676 748,874 788,702 Tancoal produces a high quality thermal coal with an energy of 6,000K~6,300Kcals/kg which consistently meets client specifications. Tancoal has been producing and selling coal in Tanzania since 2011. Coal from the mine is transported on a 52 kilometre haul road to the Sales Point at Kitai where the coal undergoes final processing and is then sold and loaded into trucks provided by the respective consumers. From the stockpile at the Kitai Sales Point the coal is loaded onto customers trucks Free On Transport (FOT), which is where change of ownership takes place. Royalties have always been paid at the Sales Point where the Government calculates the royalty and issues an invoice for payment. The Tanzania Mining Commission has demanded that Tancoal charge Royalty on the Transportation of the coal to the customers final destination, wherever that may be, both domestically and internationally. The Mining Commission set a standard cost of Page 6 For personal use onlyReview of Operations transport to the customers plant at a rate per tonne per kilometre of $0.065 for domestic customers and $0.083 for export customers for the 2020 year. The cost of the royalty and clearance fees on transport cost for the 2020 year was A$2.66m (US$1.78m). MALCOAL (MALAWI) Operations and expenditure have ceased and rehabilitation of the site is in its final stage. The mining licence has been relinquished. OCCUPATIONAL HEALTH, SAFETY AND ENVIRONMENT (“OHSE”) OHSE is an important priority for IEC. The mine operations are subject to an Environmental Impact Assessment Plan and the operations are regularly audited by the relevant regulatory authorities. Tancoal continued upgrading facilities at the mine site and no major issues were identified for the financial year. The annual tree planting programme again saw Tancoal transplant a total of 10,000 tree seedlings of indigenous species. Trees were planted around the mine site and stockpile area at the mine, villages surrounding the mine site, the haul road and stockpile area at the Kitai sales point and others were given to the Kitai Prison which is close to the Kitai sales point. Tancoal has worked with a consultant to meet the requirements for the Mine Closure Plan as directed by the Mining Commission including topographic survey and aerial mapping, waste dump design, ROM pad design and mine plan review. In the new Mining License Area (ML 610/2020) Tancoal has conducted an environmental audit and the granting of the environmental certificate is in process. Storm water trenches and ponds have been continually upgraded for the rainy season in accordance with the mine development plan. The monitoring of acid water and suppression of mine dust continues. Blasting is controlled by monitoring sound level, vibration and dust emission during blasting to ensure they do not exceed the required standard set by Tanzania Bureau of Standard (TBS). The addition of the Speed Detector (Gun) has provided Tancoal with better control of the haulage between the mine site and Sales Point reducing roll-overs and other speed related accidents. EXPLORATION Coal exploration is concentrated on tenements being maintained in good standing and supporting mine development work. Gold exploration continues through an associated company, Intra Minerals Limited (Mauritius) in the Cabo Delgado and Nampula Provinces of Mozambique. The initial gold exploration programme ended with the advent of the wet season in December/January. Gold and other minerals are being explored by Intrafrican Resources Limited, formerly known as AAA Drilling Limited (Mauritius) which will host the diversification of IEC into mineral exploration and services. Project Tanzania Tancoal – North Tancoal – South Total JORC resources Table 1 - Intra Energy JORC resources Measured (Mt) Indicated (Mt) Inferred (Mt) Total (Mt) 51.00 25.53 76.53 73.70 71.80 145.50 71.73 63.00 134.73 196.43 160.33 356.76 COMPETENT PERSON STATEMENT MBALAWALA/MBUYURA-MKAPA The information in this report relates to Exploration Results, Mineral Resources or Ore Reserves based on the Mbalawala Mine Bankable Feasibility Study with related infrastructure feasibility options as at 31 August 2010, the Mbalawala Coal Mine Bankable Feasibility Study as at 13 August 2010, the Resource Model Assessment and Review, Ngaka Project Area as at 20 July 2010 and the Updated Raw Coal Resource Estimate provided by JB Mining Services Pty Ltd dated 30 September 2017 and 30 November 2017 and have been reviewed by Mr Phillip Sides. Mr Sides is a Member of the Australian Institute of Geoscientists and as such qualifies as a Competent Page 7 For personal use onlyReview of Operations Person as defined by the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves ~ The JORC Code ~ 2012 Edition”. Mr Sides is a consultant to JB Mining Services Pty Ltd and has sufficient experience to qualify as a Competent Person as defined in The JORC Code. Mr Sides consents to the inclusion of the matters based on his information in the form and context in which it appears. CORPORATE Operating cash flow was restricted in FY 2020 due to the difficult operating conditions and the implementation of royalty and clearance fees on the cost of transport to customers’ premises. The last three payments on the settlement to the Caspian contractor have been delayed and a new payment plan is being discussed. Tancoal’s banking facilities with KCB Bank of Tanzania were extended to September 2020. Marc Schwartz joined the Board on 31 July 2019. CORPORATE SOCIAL RESPONSIBILITY (“CSR”) COMMUNITY At IEC our approach to corporate social responsibility (“CSR”) is about partnership with local communities to develop initiatives to provide social and economic development as well as environmental protection and conservation in the areas IEC operate. By developing partnerships with the communities, IEC is helping to foster sustainable development, share the socio-economic benefits from its operations and alleviate poverty. Some of the key challenges associated with investing in Africa relate to governance, capacity building, human rights, environment and social issues. The mining industry in Tanzania is committed to continue to work in conjunction with the government and local communities to put in place programs and develop projects that have a tangible outcome, and priority is given to projects that alleviate poverty, contribute to building skills and support women’s and youth economic empowerment, especially through education and business ownership. The Tanzania government implemented new rules in FY 2019 requiring a Corporate Social Responsibility (“CSR”) plan to be submitted and approved for each year. Tancoal’s CSR plan for 2020 has been submitted. The Mbalawala Women’s Organisation (“MWO”) in Tanzania that has been supported by the company for many years continues to go from strength to strength as their operations expand with the growth of the mine. Page 8 For personal use onlyDirectors Report DIRECTORS The names and details of the Company’s Directors in office during the financial year and until the date of this report are as follows. The Directors were in office for the entire period unless otherwise stated. Name Position Description Graeme Robertson BA, FAICD, MAIE Non-Executive Chairman Troy Wilson Non-Executive Director (appointed 2 October 2017) Graeme joined the Board in November 2010 as Non-Executive Chairman and was appointed Executive Chairman in January 2011 and Non-Executive Chairman in October 2014. He has over forty years’ experience infrastructure and power development industries. Graeme is currently Chairman of the Intrasia Capital Pte Ltd in Singapore with corporate and financial services operating from Mauritius into Africa. the coal, in From 1983 to 2005 Graeme was CEO and Managing Director of New Hope Corporation Limited (ASX:NHC). During this period he pioneered the development of major international companies including as President Director of Adaro Indonesia, the largest single open cut coal mine in the Southern Hemisphere, President Director of Indonesia Bulk Terminal, a 12 mtpa capacity bulk coal port and as an advisor to the development of the 1,230MW Paiton Power station, the first IPP in Indonesia. His career has spanned both public and private developments including directorships with the Port of Brisbane Authority and Washington H. Soul Pattinson & Co Ltd, one of Australia’s oldest listed companies as well as AfrAsia Bank Ltd in Mauritius where he is currently Chairman of the AfrAsia Foundation for education to the underprivileged. Graeme was the recipient of the Asia 500 Award in 2000 and the Coaltrans Lifetime Achievement Award in 2010 for his contribution to the coal industry. He is a Fellow of the Australian Institute of Company Directors and a Member of the Australian Institute of Energy. Troy is the Managing Director and owner of Gigajule Energy Pty Ltd and is widely recognized in Australia and internationally as a Coal Bed Methane (CBM) completion and production expert with over 16 years’ experience in this field. Troy’s most recent experience includes the development of CBM in Africa, flowing gas from the first Surface to Inseam Wells in Botswana, being the lead in the production enhancement team taking the gas field from 8tjs to 17tjs in 6months for Westside Corporation. He has previously been Operations Manager with Mitchell Drilling Corporation, developing the production for Peabody (North Goonyella) and A.J. Lucas. Troy currently sits on the Board of Intrasia Securities limited and is advising several CBM development companies in South Africa, Botswana, Zimbabwe and in Australia. Alan Fraser Non-Executive Director (appointed 24 August 2018) Mr Fraser has over 30 years’ experience in greenfield mineral exploration, project management and mine construction. He has managed base metal and gold exploration projects through the stages of tenement acquisition, joint venture negotiation, obtaining regulatory approvals and the management of field exploration Page 9 For personal use onlyDirectors Report Marc Schwartz Non-Executive Director (appointed 31 July 2019) James (Jim) Shedd Managing Director (appointed 7 November 2018), CEO appointed 27 December 2016) programs, at times in remote locations. He has worked extensively across the Asis -Pacific region especially in Australia and Indonesia. in NuEnergy's acquisition of Alan served as CEO of New Holland Mining Limited, an ASX listed gold and base metal exploration and production company, now NuEnergy Gas Limited, having been a director since 1992. Alan was the coal and instrumental unconventional gas assets in Indonesia. He stepped down as CEO to ensure new leadership could move the company forward with its focused gas strategy. Alan was engaged in the IPO and listing and served as MD and Chairman of Resource Base Limited another ASX listed company engaged in gold exploration and production with activities in Australia, retiring in 2016. Mr Fraser has a vast knowledge of working with ASX listed companies and helping to create value for the Australian investment community. Marc has had a very successful business career starting at Macquarie Bank to being Managing Director of Pascoes Pty Ltd from 2008 to 2018, which employed approximately 150 people across multiple manufacturing sites and manufactured or distributed over 400 items to retailers and brand owners. Amongst other varied business interests, he is currently a Director of Gelflex Laboratories which is the largest manufacturer of contact lenses in the Southern Hemisphere. Marc holds a Bachelor of Computer Science and Financial Mathematics from the University of Western Australia. Jim has been CEO of the Company since December 2016 and has been pivotal in the development of IEC’s mining operations in Tanzania. He has developed a strong Tanzanian team and improved mine efficiency under challenging conditions. Jim is also the Managing Director of Intra African Resources (IRL) which is a 100% owned subsidiary of IEC in Mauritius which currently holds 15% of Intra Minerals (IML), which Jim is also a director, that owns 95% of Minas Do Lurio (MDL) Gold project in Mozambique. Jim graduated in business from the University of Maryland, USA, and after serving as a combat engineer and productivity analyst in the US Armed Forces, has over 20 years’ experience in the mining industry specialising in general mine, turnaround and productivity management. Jim also holds an MBA from Regis University, Colorado, USA. He has lived and worked in over 14 countries worldwide including Tanzania, Indonesia and Australia. He has held positions in Indonesia, Senegal and Western Australia as a performance improver in mines on behalf of McKinsey Consultants. COMPANY SECRETARY Company Secretary Rozanna has acted as Company Secretary of IEC since October 2011. She holds both commerce and law degrees from the University of Queensland and is an Associate Member of the Governance Institute of Australia. Rozanna Lee B. Com (Hons), LLB, GradDipACG, AGIA, AGIS Page 10 For personal use onlyDirectors Report CORPORATE STRUCTURE IEC is a public company domiciled in Australia and listed on the Australian Stock Exchange (ASX:IEC). The Company has prepared a consolidated financial report incorporating the entities that it controlled during the financial year, which are outlined in Note 21 of the financial statements. INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE As at the date of this report, the interests of the Directors in the shares of the Company were: G Robertson T Wilson A Fraser Special Responsibilities Non-Executive Chairman Non-Executive Director Non-Executive Director M Schwartz Non-Executive Director1 J Shedd 1Mr Marc Schwartz was appointed 31 July 2019 Managing Director/CEO Ordinary Shares 131,306,585   9,058,309  Performance rights      Profit/(loss) Per Share Basic Profit/(loss) per share (cents) 2020 (3.04) 2019 0.80 NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES The principal activities of the entities within the Consolidated Entity during the year were coal production and gold exploration in South Eastern Africa. OPERATING REVIEW The Consolidated Entity’s operations are discussed in detail in the Review of Operations which can be found on pages 6 to 8 of this Annual Financial Report. REVIEW OF FINANCIAL POSITION The Consolidated Entity recorded an operating loss after income tax $17.19m (2019 Profit: $4.54m). Income tax benefit for the year is $nil (2019: $nil). CAPITAL STRUCTURE As at the date of signing this report, the Company had 387,724,030 fully paid ordinary shares on issue. DIVIDEND No dividend was paid or declared during the year ended 30 June 2020. CASH FROM OPERATIONS The net cash inflow from operations of $1.96m (2019: $2.9286m). The Group had a net overdraft of $0.965m at year end with $0.322m cash at bank and a bank overdraft facility of $1.287m. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There are no further significant changes to the state of affairs of the Company. Page 11 For personal use onlyDirectors Report SIGNIFICANT EVENT AFTER THE BALANCE DATE There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years. ENVIRONMENTAL REGULATION AND PERFORMANCE The Company is subject to environmental regulations and is compliant with all aspects of environmental regulation in its exploration and mining activities, including provision for environmental rehabilitation costs. The Directors are not aware of any environmental law that is not being complied with. SHARES UNDER OPTION As at 30 June 2020, there were no unissued ordinary shares under option. MEETINGS OF DIRECTORS Directors Mr G Robertson Mr T Wilson Mr A Fraser Mr M Schwartz1 Mr J Shedd ¹ Appointed 31 July 2019 Attended Available to attend 7 6 7 7 7 7 7 7 7 7 INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has entered into Directors’ Access Indemnity and Insurance Deeds (“Deed”) with each Director. Under the Deed, the Company indemnifies the Directors to the maximum extent permitted by law and the Constitution against legal proceedings, damage, loss, liability, cost, charge, expense, outgoing or payment (including legal expenses on a solicitor/client basis) suffered, paid or incurred by the Directors in connection with the Directors being an officer of the Company, the employment of the officer with the Company or a breach by the Company of its obligations under the Deed. Also pursuant to the Deed, the Company must insure the Directors against liability and provide access to all board papers relevant to defending any claim brought against the Directors in their capacity as officers of the Company. Amounts disclosed for remuneration of directors and specified officers exclude insurance premiums of $110,557 (2019: $122,075) paid by the Company in respect of liability for any current and former Directors, executive officers and secretaries of the Company and its controlled entities. This amount has not been allocated to the individuals covered by the insurance policy as, based on all available information, the Directors believe that no reasonable basis for such allocation exists. CORPORATE GOVERNANCE The Board of Directors of IEC is responsible for the corporate governance of the Company. The Board guides and monitors the business and affairs of IEC on behalf of the shareholders by whom it is elected and to whom it is accountable. The Company is committed to ensuring that its systems, procedures and practices reflect a high standard of corporate governance. The Directors believe that the corporate governance framework is critical in maintaining high standards of corporate governance and fostering a culture that values ethical behaviour, integrity and respect to protect security holders’ and other stakeholders’ interests at all times. Page 12 For personal use onlyDirectors Report During the year ended 30 June 2020, the Company’s corporate governance framework was consistent with the third edition of the Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council. The Company publishes its Corporate Governance statement on its website rather than in its Annual Report. The Corporate Governance statement may be viewed or downloaded at: www.intraenergycorp.com.au. Copies of the Group policies referred to in the Corporate Governance Statement are also posted on the website. Page 13 For personal use onlyRemuneration Report REMUNERATION REPORT (AUDITED) This report outlines the remuneration arrangements in place for key management personnel of the Company, in connection with the management of the affairs of the entity and its subsidiaries, during the year to 30 June 2020. Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and the Consolidated Entity, including Directors of the Company and other executives. Key management personnel comprise the Directors of the Company and executives of the Company and the Consolidated Entity. A. REMUNERATION POLICY Remuneration Committee At 30 June 2020 the function of the Remuneration Committee (“the Committee”) was carried out by the Board. The function of the Board in fulfilling its corporate governance responsibilities with respect to remuneration is by reviewing and making appropriate recommendations on: (a) Remuneration packages of Non-Executive Directors, Executive Directors and Senior Management; (b) Employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed. Remuneration Policy The Committee adopts the following policies on executive compensation and will bear these policies in mind during remuneration reviews: All key executives should be paid fair market Total Fixed Remuneration (“TFR”) for their employment, taking into account their responsibilities and performance expectations. All remuneration paid to Directors and Executives is valued at the cost to the Company and expensed. The Committee’s policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Committee determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when needed. Fees for Non-Executive Directors are not linked to the performance of the Consolidated Entity. The Directors are not required to hold any shares in the Company under the Company’s Constitution. Executive Directors’ and Senior Management Remuneration In considering the Company’s Remuneration Policy and levels of remuneration for Executives, the Committee makes recommendations that seek to:  Motivate Executive Directors and Senior Management to pursue long term growth and success of the Company within an appropriate control framework;  Demonstrate a clear correlation between Executives’ performance and remuneration; and  Align the interests of Executives with the long-term interests of the Company’s shareholders. To the extent that the Company adopts a different remuneration structure for its Executive Directors, the Committee shall document its reasons for the purpose of disclosure to stakeholders. Non-Executive Director Remuneration In considering the Company’s Remuneration Policy and levels of remuneration for Non-Executive Directors, the Committee is to ensure that:  Fees paid to Non-Executive Directors are within the aggregate amount approved by shareholders and recommendations are made to the Board with respect to the need for increases to this aggregate amount at the Company’s Annual General Meeting;  Non-Executive Directors are remunerated by way of fees (in the form of cash);  Non-Executive Directors are not provided with retirement benefits; and Page 14 For personal use onlyRemuneration Report  Non-Executive Directors are not entitled to participate in equity-based remuneration schemes designed for Executives without due consideration and appropriate disclosure to the Company’s shareholders. To the extent that the Company adopts a different remuneration structure for its Non-Executive Directors, the Committee shall document its reasons for the purpose of disclosure to stakeholders. KEY MANAGEMENT PERSONNEL During the year ended 30 June 2020 the Key Management Personnel (“KMP”) of IEC were: Name Position Held Mr Graeme Robertson Non-Executive Chairman Mr Troy Wilson Mr Alan Fraser Mr Marc Schwarz1 Mr James Shedd Ms Kerry Angel Non-Executive Director Non-Executive Director Non-Executive Director Managing Director and Chief Executive Officer Chief Financial Officer 1Mr Marc Schwarz was appointed 31 July 2019 Page 15 For personal use onlyRemuneration Report B. DETAILS OF REMUNERATION 2020 Salary and fees $ NON-EXECUTIVE DIRECTORS Mr G Robertson Mr T Wilson Mr A Fraser Mr M Schwartz1 116,597 40,000 40,000 36,667 KEY MANAGEMENT PERSONNEL Mr J Shedd Ms K Angel Total 1Appointed 31 July 2019 2019 496,154 293,656 1,023,073 Salary and fees $ NON-EXECUTIVE DIRECTORS Mr G Robertson Mr T Wilson Mr A Fraser1 Mr D Nolan2 114,608 40,000 33,333 6,667 KEY MANAGEMENT PERSONNEL Mr J Shedd Ms K Angel Total 454,096 257,683 906,387 Short-term Post-Employment Long-term Share-based Payment Cash bonus $ Non-monetary benefits $ Superannuation $ Retirement Benefits $ Long service leave $ Shares $ Options $ Incentive plans $ TOTAL $ % of Remuneration granted as options % – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – Short-term Post-Employment Long-term Cash bonus $ Non-monetary benefits $ Superannuation $ Retirement Benefits $ Long service leave $ Shares $ – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 116,597 40,000 40,000 36,667 496,154 293,656 1,023,073 – – – – – – – Share-based Payment Options $ Incentive plans $ TOTAL $ % of Remuneration granted as options % – – – – – – – – – – – – – – 114,608 40,000 33,333 6,667 454,096 257,683 906,387 – – – – – – – 1Appointed 24 August 2018 2 Resigned 24 August 2018 Page 16 For personal use onlyRemuneration Report C. CASH BONUSES There were no cash bonuses paid during the year. D. SHARE BASED PAYMENT BONUSES There were no share-based payment bonuses paid during the year. E. OPTIONS ISSUED AS PART OF REMUNERATION No options were issued as part of remuneration during the year (2018: Nil) EMPLOYMENT CONTRACTS OF DIRECTORS AND EXECUTIVES Mr Graeme Robertson‘s Non-Executive Chairman’s fees are $85,000 per annum. Mr Robertson is also the Non- Executive Chairman of Tancoal Energy Limited (Tancoal), a 70% owned subsidiary of IEC. During the year he received director’s fees of US$21,176 from Tancoal. Mr Troy Wilson was employed as Non-Executive Director on 4 October 2017 and his Non-Executive Director’s fees are $40,000 per annum. Mr Alan Fraser was employed as Non-Executive Director on 24 August 2018 and his Non-Executive Director’s fees are $40,000 per annum. Mr Marc Schwartz was employed as Non-Executive Director on 31 July 2019 and his Non-Executive Director’s fees are $40,000 per annum. Mr James (Jim) Shedd was appointed Managing Director of IEC from 7 November 2018 and has been employed as Chief Executive Officer from 27 December 2016 for an indefinite period until terminated by either party by giving not less than three months’ notice. Mr Shedd’s salary is US$280,000 and A$40,000 per annum. Mr Shedd is also a non-executive director of Tancoal Energy Limited (Tancoal), a 70% owned subsidiary of IEC for which during the year he received director’s fees of US$25,714 from Tancoal. The key terms of Mr Shedd’s remuneration package are as follows:   Total Fixed Remuneration (TFR) of US$280,000 and A$40,000 (including superannuation contributions), subject to annual review; Eligibility to participate in the Company’s incentive scheme as approved by the Board from time to time; Ms Kerry Angel is employed as the Chief Financial Officer. Ms Angel’s salary is US$170,000 and A$40,000 per annum including superannuation. Each employment contract of Executive Directors and Executives includes:     Base total fixed remuneration (including superannuation) to be reviewed annually; Provision of annual leave, accrued balance payable upon termination; Provision made for the awarding of bonuses at the recommendation of the Committee (“STI”); and Provision made for the award of performance share rights (“LTI”), subject to shareholder approval. No payments were made under an LTI or STI scheme for the year ended 30 June 2020. Page 17 For personal use onlyRemuneration Report F. KEY MANAGEMENT PERSONNEL COMPENSATION – OPTIONS 2020 Mr G Robertson Mr T Wilson Mr A Fraser Mr M Schwarz1 Mr J Shedd Ms K Angel Total Balance at beginning of year Granted during the year as compensation Exercised during the year Lapsed / cancelled during the year Balance at the end of the year Vested and exercisable – – – – – – - – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 1Mr Marc Schwarz was appointed 31 July 2019 2019 Mr G Robertson Mr T Wilson Mr A Fraser1 Mr D Nolan2 Mr J Shedd Ms K Angel Total Balance at beginning of year Granted during the year as compensation Exercised during the year Lapsed / cancelled during the year Balance at the end of the year Vested and exercisable – – – – – – - – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 1Mr Alan Fraser was appointed 24 August 2018 2Mr David Nolan resigned 24 August 2018 Page 18 For personal use onlyRemuneration Report G. KEY MANAGEMENT PERSONNEL COMPENSATION – FULLY PAID SHARES The numbers of shares in the Company held during the financial year or at time of resignation by each Director or KMP of IEC are set out below: 2019 Balance at beginning of year Granted during the year as compensation Received during the year on exercise of options Changes during the year* Balance at the end of the year Mr G Robertson 131,556,585 Mr T Wilson Mr A Fraser – – Mr M Schwarz1 9,058,389 Mr J Shedd Ms K Angel Total – – 140,614,974 – – – – – – – – – – – – – – 1Mr Marc Schwarz was appointed 31 July 2019 *Changes during the year represent shares acquired or sold by KMP or their associates – – – – – – – 131,556,585 – – 9,058,389 – – 140,614,974 2019 Balance at beginning of year Granted during the year as compensation Received during the year on exercise of options Mr G Robertson 131,306,585 Mr T Wilson Mr A Fraser1 Mr D Nolan2 Mr J Shedd Ms K Angel – – – – – Total 131,306,585 – – – – – – – – – – – – – – Changes during the year* Balance at the end of the year 250,000 131,556,585 – – – – – – – – – – 250,000 131,556,585 1Mr Alan Fraser was appointed 24 August 2018 2Mr David Nolan resigned 24 August 2018 *Changes during the year represent shares acquired or sold by KMP or their associates Page 19 For personal use onlyRemuneration Report H. KEY MANAGEMENT PERSONNEL COMPENSATION – PERFORMANCE RIGHTS The numbers of performance rights in the Company held during the financial year or at time of resignation by each Director or KMP of IEC, including their personally related parties, are set out below: 2020 Mr G Robertson Mr T Wilson Mr A Fraser Mr M Schwarz1 Mr J Shedd Ms K Angel Total Balance at beginning of year Granted during the year as compensation Vested during the year Lapsed/cancell ed during the year Balance at the end of the year – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 1Mr Marc Schwarz was appointed 31 July 2019 2019 Mr G Robertson Mr T Wilson Mr A Fraser1 Mr D Nolan2 Mr J Shedd Ms K Angel Total Balance at beginning of year Granted during the year as compensation Vested during the year Lapsed/cancell ed during the year Balance at the end of the year – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 1Mr Alan Fraser was appointed 24 August 2018 2Mr David Nolan resigned 24 August 2018 I. LOANS TO DIRECTORS AND EXECUTIVES No loans were made to any Directors or Executives during the financial year. End of Remuneration Report Page 20 For personal use onlyDirectors’ Report NON-AUDIT SERVICES The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:   all non-audit services are reviewed and approved by the Board prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and APES110 Code of Ethics for Professional Accountants. There were no fees for non-audit services paid to an affiliated entity of the external auditors during the year ended 30 June 2020. LEAD AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration is set out on page 27 and forms part of the Directors’ Report for the financial year ended 30 June 2020. ROUNDING OFF The Group is of a kind referred to in ASIC Legislative Instrument 2016/191 and in accordance with that Class Order, amounts in the financial report and Directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated. This Directors’ Report, Remuneration Report and Corporate Governance Statement are made with a resolution of the Directors. GRAEME ROBERTSON Chairman Dated this 29 September 2020 Page 21 For personal use onlyINTRA ENERGY CORPORATION LIMITED ABN 65 124 408 751 AND ITS CONTROLLED ENTITIES AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF INTRA ENERGY CORPORATION LIMITED In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Intra Energy Corporation Limited. As the lead audit partner for the audit of the financial report of Intra Energy Corporation Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. HALL CHADWICK (NSW) Level 40, 2 Park Street Sydney NSW 2000 DREW TOWNSEND Partner Dated: 29 September 2020 For personal use only Directors’ Declaration 1. In the opinion of the Directors: (a) the accompanying financial statements, notes and additional disclosures are in accordance with the Corporations Act 2001 including: (i) giving a true and fair view of the Company and Group’s financial position as at 30 June 2020 and its performance for the financial year ended on that date; and (ii) complying with Accounting Standards (includes the Australian Accounting Interpretations), the Corporations Regulations 2001 and any other mandatory professional reporting requirements. (b) as disclosed in note 1(A) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (c) the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. 2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2020. The declaration is signed in accordance with a resolution of the Board of Directors. GRAEME ROBERTSON Chairman Dated this 29 September 2020 Page 23 For personal use onlyINTRA ENERGY CORPORATION LIMITED ABN 65 124 408 751 AND ITS CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INTRA ENERGY CORPORATION LIMITED AND ITS CONTROLLED ENTITIES Opinion We have audited the financial report of Intra Energy Corporation Limited and its controlled entities (the Group), which comprises the consolidated statement of financial position as at 30 June 2020, 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 consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion the accompanying financial report of the Intra Energy Corporation Limited and its controlled entities is in accordance with the Corporations Act 2001, including: (a) (b) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis of Opinion We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those standards are further described in the Auditor’s responsibility section of our report. We are independent of the Company 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 Corporation Act 2001 has been given to the directors of the company 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(a) in the financial report, which indicates that the Group’s current liabilities exceeded its current assets by $18,764,000. As stated in Note 1(a), this event or condition, along with other matters as set forth in Note 1(a), indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. For personal use only INTRA ENERGY CORPORATION LIMITED ABN 65 124 408 751 AND ITS CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INTRA ENERGY CORPORATION LIMITED AND ITS CONTROLLED ENTITIES 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 year ended 30 June 2020. 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. Key Audit Matter How Our Audit Addressed the Key Audit Matter Carrying Value of Non-Current Assets Refer to Note 11 Property, plant and equipment; Note 12 Mine development costs; Note 13 Exploration expenditure; and Note 1(y) Critical accounting judgments and key sources of estimation and uncertainty. A significant proportion (70%) of the Group’s total assets relate to property, plant mine and equipment, exploration costs, development expenditures and right of use assets totalling $14,709,000 as at 30 June 2020 which are subject to an impairment assessment in accordance with AASB 136 “Impairment of Assets”. The group's impairment assessment of these non-current assets is considered a key audit matter as the valuation is judgemental and based on a number of assumptions, specifically coal prices, operating/capital costs, discount rates, inflation rates and foreign exchange rates, which are affected by future events and economic conditions. • We Our procedures included, amongst others: management's determination of the Group's Cash- Generating Units ("CGUs"). assessed • We reviewed and analysed the key assumptions including growth rates, discount rate, projected coal sales and gross margin used in the cash flow forecasts and considered the reasonableness these assumptions. of • We assessed management’s consideration of the sensitivity to a change in key assumptions that either individually or collectively would be required for assets to be impaired and considered the likelihood of such a movement in those key assumptions arising. • We involved Hall Chadwick’s valuation experts to: - evaluate the - key valuation assumptions and estimates to assess the discounted cash flows. reviewed mathematical accuracy of the cash flow model and agreed to supporting information. relevant data the • We assessed the adequacy of the Group’s disclosures in relation to the carrying value of non-current assets. For personal use only INTRA ENERGY CORPORATION LIMITED ABN 65 124 408 751 AND ITS CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INTRA ENERGY CORPORATION LIMITED AND ITS CONTROLLED ENTITIES Contingent Liabilities Refer to Note 24 Contingent liabilities. is a party to numerous The group ongoing litigation and legal matters, of which the most significant are disclosed in Note 24 to the financial statements. to a significant We focused on this area as a key audit matter due level of judgement and estimation involved in determining whether liabilities existed in accordance with AASB 137 “Provisions, Contingent Liabilities and Contingent Assets”. Our procedures others: included, amongst reviewed • We held discussions with management correspondence and and legal confirmations advisors regarding the status of litigation matters. the external from • We read the minutes of the Board of Directors and reviewed the related legal documents latest correspondence with the claimants. and the • We assessed the status of the claims and if they met the definition of a liability in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets. • We assessed the adequacy of group's to contingent relation in disclosures liabilities. Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2020 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the 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. For personal use only INTRA ENERGY CORPORATION LIMITED ABN 65 124 408 751 AND ITS CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INTRA ENERGY CORPORATION LIMITED AND ITS CONTROLLED ENTITIES In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibility for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the director’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. For personal use only INTRA ENERGY CORPORATION LIMITED ABN 65 124 408 751 AND ITS CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INTRA ENERGY CORPORATION LIMITED AND ITS CONTROLLED ENTITIES We communicate with the directors regarding, amongst other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the remuneration report included in pages 14 to 20 of the directors’ report for the year ended 30 June 2020. In our opinion, the remuneration report of Intra Energy Corporation Limited, for the year ended 30 June 2020, complies with s 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 s 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. HALL CHADWICK (NSW) Level 40, 2 Park Street Sydney NSW 2000 DREW TOWNSEND Partner Dated: 29 September 2020 For personal use only Consolidated Statement of Profit or Loss and Other Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED Sales revenue Cost of production Gross Profit Other income Foreign exchange gain / (loss) Compliance and regulatory expenses Legal and professional expenses Depreciation and amortisation Remuneration and employee expenses Impairment of tenements Impairment on financial assets Write-off goodwill Other expenses Prior period expenses for taxes and audits Finance income Finance expenses Loss on sale and write-off of asset Profit/(loss) Before Income Tax Income tax benefit Profit/(loss) from continuing operations Loss from discontinued operations Loss from discontinued operations – share of equity-accounted investees (Reversal of)/Loss from impairment of assets of discontinued operations Profit/(loss) for the Year Other Comprehensive Income Foreign currency translation gain/(loss) Total Comprehensive Loss for the Year Net Profit/(loss) for the Year Attributable to: Shareholders of IEC Non-controlling interest Total Comprehensive Profit/(loss) for the Year Attributable to: Shareholders of IEC Non-controlling interest Loss per share Profit/(loss) per share (cents per share, basic and diluted) Profit/(loss) per share (cents per share, basic and diluted) on continuing operations Loss per share (cents per share, basic and diluted) on discontinued operations NOTES 2 3 4 10 10 7 7 7 2020 $’000S 37,770 (29,308) 8,462 - 19 (230) (329) (1,731) (2,312) (230) (457) - (3,378) (16,361) - (471) - (17,018) - (17,018) (78) - (90) (17,186) 126 (17,060) (11,769) (5,417) (17,186) (11,597) (5,463) (17,060) (3.04) (3.00) (0.04) 2019 $’000S 52,277 (38,581) 13,696 - (232) (221) (263) (1,001) (1,844) - (949) (73) (3,920) - 10 (325) (153) 4,725 - 4,725 (97) (87) (6) 4,535 385 4,920 3,280 1,255 4,535 3,965 955 4,920 0.80 0.85 (0.05) The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes to the Financial Statements. Page 29 For personal use onlyConsolidated Statement of Financial Position AS AT 30 JUNE 2020 CONSOLIDATED 2020 $’000S NOTES Assets Current Assets Cash and cash equivalents Inventories Trade and other receivables Total Current Assets Non-Current Assets Property, plant and equipment Right of use assets Mine development costs Exploration expenditure Investments Total Non-Current Assets Total Assets Liabilities Current Liabilities Bank overdraft Trade and other payables Employee benefits Interest bearing liabilities Lease liabilities Liabilities held for sale Total Current Liabilities Non-Current Liabilities Trade and other payables Lease liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets/(liabilities) Equity Issued capital Reserves Accumulated losses Total equity attributed to equity holders of the Company Non-controlling interest Total Equity 8 9 11 11 12 13 14 16(b) 15 16 17 10 15 17 18 19 20 22 322 1,731 4,180 6,233 6,888 2,095 5,172 554 226 14,935 21,168 1,287 20,796 130 1,336 1,448 - 24,997 11,209 85 887 12,181 37,178 (16,010) 69,590 2,284 (76,682) (4,808) (11,202) (16,010) 2019 $’000S 724 2,204 5,060 7,988 8,271 - 5,079 722 - 14,072 22,060 967 15,254 89 2,715 - 1,182 20,207 - - 803 803 21,010 1,050 69,590 2,112 (64,913) 6,789 (5,739) 1,050 The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes to the Financial Statements. Page 30 For personal use onlyConsolidated Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED NOTES Cash Flows from Operating Activities Receipts from customers Payments to creditors and suppliers Interest received Interest paid Net cash provided in operating activities 26 Cash Flows from Investing Activities Mine development and capitalised exploration costs Purchase of property, plant and equipment Payment for investments Payment for acquisition of AAA Drilling, net of cash acquired Net cash (used) in investing activities Cash Flows from Financing Activities Proceeds from interest bearing liabilities Repayment of interest bearing liabilities Repayment of lease liabilities Transfer of overdraft to term loan Net cash (used) in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Effects of exchange rate changes on cash Cash and Cash Equivalents/(Net Overdraft) at end of year Cash and cash equivalents Bank overdrafts used for cash management purposes Cash and Cash equivalents/(Net Overdraft) in the Statement of Cash Flows 2020 $’000S 37,973 (35,719) - (293) 1,961 (47) (76) (226) - (349) - (1,125) (1,205) - (2,330) (718) (243) (4) (965) 322 (1,287) (965) 2019 $’000S 48,148 (44,905) 10 (325) 2,928 (59) (1,876) - (101) (2,036) 1,073 (1,439) - 1,187 821 1,713 (1,857) (99) (243) 724 (967) (243) The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes to the Financial Statements. Page 31 For personal use onlyISSUED CAPITAL $’000S 69,590 ACCUMULATED PERFORMANCE OPTION RESERVE $’000S FOREIGN CURRENCY TRANSLATION RESERVE $’000S TOTAL $’000S RIGHTS $’000S 795 2,216 (899) 6,789 NON-CONTROLLING INTEREST $’000S (5,739) TOTAL EQUITY $’000S 1,050 Consolidated Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2020 CONSOLIDATED At 1 July 2019 TOTAL COMPREHENSIVE INCOME FOR THE YEAR Loss for the year Other Comprehensive Income Foreign currency translation differences Total Comprehensive Income TRANSACTIONS WITH OWNERS RECORDED DIRECTLY INTO EQUITY Shares issued during the year Total transactions with owners CONSOLIDATED At 1 July 2018 TOTAL COMPREHENSIVE INCOME FOR THE YEAR Profit for the year Other Comprehensive Income Foreign currency translation differences Total Comprehensive Income TRANSACTIONS WITH OWNERS RECORDED DIRECTLY INTO EQUITY Shares issued during the year Total transactions with owners           LOSSES $’000S (64,913) (11,769)  (11,769)   LOSSES $’000S (68,193) 3,280  3,280   ACCUMULATED PERFORMANCE RIGHTS $’000S OPTION RESERVE $’000S ISSUED CAPITAL $’000S 69,590            (11,769) (5,417) (17,186) 172 172   172 (11,597)   (46) (5,463)   126 (17,060)   FOREIGN CURRENCY TRANSLATION RESERVE $’000S (1,584) TOTAL $’000S 2,824  3,280 685 685   685 3,965   NON-CONTROLLING INTEREST $’000S (6,694) 1,255 (300) 955   TOTAL EQUITY $’000S (3,870) 4,535 385 4,920   795 2,216           Balance at 30 June 2020 69,590 (76,682) 795 2,216 (727) (4,808) (11,202) (16,010) Balance at 30 June 2019 69,590 (64,913) 795 2,216 (899) 6,789 (5,739) 1,050 The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes to the Financial Statements. Page 32 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Intra Energy Corporation Limited (“IEC” or “the Company”) is a company limited by shares, incorporated and domiciled in Australia. The shares of Intra Energy Corporation Limited are publicly traded on the Australian Stock Exchange. The consolidated financial statements for the year ended 30 June 2018 comprise the Company and its controlled entities (together referred to as “the Group” or “Consolidated Entity”) and the Group’s interests in associates and jointly controlled entities. The Company is a for-profit entity and primarily is involved in the mining and sale of coal. The consolidated financial statements were approved by the Board and authorised for issue on 29 September 2020. A. Going Concern The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to continue trading, realise its assets and discharge its liabilities in the ordinary course of business for a period of at least 12 months from the date that these financial statements are approved. The Directors note that:         The Group made a loss after tax for the year of ($17,186m) (2019: profit $4.535m), including losses and impairments from discontinued operations of $0.17m (2019: $0.19m), non-cash depreciation and amortisation charges of $1.73m (2019: $1.00m), past years royalty and clearance fees from 2011 to 2019 of $15.48m (2019: nil) and taxes from audits of past years of $0.88m (2019: $2.40m); and As at balance date, the Group's current liabilities exceeded its current assets by $18.764m (2019: $12.219m). The deficit in net current assets included $1.287m (2019: $0.967m) overdraft payable to KCB Bank of Tanzania (“KCB”), $1.155m (2019: $1.821m) payable to KCB Bank under loan facilities which expire in September 2020, equipment finance of $1.022m (2019: $0.380) for the purchase of three ADT trucks over twenty four months and $3.736m for the current portion of the past royalty and clearance fees on customers’ transport costs from 2011 to 2019 (2019: nil) which were included in current liabilities. In assessing the appropriateness of using the going concern assumption, the Directors have noted:  Intra Energy Tanzania Limited (IET) a company registered in Tanzania is the investor in the Tancoal joint venture, IEC has not given a corporate guarantee to IET or Tancoal. KCB has continued to show support for Tancoal. Sales were lower in FY 2020 due to competition from small miners and the impact of Covid-19 but business conditions are expected to improve during FY 2021. Tancoal remains the dominant coal miner and supplier to industrial energy users in the Eastern African region and continues to implement productivity improvements. Continued to implement a number of cost saving initiatives and enter into repayment arrangements with creditors to preserve working capital. Discussions continue with the Ministry of Minerals for a moratorium on the assessment for past charges for royalty on transport to customers' business premises and discussions are also continuing with the former contractor, Caspian, to extend the payment plan for the three final payments due to tight cash flow from lower sales. Recognised that the interest-bearing liabilities relating to the loans from KCB are secured against the Group’s mining equipment. Noted JORC compliant resources of 357 million tonnes at the Tancoal mine in Tanzania. Retained their confidence in the strategic value of the Group as it continues with its coal project in Tanzania and its focus on the development of the gold resources in Mozambique. After considering the above factors, the Directors have concluded that the use of the going concern assumption is appropriate. However if improved coal sales, cost saving initiatives or working capital improvements are not achieved or if KCB Bank of Tanzania demands repayment of their combined $2.442m debt facility ($2.788m at 30 June 2019), the Group will be required to raise further debt or equity or divest assets to continue as a going concern. Whilst the Directors remain confident in the Group’s ability to access further working capital through debt, equity or asset sales if required, there remains material uncertainty as to whether the Group will continue as a going concern. Had the going concern basis not been used, adjustments would need to be made relating to the recoverability and classification of certain assets, and the classification and measurement of certain liabilities to reflect the fact that the Page 33 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.) Group may be required to realise its assets and settle its liabilities other than in the ordinary course of business, and at amounts different from those stated in the consolidated financial statements. B. Statement of compliance and basis of preparation The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial report of Intra Energy Corporation Limited (“IEC” or “the Company”) and controlled entities (“the Group” or “Consolidated Entity”), and IEC as an individual parent entity (“IEC Parent” or “Parent Entity”) complies with all Australian equivalents to International Financial Reporting Standards (AIFRS) and International Financial Reporting Standards (IFRS). b.i Reporting Basis and Conventions The financial report has been prepared on an accruals basis and is based on historical costs other than financial assets and financial liabilities for which the fair value basis of accounting has been applied. The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Separate financial statements for IEC Parent, as an individual entity have not been presented within this financial report. Financial information for IEC Parent as an individual entity is included in Note 31 as permitted by the Corporations Act 2001. b.ii New Accounting Standards and Interpretations that are not yet mandatory The Group’s assessment of the impact of these new standards and interpretations is set out below. The Group does not plan to adopt these standards early. There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. b.iii New and Amended Accounting Policies Adopted by the Group Initial application of AASB 16 AASB 16 was issued in January 2016 and it replaces AASB 117 Leases, AASB Interpretation 4 Determining whether an Arrangement contains Lease, AASB Interpretation-115 Operating Lease-Incentives and AASB Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117. The standard includes two recognition exemptions for lessees – lease of ‘low-value’ assets (e.g., personal computers) and short term 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to sue the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to be separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees are also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. AASB 16, which is effective for annual periods beginning on or after 1 January 2019, requires lessees to make more extensive disclosure than under AASB 117. The Group has adopted AASB 16 using the first variation of the modified retrospective approach, where the right-of- use asset at the date of initial application (1 July 2019) is measured at an amount equal to the lease liability, using an incremental borrowing rate (IBR). Comparative figures are not restated. The Group has elected to apply the standard to contracts that were previously identified as leases applying AASB 117 and AASB Interpretation 4. Page 34 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.) The Group has elected to use the exemptions proposed by the standard on lease contracts for which:   the lease terms ends within 12 months as of the date of initial application; and lease contracts for which the underlying asset is of low value. The Group has leases of certain office equipment (i.e. personal computers, printing and photocopying machines) that are considered of low value of less than $10,000. Adjustments recognised in the balance sheet on 1 July 2019 The following summary indicates the adjustments and reclassifications of financial statement line item in the balance sheet due to the implementation of AASB 16. Property, plant and equipment Right of use assets Interest bearing liabilities Lease liabilities Carrying amount under AASB 117 Adjustments Carrying amount under AASB 16 $ $ $ 8,271 - (2,715) - - 244 334 (578) 8,271 244 (2,381) (578) Measurement of lease liabilities The following table represents a reconciliation between the lease commitments as of 30 June 2019 and the lease liability as of 1 July 2019. Operating lease commitments disclosed as at 30 June 2019 Less: short-term and low value asset leases Add: Adjustments as a result of a different treatment of extension options Add: finance lease liabilities recognised as at 30 June 2019 Lease liabilities recognised as at 1 July 2019 $ 127 (33) 150 334 578 C. Principles of consolidation The consolidated financial statements incorporate all assets, liabilities and results of the parent (Intra Energy Corporation Limited) and all of the subsidiaries. c.i Business combinations Business combinations occur where an acquirer obtains control over one or more businesses. The purchase method of accounting is used to account for all business combinations, unless it is a combination involving entities or businesses under common control. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange. All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are recognised as expenses in profit or loss when incurred. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are expensed in the period incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the Group’s share of the fair value of the identifiable net assets of the Page 35 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) subsidiary acquired, the difference is recognised directly in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, but only after a reassessment of the identification and measurement of the net assets required. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. c.ii Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 20. Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully eliminated on consolidation. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully eliminated on consolidation. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. c.iii Transactions eliminated on consolidation All balances and transactions, arising from transactions between entities within the group are eliminated in preparing the consolidated financial statements. c.iv Non-controlling interests Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling interests”. Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. c.v Equity accounted investments A joint venture is an arrangement in which the Group has joint control whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. The financial statements include the Group’s share of the total recognised gains and losses on an equity accounted basis subsequent to initial recognition at cost, which includes transaction costs. When the Group’s share of losses exceeds its interest in a joint venture, the Group’s carrying amount is reduced to $nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of a joint venture. Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group. Associates are all entities over which the group has significant influence but not control or joint control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. D. Income tax Tax expense comprises current and deferred tax and is recognised in the statement of profit or loss or the statement of comprehensive income according to the accounting treatment of the related transaction. Page 36 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax in respect of previous years. Deferred tax expense represents the tax expense in respect of the future tax consequences of recovering or settling the carrying amount of an asset or liability. Both are calculated using tax rates for each jurisdiction, enacted or substantially enacted at the reporting date, and for deferred tax those that are expected to apply when the asset is realised or the liability is settled. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:  arising on the initial recognition or assets or liabilities, other than on a business combination, that affect neither accounting or taxable profit; arising from the recognition of goodwill; and relating to investments in subsidiaries to the extent that they will not reverse in the foreseeable future.   E. Property, Plant and Equipment Each class of plant and equipment is carried at cost less any accumulated depreciation and impairment losses. Plant and equipment are measured on the cost basis. 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. e.i Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the consolidated group commencing from the time the asset is held ready for use. The useful lives used for each class of depreciable asset are: Class of fixed asset Mining Plant and Equipment Motor Vehicles Office Equipment Computer Equipment and Software Leasehold Improvements Useful life 5 to 15 years 4 to 10 years 4 to 8 years 3 years 25 years 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 the profit or loss. F. Exploration, evaluation and acquisition expenditure Acquisition costs are accumulated in respect of each separate area of interest. Acquisition costs are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Where an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated acquisition costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated acquisition costs written off to the extent that they will not be recoverable in the future. Amortisation is not charged on acquisition costs carried forward in respect of areas of interest in the development phase until production commences. Page 37 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) G. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on average costs over the relevant period of production and includes expenditure in accumulating the inventories, production costs and other costs incurred in bringing them to their existing location and condition. Stockpile tonnages are verified by periodic surveys. H. Overburden removal costs Overburden and other mine waste materials are often removed during the initial development of a mine site in order to access the mineral deposit. This activity is referred to as development stripping. The directly attributable costs are initially capitalised as mine development costs. Capitalising of development stripping costs ceases at the time that saleable mineral rights begin to be extracted from the mine. Production stripping commences at the time that saleable materials begin to be extracted from the mine and normally continues through the life of a mine. The costs of production stripping are capitalised to the cost of inventory, and charged to the income statement upon sale of inventory in cost of goods sold. I. Development expenditure When a mining project has been established as commercially viable and technically feasible, expenditure other than that on land, buildings and plant equipment is capitalised under development expenditure. Development expenditure costs include previously capitalised exploration and evaluation costs, pre-production development costs, development excavation, development studies and other subsurface expenditure pertaining to that area of interest. Costs related to surface plant and equipment and any associated land and buildings are accounted for as property, plant and equipment. Development costs are accumulated in respect of each separate area of interest. Costs associated with commissioning new assets in the period before they are capable of operating in the manner intended by management, are capitalised. Development costs incurred after the commencement of production are capitalised to the extent they are expected to give rise to a future economic benefit. Amortisation of carried forward exploration and development costs is charged on a unit of production basis over the life of economically recoverable reserves. When an area of interest is abandoned or the Directors decide it is not commercial or technically feasible, any accumulated cost in respect of that area is written off in the financial period the decision is made. Each area of interest is reviewed at the end of each accounting period and accumulated cost written off to the Statement of Comprehensive Income to the extent that they will not be recoverable in the future. Development assets are assessed for impairment if facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purpose of impairment testing, development assets are allocated to cash generating units to which the development activity relates. The cash generating unit shall not be larger than the area of interest. J. Rehabilitation expenditure The mining, extraction and processing activities of the Group give rise to obligations for site rehabilitation. Rehabilitation obligations can include facility decommissioning and dismantling, removal or treatment of waste materials, land rehabilitation and site restoration. The extent of work required and the associated costs are estimated based on feasibility and engineering studies using current restoration standards and techniques. Provisions for the cost of each rehabilitation programme are recognised at the time that environmental disturbance occurs. Rehabilitation provisions are initially measured at the expected value of future cash flows required to rehabilitate the relevant site, discounted to their present value. The value of the provision is progressively increased over time as the effect of discounting unwinds. When provisions for rehabilitation are initially recognised, the corresponding cost is capitalised as an asset, representing part of the cost of acquiring the future economic benefits of the operation. The capitalised cost of rehabilitation activities is recognised in ‘Development Expenditure’ as rehabilitation assets and amortised accordingly. Where rehabilitation is expected to be conducted systematically over the life of the operation, rather than at the time of closure, provision is made for the present obligation or estimated outstanding continuous rehabilitation work at each balance date and the costs are recognised based on a consideration of the period which the rehabilitation is expected to occur. Page 38 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. K. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Segment Reporting Segment results are reported to the Board of Directors (chief operating decision maker) and include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent with those adopted in the Annual Financial Statements of the Company. L. Financial Instruments l.i Recognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions to the instrument. For financial assets, this is the date that the Group commits itself to either the purchase or sale of the asset. Financial instruments (except for trade receivables) are initially measured at fair value plus transaction costs, except where the instrument is classified "at fair value through profit or loss", in which case transaction costs are expensed to profit or loss immediately. Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or if the practical expedient was applied as specified in AASB 15.63. l.ii Financial liabilities All financial liabilities are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition. A financial liability cannot be reclassified. l.iii Financial assets Financial assets are subsequently measured at:    amortised cost; fair value through other comprehensive income; or fair value through profit or loss. Measurement is on the basis of two primary criteria:   the contractual cash flow characteristics of the financial asset; and the business model for managing the financial assets. A financial asset that meets the following conditions is subsequently measured at amortised cost:   the financial asset is managed solely to collect contractual cash flows; and the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive income:  the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates; the business model for managing the financial assets comprises both contractual cash flows collection and the selling of the financial asset.  By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through other comprehensive income are subsequently measured at fair value through profit or loss. The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised. Page 39 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) l.iv Derecognition Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position. A liability is derecognised when it is extinguished (ie when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial liability is treated as an extinguishment of the existing liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred. All of the following criteria need to be satisfied for derecognition of financial asset:  the right to receive cash flows from the asset has expired or been transferred;  all risk and rewards of ownership of the asset have been substantially transferred; and  the Group no longer controls the asset. On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. l.v Impairment The Group recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost or fair value through other comprehensive income. Loss allowance is not recognised for:   financial assets measured at fair value through profit or loss; or equity instruments measured at fair value through other comprehensive income. Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial instrument. A credit loss is the difference between all contractual cash flows that are due, and all cash flows expected to be received, all discounted at the original effective interest rate of the financial instrument. The Group uses the following approaches to impairment, as applicable under AASB 9: Financial Instruments:   the general approach the simplified approach General approach Under the general approach, at each reporting period, the Group assesses whether the financial instruments are credit- impaired, and if:  the credit risk of the financial instrument has increased significantly since initial recognition, the Group measures the loss allowance of the financial instruments at an amount equal to the lifetime expected credit losses; or there is no significant increase in credit risk since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.  Simplified approach The simplified approach does not require tracking of changes in credit risk at every reporting period, but instead requires the recognition of lifetime expected credit loss at all times. This approach is applicable to trade receivables which do not contain a significant financing component. In measuring the expected credit loss, a provision matrix for trade receivables was used taking into consideration various data to get to an expected credit loss (ie diversity of customer base, appropriate groupings of historical loss experience, etc). Recognition of expected credit losses in financial statements At each reporting date, the Group recognises the movement in the loss allowance as an impairment gain or loss in the statement of profit or loss and other comprehensive income. The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that asset. Page 40 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) For financial assets that are unrecognised (eg loan commitments yet to be drawn, financial guarantees), a provision for loss allowance is created in the statement of financial position to recognise the loss allowance. M. Foreign Currency Transactions and Balances m.i. Functional and Presentation Currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. m.ii. Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, except where deferred in Other Comprehensive Income as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in Other Comprehensive Income to the extent that the gain or loss is directly recognised in other comprehensive income; otherwise the exchange difference is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. m.iii. Group Companies The financial results and position of foreign operations whose functional currency is different from the Company’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 year. 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 Consolidated Statement of Profit or Loss and Other Comprehensive Income in the year in which the operation is disposed. N. Employee Benefits Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. 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. n.i Short-term employee benefits Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled. The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position. n.ii Share-based payments The Group provides benefits to employees (including Directors) of the Company in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (“equity-settled transactions”). The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an internal valuation and an external valuation using the Black-Scholes model. Page 41 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the year in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at reporting date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon market condition. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award. O. Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting date. P. 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. Q. Revenue recognition The Group produces and sells a range of thermal coal products. Revenue from the sale of coal is recognised when control of the product has transferred to the customer. Control of the product is considered transferred to the customer at the time of delivery, usually on Free on Board ("FOB") basis or a Cost and Freight ("CFR") basis. For CFR contracts the performance obligation relating to freight services is accounted for as a separate performance obligation. A receivable is recognised when control of the products is delivered as this is the point in time that the consideration is unconditional and when control of the product is transferred to the customer. From time to time, the Group receives prepayment before control of the product has transferred to the customer. Such prepayments are recognised as contract liabilities. Some of the Group's coal sales contracts are long-term supply agreement which stipulate the nominal annual quantity and price negotiation mechanism. For those contracts, the actual quantity and transaction price applicable for future shipments are only negotiated or determined prior to the beginning of, or a date which is after, each contract year or delivery period. The transaction price for a future shipment is based on, or derived from, a market price prevailing at the time of the future shipment. As the future market price for coal is highly susceptible to factors outside the Group's influence, the transaction price for a shipment is not readily determinable until or nearing the time of the shipment. As a result, the Group has concluded that a contract with the customer does not exist for those shipments for which the actual delivery quantity and transaction price have not yet been negotiated or determined. R. Finance income and finance expense Finance income and expenses are recognised using the effective interest rate method, which, for floating rate financial assets and liabilities is the rate inherent in the instrument. All finance income and expenses are stated net of the amount of goods and services tax (GST) and local value added tax (VAT). S. Goods and Service Tax (GST) and Value Added Tax (VAT) Revenues, expenses and assets are recognised net of the amount of respective GST or VAT, except where the amount of GST or VAT incurred is not recoverable from the relevant Tax Office. In these circumstances the GST or VAT is Page 42 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 1. 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 Consolidated Statement of Financial Position are shown inclusive of GST or VAT. Cash flows are presented in the Consolidated Statement of Cash Flows a gross basis, except for the GST or VAT component of investing and financing activities, which are disclosed as operating cash flows. Trade and other payables T. These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Leases U. At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease present, a right-of- use asset and a corresponding lease liability is recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (ie a lease with a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expense on a straight-line basis over the term of the lease. Initially, the lease liability is measured at the present value of the lease payments still to be paid at commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate. Lease payments included in the measurement of the lease liability are as follows:   fixed lease payments less any lease incentives; variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; the amount expected to be payable by the lessee under residual value guarantees; the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; lease payments under extension options, if lessee is reasonably certain to exercise the options; and payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.     The right-of-use assets comprise the initial measurement of the corresponding lease liability as mentioned above, any lease payments made at or before the commencement date, as well as any initial direct costs. The subsequent measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest. Where a lease transfers ownership of the underlying asset, or the cost of the right-of-use asset reflects that the Group anticipates exercising a purchase option, the specific asset is depreciated over the useful life of the underlying asset. V. Earnings per share v.i. Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. v.ii. Diluted earnings per share Diluted earnings per share adjust 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. W. Assets held for sale Non-current assets and disposal groups are classified as held for sale and measured at the lower of carrying amount and fair value less costs to sell, where the carrying amount will be recovered principally through sale as opposed to continued use. No depreciation or amortisation is charged against assets classified as held for sale. Classification as “held for sale” occurs when: management has committed to a plan for immediate sale; the sale is expected to occur within one year from the date of classification; and active marketing of the asset has commenced. Such assets are classified as current assets. Page 43 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 1. A discontinued operation is a component of an entity, being a cash-generating unit (or a group of cash generating units), that either has been disposed of, or is classified as held for sale, and: represents a separate major line of business or geographical area of operations; is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with the view to resale. Impairment losses are recognised for any initial or subsequent write-down of an asset (or disposal group) classified as held for sale to fair value less costs to sell. Any reversal of impairment recognised on classification as held for sale or prior to such classification is recognised as a gain in Consolidated Profit or Loss and Other Comprehensive Income in the period in which it occurs. X. Impairment of non-financial 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 asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Consolidated Statement of Profit or Loss and Other Comprehensive Income. 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. Y. Critical accounting judgments and key sources of estimation uncertainty In the application of the Group’s accounting policies, which are described in Note 1, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or, in the period of the revision and future periods if the revision affects both current and future periods. The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:     Recoverability of exploration and evaluation expenditure The recoverability of the capitalised acquisition expenditure recognised as a non-current asset is dependent upon the successful development, or alternatively sale, of the respective tenements which comprise the assets. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on average costs over the relevant period of production and includes expenditure in accumulating the inventories, production costs and other costs incurred in bringing them to their existing location and condition. Stockpile tonnages are verified by periodic surveys. Rehabilitation The extent of work required and the associated costs are estimated based on feasibility and engineering studies using current restoration standards and techniques. Provisions for the cost of each rehabilitation programme are recognised at the time that environmental disturbance occurs. Impairment of non-financial assets The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. In light of lengthy negotiations with the Malawi government and ongoing logistical issues with the operation of the mine, the Group recognised a full impairment on the carrying value of its Malawian subsidiaries. Page 44 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D) Z. Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. 2. REVENUES From continuing operations Coal sales 3. DEPRECIATION AND AMORTISATION Loss before income tax includes the following specific expenses: Depreciation and amortisation Depreciation Plant and equipment Right of use assets Total depreciation Amortisation Total CONSOLIDATED 2020 $’000S 2019 $’000S 37,770 52,277 CONSOLIDATED 2020 $’000S (1,172) (502) (1,674) (57) (1,731) 2019 $’000S (907) (18) (925) (76) (1,001) Page 45 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 4. INCOME TAX BENEFIT (a) Numerical reconciliation of income tax expense to prima facie tax payable Profit/(loss) from ordinary activities before income tax expense Prima facie tax/(benefit) on profit/(loss) from ordinary activities at 30% Non-deductible expenditure Tax effect of temporary differences not recognised Tax effect of current year tax profits/(losses) for which no deferred tax asset has been recognised Foreign tax losses utilised Foreign income tax payable Income tax (benefit)/ expense (b) Unrecognised temporary differences Deferred Tax Assets (at 30%) Temporary differences Carry forward revenue tax losses Carry forward capital tax losses Carry forward foreign tax losses Total CONSOLIDATED 2020 $’000S 2019 $’000S (17,186) (5,156) 24 (542) 5,674 - - - 4,031 5,806 8 17,151 26,996 4,535 1,361 38 1,299 (2,698) - - - 3,611 6,043 8 12,202 21,864 The deferred tax assets relating to carry forward losses and temporary differences have not been brought to account as it is unlikely they will arise until such a point that the Company generates sufficient profit to utilise them. 5. KEY MANAGEMENT PERSONNEL COMPENSATION The following persons were Key Management Personnel of the Company during the financial year: Non-Executive Directors Executive Directors Senior Management Mr G Robertson (Chairman) Mr J Shedd (Managing Director/CEO) Ms K Angel (Chief Financial Officer) Mr T Wilson Mr A Fraser Mr D Marc Schwarz1 1Mr Marc Schwarz was appointed 31 July 2019 Page 46 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 5. KEY MANAGEMENT PERSONNEL COMPENSATION (CONT’D) KEY MANAGEMENT PERSONNEL COMPENSATION Short-term employee benefits Superannuation Post-employment benefits Performance rights Total Compensation 2020 $ 1,023,073 - - - 2019 $ 906,387 - - - 1,023,073 906,387 Details on the remuneration paid to the non-executive directors and executive directors who at any point during the year had authority and responsibility for planning, directing and controlling the activities of Intra energy Corporation Limited are provided under Section B of the Remuneration Report. EQUITY INSTRUMENT DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL Options provided as remuneration and shares issued on exercise of such options Details of options and performance rights provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in the Remuneration Report forming part of the Directors’ Report. 6. AUDITOR’S REMUNERATION Audit services Auditors of the Group Audit and review of financial reports – Hall Chadwick Non-Audit services Tax advisory services Other advisory services CONSOLIDATED 2020 $’000S 2019 $’000S 195 195 - - - 195 195 - - - Page 47 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 7. EARNINGS PER SHARE 2020 2019 Basic and diluted loss per share Profit/(loss) from continuing operations attributable to the ordinary equity holders of the Company ($11,615,000) $3,461,000 Profit/(loss) from discontinued operations attributable to the ordinary equity holders of the Company (154,000) (181,000) Profit/(loss) attributable to the ordinary equity holders of the Company ($11,769,000) $3,280,000 Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS 387,724,030 387,724,030 Profit/(loss) per share (cents) – basic and diluted from continuing operations Profit/(loss) per share (cents) – basic and diluted from discontinued operations Profit/(loss) per share (cents) – basic and diluted (3.00) (0.04) (3.04) 8. INVENTORIES Consumables, fuel and other equipment Coal stock Total Less: Provision for impairment Net carrying amount CONSOLIDATED 2020 $’000S 624 1,108 1,732 (1) 1,731 0.85 (0.05) 0.80 2019 $’000S 926 1,278 2,204 - 2,204 Page 48 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 9. TRADE AND OTHER RECEIVABLES Current Trade receivables Other receivables Related party receivables Prepayments Total Less: Provision for impairment Net carrying amount Non-current Other receivables Less: Provision for impairment CONSOLIDATED 2020 $’000S 4,321 486 138 735 5,680 (1,500) 4,180 218 (218) - 2019 $’000S 5,077 370 138 885 6,470 (1,410) 5,060 214 (214) - Page 49 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 10. DISPOSAL GROUP HELD FOR SALE AND DISCONTINUED OPERATIONS The Malawi Group was presented as a disposal group held for sale since the carrying value of the assets were fully impaired as at 30 June 2016. In 2020 the Company continued to work to progress a sale with potential purchasers but was not successful and the Malawi Group was no longer considered as available for sale. The mining license was also relinquished and associated costs were written-off. The Malawi Group will subsequently be wound up. As at 30 June 2019 the group was presented as a disposal group held for sale. As at 30 June 2020 the discontinued operations group was stated at lower of carrying value and fair value and comprised the following assets and liabilities Assets and Liabilities held for sale and discontinued operations Current Assets Property, plant and equipment Mine development expenditure Exploration expenditure Inventories Trade and other receivables Less: Provision for impairment Assets held for sale and discontinued operations Current Liabilities Trade and other payables Employee benefits Liabilities held for sale and discontinued operations CONSOLIDATED 2020 $’000S - - - - - - - - - - 2019 $’000S 244 1,273 4 1 9 (1,531) - 1,182 - 1,182 ^On 28 August 2013, IEC’s subsidiary Malcoal Mining Limited entered into a hire purchase arrangement to finance mining equipment at the Malcoal Mine in Malawi. The agreement term is 5 years with an option to purchase the equipment at the conclusion of the term. On 31 March 2016, the arrangement was terminated and the assets returned to the supplier. A contingent liability has been recognised for a legal claim that the supplier has brought to the company, see note 24. The Malawian subsidiaries earned no revenue and recorded a loss after tax of $78,000 for the year ended 30 June 2020, and an additional provision of impairment amounting to $90,000. Page 50 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 11. PROPERTY, PLANT AND EQUIPMENT 30 June 2020 Year ended 30 June 2020* At 1 July 2019, net of accumulated depreciation Additions Transfers Depreciation charge Effect of exchange rates (net) At 30 June 2020, net of accumulated depreciation At 30 June 2020 At cost Accumulated depreciation and impairment Net carrying value Office Equipment $’000 Mining Plant and Equipment $’000 Motor Vehicles $’000 Leasehold $’000 Capital Work in Progress $’000 Software $’000 Right of Use Assets $’000 368 9 20 (110) 43 330 1,240 (910) 330 6,372 67 - (999) 315 5,755 11,315 (5,560) 5,755 418 - - (174) 11 255 1,241 (986) 255 437 - 72 (78) 18 449 778 (329) 449 666 - (579) - - 87 87 - 87 10 - - - 2 12 488 (476) 12 244 1,902 487 (313) (225) 2,095 2,495 (400) 2,095 Total $’000 8,515 1,978 - (1,674) 164 8,983 17,644 (8,661) 8,983 * Refer to Note 1(b) for adjustments recognised on adoption of AASB 16 on 1 July 2020. $6.88m of Property, Plant and Equipment is held as collateral by KCB Bank of Tanzania in relation to loan facilities. Page 51 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 11. PROPERTY, PLANT AND EQUIPMENT (CONT’D) 30 June 2019 Year ended 30 June 2019 At 1 July 2018, net of accumulated depreciation Additions Acquisition of AAA Drilling Disposals (net) Transfers Depreciation charge Effect of exchange rates (net) At 30 June 2019, net of accumulated depreciation At 30 June 2019 At cost Accumulated depreciation and impairment Net carrying amount Year ended 30 June 2019 Office Equipment $’000 Mining Plant and Equipment $’000 Motor Vehicles $’000 Leasehold $’000 Capital Work in Progress $’000 Software $’000 330 78 - (48) 94 (102) 16 368 1,168 (800) 368 5,250 706 417 - 282 (658) 375 6,372 11,020 (4,648) 6,372 275 351 - (105) - (112) 9 418 1,230 (812) 418 400 74 - - - (53) 16 437 688 (251) 437 375 667 - - (376) - - 666 666 - 666 Total $’000 6,640 1,876 417 (153) - (925) 416 8,271 10 - - - - - - 10 486 (476) 10 15,258 (6,987) 8,271 $8.271m of Property, Plant and Equipment is held as collateral by KCB Bank of Tanzania in relation to loan facilities. Page 52 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 12. MINE DEVELOPMENT COSTS Tancoal Mine Opening balance Mine development expenditure Rehabilitation asset Amortisation Effect of exchange rates Net carrying value CONSOLIDATED 2020 $’000s 2019 $’000s 5,079 4,823 - 135 (57) 15 - 114 (76) 218 5,172 5,079 The recoverable amounts of the Group’s mine development costs and property, plant and equipment have been determined by a value-in-use calculations using a discounted cash flow model, based on a 12-month projection period approved by the Board and extrapolated for a further 4 years by using key assumptions. The key assumptions in the calculations include:      Long-term thermal coal prices of US$42 – US$45 per tonne Long-term exchange rate of US$1:00: AUD$0.70 Discount rate of 20% Revenue and cost growth rate of 5% Coal reserves and resources Based on the above assumptions at 30 June 2020 the recoverable amount is determined to be above the carrying value of mining assets resulting in no further impairment. The most sensitive input in the value in use calculations is forecast revenue, which is primarily dependent on estimated future coal prices and the AUD/USD forecast exchange rate. If the long-term coal prices had been 10% lower than management’s estimates, the recoverable amount would still exceed the carrying value of mining assets. If the AUD/USD long-term exchange rate was $0.80, the recoverable amount would still exceed the carrying value of mining assets. 13. EXPLORATION EXPENDITURE Tancoal Energy Limited tenements Opening balance Exploration expenditure Impairment Effect of exchange rates Net carrying value CONSOLIDATED 2020 $’000s 2019 $’000s 722 47 (230) 15 554 636 59 - 27 722 The recoverability of the carrying amount of exploration assets is dependent on the successful development and commercial exploitation or sale of the respective mining permits. Page 53 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 14. INVESTMENTS Investment in unlisted shares Opening balance Investment expenditure Total CONSOLIDATED 2020 $’000s 2019 $’000s - 226 226 - - - Investment by Intrafrican Resources Limited, a fully owned subsidiary registered in Mauritius in Intra Minerals Limited, a company registered in Mauritius, which is the 95% owner of the Minas Do Lurio Gold Project in Mozambique. Intrafrican Resources Limited owns 15% of the Project. 15. TRADE AND OTHER PAYABLES Current Trade payables Related party payables Accruals and other payables Total Non-current Trade and other payables CONSOLIDATED 2020 $’000s 10,034 1,255 9,507 20,796 11,209 2019 $’000s 5,623 220 9,411 15,254 - Total 15,254 Amount owing by Tancoal energy Limited to Ministry of Mineral Tanzania for royalty and clearance fees on cost of transport to customers premises for past years 2011 to 2014. Amount to be paid over four years A$15.84m (US$10.4m). 11,209 16. INTEREST BEARING LIABILITIES Current Secured loan facilities Total CONSOLIDATED 2020 $’000s 1,336 1,336 2019 $’000s 2,005 2,005 16(a) Secured loan facility In July 2017 KCB approved a facility of US$936,000 to be repaid over five years at a rate of 8% per annum for the purchase of a new crushing and screening plant, the balance payable at 30 June 2020 was US$442,000 (2018: US$692,000). In July 2018, US$0.9m of the overdraft facility with KCB was converted to a term loan to be repaid over three years at a rate of 8% per annum, the balance payable at 30 June 2020 was US$351,000 (2019: US$648,000). Page 54 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 16. INTEREST BEARING LIABILITIES (CONT’D) 16(b) Bank overdraft facility The bank overdraft facility was US$0.9m, the balance payable at 30 June 2020 was A$1,287,000. Interest is charged on the facility at a rate of 8% per annum. The overdraft is not subject to any covenant requirements and is repayable on demand. 16(c) Insurance Premium facility During the year Commercial Bank of Africa Limited (CBA) provided an insurance premium facility, the balance payable at 30 June 2020 was A$181,000 (2019: A$184,000). 17. LEASE LIABILITIES Current Lease liabilities Hire purchase Total Non-current Lease liabilities Total CONSOLIDATED 2020 $’000s 2019 $’000s 1,107 341 1,448 85 85 - - - - - * In the previous year, the group only recognised lease assets and lease liabilities in relation to leases that were classified as “finance leases” under AASB 117: Leases. The assets were presented in property, plant and equipment and the liabilities as part of the group’s borrowings. In January 2014, a hire purchase contract with an option to purchase four trucks was entered into with Extran Limited, a related party of Graeme Robertson and David Mason. The full amount under the contract of A$341,000 (2019: A$334,000) was outstanding at 30 June 2019. 18. PROVISIONS Non-current Rehabilitation provision Total Page 55 CONSOLIDATED 2020 $’000s 887 887 2019 $’000s 803 803 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 18. PROVISIONS (cont’d) The movement in provisions during the year are as follows: 2020 $000’s Opening balance Addition Effect of exchange rates Closing balance Represented by Current Non-current Closing balance 2019 $000’s Opening balance Addition Effect of exchange rates Closing balance Represented by Current Non-current Closing balance Rehabilitation Total 803 135 (51) 887 - 887 887 803 135 (51) 887 - 887 887 Rehabilitation Total 662 114 27 803 - 803 803 662 114 27 803 - 803 803 Rehabilitation The mining, extraction and processing activities of the Group give rise to obligations for site rehabilitation. Rehabilitation obligations can include facility decommissioning and dismantling, removal or treatment of waste materials, land rehabilitation and site restoration. The extent of work required and the associated costs are estimated based on feasibility and engineering studies using current restoration standards and techniques. Provisions for the cost of each rehabilitation programme are recognised at the time that environmental disturbance occurs. Page 56 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 19. ISSUED CAPITAL Balance at the beginning of the year: Shares issued Share issue costs Balance at the end of the year 2020 Issue price No. $ per share 2020 $’000s 2019 Issue price No. $ per share 387,724,030 69,590 387,724,030 - - - - - - - - - - 2019 $’000s 69,590 - - 387,724,030 69,590 387,724,030 69,590 Fully paid ordinary shares carry one vote per share and carry the rights to dividends 20. RESERVES 20(a) Options reserve Balance at the beginning of the year Options exercised during year Options expired during year Issued during the year Balance at the end of the year 1. Options reserve recognises the fair value of options issued 2. No options were issued during the year ended 30 June 2020 20(b) Performance Rights reserve Total Performance Rights reserve 2020 No.      2020 $’000s 2,216    2,216 2019 No.      2019 $’000s 2,216    2,216 CONSOLIDATED 2020 $’000s 795 2019 $’000s 795 1. The performance rights reserve recognises the fair value of performance rights issued as compensation to employees 2. No performance rights were issued during the year ended 30 June 2020 20(c) Foreign currency translation reserve Non-current Balance at the beginning of the year Foreign currency translation differences Balance at the end of the year Page 57 CONSOLIDATED 2020 $’000s (899) 172 (727) 2019 $’000s (1,584) 685 (899) For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 20. RESERVES (CONT’D) Foreign currency translation reserve recognises exchange differences arising on translation of the foreign controlled entities. The cumulative amount is reclassified to profit or loss when the net investment is disposed of. 21. SUBSIDIARIES AND JOINTLY CONTROLLED ENTITIES The Consolidated Financial Statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with accounting policy described in Note 1. Name of Entity Country of Incorporation Class of Share Equity (%)* 2020 Equity (%)* 2019 Intra Energy (Tanzania) Limited Tanzania Ordinary Tancoal Energy Limited Tanzania Ordinary Intrafrican Resources Limited Mauritius Ordinary Tanzacoal East Africa Mining Limited Tanzania Ordinary AAA Drilling Limited AAA Drilling Limited Intra Energy Limited Mauritius Ordinary Tanzania Ordinary Mauritius Ordinary East Africa Mining Limited Mauritius Ordinary Intra Energy Trading (Malawi) Limited Malawi Ordinary Malcoal Mining Limited Malawi Ordinary Intra Energy (Sarawak) Sdn. Bhd.** Malaysia Ordinary Pamodzi Power Limited Malawi Ordinary 100% 70% 100% 85% 100% 100% 100% 100% 100% 90% 100% 100% 100% 70% - 85% 100% 100% 100% 100% 100% 90% 100% 100% * Percentage of voting power is in proportion to ownership ** Entity is dormant and in the process of winding up. 22. NON-CONTROLLING INTEREST Total non-controlling interest CONSOLIDATED 2020 $’000s (11,202) 2019 $’000s (5,739) The Company’s subsidiary Intra Energy (Tanzania) Limited (“IETL”) owns 70% of Tancoal and 30% is owned by Tancoal’s joint venture partner, the National Development Corporation of Tanzania, a Tanzanian government entity. IETL owns 85% of Tanzacoal and 15% is owned by IETL’s Tanzacoal joint partner, Olympic Exploration Limited, a private Tanzanian entity. The Company’s subsidiary East Africa Mining Limited owns 90% of Malcoal and 10% is owned by Consolidated Mining Industries Limited, a private Malawian entity. Page 58 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 23. COMMITMENTS 23(a) Operating Commitments Operating expenditure contracted for at the reporting date but not recognised as liabilities is as follows: Tenement Leases Expenditure Payable Less than 1 year Between 2 and 5 years Greater than 5 years Total 2020 $’000s 302 895 - 1,197 2019 $’000s 550 1,182 - 1,732 23(b) Capital and Leasing Commitments Finance lease liabilities committed to at the reporting date, recorded as liabilities, are as follows: Lease commitments Payables – minimum lease payments Not later than 12 months Between 12 months and 5 years Minimum lease payments Less: future finance charges Present value of minimum lease payments Operating lease commitments: 2020 $’000s 2019 $’000s 1,517 88 1,605 (72) 1,533 324 - 324 - 324 Non-cancellable operating leases contracted for but not recognised in financial statements were nil (2019: $127,000). Hire Purchase In January 2014, a hire purchase contract with an option to purchase four trucks was entered into with Extran Limited, a related party of Graeme Robertson and David Mason. The full amount under the contract of $341,000 (2019: $334,000) was outstanding at 30 June 2020. 24. CONTINGENT LIABILITIES AND CONTINGENT ASSETS The supplier of the hire purchase contract in Malawi has brought a legal claim for penalties as part of the cancellation of the arrangement against the subsidiary company Malcoal Mining Limited. The company is defending the claim but the potential liability may be up to $500,000 in addition to costs accounted for in the accounts. The claim was still pending at 30 June 2020. Tancoal Energy Limited in Tanzania won a legal claim brought by NBC bank for recovery of money paid under a letter of credit arrangement in 2013 for a potential liability up to US$470,000 and also won a claim against NBC for the return of US$230,000 it withdrew without authority from Tancoal’s bank account. NBC has lodged an appeal. Other than the above, the Directors are not aware of any other contingent liabilities or contingent assets at 30 June 2020. The Tanzanian Revenue Authority (TRA) issued Tancoal a VAT assessment for the years 2011 to 2015 for TZS 6 billion (A$3.7 million), the amount of TZS 3.9 billion (A$2.4 million) has been provided for in the FY 2019 accounts. Tancoal Page 59 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 24. CONTINGENT LIABILITIES AND CONTINGENT ASSETS (cont’d) has not provided the full amount as it has proof of payments that were not included in the TRA’s assessment. Tancoal has lodged an objection to the assessment and paid the one third required for the objection to be administered. 25. SEGMENT REPORTING The Group operates in two geographical segments being Australia and Africa. Segment information The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision maker) in assessing performance and determining the allocation of resources. The Group’s business is the exploration, evaluation, marketing, production and sale of coal in Africa. Basis of Accounting for purposes of reporting by operating segments Accounting policies adopted Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent with those adopted in the annual Financial Statements of the Group. Inter-segment loans payable and receivable are initially recognised at the consideration received net of transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates. Segment assets Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location. Unless indicated otherwise in the segment assets note, investments in financial assets, deferred tax assets and intangible assets have not been allocated to operating segments. Segment liabilities Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables. Notes to and forming part of the segment information The consolidation adjustments represent the elimination of inter-segment loan balances and transactions. Accounting policies Segment information is prepared in conformity with the accounting policies of the entity as per Accounting Standard AASB 8 Operating Segments. Page 60 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 25. SEGMENT REPORTING (CONT’D) Australia Period Ended 30 June 20 $’000 Australia Period Ended 30 June 19 $’000 Africa Period Ended 30 June 20 $’000 Africa Period Ended 30 June 19 $’000 Elimination Period Ended 30 June 20 $’000 Elimination Period Ended 30 June 19 $’000 Consolidated Period Ended 30 June 20 $’000 Consolidated Period Ended 30 June 19 $’000 Geographical Segment Revenue Sales revenue Inter-segment revenue Total revenue Net costs of production Gross Profit Other income – 3,093 3,093 – 3,093 – 2,654 2,654 – 2,654 37,770 37,770 (29,308) 8,462 52,277 – 52,277 (38,581) 13,696 Other operating expenses (1,725) (1,909) (20,866) (5,673) Profit/(loss) before impairment, depreciation, amortisation, net finance costs and tax Impairment Depreciation Write-off goodwill Amortisation 1,368 – – – – Results from operating activities 1,368 745 – – (73) – 672 (12,404) (687) (1,674) – (57) (14,822) 8,023 – (925) – (76) 7,022 – (3,093) (3,093) – (3,093) – – – (2,654) (2,654) – (2,654) – – (3,093) (2,654) – – – – – – – – 37,770 – 37,770 (29,308) 8,462 – (22,591) (14,129) (687) (1,674) – (57) (3,093) (2,654) (16,547) Finance income Finance expenses Profit/(loss) before tax Income tax benefit/(expense) Net Loss from continuing operations Loss from discontinued operations and impairments on those operations Profit/(loss) for the year Total Assets Total Liabilities Page 61 4,466 (159) 4,684 (142) 20,933 (78,432) 22,124 (60,651) (4,231) 41,413 (4,748) 39,783 – (471) (17,018) – (17,018) (168) (17,186) 21,168 (37,178) 52,277 – 52,277 (38,581) 13,696 – (7,582) 6,114 – (925) (73) (76) 5,040 10 (325) 4,725 – 4,725 (194) (1,921) 22,060 (21,010) For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 26. CASH FLOW INFORMATION Profit/(loss) before income tax Non-cash flows in profit Depreciation and amortisation Loss on sale and impairment of non-current assets Doubtful debts Foreign exchange (Reversal)/impairment of assets Share of loss of equity-accounted investees Transfer of overdraft to term loan Finance costs Write-off goodwill Change in inventories Change in receivables Change in provisions Change in trade payables and employee benefits Change in current assets Net cash provided in operating activities 27. SHARE BASED PAYMENTS 27(a) Shares and options 2020 $’000s (17,186) 2019 $’000s 4,535 1,731 1,001 230 457 45 90 - - 178 - 473 423 41 16,751 (1,272) 1,961 153 - 769 6 87 (1,187) - 73 731 (2,728) 141 (680) 27 2,928 No shares or options were granted by the Company during the 2020 or 2019 years. 27(b) Performance rights No Performance rights were issued in the 2020 or 2019 years. 28. SUBSEQUENT EVENTS There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years. 29. RELATED PARTY TRANSACTIONS Details relating to Key Management Personnel are disclosed in Note 5 and remuneration report contained in the directors’ report. 2020 At 30 June 2020 a loan of US$150,000 (A$218,000) to Malcoal joint venture partner Consolidated Mining Industries Limited, a private Malawian entity remained outstanding. The loan was to be repaid from first dividends from Malcoal and interest is charged on the loan at the rate of 5% per annum. The loan was fully impaired at 30 June 2016 and remained unpaid at 30 June 2020. At 30 June 2020, $115,000 was receivable from Geothermal Power Tanzania Limited and NuEnergy Gas (Tanzania) Limited, $13,000 was receivable from NuAfrica Limited and $13,000 was receivable from Tanzagrain Page 62 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 29. RELATED PARTY TRANSACTION (CONT’D) Limited, for services provided in a prior year, related parties to Graeme Robertson. The companies are no longer operating so the balances were fully impaired at 30 June 2020. A company related to Graeme Robertson provides management services for subsidiary companies in Mauritius and during 2020 the company provided services of US$9,000. In January 2014, a hire purchase contract with an option to purchase four trucks was entered into with Extran Limited, a related party of Graeme Robertson and David Mason. An amount of $341,000 was outstanding at 30 June 2020. At 30 June 2020 an amount of $1.255m was owed to National Development Corporation (“NDC”) the 30% joint venture partner in Tancoal Energy Limited for unpaid management fees. 2019 At 30 June 2019 a loan of US$150,000 (A$214,000) to Malcoal joint venture partner Consolidated Mining Industries Limited, a private Malawian entity remained outstanding. The loan was to be repaid from first dividends from Malcoal and interest is charged on the loan at the rate of 5% per annum. The loan was fully impaired at 30 June 2016 and remained unpaid at 30 June 2019. At 30 June 2019, $112,000 was receivable from Geothermal Power Tanzania Limited and NuEnergy Gas (Tanzania) Limited, $13,000 was receivable from NuAfrica Limited and $13,000 was receivable from Tanzagrain Limited, for services provided in a prior year, related parties to Graeme Robertson. In January 2014, a hire purchase contract with an option to purchase four trucks was entered into with Extran Limited, a related party of Graeme Robertson and David Mason. An amount of $334,000 was outstanding at 30 June 2019. 30. FINANCIAL RISK MANAGEMENT Exposure to credit and interest rate risks arises in the normal course of the Group’s businesses. The Group has exposure to the following risks from their use of financial instruments: Credit Risk Liquidity Risk    Market risk i) Interest rate risk, ii) Foreign currency risk This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout this financial report. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed to reflect changes in market conditions and the Group’s activities. The Group, through their training and management standards and procedures, aim to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. 30(a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities. Page 63 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 30. FINANCIAL RISK MANAGEMENT (CONT’D) Exposure to credit risk The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Trade and other receivables Cash and cash equivalents Total Trade and other receivables 2020 $’000s 4,180 322 4,502 2019 $’000s 5,060 724 5,784 Some of the Group’s receivables relate to GST and other taxation (including VAT) due from the Australian and Tanzanian taxation offices and trade receivables from coal sales. Cash and cash equivalents Cash and cash equivalents comprise of cash on hand and demand deposits. The Group limits its credit risk by holding its cash balance and demand deposits with reputable counterparties with acceptable credit ratings. 30(b) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Board monitors liquidity risk on a monthly basis. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period. The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements: 30 June 2020 CARRYING AMOUNT $’000S CONTRACTUAL CASH FLOWS 6 MONTHS OR LESS 6 – 12 MONTHS 1 – 2 YEARS 2 – 5 YEARS MORE THAN 5 YEARS $’000S $’000S $’000S $’000S $’000S $’000S Non-derivative financial liabilities Current Bank overdraft 1,287 1,287 1,287 Trade and other payables 32,005 32,005 20,796 Interest bearing liabilities Lease liabilities 1,336 1,533 1,336 1,533 529 712 – – 459 736 – – 2,802 8,407 320 85 28 – Total 36,161 36,161 23,324 1,195 3,207 8,435 – – – – – Page 64 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 30. FINANCIAL RISK MANAGEMENT (CONT’D) 30 June 2019 CARRYING AMOUNT $’000S CONTRACTUAL CASH FLOWS 6 MONTHS OR LESS 6 – 12 MONTHS 1 – 2 YEARS 2 – 5 YEARS MORE THAN 5 YEARS $’000S $’000S $’000S $’000S $’000S $’000S Non-derivative financial liabilities Bank overdraft 967 967 967 Trade and other payables 15,254 15,254 15,254 Interest bearing liabilities 2,715 2,715 872 Total 18,936 18,936 17,093 – – 712 712 – – 750 750 – – 381 381 – – – – Cash and receivables The following are the contractual maturities of financial assets including receivables. 30 June 2020 Financial assets Cash Trade and other receivables Total 30 June 2019 Financial assets Cash Trade and other receivables Total CARRYING AMOUNT $’000S 322 4,180 4,502 CARRYING AMOUNT $’000S 724 5,060 5,784 CONTRACTUAL CASH FLOWS 6 MONTHS OR LESS 6 – 12 MONTHS 1 – 2 YEARS 2 – 5 YEARS MORE THAN 5 YEARS $’000S $’000S $’000S $’000S $’000S $’000S 322 4,180 4,502 322 4,180 4,502 – – – – – – – – – – – – CONTRACTUAL CASH FLOWS 6 MONTHS OR LESS 6 – 12 MONTHS 1 – 2 YEARS 2 – 5 YEARS MORE THAN 5 YEARS $’000S $’000S $’000S $’000S $’000S $’000S 724 5,060 5,784 724 5,060 5,784 – – – – – – – – – – – – 30(c) Market risk Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Page 65 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 30. FINANCIAL RISK MANAGEMENT (CONT’D) (i) Interest rate risk Profile At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was: 30 June 2020 Financial assets Cash and cash equivalents Trade and other receivables Total Financial liabilities Current Bank overdraft Trade and other payables Interest bearing liabilities Lease liabilities Total Non-current Trade and other payables Lease liabilities Total NET FINANCIAL ASSETS/ (LIABILITIES) AVERAGE INTEREST RATE % FLOATING INTEREST RATE % 0% 0% – – – – – – – – – – – – – 8% – 8% 10% – – 8% – – TOTAL $’000S 322 4,180 4,502 1,287 20,796 1,336 1,448 24,867 11,209 85 11,294 (31,659) Page 66 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 30. FINANCIAL RISK MANAGEMENT (CONT’D) 30 June 2019 Financial assets Cash and cash equivalents Trade and other receivables Total Financial liabilities Bank overdraft Trade and other payables Interest bearing liabilities Total NET FINANCIAL ASSETS/ (LIABILITIES) 30. FINANCIAL RISK MANAGEMENT (CONT’D) AVERAGE INTEREST RATE % FLOATING INTEREST RATE % 0% 0% – – – – – – – – – 8% – 8% – – TOTAL $’000S 724 5,060 5,784 967 15,254 2,715 18,936 (13,152) The Group’s cash at bank and on hand and short term deposits had a weighted average floating interest rate at year end of 0%. The Company currently does not engage in any hedging or derivative transactions to manage interest rate risk. Interest rate sensitivity A sensitivity of 10% has been selected as this is considered reasonable given the current level of both short term and long term interest rates. A 10% movement in interest rates at the reporting date would have increased (decreased) equity and profit and loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. 30 June 2020 Financial assets Cash and cash equivalents Interest bearing liabilities Lease liabilities Total PROFIT OR LOSS EQUITY 10% INCREASE $’000S 10% DECREASE $’000S 10% INCREASE $’000S 10% DECREASE $’000S – (11) (15) (26) – 11 15 26 – (11) (15) (26) – 11 15 26 Page 67 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 30. FINANCIAL RISK MANAGEMENT (CONT’D) 30 June 2019 Financial assets Cash and cash equivalents Interest bearing liabilities Total Foreign currency risk PROFIT OR LOSS EQUITY 10% INCREASE $’000S 10% DECREASE $’000S 10% INCREASE $’000S 10% DECREASE $’000S – (22) (22) – 22 22 – (22) (22) – 22 22 As a result of activities overseas, the Group’s Consolidated Statement of Financial Position can be affected by movements in exchange rates. The Group also has transactional currency exposures. Such exposure arises from transactions dominated in currencies other than the functional currency of the entity. The Group currently does not engage in any hedging or derivative transactions to manage foreign currency risk. The Group’s exposure to foreign currency risk throughout the current year primarily arose from the Group’s 100% interest in Intra Energy (Tanzania) Limited and its controlling interests in Tancoal and Tanzacoal (collectively “Tanzanian subsidiaries”), whose functional currencies are Tanzanian Shillings. Additionally the Group has exposure to foreign currency risk through the Group’s 90% interest in Malcoal Mining Limited and 100% interest in Intra Energy Trading Malawi Limited (collectively “Malawian subsidiaries”), whose functional currencies are Malawian Kwacha. Foreign currency risk arises on translation of the net assets of these entities to Australian dollars. The foreign currency gains or losses arising from this risk are recorded through the foreign currency translation reserve. The Group is additionally exposed to the USD by way of its USD denominated loans to the KCB Bank Tanzania Limited and leases with Kanu Equipment. The foreign currency gains or losses arising from this risk are recorded Sensitivity Analysis for Foreign Currency risk A sensitivity of 10% has been selected as this is considered reasonable given historic and potential future changes in foreign currency rates. This has been applied to the net assets of the Group. This sensitivity analysis is prepared at reporting date. A 10% strengthening of the Australian dollar against the Tanzanian Shilling and Malawian Kwacha at 30 June 2020 would have decreased the net liabilities of the Tanzanian and Malawian subsidiaries by A$1.84m (2019: decrease $0.15m). A 10% weakening of the Australian dollar against the Tanzanian Shilling and Malawian Kwacha at 30 June 2019 would have increased the net liabilities of the Tanzanian and Malawian subsidiaries by A$2.25m (2019: decreased $0.18m). There would be no impact on profit or loss arising from these changes in the currency risk variables as all changes in value are taken to a reserve. A 10% strengthening of the Australian dollar against the United States dollar at 30 June 2020 would have decreased net interest bearing liabilities of the interest bearing loans and lease liabilities by A$0.26m (2019: $0.30m). A 10% weakening of the Australian dollar against the United States dollar at 30 June 2020 would have increased net interest bearing liabilities and lease liabilities by A$0.32m (2019: $0.30m). The impact on profit or loss arising from changes in this currency risk variables would be taken to the Statement of Comprehensive Income. Page 68 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 30. FINANCIAL RISK MANAGEMENT (CONT’D) The above analysis assumes that all other variables, in particular interest rates and equity prices, remain constant. 30(d) Fair value versus carrying amounts The Group’s carrying mounts of fair value assets and liabilities equate to their corresponding fair values. 30(e) Capital management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence. There were no changes in the Group’s approach to capital management during the year. Neither the Group nor any of its subsidiaries are subject to externally imposed capital requirements. Page 69 For personal use onlyNotes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2020 31. PARENT ENTITY DISCLOSURES Financial Position of Intra Energy Corporation Limited Assets Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets Non-Current Assets Investment in subsidiaries1 Investments Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity 2020 $’000S 2019 $’000S 76 28 104 4,136 226 4,362 4,466 159 159 4,307 480 68 548 4,136 - 4,136 4,684 142 142 4,542 69,590 2,998 (68,281) 4,307 69,590 3,011 (68,059) 4,542 1. The ultimate recovery of investments and loans to subsidiaries is dependent on the successful development and commercial exploitation or sale of the subsidiary’s exploration assets. 2. The Parent has net current liabilities of $0.055m (2019: net current assets of $0.41m) Financial Performance of Intra Energy Corporation Limited Profit/(loss) for the year Total Comprehensive Income 2019 $’000S (222) (222) 2019 $’000S 1,486 1,486 The parent entity has not entered into any guarantees in relation to debts of its subsidiaries, has no contingent liabilities and has no commitments for the acquisition of property, plant and equipment. Page 70 For personal use onlyASX Additional Information FOR THE YEAR ENDED 30 JUNE 2020 Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. The information is current as at 10 September 2020. (a) Distribution of Equity Securities The numbers of shareholders, by size of holding, in each class of share are: 1 1,001 5,001 10,001 100,001      1,000 5,000 10,000 100,000 and over LISTED ORDINARY SHARES NUMBER OF HOLDERS 9,232 228,114 821,274 13,002,687 373,662,723 10.55 10.42 13.53 40.60 24.90 100.00 387,724,030 78 77 100 300 184 739 NUMBER OF SHARES 0.00 0.06 0.21 3.35 96.37 100.00 The number of shareholders holding less than a marketable parcel of shares are: 473 7,543,486 (b) Twenty Largest Shareholders The names of the twenty largest holders of quoted shares are: LISTED ORDINARY SHARES NUMBER OF SHARES PERCENTAGE OF SHARES 115,762,065 29.86 21,576,237 19,097,855 12,314,982 11,362,194 10,064,230 9,312,303 9,058,389 8,835,770 8,731,766 8,474,297 8,319,000 7,975,390 6,850,625 6,250,000 6,245,368 5,205,305 4,399,702 4,135,843 3,500,000 5.56 4.93 3.18 2.93 2.60 2.40 2.34 2.28 2.25 2.19 2.15 2.06 1.77 1.61 1.61 1.34 1.13 1.07 0.90 287,471,321 100,252,709 387,724,030 74.14 25.86 100.00 1. ASPAC MINING LIMITED J P MORGAN NOMINEES AUSTRALIA LIMITED 2. 3. MR DAVID SCHWARTZ 4. MR DAVID JACOB SCHWARTZ & MRS MELANIE ANN SCHWARTZ 5. 6. 7. ROTHSTEIN PTY LTD SPRINGTIDE CAPITAL PTY LTD LUJETA PTY LTD 8. MR MARC ARIEL SCHWARTZ 9. NUVOLARI CAPITAL LIMITED 10. MR PETER TSEGAS 11. MR GRAEME LANCE ROBERTSON 12. JAYANA SUPER PTY LTD 13. MARA SUPERANNUATION PTY LTD 14. MARA SUPERANNUATION PTY LTD 15. MR JOSHUA SAMUEL ALTIT 16. ROTHSTEIN PTY LTD 17. INTRASIA CAPITAL PTE LTD 18. OZEA PTY LTD 19. MS AILEEN ROSAMUND PARIS 20. MR DAVID WILLIAM MC KAY & MRS DONNA MICHELLE MC KAY TOTAL BALANCE OF REGISTER GRAND TOTAL Page 71 For personal use onlyASX Additional Information FOR THE YEAR ENDED 30 JUNE 2020 Substantial Shareholders (c) The names of substantial shareholders who have notified the Group in accordance with section 671B of the Corporations Act 2001 are: ASPAC MINING LIMITED AND ASSOCIATES DAVID SCHWARTZ AND MELANIE SCHWARTZ (d) Schedule of Mining Tenements NUMBER OF SHARES 131,556,585 30,012,837 PERCENTAGE OF ORDINARY SHARES 33.93% 7.74% AREA OF INTEREST TENEMENTS % INTEREST Tanzania Tancoal Energy Limited Intra Energy Limited ML439/2011, PL7391/2011, PL7620/2012, PL7713/2012, PL8999/2013, ML608/2019, ML609/2019, ML610/2019, PL11156/2007, PL 11086/2016, PL 13996/2019 PL 110975/2016, PL10979/2016 Tanzacoal East Africa Mining Limited PL10116/2014 70% 100% 85% Page 72 For personal use only

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