Level 1
100 Havelock Street
West Perth WA 6005
T: + 61 (0) 8 6160 6022
ABN: 50 120 580 618
29 September 2021
The Manager
The Australian Securities Exchange
The Announcements Office
Level 4/20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
2021 ANNUAL REPORT
Please find attached Key Petroleum Limited’s 2021 Annual Report.
This announcement has been authorised by the Board of Directors.
For more information please contact:
IAN GREGORY
Company Secretary
Key Petroleum Limited
Telephone: +61 (0) 8 6160 6022
Email: investors@keypetroleum.com.au
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2021
ACN 120 580 618
CORPORATE INFORMATION
ABN 50 120 580 618
Directors
Geoff Baker (Non-Executive Chairman)
Dennis Wilkins (Non-Executive Director)
Min Yang (Non-Executive Director)
Dongmei Ye (Non-Executive Director)
Company Secretary
Ian Gregory
Registered Office and Principal Place of Business
Level 1
100 Havelock Street
WEST PERTH WA 6005
Telephone: +61 8 6160 6022
Facsimile: +61 8 6160 5901
Solicitors
Thomson Greer
Lawyers
Level 14, 60 Martin Place
SYDNEY NSW 2000
Bankers
National Australia Bank Limited
1232 Hay Street
WEST PERTH WA 6005
Share Register
Computershare Investor Services Pty Ltd
Level 11
172 St George’s Terrace
PERTH WA 6000
Telephone: +61 3 9415 4000 or 1300 850 505 (within Australia)
Auditors
Hall Chadwick
283 Rokeby Road
SUBIACO WA 6008
Internet Address
www.keypetroleum.com.au
Email Address
investors@keypetroleum.com.au
Stock Exchange Listings
Key Petroleum Limited shares (Code: KEY) are listed on the Australian Securities Exchange
1
CONTENTS
Chairman’s Report
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
3
4
15
16
17
18
19
20
45
46
52
2
CHAIRMAN’S REPORT
Dear Shareholders
I am pleased to present the Annual Report of the consolidated entity (referred to as the ‘Group’) consisting of Key Petroleum Limited (referred
to as the ‘Company’) and the entities it controls.
The continued disruption of COVID-19 has caused significant distress in investment in Australia and across the world. This uncertainty seems
to be never ending although there are signs that the worst maybe behind us. To date we have been able to weather these disruptions and not
suffer too many significant adverse consequences.
The Financial Year ending June 2021 for the Group started with some significant changes at the board level with the resignation of Rex
Turkington and Kane Marshall. In the lead up to 2020 the Company had successfully implemented strategy based on organic growth focussed
on conventional oil and gas assets within Australia. However, even before the impact of COVID-19 unfolded, the Company had made efforts
to monetise its offshore Perth basin asset in the face of increasing offshore exploration costs.
The successful sale of WA-481-P to Pilot Energy Limited, completed in December 2020, provided the Company with access to significant
financial resource through receipt of 20,000,000 Pilot shares received in the transaction, as well as the Company's first exposure to a renewable
energy through Pilot’s Mid West Blue Hydrogen project.
In the second half of 2020, as the Group attempted to navigate a path forward for the Company’s remaining assets in the Perth Basin, it became
clear that Key’s best interests would be served by selling its interests in L7 and EP 437. Several factors led to this consideration including the
uncertainty created by the announcement regarding the Kwinana oil refinery. While the sale process has extended out beyond the end of this
financial year the Company remains insulated from any ongoing costs, which are to be covered by Triangle Energy.
While the company continues to monitor the impact of COVID-19 on exploration activities, it is now focussing on the forecast sustained
increase in demand for energy in the east Australian economy. As part of its risk management strategy the Company intends to revert to
previously planned operational schedules once conditions stabilise.
The directors of the Group see great potential in its Cooper-Eromanga Basin assets, particularly for gas, and are confident in delivering
shareholder wealth.
I want to sincerely thank all our loyal shareholders, lenders, clients, directors, employees and consultants for being on the difficult journey
with us. More than ever, we are fully committed to a path of continuous growth and value creation for our shareholders and partners.
Yours sincerely
Geoff Baker
Chairman
28 September 2021
3
DIRECTORS’ REPORT
Your Directors submit their report on the consolidated entity (referred to hereafter as the Company or Group) consisting of Key Petroleum
Limited and the entities it controlled at the end of, or during, the year ended 30 June 2021.
DIRECTORS
The names and details of the Company’s Directors in office during the year and until the date of this report are as follows. Where applicable,
all current and former directorships held in listed public companies over the last three years have been detailed below. Directors were in office
for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Geoff Baker, BCom, LLB, MBA (Non-Executive Director, appointed 1 March 2015 and Non-Executive Chairman appointed 31 August
2020)
Mr Baker is an Australian solicitor residing and working in Hong Kong and UK and has over 30 years of experience assisting companies in
conducting business in China in addition to providing advice in mining, resources and finance. Currently a Non-Executive Director of ASF
Group Limited, Rey Resources Limited, ActivEX Limited and BSF Enterprise PLC.
Min Yang, (Non-Executive Director, appointed 28 January 2014)
Ms Yang resides in Hong Kong and has over 22 years of experience with private and state-run businesses in China and has expertise in the
identification of opportunities in resources and financial investment. Currently the Director and Chairman of ASF Group Limited and a Non-
Executive Chairman of Rey Resources Limited, ActivEX Limited and BSF Enterprise PLC.
Dennis Wilkins, BBus, AICD, ACIS (Non-Executive Director, appointed 5 July 2006)
Mr Wilkins is an accountant who has been a Director, Company Secretary and acted in a corporate advisory capacity to listed resource
companies for over 25 years.
Mr Wilkins previously served as the Finance Director and Company Secretary for a mid-tier gold producer and spent five years working for
a leading merchant bank in the United Kingdom. Resource postings to Indonesia, South Africa and New Zealand in managerial roles has
broadened his international experience.
Mr Wilkins has extensive experience in capital raising, specifically for the resources industry, and is the principal of DWCorporate Pty Ltd
which provides advisory, funding and administrative management services to the resource sector. Within the last three years Mr Wilkins was
also an alternate director of Middle Island Resources Limited (resigned 31 January 2021).
Dongmei (Yvonne) Ye, BAcc, MAcc(CPA), CPA (Non-Executive Director, appointed 18 December 2020)
Ms Ye has over 10 years knowledge and experience gained in small to large businesses in the areas of accounting and taxation compliance.
Prior to being a senior tax accountant in a firm of Chartered Accountants in Australia, she worked internationally in the accounting field, since
2002. Ms Ye also brings to the Company extensive experience in the areas of corporate finance, business restructuring and tax planning in a
number of industries both in Australia and overseas, including with Australian listed companies. Ms Ye is currently a non-executive director
of ActivEX Limited.
Rex Turkington, was a director from the beginning of the financial year until his resignation on 31 August 2020.
Kane Marshall, was a director from the beginning of the financial year until his retirement on 28 August 2020.
COMPANY SECRETARY
Ian Gregory, BBus, FGIA, FCGI, MAICD
Mr Gregory is a professionally well-connected Director and Company Secretary with over 30 years’ experience in the provision of company
secretarial, governance and business administration services with listed and unlisted companies in a variety of industries, including oil and
gas, exploration, mining, mineral processing, banking and insurance. He also has expertise which includes launching successful start-up
operations through the development of the company secretarial role and board reporting processes. Mr Gregory currently consults on company
secretarial and governance matters to a number of listed and unlisted companies.
Prior to founding his own consulting Company Secretarial business in 2005 Mr Gregory was the Company Secretary of Iluka Resources Ltd
(6 years), IBJ Australia Bank Ltd Group, the Australian operations of The Industrial Bank of Japan (12 years), and the Griffin Coal Mining
Group of companies (4 years). Mr Gregory is a past member and Chairman of the Western Australian Branch Council of Governance Institute
of Australia (GIA) and has also served on the National Council of GIA.
4
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 and options of Key Petroleum Limited were:
Geoff Baker
Min Yang
Dennis Wilkins
Yvonne Ye
Ordinary Shares
225,372,940(1)
225,372,940(1)
-
-
Options over
Ordinary Shares
Performance
Rights
-
-
-
-
-
-
-
-
(1) Ms Yang and Mr Baker are both directors of ASF Group Limited which is the ultimate holding company of ASF Oil & Gas Holdings
Pty Ltd which holds shares in Key Petroleum Limited.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were the acquisition of petroleum permits, and the exploration of these permits with the
objective of identifying economic oil and gas reserves.
DIVIDENDS
No dividends were paid or declared during the year. No recommendation for payment of dividends has been made.
OPERATING AND FINANCIAL REVIEW
Operations Review
Much of efforts throughout the financial year ended 30 June 2021, were placed in finding an agreeable solution to progressing efforts in the
Perth Basin. On 28 January 2021 Key Petroleum Limited (Key) announced that it had completed an agreement with Triangle Energy (Global)
Limited (Triangle) and its subsidiary A.C.N. 008 939 080 Pty Ltd for an agreed path forward for the L7 Joint Venture. The agreement included
the transfer of Key’s equity in EP 437 as part of a combined exploration effort on the Bookara Shelf, in the northern Perth Basin, thereby
removing all financial commitments to Key in the Perth Basin.
As part of the commitments Triangle agreed to provide funds to cover and commenced planning activities for a larger (>200sq.km) Bookara
3D survey. At the end of the reporting period planning was well advanced for the proposed 230 sq.km Bookara 3D survey covering a greater
area of L7 and extending into EP 437. Part of the planning activities included the purchase of approximately 200 square kilometres of a high
resolution aerial photo survey to assist with access and environmental approvals.
COVID-19 impacts continued to be felt throughout the year with long standing Western Australian border closures. Towards the end of 2020
Key approached the Department of Mines, Industry Regulation and Safety, Western Australia (DMIRS) to discuss the EP 437 work program,
for the purpose of acquiring a larger 3D survey that encompasses L7 and west into parts of EP 437, including Wye Knot and other identified
prospects. On 12 January 2021 DMIRS approved a Variation and Suspension to the EP 437 work program where the Year three commitment
is now one well and twenty square kilometres of 3D seismic, to be completed by 27 May 2022.
On 17 August 2020 the company announced that the offshore northern Perth Basin permit WA-481-P, operated by Pilot Energy, had been
renewed for a further five years. The R1 renewal area has been carefully selected by the joint venture participants, Key (40%) and Pilot Energy
(60% and Operator), in consideration for the forward work program that is designed to target and illuminate the high graded hydrocarbon
fairways.
Upon completing the renewal of the permit WA-481-P (“the 481 Permit”) on 6 October 2020 Key Petroleum Ltd advised it had entered into
an agreement to sell its 40% interest to Pilot Energy Limited (Pilot), to rationalise the ownership of the 481 Permit., 21 million fully paid
ordinary shares in Pilot were issued to Key (its nominee Key Perth Basin Investments Pty Ltd) in consideration for the transfer of this interest.
At 30 June 2021 the company’s shares in Pilot Energy were worth $1,640,000.
The COVID-19 pandemic continued to impact progress in Key’s Cooper Basin assets during 2021. Key successfully applied to the Department
of Nature Resources, Mines and Energy, Queensland (DNRME) for a variation in it exploration commitments by removing the Year one well
from the ATP-924 renewal program. At 30 June 2021 the company was still waiting for an outcome on its application for project status across
the three ATPs. Key continued its efforts to attract investment for its Cooper Basin exploration program. At the same time the company
continues to monitor movement restrictions, particularly in relation to planning for its exploration commitments. The Company intends to
revert to previously planned operational schedules once conditions stabilise.
Outlook
Key continues to maintain its status as operator of L7 and EP 437 until the transfer of equities and title is completed. All of the costs associated
with this activity will continue to be paid for by Triangle. The Bookara 3D survey remains on track to commence in December 2021, after
crop harvesting in the area is near completion.
Key continued efforts to attract investment for its Cooper Basin assets, while at the same time monitoring movement restrictions, particularly
in relation to planning for its exploration commitments. The Company intends to revert to previously planned operational schedules once
conditions stabilise.
5
Cooper-Eromanga Basin Satellite imagery of ATP-920, 924 and surrounding Cooper Creek catchment area.
6
Finance Review
The Group has recorded an operating loss after income tax for the year ended 30 June 2021 of $2,233,603 (2020: $145,922).
At 30 June 2021 funds available totalled $45,903 (2020: $642,193).
Operating Results for the Year
Summarised operating results are as follows:
Consolidated revenues and loss
Shareholder Returns
Basic loss per share (cents)
Risk Management
2021
Revenues
Results
$
$
1,074,193
(2,233,603)
2021
(0.11)
2020
(0.01)
The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with the
risks and opportunities identified by the board.
The Company believes that it is crucial for all Board members to be a part of this process, and as such the Board often meets in tandem with
Audit and Risk Management Committee to discuss risk and strategy.
The Board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the risks identified by
the Board. These include the following:
•
•
Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholder’s needs and manage business
risk; and
Implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as disclosed in this Annual Report, no significant changes in the state of affairs of the Group occurred during the financial year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 29 July 2021 the Group drew down a further $50,000 on the ASF Group Limited unsecured loan in accordance with the terms as disclosed
at Note 12.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Group expects to maintain the present status and level of operations and hence there are no likely developments in the Group’s operations.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is subject to significant environmental regulation in respect of its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance
with all environmental legislation. The Directors of the Company are not aware of any breach of environmental legislation for the year under
review.
The Group is in compliance with the various environmental legislation and regulations that govern its activities in the jurisdictions in which
it operates.
7
REMUNERATION REPORT
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
Principles used to determine the nature and amount of remuneration
Remuneration Policy
The Remuneration Committee Charter of Key Petroleum Limited has been designed to align director and executive objectives with shareholder
and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance
areas affecting the Company’s strategic goals. The Board of Key Petroleum Limited believes the Remuneration Policy to be appropriate and
effective in its ability to attract and retain the best executives and directors to run and manage the Group.
The Board’s policy for determining the nature and amount of remuneration for board members and senior executives of the Group is as
follows:
The Remuneration Policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the
Board. All executives receive a base salary or an agreed fee (which is based on factors such as length of service and experience) and
superannuation. The Board reviews executive packages annually by reference to the Group’s performance, executive performance and
comparable information from industry sectors and other listed companies in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain the
highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.
Executives are also eligible to participate in the employee share and option arrangements.
The executives receive a superannuation guarantee contribution required by the government, which was 9.5% for the 2021 financial year, and
do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their salary to increase payments
towards superannuation.
All remuneration paid to directors and executives is valued at the cost to the Group. Based on each individual’s timesheet, costs are allocated
to exploration projects and treated in accordance with the accounting policy described at Note 1(o) or expensed where the time is not allocated
directly to a project. Options are valued using the Black-Scholes Option Pricing methodology.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration annually, based on market
practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be
paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting (currently $500,000). Fees for
non-executive directors are not linked to the performance of the Group. However, to align directors’ interests with shareholder interests, the
Directors are encouraged to hold shares in the Company and are eligible to participate in the employee share option plan.
Performance based remuneration
The Group currently has no performance based remuneration component built into key management personnel remuneration packages.
Kane Marshall was issued 4,000,000 performance rights for nil consideration following shareholder approval granted at a General Meeting
held on 6 August 2012. The performance rights lapsed, unvested, upon Mr Marshall’s retirement.
In addition, Mr Marshall received 20,000,000 options for nil consideration following shareholder approval granted at the Annual General
Meeting on 22 November 2016. The options expired, unvested, on 30 November 2020.
Group performance, shareholder wealth and directors' and executives' remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives and
directors’ and executives’ performance. The Company plans to facilitate this process by directors and executives participating in future option
issues to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing
shareholder wealth.
Use of remuneration consultants
The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2021.
Voting and comments made at the Company’s 2020 Annual General Meeting
The Company received 95.2% of “yes” votes on its remuneration report for the 2020 financial year. The Company did not receive any specific
feedback at the AGM or throughout the year on its remuneration practices.
Details of remuneration
Details of the remuneration of the directors and the key management personnel of the Group are set out in the following table.
The key management personnel of the Group include the directors as per page 4 above and the following executive officer who had authority
and responsibility for planning, directing and controlling activities within the Group:
•
Ric Jason – Interim Chief Executive Officer (appointed 28 August 2020) and Exploration Manager.
Given the size and nature of operations of the Group, there are no other employees who are required to have their remuneration disclosed in
accordance with the Corporations Act 2001.
8
Key management personnel of the Group
Short Term Benefits
Post-Employment
Benefits
Long-Term Benefits
Equity-Settled Share-
Based Payments
Salary
& Fees
Profit
Share &
Bonuses
Non-
Monetary
Other
Pension &
Super-
annuation
Other
Incentive
Plans
LSL
Shares/
Units
Options/
Rights
Total
$
$
$
$
$
$
$
$
$
$
$
Directors
Geoff Baker (1)
2021
55,333
2020
32,000
Min Yang (1)
2021
32,000
2020
32,000
Dennis Wilkins (2) 2021
28,250
Yvonne Ye
(appointed 18
December 2020)
Rex Turkington
(resigned 31
August 2020)
2020
32,000
2021
17,227
2021
10,000
2020
60,000
Kane Marshall
(retired 28 August
2020)
2021
138,420
2020
222,160
Other KMP
Ric Jason (3)
2021
171,467
Total key
management
personnel
2021
452,697
2020
378,160
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,273
21,904
13,943
17,216
21,904
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6,382)
2,306
2,306
(6,382)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55,333
32,000
32,000
32,000
28,250
32,000
17,227
10,000
60,000
3,316
145,009
7,911
245,593
-
187,716
3,316
475,535
7,911
401,593
(1)
In addition to Min Yang’s and Geoff Baker’s remuneration as directors, interest payments totalling $6,301 (2020: nil) were made to
ASF Group Limited and a total of nil (2020: $30,000) was paid to ASF Capital Pty Ltd, businesses of which Min Yang and Geoff Baker
are directors. ASF Group Limited provided the Group with an unsecured loan during the year, refer to Note 12 for details. ASF Capital
Pty Ltd provided corporate advisory services to the Group during the 2020 financial year. The amounts paid were at usual commercial
rates.
(2)
In addition to Mr Wilkins’ remuneration as a director, a total of $21,274 (2020: $21,787) was paid to DWCorporate Pty Ltd, a business
of which Mr Wilkins is principal. DWCorporate Pty Ltd provided accounting services to the Group during the year. The amounts paid
were at usual commercial rates with fees charged on an hourly basis.
(3) Ric Jason was appointed Interim Chief Executive Officer, and became a member of key management personnel, on 28 August 2020.
Before this appointment he was, and continues as, the Group’s Exploration Manager. Amounts shown above include all Mr Jason’s
remuneration during the reporting period.
Service agreements
The details of service agreements of the key management personnel of Key Petroleum Limited are as follows:
Rex Turkington, Non-Executive Chairman (resigned 31 August 2020):
•
•
•
Annual consulting fee of $60,000 paid to Katarina Corporation Pty Ltd, a business of which Mr Turkington is principal;
Agreement commenced 14 January 2014 for a twelve month period and was since renewed for a further twelve months in each of the
following three years. Since January 2018 the contract is a rolling month by month agreement with the Company; and
The agreement may be terminated, without cause, by either party giving written notice.
Kane Marshall, Managing Director (retired 28 August 2020):
• Mr Marshall was a full-time employee of the Company with an annual salary of $175,000, plus statutory superannuation;
• Mr Marshall’s original employment agreement expired in April 2018 and was renewed on the same terms for a further 2 years then
rolling on a monthly basis; and
•
The agreement may be terminated, without cause, by either party with three months’ written notice.
9
Min Yang, Non-Executive Director:
•
•
•
Annual consulting fee of $32,000 to be paid to Luxe Hill Ltd, a business of which Ms Yang is principal;
Agreement commenced 28 January 2014 for a twelve month period and was since renewed for a further twelve months in each of the
following three years. Since January 2018 the contract is a rolling month by month agreement with the Company; and
The agreement may be terminated, without cause, by either party giving written notice.
Geoff Baker, Non-Executive Director till 31 August 2020, Non-Executive Chairman since 31 August 2020:
•
•
•
Annual consulting fee of $32,000 to be paid to Gold Star Industry Limited, a business of which Mr Baker is principal;
Agreement commenced 3 March 2015 for a twelve month period and was since renewed for a further twelve months in each of the
following two years. Since March 2018 the contract is a rolling month by month agreement with the Company; and
The agreement may be terminated, without cause, by either party giving written notice.
Dennis Wilkins – Non-Executive Director:
•
•
•
Annual consulting fee of $32,000 to be paid to DWCorporate Pty Ltd, a business of which Mr Wilkins is principal;
The contract is a rolling month by month agreement with the Company; and
The agreement may be terminated, without cause, by either party giving written notice.
Yvonne Ye – Non-Executive Director (appointed 18 December 2020):
•
•
•
Annual consulting fee of $32,000 to be paid to Star Surpass Ltd, a business of which Ms Ye is principal;
The contract is a rolling month by month agreement with the Company; and
The agreement may be terminated, without cause, by either party giving written notice.
Ric Jason – Interim Chief Executive Officer (appointed 28 August 2020) and Exploration Manager:
• Mr Jason is a full-time employee of the Company with an annual salary of $159,100, plus statutory superannuation;
• Mr Jason’s original employment agreement expired in August 2020 and has since been rolling on a monthly basis on the same terms;
and
•
The agreement may be terminated, without cause, by either party with three months’ written notice.
Share-based compensation
Options
Options are issued at no cost to key management personnel as part of their remuneration. The options are not issued based on performance
criteria but are issued to key management personnel of Key Petroleum Limited to increase goal congruence between key management
personnel and shareholders. The following options over ordinary shares of the Company were granted to or vesting with key management
personnel during the year:
Grant Date
Granted
Number
Vesting Date Expiry Date
Exercise
Price (cents)
Value per
option at grant
date (cents)
Exercised
Number % of Remuneration
Directors
Kane Marshall
22/11/2016
20,000,000
(1)
30/11/2020
1.5
0.4
N/A
2.3
(1) The options were to vest if the average 30 consecutive day VWAP of the Company’s shares was equal or greater than 1.5 cents. The
options expired, unvested, on 30 November 2020.
(2) There were no ordinary shares issued upon exercise of remuneration options to directors or other key management personnel of Key
Petroleum Limited during the year.
10
Performance Rights
Performance rights are issued to directors and executives as part of their remuneration. The Company does not have a formal policy in relation
to the key management personnel limiting their exposure to risk in relation to the securities, but the Board actively discourages key personnel
from obtaining mortgages in securities held in the Company.
The following performance rights were granted to or vesting with key management personnel during the year, all the performance rights lapsed
upon Mr Marshall’s retirement on 28 August 2020:
Grant Date
Granted
Number
Vested
Number
Date Vesting
and
Exercisable Expiry Date
Value per
right at
grant date
(cents) (1) % of Remuneration
Directors
Kane Marshall
Kane Marshall
06/08/2012 2,000,000
06/08/2012 2,000,000
Nil
Nil
(2)
(3)
N/A
N/A
3.6
3.6
-
-
(1) The value at grant date in accordance with AASB 2: Share Based Payments of performance rights granted during the year as part of
remuneration. The value is the closing share price on grant date.
(2) These rights were to vest upon the satisfaction of the following performance hurdle:
“When the volume weighted average price of the Company’s shares increases by 100% for a consecutive period of at least 30 business
days during each calendar year of the directors’ term.”
(3) These rights were to vest upon the satisfaction of the following performance hurdle:
“When the volume weighted average price of the Company’s shares increases by 150% for a consecutive period of at least 30 business
days during each calendar year of the directors’ term.”
Equity instruments held by key management personnel
Share holdings
The numbers of shares in the Company held during the financial year by each director of Key Petroleum Limited and other key management
personnel of the Group, including their personally related parties, and any nominally held, are set out below. There were no shares granted
during the reporting period as compensation.
Balance at start of
the year (1)
Received during the
year on the exercise
of options
Other changes
during the year
Balance at end of
the year (1)
2021
Directors of Key Petroleum Limited
Ordinary shares
Geoff Baker (2)
Min Yang (2)
Dennis Wilkins
Yvonne Ye (appointed 18 December 2020)
Rex Turkington (resigned 31 August 2020)
225,372,940
225,372,940
-
-
-
Kane Marshall (retired 28 August 2020)
18,908,450
Other key management personnel
Ordinary shares
Ric Jason (appointed 28 August 2020)
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
225,372,940
225,372,940
-
-
-
18,908,450
2,000,000
(1) Balances are at the respective dates of appointment or cessation where not in the position for the full reporting period.
(2) Ms Yang and Mr Baker are both directors of ASF Group Limited which is the ultimate holding company of ASF Oil & Gas Holdings
Pty Ltd which holds shares in Key Petroleum Limited.
11
Option holdings
The numbers of options over ordinary shares in the Company held during the financial year by each director of Key Petroleum Limited and
other key management personnel of the Group, including their personally related parties, are set out below:
Balance at
start of the
year (1)
Granted as
compensation
Exercised
Other
changes
Balance at
end of the
year (1)
Vested and
exercisable
Unvested
2021
Directors of Key Petroleum Limited
Geoff Baker
Min Yang
Dennis Wilkins
Yvonne Ye (appointed 18 December
2020)
Rex Turkington (resigned 31 August
2020)
-
-
-
-
-
Kane Marshall (retired 28 August
2020)
20,000,000
Other key management personnel
Ric Jason (appointed 28 August
2020)
4,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 20,000,000
-
20,000,000
-
4,500,000
4,500,000
-
(1) Balances are at the respective dates of appointment or cessation where not in the position for the full reporting period.
Performance Right holdings
Kane Marshall was issued 4,000,000 Performance Rights for nil consideration on 6 August 2012 following shareholder approval granted at the
General Meeting held on that date. The performance rights were issued in two equal tranches that were to vest on the respective satisfaction of
the following performance conditions:
(1) Performance rights A:
“When the volume weighted average price of the Company’s shares increases by 100% for a consecutive period of at least 30 business
days during each calendar year of the directors’ term.”
(2) Performance rights B:
“When the volume weighted average price of the Company’s shares increases by 150% for a consecutive period of at least 30 business
days during each calendar year of the directors’ term.”
As a result of the retirement of Kane Marshall on 28 August 2021, all of the Performance Rights lapsed, unvested, on that date.
Loans to key management personnel
There were no loans to key management personnel during the year.
Other transactions with key management personnel
The Company had a lease agreement for a vehicle relating to an associate of Mr Marshall. The value of the lease payments for the year was
$1,197 (2020: $14,364) and this total plus related FBT contribution was taken from Mr Marshall’s gross salary as a deduction for the year.
DWCorporate Pty Ltd, a business of which Mr Wilkins is principal, provided accounting services to the Key Petroleum Group during the year.
The amounts paid of $21,274 (2020: $21,787) were on arm’s length commercial terms and are disclosed in the remuneration report in
conjunction with Mr Wilkin’s compensation. At 30 June 2021 there was $17,466 (2020: $11,951) owing to DWCorporate Pty Ltd.
Interest payments totalling $6,301 (2020: nil) were made to ASF Group Limited and a total of nil (2020: $30,000) was paid to ASF Capital Pty
Ltd, businesses of which Min Yang and Geoff Baker are directors. ASF Group Limited provided the Group with an unsecured loan during the
year, refer to Note 12 for details. ASF Capital Pty Ltd provided corporate advisory services to the Group during the 2020 financial year. The
amounts paid were at usual commercial rates.
End of audited Remuneration Report
12
DIRECTORS’ MEETINGS
During the year the Company held fourteen meetings of directors. The attendance of directors at meetings of the board were:
Geoff Baker
Min Yang
Dennis Wilkins
Yvonne Ye (appointed 18 December 2020)
Rex Turkington (resigned 31 August 2020)
Kane Marshall (retired 28 August 2020)
Notes
A – Number of meetings attended.
Directors Meetings
A
14
14
10
7
3
3
B
14
14
14
7
3
3
B – Number of meetings held during the time the director held office during the year.
On 10 March 2020 the Board of Directors determined that there were no efficiencies to be gained by continuing the Audit and Risk Committee
and Remuneration Committee. It was resolved to disband these Committees. Instead the functions of these Committees are undertaken by
the full Board. When the Board is considering matters within the ambit of the Audit and Risk Committee Charter and Remuneration
Committee Charter, it will be guided by and, to the extent practicable, act in accordance with, those Charters. At such time when the Group
is of sufficient size, consideration will be given to reforming these Committees.
SHARES UNDER OPTION
Unissued ordinary shares of Key Petroleum Limited under option at the date of this report are as follows:
Date options granted
Expiry date
Exercise price (cents)
Number of options
24 August 2018
28 March 2019
24 August 2022
27 March 2023
1.3
1.3
Total number of options outstanding at the date of this report
4,500,000
1,000,000
5,500,000
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, Key Petroleum Limited paid a premium of $35,250 to insure the directors and secretary of the Company.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers
in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such
proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper
use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company.
It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.
NON-AUDIT SERVICES
The following details any non-audit services provided by the entity's auditor, Hall Chadwick WA Audit Pty Ltd or associated entities. The
directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
•
•
All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the
auditor; and
None of the services undermine the general standard of independence for auditors.
Hall Chadwick WA Audit Pty Ltd and associated entities received or are due to receive the following amounts for the provision of non-audit
services:
Taxation compliance services
13
2021
$
2,395
2020
$
-
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or
to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or any
part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237 of the Corporations Act
2001.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 15.
Signed in accordance with a resolution of the directors for Key Petroleum Limited.
Geoff Baker
Non-Executive Chairman
Perth, 28 September 2021
CORPORATE GOVERNANCE STATEMENT
The Company’s 2021 Corporate Governance Statement has been released as a separate document and is located on the Company’s website
at http://www.keypetroleum.com.au/corporate_governance.
14
To the Board of Directors
Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
As lead audit partner for the audit of the financial statements of Key Petroleum Limited for the financial
year ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• any applicable code of professional conduct in relation to the audit.
Yours Faithfully
HALL CHADWICK WA AUDIT PTY LTD
DOUG BELL CA
Partner
Dated this 28th day of September 2021
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2021
CONTINUING OPERATIONS
Revenue
Fair value gains on financial assets
Depreciation expense
Salaries and employee benefits expense
Corporate expenditure
Administration costs
Exploration costs not capitalised
Share-based payments expense
Finance costs
Impairment of capitalised exploration costs
Impairment of plant and equipment
LOSS BEFORE INCOME TAX
INCOME TAX BENEFIT / (EXPENSE)
LOSS FOR THE YEAR
Other comprehensive income for the year, net of tax
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO
MEMBERS OF KEY PETROLEUM LIMITED
Notes
2
24
3
4
2021
$
549,193
525,000
(40,993)
(327,709)
(65,243)
(412,497)
(126,479)
(3,316)
(10,739)
(2,162,815)
(158,005)
(2,233,603)
-
2020
$
767,527
-
(82,793)
(143,057)
(133,586)
(411,291)
(121,486)
(10,509)
(10,727)
-
-
(145,922)
-
(2,233,603)
(145,922)
-
-
(2,233,603)
(145,922)
Basic and diluted loss per share attributable to the members of Key Petroleum
Limited (cents per share)
23
(0.11)
(0.01)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the
Consolidated Financial Statements.
16
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2021
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Assets classified as held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Plant and equipment
Capitalised exploration costs
Right of use Asset
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Lease liabilities
Provisions
Liabilities directly associated with assets classified as held for sale
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease Liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Notes
5
6
7
10(2)
8
9
10
19
11
12
19
13
19
13
2021
$
45,903
37,076
1,344,000
1,426,979
700,000
2,126,979
61,392
403
1,346,177
4,136
1,412,108
3,539,087
273,724
200,000
2,127
-
475,851
300,000
775,851
2,346
3,575
5,921
781,772
2,757,315
2020
$
642,193
268,735
-
910,928
-
910,928
178,562
171,293
4,502,264
33,856
4,885,975
5,796,903
439,102
-
26,369
338,256
803,727
-
803,727
4,305
1,269
5,574
809,301
4,987,602
14
15(a)
42,515,302
42,515,302
32,950
756,674
(39,790,937)
(38,284,374)
2,757,315
4,987,602
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial Statements.
17
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2021
Issued Capital
Share-Based
Payments
Reserve
Accumulated
Losses
$
$
$
Total
$
BALANCE AT 1 JULY 2019
Loss for the year
TOTAL COMPREHENSIVE INCOME
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS
OWNERS
Shares issued during the year
Share issue transaction costs
Share-based payments
BALANCE AT 30 JUNE 2020
Loss for the year
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS
OWNERS
Share-based payments
BALANCE AT 30 JUNE 2021
41,314,075
746,165
(38,138,452)
3,921,788
-
-
1,297,010
(95,783)
-
-
-
-
-
10,509
(145,922)
(145,922)
(145,922)
(145,922)
-
-
-
1,297,010
(95,783)
10,509
42,515,302
756,674
(38,284,374)
4,987,602
-
-
-
-
-
(2,233,603)
(2,233,603)
(2,233,603)
(2,233,603)
(723,724)
727,040
3,316
42,515,302
32,950
(39,790,937)
2,757,315
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements.
18
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2021
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Government Grants and tax incentives
Finance costs paid
Expenditure on petroleum interests
2021
$
4,223
(893,536)
4,499
121,056
(7,068)
(455,690)
2020
$
197,322
(767,322)
921
68,000
(10,727)
(535,360)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
5(a)
(1,226,516)
(1,047,166)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of plant and equipment
Refund of permit guarantees
Proceeds on sale or farmout of Permit
4,400
95,913
200,000
-
-
150,000
Payments for rehabilitation expenses on petroleum interest
-
(1,382,750)
Reimbursement of rehabilitation expenses
NET CASH INFLOW FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares and options
Payments of share issue transaction costs
Proceeds from borrowings
Principal elements of Lease Payment
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
5
156,114
456,427
-
-
200,000
(26,201)
173,799
(596,290)
642,193
45,903
1,334,164
101,414
1,297,010
(95,783)
-
(60,177)
1,141,050
195,298
446,895
642,193
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements.
19
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Key Petroleum
Limited and its subsidiaries. The financial statements are presented in Australian currency. Key Petroleum Limited is a company limited by
shares, domiciled and incorporated in Australia. The financial statements were authorised for issue by the directors on 28 September 2021.
The directors have the power to amend and reissue the financial statements.
(a) Basis of preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board and the Corporations Act 2001. Key Petroleum Limited is a for-profit entity for the purpose of
preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Key Petroleum Limited Group also comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the Group
The Group has adopted all the new, revised or amending Accounting Standards and Interpretations issued by the AASB that are relevant to its
operations and effective for the current annual reporting period. The Group did not have to change its accounting policies or make retrospective
adjustments as a result of adopting these standards.
(iii) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2021 reporting periods and have
not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is that they are not
expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the amount of share based payments
expense, which have been measured at fair value.
(v) Going concern
The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the
realisation of assets and the settlement of liabilities in the ordinary course of business.
The Group incurred a loss for the year of $2,233,603 (2020: $145,922) and net cash outflows from operating activities of $1,226,516 (2020:
$1,047,166).
The directors have prepared an estimated cash flow forecast for the period to September 2022 to determine if the Group will require additional
funding during the next 15 month period. Where this cash flow forecast includes the likelihood that additional amounts will be needed and
these funds have not yet been secured, it creates material uncertainty as to whether the Group will continue to operate in the manner it has
planned over the next 15 months.
Where the cash flow forecast includes these uncertainties, the directors are required to make an assessment of whether it is reasonable to assume
that the Group will be able to continue its normal operations. The directors are satisfied that the going concern basis of preparation is appropriate
based on the following factors and judgements:
•
•
•
•
•
The Group has access to cash reserves of $45,903 as at 30 June 2021 (30 June 2020: $642,193);
The Group has the ability to adjust its exploration expenditure subject to results of its exploration activities and has a history of attracting
Farm-in partners to assist in funding exploration commitments;
The Group has agreed a sale for its interests in the L7 and EP 437 projects for cash proceeds of $600,000 (of which $200,000 was received
as a non-refundable deposit in January 2021 and a further $200,000 was received as a non-refundable deposit in August 2021) plus a 5%
gross overriding royalty payable on production from L7 and EP 437;
The Group has the ability to raise funds from equity sources; and
The Directors anticipate the support of the Group’s major shareholders to continue with the advancement of the Group’s assets.
Should the Directors not achieve the matters as set out above, there is a material uncertainty whether the Group will continue as a going concern
and it may be required to realise its assets and extinguish its liabilities other than in the ordinary course of business and at amounts to those
stated in the annual report. The annual report does not include any adjustments relating to the recoverability and classification of asset carrying
amounts or to the amount and classification of liabilities that might result should the Group be unable to continue as a going concern and meet
its debts as and when they fall due.
20
(b) Principles of consolidation
(i)
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group 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 to
direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the transferred asset. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss and other
comprehensive income, statement of changes in equity and statement of financial position respectively.
(ii) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the
Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests
to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any
consideration paid or received is recognised in a separate reserve within equity attributable to owners of Key Petroleum Limited.
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount
recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest
as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts
previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a jointly controlled entity or associate is reduced but joint control or significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.
(iii)
Interests in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations
for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require unanimous consent of the parties sharing control.
When a Group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its interest in a joint
operation:
•
•
•
•
•
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liabilities incurred jointly;
its revenue from the sale of its share of the output arising from the joint operation;
its share of the revenue from the sale of the output by the joint operation; and
its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the AASBs
applicable to the particular assets, liabilities, revenues and expenses.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a sale or contribution of assets), the
Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the
transactions are recognised in the Group's consolidated financial statements only to the extent of other parties' interests in the joint operation.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a purchase of assets), the Group does
not recognise its share of the gains and losses until it resells those assets to a third party.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified
as the full Board of Directors.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment
in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Key
Petroleum Limited's functional and presentation currency.
21
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. They are deferred in equity if they are
attributable to part of the net investment in a foreign operation.
Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation
differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or
loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-
sale financial assets are included in the fair value reserve in equity.
(e) Revenue recognition
Sales revenue from providing services to external parties is recognised in the accounting period in which the services are rendered. For fixed
price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services
to be provided because the customer receives and uses the benefits simultaneously. This is based on the actual labour hours spent relative to
the total expected labour hours. Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial assets.
(f)
Income tax
The Company formed a tax consolidated Group on 1 July 2016. The effect of the transition from single taxable entities to a tax consolidated
group is the re-setting of the tax bases for assets within the group and an adjustment to the available carry forward losses under the available
fraction calculation.
The head entity, Key Petroleum Limited, and the controlled entities in the tax consolidated group account for their own current and deferred
taxes and are measured on a stand-alone taxpayer basis. The Group currently does not have a tax sharing or tax funding arrangement.
The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the applicable income tax rate
for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in
the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation
authority will accept an uncertain tax treatment. The Group measures its tax balances either based on the most likely amount or the expected
value, depending on which method provides a better prediction of the resolution of the uncertainty.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises
from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability
is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
(g) Leases
The Group leases an item of office equipment with a five-year term. Upon commencement of the lease the Group recognised a lease liability
for this lease, measured at the present value of the remaining lease payments, discounted using the Group’s incremental borrowing rate, being
10%.
Where the Group is lessee, the Group recognises a right-of-use asset and a corresponding liability at the date at which the lease asset is available
for use by the Group. Each lease payment is allocated between the liability and the finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-
of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following
lease payments:
•
•
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that are based on an index or a rate;
amounts expected to be payable by the lessee under residual value guarantees;
22
•
•
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental
borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a
similar economic environment with similar terms and conditions.
The Group’s current lease agreement does not contain any extension options.
Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before commencement
date less any lease incentives received, and any initial direct costs.
Where the terms of a lease require the Group to restore the underlying asset, or the Group has an obligation to dismantle and remove a leased
asset, a provision is recognised and measured in accordance with AASB 137. To the extent that the costs relate to a right-of-use asset, the costs
are included in the related right-of-use asset.
Where leases have a term of less than 12 months or relate to low value assets the Group may apply exemptions in AASB 16 to not capitalise
any such leases and instead recognise the lease payments on a straight-line basis as an expense in profit or loss.
(h) Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets
are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:
•
•
•
•
•
fair values of the assets transferred;
liabilities incurred to the former owners of the acquired businesses;
equity interests issued by the Group;
fair value of any asset or liability resulting from a contingent consideration arrangement; and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-
by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the:
•
•
•
consideration transferred;
amount of any non-controlling interest in the acquired entity; and
acquisition-date fair value of any previous equity interest in the acquired entity,
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss as a bargain purchase.
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 similar borrowing could be obtained
from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the
acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such re-measurement are recognised in profit or
loss.
(i)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be impaired. Exploration and Evaluation Expenditure is assessed for
impairment indicators under AASB 6 paragraph 20 and where there are indicators of impairment the Company will test for impairment. Other
assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal
of the impairment at the end of each reporting period.
(j) Cash and cash equivalents
For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial
23
institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the statement of financial position.
(k)
Investments and other financial assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
•
•
Those to be measured subsequently at fair value (either through OCI or through profit or loss); and
Those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that
are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account
for the equity investment at fair value through other comprehensive income (FVOCI).
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Company commits to purchase or sell
the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred
and the Company has transferred substantially all the risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through
profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets
carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of
principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
•
•
•
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective
interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other income or
expenses. Impairment losses are presented as a separate line item in the statement of profit or loss.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows
represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI,
except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in
profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from
equity to profit or loss and recognised in other income or expenses. Interest income from these financial assets is included in finance
income using the effective interest rate method. Foreign exchange gains and losses are presented in other income or expenses and
impairment losses are presented as a separate line item in the statement of profit or loss.
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that
is subsequently measured at FVPL is recognised in profit or loss and presented net within other income or expenses in the period in
which it arises.
Equity instruments
The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected to present fair value
gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following
the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the
Company’s right to receive payment is established.
Changes in the fair value of financial assets at FVPL are recognised in other income or expenses in the statement of profit or loss as applicable.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes
in fair value.
(iv)
Impairment
The Group assesses, on a forward-looking basis, the expected credit loss associated with its debt instruments carried at amortised cost and
FVOCI. The impairment methodology depends on whether there has been a significant increase in credit risk.
(l) Plant and equipment
All plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
24
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount
of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the
statement of comprehensive income during the reporting period in which they are incurred.
Depreciation of plant and equipment is calculated using the reducing balance method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter
lease term. The rates vary between 5% and 40% per annum.
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 (Note 1(i)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of
comprehensive income. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those
assets to retained earnings.
(m) Exploration and evaluation costs
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in
the year in which they are incurred where the following conditions are satisfied:
(i)
the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions is also met:
(a)
(b)
the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the
area of interest, or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in
relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, salaries of exploration
personnel, exploratory drilling and sampling and associated activities and depreciation of assets used in exploration and evaluation activities.
General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to
operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration
and evaluation asset may exceed its recoverable amount. The policy on impairment can be found at Note 1(i). The recoverable amount of the
exploration and evaluation asset is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently
reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
in previous years.
When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated costs in respect of that area are written
off in the financial year the decision is made.
(n) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. They
are recognised initially at fair value and subsequently at amortised cost. The amounts are unsecured and are paid on normal commercial terms.
(o) Employee benefits
(i) Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting
date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to
be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The Group also has liabilities for long service leave that are not expected to be settled wholly within 12 months after the end of the period in
which the employees render the related service. These obligations are therefore measured as the present value of expected future payments to
be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration
is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the end of the reporting period of high-quality corporate bonds with terms and currencies that match, as
closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial
assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for
at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
25
(iii) 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 using a Black-Scholes Option Pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period 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 options that, in the opinion of the directors of the Company, will ultimately vest. This opinion
is formed based on the best available information at balance 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 a 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.
(p) Provisions and asset retirement obligation
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. When this provision gives access to future economic
benefits, an asset is recognised and then subsequently depreciated in line with the life of the underlying producing asset, otherwise the costs
are charged to the income statement. The unwinding of the discount on the provision is included in the profit or loss and other comprehensive
income within finance costs. Any changes to estimated costs or discount rates are dealt with prospectively.
(q)
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the
acquisition as part of the purchase consideration.
(r) Earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners 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.
(b) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax
effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed
to have been issued for no consideration in relation to dilutive potential ordinary shares.
(s) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation
authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable
to, the taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(t) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial
year.
(u) Critical accounting judgements, estimates and assumptions
The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires management to exercise
its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial statements are:
Exploration and evaluation costs
Exploration and evaluation costs are accumulated in respect of each identifiable area of interest. The write-off or carrying forward of exploration
expenditure is based on a periodic assessment of the viability of an area of interest and/or the existence of economically recoverable reserves.
26
This assessment is based on pre-determined impairment indicators, taking into account the requirements of the accounting standard, and with
the information available at the time of preparing this report. Information may come to light in subsequent periods which requires the asset to
be impaired or written down for which the directors are unable to predict the outcome. When an area of interest is abandoned or the directors
decide that it is not commercial, any accumulated costs in respect of that area are written off in the financial year the decision is made.
Environmental Issues
Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the
directors understanding thereof. At the current stage of the Group’s development and its current environmental impact the directors believe
such treatment is reasonable and appropriate.
Taxation
Deferred tax assets are recognised for deductible temporary differences and taxation losses when the directors and management consider that
it is probable that sufficient future tax profits will be available to utilise those temporary differences and losses. Significant judgement is
required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable
profits over the future period together with future tax planning strategies and the impact of the current income taxation legislation. Where there
are significant variables relating to generating taxable profits in the future and there is limited operating history, the Group will disclose the
unrecognised deferred taxes.
Share-based payments
Share-based payment transactions, in the form of options to acquire ordinary shares, are valued using the Black-Scholes option pricing model.
This model uses assumptions and estimates as inputs based on historical information available at the time the valuation was undertaken. This
historical information may not be indicative of the future result.
Provisions for rehabilitation
A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of development activities undertaken,
it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured
reliably. The estimated future obligations include the costs of abandoning sites, removing facilities and restoring the affected areas.
The provision for future restoration costs is the best estimate of the present value (including an appropriate discount rate relevant to the time
value of money plus any risk premium associated with the liability) of the expenditure required to settle the restoration obligation at the
reporting date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration
provision.
The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the same
basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the amount is
included in the cost of production for the period. Changes in the estimate of the provision for restoration and rehabilitation are treated in the
same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised
into the cost of the related asset.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Company
based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing
and geographic regions in which the Company operates. Other than as addressed in specific notes, there does not currently appear to be either
any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the
Company unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
27
30 JUNE 2021
2.
REVENUE AND OTHER INCOME
From continuing operations
Other revenue
Interest from financial institutions
Management fees
Fuel tax credits
Recharge Income
Gain on sale of permit
Net gain on disposal of plant and equipment
Consulting services
Government grants
Other Income
3.
EXPENSES
Loss before income tax includes the following specific expenses:
Directors’ fees
Superannuation expense
Expenses relating to short-term leases
Depreciation expenses:
Plant and equipment
Right-of-use assets
2021
$
2020
$
4,499
-
1,058
-
463,816
2,790
-
74,800
2,230
549,193
142,811
16,423
40,265
11,273
29,720
40,993
921
32,092
5,750
481,094
-
-
133,286
89,500
24,884
767,527
156,000
52,306
-
25,799
56,994
82,793
28
30 JUNE 2021
4.
INCOME TAX
(a)
Income tax expense
Current tax
Deferred tax
(b) Numerical reconciliation of income tax expense to prima facie tax
payable
Loss before income tax expense
Prima facie tax (benefit)/expense at the Australian tax rate of 26% (2020: 27.5%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Share based payments
COVID-19 Cash flow BOOST
Other
Movements in unrecognised temporary differences
Tax effect of current year tax losses for which no deferred tax asset has been
recognised
Under/Over
Income tax expense
(c) Deferred tax assets not brought to account at 25% (2020: 26%)
Capital raising costs
Provision and accruals
Financial assets at fair value through profit or loss
Tax losses
Total
2021
$
2020
$
-
-
-
-
-
-
(2,233,603)
(580,737)
862
(19,448)
353
(598,970)
462,401
136,569
-
-
31,367
11,205
131,250
2,323,069
2,496,891
(145,922)
(40,129)
2,890
(17,188)
416
(54,010)
(196,669)
277,020
(26,341)
-
49,890
110,680
-
2,279,423
2,439,993
29
30 JUNE 2021
4.
INCOME TAX (cont’d)
(d) Deferred tax liabilities at 25% (2020: 26%)
Right of Use Asset
Capitalised exploration and evaluation costs
Total
(e) Offset provisions
Deferred tax liabilities
Deferred tax assets (portion off-set deferred tax liabilities)
Unused tax losses for which no deferred tax asset has been recognised
2020
$
84
165,323
165,407
(165,407)
165,407
-
2018
$
827
845,135
845,962
(845,962)
845,962
-
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not been brought to account at 30 June
2020 because the directors do not believe it is appropriate to regard realisation of the deferred tax assets as probable at this point in time. These
benefits will only be obtained if:
(i)
the Group derives future assessable income of nature and of an amount sufficient to enable the benefits to be utilised;
(ii)
the Group continues to comply with the conditions for deductibility imposed by law; and
(iii) no changes in income tax legislation adversely affect the Group in utilising the benefits.
In April 2017, the Australian Government enacted legislation which reduces the corporate rate for small and medium business (base rate)
entities from 30% to 25% over the next decade. For the 2017 financial year the corporate tax rate reduced to 27.5% for small business entities
with turnover less than $10 million. This turnover threshold progressively increased until it reached $50 million in the 2020 financial year.
For the 2021 financial year, the tax rate has decreased to 26% and then 25% for the 2022 and later financial years. Key Petroleum Limited
satisfies the criteria to be a base rate entity.
5.
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents as shown in the statement of financial position and
the statement of cash flows
45,903
-
45,903
627,193
15,000
642,193
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the
Group and earn interest at the respective short-term deposit rates.
Credit risk
A-1+
45,903
642,193
The equivalent S&P rating of the financial assets represent that rating of the counterpart with whom the financial asset is held rather than the
rating of the financial asset itself.
30
30 JUNE 2021
5.
CASH AND CASH EQUIVALENTS (cont’d)
(a) Reconciliation of net loss after income tax to net cash outflow from
operating activities
Net loss for the year
Non-cash items
Depreciation of non-current assets
Net gain on disposal of plant and equipment
Impairment of plant and equipment
Impairment of capitalised exploration costs
Share-based payments expense
Gain on sale of permit
Change in operating assets and liabilities
Decrease/(increase) in trade and other receivables
(Increase) in financial assets
(Increase) in capitalised exploration costs
(Decrease) in trade and other payables
(Decrease)/increase in provisions
Net cash outflow from operating activities
2021
$
2020
$
(2,233,603)
(145,922)
40,993
(2,790)
158,005
2,162,815
3,316
(463,817)
96,803
(525,000)
(261,910)
(165,378)
(35,950)
82,793
-
-
-
10,509
-
(38,747)
-
(679,050)
(277,586)
837
(1,226,516)
(1,047,166)
(b) Liabilities for which cash flows classified as financing activities
This section sets out an analysis of the liabilities for which cash flows have been classified as financing activities and the movements for
each of the periods presented.
Borrowings
Lease liabilities
As at 1 July 2019
Recognised on adoption of AASB 16
Cash flows
As at 30 June 2020
Cash flows
As at 30 June 2021
200,000
4,473
204,473
Liabilities from financing activities
Borrowings
Lease liabilities
$
-
-
-
-
200,000
200,000
$
-
90,851
(60,177)
30,674
(26,201)
4,473
-
30,674
30,674
Total
$
-
90,851
(60,177)
30,674
173,799
204,473
(c) Non-cash investing and financing activities
Non-cash investing and financing activities disclosed in other notes are:
•
•
The Group received shares in ASX listed Pilot Energy Limited (ASX: PGY), classified as financial assets at fair value through profit or
loss, as consideration for the sale a permit, refer Note 10(1); and
Options issued to employees, contractors and suppliers for no cash consideration – Note 24.
31
30 JUNE 2021
6. TRADE AND OTHER RECEIVABLES
L7 restoration reimbursement receivable
Other receivables
Credit Risk – Trade and Other Receivables
-
37,076
37,076
156,114
112,621
268,735
The Group has no significant concentration of credit risk with respect to any single counter party or group of counterparties other than those
receivables specifically provided for and mentioned within Note 26. The class of assets described as ‘trade and other receivables’ is considered
to be the main source of credit risk related to the Group.
The following table details the Group’s trade and other receivables exposed to credit risk with ageing analysis and impairment provided for
thereon. Amounts are considered to be ‘past due’ when the debt has not been settled, with the terms and conditions agreed between the Group
and the customer or counterparty to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the
debtors and are provided for where there are specific circumstances indicating that the debt may not be fully repaid to the Group.
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high quality.
The table below outlines the amounts due, past due and not impaired.
Gross Amount
Past due and
impaired
Past due but not impaired
(days overdue)
Within initial trade
terms
$
$
< 30
$
31 - 60
61 - 90
$
$
> 90
$
2021
Other receivables
Total
2020
37,076
37,076
L7 restoration
reimbursement receivable
Other receivables
Total
156,114
112,621
268,735
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
37,076
37,076
156,114
112,621
268,735
-
-
-
-
-
7.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Australian listed equity securities
1,344,000
-
Changes in fair values of financial assets at fair value through profit or loss are disclosed directly on the face of the consolidated statement of
profit or loss and other comprehensive income. These constitute Level 1 financial assets.
2021
$
2020
$
8.
NON-CURRENT RECEIVABLES
Bank guarantees
2021
$
2020
$
61,392
178,562
The guarantee is held by the Group’s financial institution in cash. The credit rating has been disclosed above in Note 5.
32
30 JUNE 2021
9. PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated depreciation
Net book amount
Reconciliation of movements in plant and equipment
Opening net book amount
Disposals
Impairment prior to transfer to assets classified as held for sale
10(2)
Depreciation charge
Closing net book amount
10. CAPITALISED EXPLORATION COSTS
Notes
2021
$
2020
$
14,028
(13,625)
403
171,293
(1,612)
(158,005)
(11,273)
403
416,866
(245,573)
171,293
197,092
-
-
(25,799)
171,293
Exploration, evaluation and development costs carried forward in respect of
areas of interest
1,346,177
4,502,264
Reconciliation - Pre-production
Carrying amount at the beginning of the year
Additions to exploration and evaluation costs
Disposals during the year
Impairment prior to transfer to assets classified as held for sale
Transferred to assets classified as held for sale
Carrying amount at the end of the year
(1), (2)
(2)
(2)
4,502,264
261,911
(555,184)
(2,162,815)
(699,999)
1,346,177
3,673,214
979,050
(150,000)
-
-
4,502,264
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and
commercial exploitation or sale of the respective petroleum interests.
(1)
(2)
During the year the Group completed the sale of its 40% interest in WA-481-P to Pilot Energy Limited (Pilot) for consideration of 21
million new ordinary shares in Pilot. The fair value of the consideration at completion was $819,000, resulting in a gain on sale of
$463,816.
During January 2021 the Group announced it had entered into the Agreement and Royalty Deed with Triangle Energy (Global) Limited
(Triangle) to sell to Triangle Key Petroleum’s 50% participating interest in L7 and Key Petroleum and Key Midwest’s combined
86.94% interest in EP 437. The Group will receive cash proceeds of $600,000 plus a 5% gross overriding royalty payable on production
from L7 and EP 437.
Summary of the key terms of the Agreement and Royalty Deed
Completion of the Agreement is conditional on usual regulatory approvals, execution of a deed of covenant in respect of the EP 437
JOA, Triangle receiving binding commitments for a capital raising of at least $1,000,000 and, if required, Key obtaining the approval
of its shareholders under Chapter 11 of the ASX Listing Rules for the Key subsidiaries to sell its interests in these assets. Under the
terms of the Agreement:
•
•
Triangle will pay to Key a cash consideration of A$600,000 ($A200,000 of which was paid as a non-refundable deposit in
January 2021 with a further A$200,000 non-refundable amount paid during August 2021), any outstanding cash calls in respect
of L7 based on an agreed work program and budget plus a 5% gross overriding royalty payable on production from L7 and
EP 437;
Subject to Completion occurring, the existing Farmout Agreement between Key and Triangle in relation to the L7 licence at
Mt Horner, the execution of which was announced on 31 October 2018, will terminate and the parties will release each other
from all claims and liabilities in respect of L7 and the Farmout Agreement, except in relation to certain rehabilitation work
undertaken by Key Petroleum prior to execution of the Agreement, including any disputes in respect of the Farmout Agreement
(refer announcement by KEY on 4 August 2020); and
33
30 JUNE 2021
10. CAPITALISED EXPLORATION COSTS (cont’d)
Notes
2021
$
2020
$
•
Triangle is guaranteeing the performance by the Triangle subsidiary acquiring the interest under the Agreement and the
Royalty Deed.
The fair value of the disposal group has been determined by reference to the estimated fair value of the consideration receivable. This
has resulted in the recognition of impairment during the year of $2,162,815 for capitalised exploration costs and $158,005 for plant
and equipment. Following recognition of this impairment, receipt of the initial $200,000 non-refundable deposit in January 2021 has
been treated as a disposal of capitalised exploration costs with a resulting nil gain or loss on disposal.
The following assets and liabilities of the Group have been presented as a disposal group classified as held for sale at 30 June 2021:
Assets classified as held for sale
Plant and equipment
Capitalised exploration costs
Total assets of disposal group held for sale
Liabilities directly associated with assets classified as held for sale
Provision for restoration
Total liabilities of disposal group held for sale
Joint operations
1
699,999
700,000
300,000
300,000
-
-
-
-
-
The Group accounts for the assets, liabilities, revenues and expenses relating to its interests in Joint Operations in accordance with the
accounting policy of the Group (refer Note 1(b)(iii)). The Group has the following interests in Joint Operations:
EP 437
ATP 783/920/924
WA-481-P
L7
10(2)
10 (1)
10(2)
-
100.00
-
-
86.94
100.00
40.00
50.00
All joint operations do not have any profit or loss items as the costs are capitalised to exploration assets. The amounts below represent the
Group’s interests in each joint operation. Refer Note 10(2), the EP 437 interest has been classified as held for sale.
EP 437
Balance sheet
CURRENT ASSETS
Cash and cash equivalents
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Exploration assets
TOTAL NON-CURRENT ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL NON-CURRENT LIABILITIES
Commitments and contingencies
-
-
-
-
-
-
22
22
1,614,180
1,614,180
19,635
19,635
There are no capital commitments or contingencies as at 30 June 2021 and 30 June 2020 for the Joint Operations outside the work program
commitments listed as part of Note 19(a) below.
34
30 JUNE 2021
11. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
12. BORROWINGS
Unsecured loan – at cost
2021
$
87,599
186,125
273,724
2020
$
166,569
272,533
439,102
(1)
200,000
-
(1)
ASF Group Limited (ASF) has provided the Group with an unsecured $250,000 loan facility. The loan has an interest rate of 10% per
annum, payable on a quarterly basis, with a maturity date of 30 September 2021. Min Yang and Geoff Baker, directors of the Company,
are also directors of ASF. Total interest paid during the year to ASF was $6,301.
13. PROVISIONS
Current
Restoration provision (L7)
Long service leave
Non-Current
Long service leave
Total Provisions
Reconciliation – provision for restoration
Opening balance
Additions – exploration (a)
Restoration expenses incurred
Transferred to liabilities directly associated with assets classified as held for
sale
Closing balance
-
-
-
3,575
3,575
300,000
-
-
(300,000)
-
300,000
38,256
338,256
1,269
339,525
1,336,500
300,000
(1,336,500)
-
300,000
(a) The addition in the restoration provision during the 2020 financial year relates to the further rehabilitation work required on the
Production Licence L7.
Reconciliation – provision for long service leave
Opening balance
Additional provision for the year
Amounts used during the year
Closing balance
39,525
2,306
(38,256)
3,575
46,683
(7,158)
-
39,525
35
30 JUNE 2021
14.
ISSUED CAPITAL
(a) Share capital
(b)
Number of shares
$
Number of shares
$
Ordinary shares fully paid
Total issued capital
(b) Movements in ordinary share capital
2021
2020
1,967,928,126
42,515,302
1,967,928,126
42,515,302
1,967,928,126
42,515,302
1,967,928,126
42,515,302
Beginning of the financial year
1,967,928,126
42,515,302
1,549,462,207
41,314,075
− Share placements
− Share issue transaction costs
End of the financial year
-
-
-
-
418,465,919
1,297,010
-
(95,783)
1,967,928,126
42,515,302
1,967,928,126
42,515,302
(c) Movements in options on issue
(d)
Beginning of the financial year
Options expired during the year:
− On 30 November 2020, exercisable at 1.5 cents
End of the financial year
(d) Movements in performance rights on issue
Beginning of the financial year
Lapsed during the year
End of the financial year
(e) Ordinary shares
Number of options
2021
2020
25,500,000
25,500,000
(20,000,000)
-
5,500,000
25,500,000
Number of performance rights
2021
2020
4,000,000
4,000,000
(4,000,000)
-
-
4,000,000
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of
and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each
share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(f) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to
provide returns for shareholders and benefits for other stakeholders.
Due to the natures of the Group’s activities, being petroleum exploration, the Group does not have the access to credit facilities, with the
primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current working capital
position against the requirements of the Group to meet exploration programs and corporate overheads. The Group’s strategy is to ensure
appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required.
Refer to Note 1 for management plans to remain a going concern. The working capital position of the Group as 30 June 2021 and 30 June
2020 are as follows:
36
30 JUNE 2021
14.
ISSUED CAPITAL (cont’d)
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Net assets classified as held for sale
Trade and other payables
Borrowings
Provisions - current
Lease liabilities - current
Working capital position
15. RESERVES
(a) Reserves
Share-based payments reserve
2021
$
45,903
37,076
1,344,000
400,000
(273,724)
(200,000)
-
(2,127)
1,351,128
2020
$
642,193
268,735
-
-
(439,102)
-
(338,256)
(26,369)
107,201
32,950
756,674
(b) Nature and purpose of reserves
(i)
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued.
16. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
17. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-
related audit firms:
Audit services
Hall Chadwick – audit and review of financial reports
Total remuneration for audit services
Non-audit services
Hall Chadwick – taxation compliance services
Total remuneration for other services
18. CONTINGENCIES
There are no material contingent liabilities or contingent assets of the Group at the reporting date.
30,551
30,551
2,395
2,395
25,000
25,000
-
-
37
30 JUNE 2021
19. COMMITMENTS
(a) Exploration commitments
2021
$
2020
$
The Company has certain commitments to meet minimum expenditure requirements on the mineral exploration assets it has an interest in.
Outstanding exploration commitments are as follows:
Within one year
Later than one year but not later than five years
3,124,500
6,585,000
9,709,500
3,524,840
12,084,040
15,608,880
(b) Leases
The statement of financial position shows the following amounts relating to
leases:
Leased Assets
Right-of-use assets
Accumulated Depreciation of Right of Use Asset
Carrying value of right-of-use-asset
Lease Liabilities
Current Lease Liabilities
Non-Current Lease Liabilities
Total Lease Liabilities
The statement of profit or loss and other comprehensive income shows the
following amounts relating to leases:
Depreciation charge for right-of-use assets
Interest expense (included in finance costs)
8,140
(4,004)
4,136
2,127
2,346
4,473
29,720
1,141
90,850
(56,994)
33,856
26,369
4,305
30,674
56,994
6,112
The Group leases an item of office equipment with a five-year term. The Group leased office premises with a two-year term that expired on
31 December 2020. Following the expiry of this lease the office premises were rented on a monthly basis and classified as a short-term lease
with the payments treated on a straight-line basis as an expense in profit or loss.
20. RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent entity within the Group is Key Petroleum Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 21.
(c) Key management personnel compensation
Short-term benefits
Post-employment benefits
Long-term benefits
Share-based payments
452,697
17,216
2,306
3,316
475,535
378,160
21,904
(6,382)
7,911
401,593
Detailed remuneration disclosures are provided in the remuneration report within the Directors’ Report.
38
30 JUNE 2021
21
RELATED PARTY TRANSACTIONS (cont’d)
(d) Transactions and balances with other related parties
Transactions with key management personnel are disclosed below:
•
•
•
The Company had a lease agreement for a vehicle relating to an associate of Mr Marshall. The value of the lease payments for the year
was $1,197 (2020: $14,364) and this total plus related FBT contribution was taken from Mr Marshall’s gross salary as a deduction for
the year.
DWCorporate Pty Ltd, a business of which Mr Wilkins is principal, provided bookkeeping and accounting services to the Key Petroleum
Group during the year. The amounts paid of $21,274 (2020: $21,787) were on arm’s length commercial terms and are disclosed in the
remuneration report in conjunction with Mr Wilkins’ compensation. At 30 June 2021 there was $17,466 (2020: $11,951) owing to
DWCorporate Pty Ltd.
Interest payments totalling $6,301 (2020: nil) were made to ASF Group Limited and a total of nil (2020: $30,000) was paid to ASF
Capital Pty Ltd, businesses of which Min Yang and Geoff Baker are directors. ASF Group Limited provided the Group with an unsecured
loan during the year, refer to Note 12 for details. ASF Capital Pty Ltd provided corporate advisory services to the Group during the 2020
financial year. The amounts paid were at usual commercial rates.
21. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in Note 1(b):
Name
Country of Incorporation
Class of Shares
Equity Holding (1)
Key Petroleum (Australia) Pty Ltd
Key Cooper Basin Pty Ltd
Key Petroleum Services Pty Ltd
Key Midwest Pty Ltd
Key Perth Basin Investments Pty Ltd (2)
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
(1) The proportion of ownership interest is equal to the proportion of voting power held.
2021
%
100
100
100
100
100
2020
%
100
100
100
100
-
(2) Key Perth Basin Investments Pty Ltd was incorporated on 14 September 2020 with Key Petroleum Limited the sole shareholder. The
sole activity of Key Perth Basin Investments Pty Ltd since incorporation has been to act as the nominee holder of the investment in Pilot
Energy Limited received as consideration for the sale of the Group’s 40% interest in the WA-481-P permit.
22. EVENTS OCCURRING AFTER THE REPORTING DATE
On 29 July 2021 the Group drew down a further $50,000 on the ASF Group Limited unsecured loan in accordance with the terms as disclosed
at Note 12.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods.
39
30 JUNE 2021
23. LOSS PER SHARE
(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the Company used in calculating basic and
diluted loss per share
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share
(c)
Information on the classification of options
2021
$
2020
$
(2,233,603)
(145,922)
Number of shares
Number of shares
1,967,928,126
1,718,902,416
As the Group made a loss for the year ended 30 June 2021, the options on issue were considered anti-dilutive and were not included in the
calculation of diluted earnings per share. The options currently on issue could potentially dilute basic earnings per share in the future.
24. SHARE-BASED PAYMENTS
(a) Employees and contractors’ options
The Group provides benefits to employees (including Directors) and contractors of the Group in the form of share-based payment transactions,
whereby options to acquire ordinary shares are issued as an incentive to improve employee and shareholder goal congruence. The exercise
prices of the options granted and on issue at 30 June 2021 are 1.3 cents per option, with expiry dates ranging from 24 August 2022 to 27
March 2023.
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share of the Company with
full dividend and voting rights.
Set out below are summaries of the options granted:
2021
2020
Number of
options
Weighted
average exercise
price cents
Number of
options
Weighted
average exercise
price cents
Outstanding at the beginning of the year
25,500,000
1.46
25,500,000
1.46
Granted
Forfeited/cancelled
Exercised
Expired / lapsed
Outstanding at year-end
Exercisable at year-end
-
-
-
(20,000,000)
5,500,000
5,500,000
-
-
-
1.50
1.30
1.30
-
-
-
-
25,500,000
25,500,000
-
-
-
-
1.46
1.46
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 1.3 years (2020: 0.8), and
the exercise prices are 1.3 cents.
There were no options granted during the 2021 or 2020 financial years.
(b) Employees and contractors performance rights
The Group provides benefits to employees (including directors) and contractors of the Group in the form of share-based payment transactions,
whereby performance rights over ordinary shares are issued as an incentive to improve employee and shareholder goal congruence. The
performance rights granted to directors and on issue at 30 June 2021 have no expiration date.
Performance rights granted carry no dividend or voting rights. When each performance condition is satisfied, each performance right is
converted into one ordinary share of the Company with full dividend and voting rights.
40
30 JUNE 2021
24
SHARE BASED PAYMENTS (cont’d)
Set out below are summaries of the performance rights granted:
Outstanding at the beginning of the year
4,000,000
4,000,000
2021
$
2020
$
Granted
Forfeited/cancelled
Exercised
Expired
Outstanding at year-end
There were no performance rights granted during the 2021 or 2020 financial years.
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the year
were as follows:
Options and performance rights issued to or vesting with employees and contractors
-
(4,000,000)
-
-
-
-
-
-
-
4,000,000
3,316
3,316
10,509
10,509
25. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Key Petroleum Limited, at 30 June 2021. The information presented here has been
prepared using accounting policies consistent with those presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Loss for the year
Total comprehensive income
The parent entity is responsible for the contingent liabilities outlined in Note 18.
The parent entity is responsible for funding the commitments outlined in Note 19.
Interests in subsidiaries are set out in Note 21.
41
28,802
2,503,091
2,531,893
347,638
5,921
353,559
684,346
4,269,672
4,954,018
352,544
5,574
358,118
42,515,302
42,515,302
32,950
756,674
(40,369,918)
(38,676,076)
2,178,334
4,595,900
(2,420,882)
(2,420,882)
(537,623)
(537,623)
30 JUNE 2021
26. FINANCIAL RISK MANAGEMENT
2021
$
2020
$
The Group’s financial instruments consist mainly of deposits with banks and accounts receivable and payable.
The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in the accounting policies to these
financial statements, are as follows:
Financial Assets
Cash and cash equivalents
Loans and receivables
Financial assets at fair value through profit or loss
Total Financial Assets
Financial Liabilities
Trade payables
Total Financial Liabilities
(a) Market risk
(i)
Price risk
45,903
37,076
1,344,000
1,426,979
87,599
87,599
642,193
268,435
-
910,628
166,569
166,569
The Group is exposed to equity securities price risk. This arises from investments held by the Group and classified in the statement of financial
position at fair value through the profit and loss. The Group is not exposed to commodity price risk. At the reporting date, the Group has
investments in ASX listed equity securities.
Sensitivity analysis
The Group’s equity investments are listed on the Australian Stock Exchange (ASX) and are all classified at fair value through the profit or
loss. At 30 June 2021, if the value of the equity investments held had increased/decreased by 15% with all other variables held constant, post
tax loss for the Company would have been $201,600 lower/higher (2020: n/a) as a result of gains/losses on the fair value of the financial
assets.
(ii)
Interest rate risk
The Group is exposed to movements in market interest rates on cash and cash equivalents. The Group policy is to monitor the interest rate
yield curve out to six months to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The entire
balance of cash and cash equivalents for the Group $45,903 (2020: $642,193) is subject to interest rate risk. The weighted average interest
rate received on cash and cash equivalents by the Group was 2.5% (2020: 0.1%).
Sensitivity analysis
At 30 June 2021, if interest rates had changed by -/+ 50 basis points from the weighted average rate for the year with all other variables held
constant, post-tax loss for the Group would have been $901 lower/higher (2020: $3,597 lower/higher) as a result of lower/higher interest
income from cash and cash equivalents.
(b) Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that
could lead to a financial loss to the Group.
Credit risk is minimised by investing surplus funds in financial institutions that maintain a minimum of an A credit ratings and by ensuring
customers and counterparties to transactions are of sound credit worthiness.
Credit Risk Exposures
The maximum exposure to credit risk by class of recognised financial assets at balance date is equivalent to the carrying value and classification
of those financial assets (net of any provisions) as presented in the statement of financial position.
All cash holdings within the Group are currently held with A-1+ rated financial institutions.
42
30 JUNE 2021
(b) Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable
securities are available to meet the current and future commitments of the Group. Due to the nature of the Group’s activities, being oil and gas
exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. The Board of
Directors constantly monitor the state of equity markets in conjunction with the Group’s current and future funding requirements, with a view
to initiating appropriate capital raisings as required. Refer to note 1 for management’s plans to remain a going concern.
The tables below reflect an undiscounted contractual maturity analysis for financial liabilities. Cash flows realised from financial assets reflect
management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows
presented in the table to settle financial liabilities reflects the earliest contractual settlement dates.
Financial Liability and Financial Asset Maturity Analysis
Within 1 Year
1 to 5 Years
Total
2021
$
2020
$
2021
$
2020
$
2021
$
2020
$
Financial liabilities due for payment
Trade payables (excluding estimated
annual leave)
Borrowings
Lease liabilities
87,599
166,569
200,000
-
2,127
26,369
Total contractual outflows
289,726
192,938
Financial assets – cash flows realisable
Cash and cash equivalents
Trade and loan receivables
Total anticipated inflows
Net (outflow)/inflow on financial
instruments
(c) Fair value estimation
45,903
37,076
82,979
642,193
268,435
910,628
-
-
2,346
2,346
-
-
-
-
-
4,305
4,305
-
-
-
87,599
166,569
200,000
-
4,473
30,674
292,072
197,243
45,903
37,076
82,979
642,193
268,435
910,628
(206,747)
717,690
(2,346)
(4,305)
(209,093)
713,385
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. All
financial assets and financial liabilities of the Group at the balance date are recorded at amounts approximating their fair value.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-
term nature.
As disclosed in note 1 should the Company not continue as a going concern then the fair value of financial assets and financial liabilities may
not reflect the true fair value of financial assets and financial liabilities on a liquidation basis.
27. SEGMENT INFORMATION
Identification of reportable segments
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 makers) in assessing performance and determining the allocation of resources. During the period, the Group is managed
primarily based on one segment being oil and gas exploration in Australia.
43
30 JUNE 2021
28. COMPANY DETAILS
The registered office of the company is:
Key Petroleum Limited
Level 1
100 Havelock Street
WEST PERTH WA 6005
The principal place of business is:
Key Petroleum Limited
Level 1
100 Havelock Street
WEST PERTH WA 6005
44
DIRECTORS' DECLARATION
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 16 to 44 are in accordance with the Corporations Act 2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(ii) giving a true and fair view of the Company’s financial position as at 30 June 2021 and of its performance for the financial year
ended on that date;
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
(c)
a statement that the attached financial statements are in compliance with International Financial Reporting Standards has been included
in the notes to the financial statements.
The directors have been given the declarations by the managing director and equivalent chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors for Key Petroleum Limited.
Geoff Baker
Non-Executive Chairman
Perth, 28 September 2021
45
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KEY PETROLEUM LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Key Petroleum Limited (“the Company”) and its subsidiaries
(“the Group”), which comprises the consolidated statement of financial position as at 30 June 2021, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion:
a.
the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards as disclosed
in Note 1(a)(i).
Basis for 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
Responsibilities for the Audit of the Financial Report section of our report. We are independent of the
Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1(a)(v) in the financial report, which indicates that the Group incurred a net
loss of $2,233,603 during the year ended 30 June 2021. As stated in Note 1(a)(v), these events or
conditions, along with other matters as set forth in Note 1(a)(v), indicate that a material uncertainty exists
that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key Audit Matter
How our audit addressed the Key Audit Matter
Assets and Liabilities classified as held for sale
(Note 10)
During the year the Company entered into an
Agreement with Triangle Energy
(Global)
Limited to dispose of its 50% participating
interest in L7 and its 86.94% interest in EP437.
As a result the assets and associated liabilities
were classified as held for sale as at balance
date.
We considered this as a key audit matter
the
because of
transactions.
the size and nature of
Capitalised Exploration Costs
(Note 10)
Our procedures included, amongst others:
• Reviewing the Sale Agreement;
• Assessing the transactions to ensure the
balance was recorded at the lower of its
carrying amount and fair value less costs
to sell; and
• Assessing the appropriateness of the
financial
the
in
related disclosures
statements.
At balance date,
exploration costs are carried at $1,346,177
the Group’s capitalised
Our audit procedures included but were not
limited to:
The recognition and recoverability of
the
capitalised exploration costs was considered a
key audit matter due to:
• The carrying value of capitalised
exploration
a
costs
significant asset of the Group, we
considered
to assess
it necessary
facts and circumstances
whether
represents
• Assessing management’s determination
of its areas of interest for consistency
with the definition in AASB 6 Exploration
and Evaluation of Mineral Resources
(“AASB 6”);
• Assessing the Group’s rights to tenure
for a sample of permits and licenses;
• Testing
to
capitalised exploration costs for the year
the Group’s additions
Key Audit Matter
How our audit addressed the Key Audit Matter
existed to suggest the carrying amount
of
the
this asset may exceed
recoverable amount; and
• Determining
whether
impairment
involves significant
indicators exist
judgement by management.
for
by evaluating a sample of recorded
expenditure
to
underlying records, the capitalisation
requirements of the Group’s accounting
policy and the requirements of AASB 6;
consistency
• By testing the status of the Group’s
tenure and planned future activities,
reading board minutes and discussions
with management we assessed each
area of interest for one or more of the
following
that may
indicate impairment of the capitalised
exploration costs:
circumstances
o The licenses for the rights to
explore expiring
in the near
future or are not expected to be
renewed;
o Substantive expenditure
for
further exploration in the area of
is not budgeted or
interest
planned;
o Decision or intent by the Group
to discontinue activities in the
specific area of interest due to
lack of commercially viable
quantities of resources; and
o Data indicating that, although a
development in the specific area
is likely to proceed, the carrying
amount of the exploration asset
is unlikely to be recorded in full
from successful development or
sale; and
• Assessing the appropriateness of the
financial
the
in
related disclosures
statements.
Other Information
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 2021, 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. In Note 1(a)(i), the directors also state in accordance with Australian Accounting Standard AASB
101 Presentation of Financial Statements, that the financial report complies with International Financial
Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are
to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
• 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.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2021. 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.
Auditor’s Opinion
In our opinion, the Remuneration Report of the Company, for the year ended 30 June 2021, complies
with section 300A of the Corporations Act 2001.
HALL CHADWICK WA AUDIT PTY LTD
DOUG BELL CA
Partner
Dated this 28th day of September 2021
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows. The information
is current as at 23 September 2021.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
-
-
-
-
1,000
5,000
10,000
100,000
100,001 and over
The number of equity security holders holding less than a marketable parcel
of securities are (minimum $500.00 parcel at $0.0035 per unit – minimum
parcel size 142,858):
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Number of holders
Number of shares
% of shares
Ordinary shares
68
86
121
616
845
12,170
278,620
1,089,138
31,508,700
1,935,039,498
1,736
1,967,928,126
0.00
0.01
0.06
1.60
98.33
100.00
987
44,749,203
2.27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
BNP PARIBAS NOMS PTY LTD
ASF OIL & GAS HOLDINGS PTY LTD
CITICORP NOMINEES PTY LIMITED
GREAT SCHEME INVESTMENTS LIMITED
START GRAND GLOBAL LIMITED
RENOWN CAPITAL HOLDINGS LTD
GRANBOROUGH PTY LTD
YUCAJA PTY LTD
MR MARC FERGUSON ROWE
MR ANDREW CHRISTOPHER MAYES
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR LIZHEN REN
MR HANIF MIAH
MR XUMING QIN
BNP PARIBAS NOMINEES PTY LTD
MR KENNETH RAYMOND PETTIT
MINSK PTY LTD
MR TENDAI RONALD MUCHEMWA + MS SINEAD GEORGE
MRS MARGARET ANN RYAN + MR MICHEAL RODNEY RYAN
MR ROBERT JOHN SUNSHINE PHILLIPS
Listed ordinary shares
Number of shares
Percentage of
ordinary shares
283,022,808
225,372,940
224,869,210
178,125,000
170,000,000
32,500,000
30,000,000
25,016,017
22,608,896
22,000,000
20,918,094
17,307,926
15,000,000
12,500,000
12,197,970
12,000,000
11,898,365
10,730,287
10,350,000
9,000,000
14.38
11.45
11.43
9.05
8.64
1.65
1.52
1.27
1.15
1.12
1.06
0.88
0.76
0.64
0.62
0.61
0.60
0.55
0.53
0.46
1,345,417,513
68.37
52
ASX ADDITIONAL INFORMATION
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:
BNP Paribas Noms Pty Ltd
ASF Oil & Gas Holdings Pty Ltd
Citicorp Nominees Pty Limited
Great Scheme Investments Limited
Start Grand Global Limited
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Number of Shares
283,022,808
225,372,940
224,869,210
178,125,000
170,000,000
(e) Schedule of interests in petroleum blocks
Location
Australia – Onshore
Australia – Onshore
Australia – Onshore
(f) Unquoted Securities
Class
1.3 cent Options, Expiry 24 August 2022
1.3 cent Options, Expiry 27 March 2023
Block
EP 437
L7
ATP 783/920/924
Percentage held/earning
86.94%
50.00%
100.00%
Holders of 20% or more of the class
Number of
Securities
Number of
Holders
4,500,000
1,000,000
1
1
Holder Name
Number of Securities
R Jason
M Armitage
4,500,000
1,000,000
53