LOCALITY PLANNING ENERGY
HOLDINGS LIMITED
ANNUAL REPORT 2016
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
CONTENTS
Corporate Directory
Chairman’s Letter
Chief Executive Officer’s Report
Directors’ Report
Auditor’s Independence Declaration
Shareholder Information
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
1
2
4
7
16
17
20
24
43
44
Corporate Directory
NON-EXECUTIVE CHAIRMAN
Mr Andrew Pierce
EXECUTIVE DIRECTORS
Mr Damien Glanville
Mr Ben Chester
COMPANY SECRETARY & CFO
Mr Charles Furness
PRINCIPAL & REGISTERED OFFICE
Suite 18, 13 Norval Court,
Maroochydore QLD 4558
Phone: +61 7 5479 2875
+61 8 6389 0576
Fax:
AUDITORS
Bentleys
Level 9, 123 Albert Street
Brisbane QLD 4000
Phone: +61 7 3222 9777
SHARE REGISTRAR
Advanced Share Registry Services
150 Stirling Highway
NEDLANDS WA 6009
Phone: +61 8 9389 8033
+61 8 9389 7871
Fax:
STOCK EXCHANGE LISTING
Australian Securities Exchange
Code: LPE
1
Chairman’s letter
Dear Shareholder,
On behalf of your board, it is a pleasure to present the annual report of Locality Planning Energy Holdings
Limited (LPE) for the financial year ended 30 June 2016.
It has been a transformative year for your Company, which has successfully transitioned from a general
minerals explorer to life as a regulated retailer of electricity in Australia, following our acquisition and relisting
on the Australian Securities Exchange (ASX).
Successful Acquisition and Capital Raising
The acquisition of Locality Planning Energy Pty Ltd by Stratum Metals Limited was successfully completed
late in 2015, in conjunction with a fund raise of $6 million. We received strong support from our shareholders
and new and existing institutional and retail investors, with the public offer closing oversubscribed.
With the acquisition, the Company was renamed Locality Planning Energy Holdings Limited and changed its
operations to become an energy retailer. Your Company was reinstated to trading on the ASX on 4 January
2016.
Strengthened Board
At the date of settlement for the acquisition of Locality Planning Energy Pty Ltd by Stratum Metals Limited,
Mr Damien Glanville and Mr Ben Chester were appointed as Executive Directors of the Company.
As Chief Executive Officer, Damien brings over 13 years of experience with previous senior roles in
management and logistics and energy sector, with a focus on renewable energy, on-site generation and the
solar PV industry.
Ben brings over 7 years of experience to his role as Chief Operating Officer, with a background in large-
scale energy asset development and deployment and energy to market strategy and prior experience with
an ASX listed company, specialising in renewable and energy projects.
Their appointments replace outgoing directors John Shepherd and Daniel Moore, who stepped down from
their roles as non-executive directors of the Company as the Company changed its core operations.
Strong Operational Performance
Operationally, LPE has continued to build strong momentum in its contracted pipeline, driven by the
management team’s commitment to driving sales. At 30 June 2016, 79.9GW were in the contracted pipeline,
with 131 strata communities under contract and 62 communities generating revenue.
Subsequent to year-end, LPE has continued to grow this pipeline, and increased revenue generating
contracts to 45.56GWh at the end of August 2016, as it fast approaches its first performance milestone of
50GWh.
2
Annual Results
Our strong operational progress has converted to solid financial results. For the year ended 30 June 2016,
LPE delivered revenues of $1.7 million, a record result which was up considerably on prior year.
The Year Ahead
We remain very well positioned to expand our operations nationally, with an initial focus on New South Wales
and the Australian Capital Territory. We have already seen a strong start to FY17, with a significant uplift in
GWh commencing billing.
The launch of our first commercial Electric Vehicle charging station in Noosa marks the first of a number of
expansion opportunities identified by your management team, which will utilise LPE’s embedded networks
technology.
Our strong momentum during the financial year has further solidified LPE’s position as a leading retail energy
provider. Thank you for your ongoing support as a shareholder and we look forward to updating you as the
Company continues to grow its market share in the residential and strata community energy market.
Yours sincerely,
Andrew Pierce
Non-Executive Chairman & Director
3
Chief Executive Officer’s Report
Dear Shareholders,
I am pleased to present this review of Locality Planning Energy Holdings Limited for the 2016 financial year,
a year with consistent growth.
With six (6) months passing from the completion of the successful acquisition of Locality Planning Energy
Pty Ltd, I am proud to report that we exceeded our interim targets for growth and are sixty-one percent (61%)
and nine (9) months ahead of our business case projections.
This has created a strong foundation to meet our long-term goal of 450MWh of energy under contract by
2020 and provided strong revenues to $1.7 million, a solid financial result, since January 2016.
The growth of your company has been exciting and the hard work is prevailing as we forge our niche inside
the large $34b National Energy Market. Our momentum in achieving our milestones of energy under
management, and establishing LPE as the leading brand for strata communities’ electricity and utility
services to and inside an embedded network, is ever increasing. This is being achieved through the delivery
of high service levels and significant ongoing financial savings to our customers, whilst maintaining the
highest level of consumer protection.
We have identified pure service levels as a key driver to business success and continually refine what we
do in order to improve our operational excellence and increase our efficiency which creates a greater
competitive advantage. During the past year, we continued to further automate our business platforms,
improve internal networking and collaboration making significant progress in building a scalable business
model with standardised and accelerated business processes.
By the end of the 2015/16 year, the number of employees across the company, most of which are in the
single service centre on the Sunshine Coast, had climbed to 19. Key processes for our entire organisation
are handled at this centre, which is a strength to our service. In addition, we are launching a new digital
networking platform for all processes which will enable satellite growth while maintaining our great service
levels. This package integrates into our current proprietary IT platforms and facilitates collaboration across
the entire business.
LPE operates in a dynamic and competitive market with many changes becoming effective in the 2015/16
year. Full deregulation of the Queensland energy market and unprecedented wholesale electricity price
movements forced up market contracts and continued the uncertainty around environmental policies. These,
plus further pressure on on-sellers of electricity to adhere to newly enforced regulations and obligations,
indicates the robust and low risk business model that LPE has established.
This is indicated with annual MWh’s under management (billed customers) along with the pipeline of contract
communities being consistently maintained above 130.
Our commitment to innovation and improvement is reflected in high growth rates across all sectors. We are
a leader in the developer market with our initiative for the deployment of electric instant water heaters as an
alternative to a centralised hot water plant. We also launched our first electric vehicle (EV) charging station
unlocking strata communities to the EV world without the body corporate having to wear the financial burden.
4
Chief Executive Officer’s Report (Cont’d)
Our Strategy for the coming year
We willl maintain our commitment to become the leader in providing energy as a service to strata
communities with an increased focus on adding more utility service products that are value added to LPE’s
new and existing communities.
Our main strategy and focus will be to drive continual growth of our Embedded Network services throughout
Queensland as we will look to NSW and ACT to grow on our strong and ever increasing portfolio of
Embedded Networks.
Our three (3) main product offerings will still remain as, Retro, Existing EN’s and Developers (Greenfield).
Retro
The Retrofitting market represents the biggest opportunity for LPE in the coming 12 months with a large
percentage of 40+ lot strata communities still not utilising an Embedded Network to unlock consumer savings
on the cost of their annual electricity bill along with body corporates common area charges.
This has been driven by our strong sales force of three (3) regional managers from the Sunshine Coast to
Harvey Bay, Inner Brisbane north and south, and the Gold Coast to Tweed Heads together with our newly
appointed Senior Sales and Marketing Manager. The current sales team has positioned us well to capture
a high number of communities throughout these regions. We are continually improving our key sales
processes to maximise our sales teams’ effort in the field with a goal of achieving an 80% customer contact
time vs 20% administration time over the coming financial year.
Existing Embedded Networks
Strata communities who are already on selling electricity to their communities remain a key growth target for
the coming year. With the initial changes to on selling obligations still filtering through to body corporate
communities and advisors, our focus will be on clearly identifying the benefits of LPE’s energy as a service
over a strata community attempting to provide these services themselves.
Strength in our brand awareness and a recent regulator imposed fine and court order to an on-seller has
positioned us well to capture a greater market share as body corporates choose to remove themselves from
the risk and obligation.
Developers (Greenfield)
The demand for utility services in the new build strata sector is still firm, with developers looking for the added
service that LPE offer through providing hot water infrastructure, gas cook top services and even the capture
and billing of air conditioning.
With new build strata developments in SE Queensland holding steady we will look for growth in the southern
states such as NSW and ACT to grow our market share in the new build sector.
Looking ahead
We maintain our long-term vision to nationally become the leader in electricity supply and utility services to
strata communities through our unique offering of “Energy as a Service” guided by our values of delivering
competitive savings, the highest service levels and without removing any of our consumers’ rights. Our aim
of outperforming our competition in service, knowledge and simplified operations is only possible through
the business focusing on our strategy and the dedication of our staff.
5
Chief Executive Officer’s Report (Cont’d)
We actively manage diversity and have instilled a meritorious employment strategy over the past year, with
the recent appointment of three women into senior management roles, this equates to around 40% of our
managers being women. Currently female employees make up 55% of our total workforce ensuring we
deliver on policies of being an equal opportunity employer providing for a diverse workforce that blends
different cultural backgrounds and work experiences.
Our excellent performance to date is based on our clear strategy and a strong team ethos that drives its
execution. In order to excel in a highly dynamic and complex business environment, our teams require strong
leaders. We aim to continuously improve our leadership team and foster a unique performance culture.
Strong relationships with our major stakeholders and industry customers are a critical success factor for our
business and helped us to grow our share of sales with them.
We are committed to leadership in sustainability – this is anchored in our company values. We will continue
to be ambassadors for consumer advocacy in the embedded electricity sector, drive continuous
improvements in all its dimensions and actively engage in dialog with stakeholders on our strategy, decisions
and actions.
I would like to thank all LPE employees for their dedication and contribution to our excellent business and
social performance. I would also like to thank our supervisory bodies for their valuable advice. I would like
to especially thank you, our shareholders, for your continued trust and support.
Finally, I would like to thank our customers, and customer stakeholders for their confidence in our company,
people, and service.
Everyone at LPE is fully committed to our strategy and targets, and we will continue to implement and deliver
excellent performance throughout the coming financial year.
Sincerely,
Damien Glanville
CEO and Executive Director
6
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
DIRECTORS’ REPORT
Your Directors present their report on the consolidated entity consisting of Locality Planning Energy Holdings Limited
and its controlled entities at the end of, or during the year ended, 30 June 2016.
1.
THE DIRECTORS
The following persons were directors of the Company during the financial year and up to date of this report:
Mr Andrew Pierce
Non-Executive Chairman and Director
Qualifications
Experience
FCA
Mr Pierce is an accomplished and highly regarded accountant and director, having
served on the boards of Variety The Children’s Charity (NSW), Guide Dogs
NSW/ACT, Royal Guide Dogs Australia and Centre For Eye Health Limited. He is
highly skilled in the areas of financial reporting, company regulatory and
governance areas. During the past three years, Mr Pierce has not served as a
director of any other ASX listed companies.
Mr Pierce is a Fellow of Chartered Accountants Australia and New Zealand, having
been in private practice as a partner or principal since 1972.
Mr Pierce is a member of the Audit and Risk Management Committee.
In accordance with the ASX Corporate Governance Council’s definition of
independence and the materiality thresholds set, the Directors consider Mr Pierce
to be independent.
Special responsibilities
Chairman
Interest in Shares and
Options
8,960,641 fully paid ordinary shares
10,000,000 options exercisable at $0.025, expiring 30June 2017
Directorships held in other
listed entities
Nil
Mr Damien Glanville
Executive Director and Chief Executive Officer
Qualifications
Experience
Appointed 11 December 2015
N/A
Co-founder and Chief Executive Officer
Mr Glanville has fourteen years’ experience in senior management, logistics and
Executive Director roles, the last seven specifically focused in the renewable
energy on-site generation and solar PV industry.
His most recent achievement is the commercialisation of the Valdora 16.5MW solar
farm located on the Sunshine Coast, Queensland. The commercial business plan
(Exclusive IP) along with the rights to the project were successfully sold to
Sunshine Coast Regional Council for $2.6m. It is the first solar farm project in
Australia that is not reliant on government subsidies to make it financially viable
and is an industry leading concept within the renewable energy industry.
Construction is due to begin in 2016.
7
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
DIRECTORS’ REPORT
1.
THE DIRECTORS (Cont’d)
Damien is a co-founder and architect of designing the electricity retail model that
successfully enabled LPE
their Australian Energy Regulator
Authorisation, and is also listed as the Chief Executive Officer for the Management
components of the Australian Energy Regulators authorisation to retail electricity.
to obtain
Special responsibilities
Chief Executive Officer
Interest in Shares and
Options
186,985,610 fully paid ordinary shares
249,314,146 performance shares
Directorships held in other
listed entities
Nil
Mr Ben Chester
Executive Director and Chief Operating Officer
Appointed 11 December 2015
Qualifications
Experience
B. Eng
Co-founder and Chief Operating Officer
Mr Chester has eight years’ experience in large scale development and
deployment of energy assets, along with energy to market strategy. He spent four
years with an ASX listed company specialising in renewable projects, as the
principal design and projects engineer for several commercial and utility scale
deployments.
Ben has contributed to several Australian, State and Federal Government advisory
panels and with the Thailand Government on generation, deployment strategies
and network integration.
Ben is a co-founder and architect of designing the electricity retail model that
successfully enabled LPE
their Australian Energy Regulator
Authorisation, and is listed as the Chief Operating Officer for the functional and
compliance components of the Australian Energy Regulators authorisation to retail
electricity.
to obtain
Special responsibilities
Chief Operating Officer
Interest in Shares and
Options
186,985,610 fully paid ordinary shares
249,314,146 performance shares
Directorships held in other
listed entities
Nil
Mr John Shepherd
Resigned 11 December 2015
Mr Daniel Moore
Resigned 11 December 2015
8
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
DIRECTORS’ REPORT
1
THE DIRECTORS (Cont’d)
Company Secretary
Mr Charles Furness
Qualifications
Experience
Appointed 19 May 2016
B Bus, CPA, FGIA
Charles is a Company Secretary and CFO with more than 25 years’ experience in
senior management positions with Australian public companies in the mining,
energy, technology and biotechnology sectors. His international experience includes
companies listed on AIM in London and Nasdaq.
Directorships held in other
listed entities
Nil
2
PRINCIPAL ACTIVITIES OF THE CONSOLIDATED ENTITY
The principal activity of the consolidated entity is the sale of electricity and utility services to residential, commercial
and retail customers throughout the Australian National Electricity Market.
3
OPERATING RESULTS
The net result of operations of the consolidated entity for the year ended 30 June 2016 was a loss of $8,613,937
(2015 – loss of $513,361) which included:
Electricity sales totalling $1,761,243 (2015: $59,899),
the expensing of the issue of options and performance shares to key personnel and convertible note
holders totaling $6,535,990 (2015: nil).,
employee costs of $1,447,188 (2015: $165,001), and
other expenses of $1,208,981 (2015: $323,973).
During the year the Company received $7,510,991 (2015: $300,443) from the issue of shares, primarily via the
successful completion of a capital raising in late 2015.
The Company invested $1,239,542 during the year (2015: $120,767) in the development and/or conversion of strata
title sites for the purpose of supplying electricity.
4
DIVIDENDS
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a
dividend since 30 June 2016 and to the date of this report.
9
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
DIRECTORS’ REPORT
5
REVIEW OF ACTIVITIES AND BUSINESS STRATEGIES
In December 2015 the Company successfully transitioned from a minerals exploration company to a regulated
retailer of electricity to strata title sites, raising approximately $7.5 million, including $1.5 million from the exercise
of options. This provided the Company with a platform to develop and grow the business. This is reflected in the
sharp revenue growth.
The Company is committed to driving sales and continues to invest in the development and conversion of sites to
rapidly expand its revenue base. Every new site, once completed, adds to the Company’s contracted pipeline,
providing a secure source of revenue for five to ten years
At 30 June 2016, 79.9GW were in the contracted pipeline, with 131 strata communities under contract and 62
communities generating revenue. This base has continued to grow significantly since balance date.
6
OUTLOOK
The expansion of the Company’s contracted pipeline is providing the Company with a growing source of secure
revenue.
Directors acknowledge that additional funding will be required if the Company is to maintain its planned growth rate
and they are presently pursuing a number of financing opportunities.
7
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 1st July 2015 the Group entered into an option agreement to purchase 100% of the issued capital of Locality
Planning Energy Pty Ltd (LPE Pty Ltd). This transaction has been accounted for as a reverse acquisition of LPE
Holdings Ltd (LPEH - formerly Stratum Metals Ltd) by LPE Pty Ltd.
In December 2015 the Company successfully completed the transaction raising approximately $6 million in the
process. The Company received a further $1.5m following the exercise of options in early 2016
In addition, on 15 December 2015 LPEH Ltd lost control over Menzies Goldfields Limited and Riqo Pty Ltd.
8
EVENTS SUBSEQUENT TO BALANCE DATE
There are no matters or circumstances have arisen since the end of the year which significantly affected or could
significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of
the consolidated entity in future financial years.
9
LIKELY DEVELOPMENTS
Directors expect the Company’s strong contracted pipeline and revenue growth to be maintained during the coming
year, and
expansion beyond the Queensland market into NSW and the ACT, and
the further deployment of commercial super-fast charging stations for electric vehicles up the SE Queensland
corridor, using LPE’s embedded electricity network, this will also strengthen LPE’s position in the marketplace.
10
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
DIRECTORS’ REPORT
10
COMPANY HEALTH & SAFETY POLICY
It is the responsibility of all employees to act in accordance with occupational health and safety legislation,
regulations and policies applicable to their respective organisations and to use security and safety equipment
provided.
Specifically all employees are responsible for safety in their work area by:
following the safety and security directives of management;
advising management of areas where there is potential problem in safety and reporting suspicious
occurrences; and
minimising risks in the workplace.
11
SHARES UNDER OPTION
Options outstanding
The following options are outstanding as at the date of this report.
Number
500,000
600,000
75,000,000
30,000,000
Exercise
price
$
0.25
0.25
0.025
0.025
Expiry
15/4/2018
23/1/2017
30/6/2017
30/6/2017
Shares issued on the exercise of options
Date
14 January 2016
12 February 2016
29 February 2016
No. of shares
3,713,542
7,975,807
63,845,099
Exercise price
$0.02
$0.02
$0.02
12
DIRECTORS’ MEETINGS
Director
Meetings of
Directors Held *
Meetings of
Directors Attended
Andrew Pierce
Damien Glanville
Ben Chester
John Shepherd
Daniel Moore
* at which eligible to attend
9
7
7
2
2
8
7
7
2
2
11
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
13
Remuneration Practices
The Company has established a Remuneration Committee as a Committee of the Board.
The primary purpose of the Committee is to support and advise the Board in fulfilling its responsibilities to
shareholders by:
a) reviewing and approving the executive remuneration policy to enable the Company to attract and retain
executives and Directors who will create value for shareholders;
b) ensuring that the executive remuneration policy demonstrates a clear relationship between senior executive
performance and remuneration;
c)
recommending to the Board the remuneration of executive Directors;
d)
fairly and responsibly rewarding executives having regard to the performance of the Company, the
performance of the executive and the prevailing remuneration expectations in the market;
e) reviewing the Company’s recruitment, retention and termination policies and procedures for senior
management;
f)
reviewing and approving the remuneration of the Chief Executive Officer/Managing Director and, as
appropriate other senior executives; and
g) reviewing and approving any equity based plans and other incentive schemes.
The Committee shall have the right to seek any information it considers necessary to fulfil its duties, which includes
the right to obtain appropriate external advice at the Company’s expense.
The Company has issued Performance Shares to Key Personnel to strengthen the relationship between senior
executive performance, shareholder value and remuneration.
One third of the Performance Shares will convert to Fully Paid Ordinary Shares upon having under
Each Performance share will convert to one fully paid ordinary share upon the satisfaction of of the following
milestones:
management (supply and sell under contract) 50 Giga Watts (GW) of annualised energy by June 2017, and
a further third of the Performance Shares will convert to Fully Paid Ordinary Shares upon contracts having
under management (supply and sell under contract) 75 Giga Watts (GW) of annualised energy by December 2017,
and
another third of the Performance Shares will convert Fully Paid Ordinary Shares upon having under
management (supply and sell under contract) 100 Giga Watts (GW) of annualised energy contracts by June 2018.
These performance milestones were chosen because sales revenue is they key driver to the future success of the
Company.
The milestones were determined after assessing the level of revenue required the Company to meet its financial
goals and what could be achieved in the marketplace.
The key management personnel of Locality Planning Energy Holdings Limited and the consolidated entity includes
the directors of the Parent Entity.
12
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
DIRECTORS’ REPORT
13
REMUNERATION REPORT – AUDITED
2016 Remuneration
Short-term
employee
benefits
Share Based
Remuneration
Post
Employment
Benefits
Total
Performance
Related %
% consisting
of options
Salary & fees
Equity
Settled
Options
Super-
annuation
$
$
$
$
%
%
55,609
89,000
-
144,609
0%
61.5%
184,293
1,583,669
16,905
1,784,867
88.73%
185,447
1,583,669
16,905
1,786,021
88.67%
49,735
89,000
13,387
89,000
-
-
138,735
102,387
0%
0%
488,471
3,434,338
33,810
3,956,619
80.05%
0%
0%
64.2%
86.9%
6.75%
Short-term
employee
benefits
Other
Salary & fees
Post
Employment
Benefits
Super-
annuation
Total
Performance
Related %
% consisting
of options
$
$
$
$
%
30,000
30,000
16,694
13,387
90,081
-
24,814
-
-
24,814
-
-
-
-
-
30,000
54,814
16,694
13,387
114,895
0%
0%
0%
0%
-
%
0%
0%
0%
0%
-
Directors
Andrew Pierce
Damien Glanville
(appointed 11/12/15)
Ben Chester
(appointed 11/12/15)
John Shepherd
(resigned 11/12/15
Daniel Moore
(resigned 11/12/15)
Total
2015 Remuneration
Directors
Andrew Pierce
John Shepherd
Daniel Moore
Richard Anthon
Total
Daniel Moore and John Shepherd were directors of the legal parent company, Locality Planning Energy Holdings (formerly
Stratum Metals Limited) until the date of acquisition. As the business combination was treated as a reverse acquisition for
accounting purposes, the results of the legal parent entity prior to acquisition date are not included in this consolidated
financial report. However to ensure comparable directors remuneration disclosures for the legal parent entity, the
remuneration paid to Daniel and John ($102,387 and $138,735 respectively) by the legal parent entity for the entire year
(including the portion of the year prior to acquisition date) is included in this remuneration report.
13
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
DIRECTORS’ REPORT
Shareholdings of key management personnel
Balance
Issued on
Options
Net change
1 July
Acquisition
exercised
other
Balance
30 June
Directors
-
Andrew Pierce
4,970,641
-
-
Damien Glanville *
Ben Chester *
-
-
186,985,610
186,985,610
Also hold 249,314,146 Performance shares
-
-
-
3,990,000
8,960,641
186,985,610
186,985,610
Option holdings of key management personnel
Balance
Received as
Options
Net change
1 July
Remuneration
exercised
other
Directors
-
-
Andrew Pierce
Damien Glanville
Ben Chester *
-
-
-
10,000,000
-
-
-
-
-
-
-
-
Balance
30 June
10,000,000
-
-
END OF REMUNERATION REPORT
14
NON-AUDIT SERVICES
No amounts were paid or payable to the auditor for non-audit services provided during the year by the auditor.
14
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
DIRECTORS’ REPORT
15
INDEMNIFICATION AND INSURANCE OF OFFICERS OR AUDITOR
Each of the Directors and the Secretary of the Company have entered into a Deed with the Company whereby
the Company has provided certain contractual rights of access to books and records of the Company to those
Directors and Secretary. The Company has insured all of the Directors and Officers of Locality Planning Energy
Holdings Limited. The contract of insurance prohibits the disclosure of the nature of the liabilities covered and
amount of the premium paid. The Corporations Act 2001 does not require disclosure of the information in these
circumstances.
The Company has not indemnified or insured its auditor.
16 PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings. The Company was not a party to any other such proceedings during
the year.
17 AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 30 June 2016 has been received and forms part of
this directors’ report and can be found on the following page.
This report is made in accordance with a resolution of the Directors.
Signed:
ANDREW PIERCE
Director
30 September 2016
15
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
SHAREHOLDER INFORMATION
Additional information required by the Australian Securities Exchange (ASX) and not shown elsewhere in the Annual
Report, current as at 29 September 2016, is advised hereunder.
Stock Exchange Quotation
The Company’s shares are quoted on the ASX (Home branch: Sydney) under the code “LPE”.
Classes of Securities
The Company has the following equity securities on issue:
ASX quoted:
630,507,518 ordinary shares, each fully paid, held by 1,238 shareholders
Unquoted:
726,628,093 ordinary shares
Voting Rights
The voting rights attaching to ordinary shares are set out in Rule 2.1 of the Company’s Constitution and are
summarised as follows:
Subject to the Constitution, a holder of ordinary shares in the Company shall be entitled to be present at any
meeting, and to vote in respect of ordinary shares held by him. Any member present at any meeting may decline
to vote on any question put to that meeting, but in that case shall not be considered absent from the meeting.
Unless otherwise provided in the Constitution, at any meeting every member present in person or by proxy or by
attorney or, in the case of a body corporate, representative appointed pursuant to Section 250D of the
Corporations Act shall be entitled:
(a) on a show of hands, to one vote; and
(b) on a poll, to one vote for each share of which he is the holder.
Holders of options have no voting rights until such options are exercised.
Restricted Securities
726,628,093 ordinary shares
On-market Buy-backs
There is no current on-market buy-back of any securities.
17
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
SHAREHOLDER INFORMATION
Distribution of Security Holders
Distribution of shares and the number of holders by size of holding are:
Shareholding Range
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
Ordinary Shares
Number
of
Holders
Number
of Shares
19
12
100
426
681
1,238
1,935
38,359
959,525
21,924,085
1,334,211,707
1,357,135,611
Totals
There are 171 shareholders with less than a marketable parcel of 17,241 shares (based on a closing share price of $0.029)
who together hold 1,743,026 shares.
Twenty Largest Security Holders
The names of the 20 largest shareholders, the number of shares and the percentage of capital each holds, are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
BEN JAMES CHESTER
DAMIEN IAN GLANVILLE
PETTETT PTY LTD
JARWILL PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
COOLAH HOLDINGS PTY LTD
MR JOHN HENRY TOLL
KEY GLORY INVESTMENTS PTY LTD
BARK (NSW) PTY LTD
MR REX SEAGER HARBOUR
LSAF HOLDINGS PTY LTD
MONOMATAPA COAL LTD
CHIFLEY PORTFOLIOS PTY LTD
BEDAR HOLDINGS PTY LIMITED
BT PORTFOLIO SERVICES LIMITED
EMS ARCADIA PTY LTD
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
WOODVILLE SUPER PTY LIMITED
MR JASON PETERSON + MRS LISA PETERSON
MR JOHN CHARLES VASSALLO + MR SEAN JAMES VASSALLO
Totals: Top 20 holders of LPE ORDINARY FULLY PAID
Total Remaining Holders Balance
186,985,610
186,985,610
186,729,289
80,100,073
32,366,666
14,475,651
11,500,000
10,900,000
10,682,796
10,000,000
10,000,000
9,788,151
9,169,354
8,960,641
8,484,988
8,400,091
8,264,767
7,800,000
7,500,000
7,066,666
816,160,353
540,975,258
13.78
13.78
13.76
5.9
2.38
1.07
0.85
0.8
0.79
0.74
0.74
0.72
0.68
0.66
0.63
0.62
0.61
0.57
0.55
0.52
60.14
39.86
18
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
SHAREHOLDER INFORMATION
Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act are:
:
THE CHESTER FAMILY A/C
THE GLANVILLE FAMILY A/C
THE PETTETT FAMILY A/C
JARWILL PTY LTD
186,985,610
186,985,610
186,729,289
80,100,073
19
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Revenue
Electricity sales
Less cost of goods sold
Retail usage
Network charges
Other COGS
Total cost of goods sold
Gain/(loss) from trading
Other income
Interest received
Other receipts
Proceeds on sale of subsidiaries
Gain/(loss) on disposal of other assets
Subsidiary loans write off
Other expenses
Employee costs
Professional costs
Share-based payments
Depreciation and amortisation
Borrowing costs
Other expenses
Loss from continued operation
Loss before income taxes
Income tax benefit/(expense)
Net loss for the period
Other comprehensive income
Other comprehensive income net of tax
Total comprehensive loss for the year
Note
2016
$
2015
$
6
1,761,243
59,899
(562,022)
(689,791)
(176,749)
(1,428,562)
332,681
33,216
105,482
110,109
(734)
(117,700)
(1,447,188)
(651,579)
(6,535,990)
(127,732)
(79,495)
(350,175)
(8,729,105)
(8,729,105)
115,168
(8,613,937)
-
-
(22,771)
(45,535)
(5,980)
(74,286)
(14,387)
-
-
-
(10,000)
-
(165,001)
(205,028)
-
(15,992)
(22,848)
(80,105)
(513,361)
(513,361)
-
(513,361)
-
-
(8,613,937)
(513,361)
6
6
6
14
7
Basic/diluted earnings/(loss) per share (dollars per share)
16
(0.0102)
(3.0587)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the notes to the financial statements
20
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Note
2016
$
2015
$
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Plant and equipment
Intangibles
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Employee entitlements – annual leave
Borrowings
Total current liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
TOTAL LIABILITIES
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
21
8
9
10
11
12
12
13
15
2,631,507
994,141
27,646
3,653,294
414,896
1,280,690
1,695,586
5,348,880
707,820
85,200
55,948
848,968
222,213
222,213
16,844
42,323
15,221
74,388
50,445
110,834
161,279
235,667
149,186
25,994
212,861
388,041
293,134
293,134
1,071,181
681,175
4,277,699
(445,508)
14,584,862
6,535,990
(16,843,153)
4,277,699
301,643
-
(747,151)
(445,508)
The Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Financial
Statements
21
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Balance at 1 July 2014
Profit /(Loss) after income tax
Other comprehensive income
Shares issued during the year
Balance at 30 June 2015
Balance at 1 July 2015
Reverse acquisition of SXT
Profit /(Loss) after income tax
Share based payments
Other comprehensive income
Shares issued during the year
Balance at 30 June 2016
Issued
capital
$
Options
reserve
$
Accumulated
losses
$
Totals
$
1,200
-
-
300,443
301,643
301,643
5,527,685
-
-
-
8,755,534
14,584,862
-
-
-
-
-
-
(233,790)
(232,590)
(513,361)
-
-
(747,151)
(513,361)
-
300,443
(445,508)
(747,151)
(445,508)
-
6,535,990
-
-
6,535,990
(7,482,065)
(8,613,937)
-
-
-
(16,843,153)
(1,954,380)
(8,613,937)
6,535,990
-
8,755,534
4,277,699
The Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Financial
Statements
22
LOCALITY PLANNING ENERGY HOLDINGS LIMITED
ABN 90 147 867 301
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Note
2016
$
2015
$
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Net cash provided by/ (used in) operating activities
21
Cash flows from investing activities
Payment for plant and equipment
Payment for intangibles
Cash acquired in a business combination
Proceeds from sale of business
Net cash provided by/ (used in) investing activities
Cash flows from financing activities
Proceeds from issues of shares
Proceeds from loans
Repayment of loans
Net cash provided by/ (used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents opening balance
1,277,912
(3,521,937)
33,216
(65,495)
(2,276,304)
(419,702)
(1,239,542)
(843,055)
110,109
(2,392,190)
7,510,991
128,590
(356,424)
7,283,157
2,614,663
16,844
65,889
(409,358)
-
(22,847)
(366,316)
(55,055)
(120,767)
-
-
(175,822)
300,443
249,029
-
549,472
7,334
9,510
Cash and cash equivalents closing balance
21
2,631,507
16,844
The Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements
23
1
REPORTING ENTITY
The financial statements of Locality Planning Energy Holdings Limited (“the Company”) for the year ended 30
June 2016 covers the Consolidated Entity consisting of Locality Planning Energy Holdings Limited and the entities
it controlled from time to time throughout the year (“the Group” or “Consolidated Entity”) as required by the
Corporations Act 2001. Locality Planning Energy Holdings Limited is a for-profit entity for the purpose of preparing
these financial statements.
The financial statements are presented in Australian dollars, which is the functional currency.
The address of the Group’s registered office and principal place of business is Suite 18, 13 Norval Court,
Maroochydore, QLD, 4558.
2
BASIS OF PREPARATION
A. Statement of compliance
The Financial Report has been prepared in accordance with requirements of Australian Accounting Standards,
other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
This report is to be read in conjunction any other public announcements made by the Group during the year in
accordance with the continuous disclosure requirements of the Corporations Act 2001.
Compliance with Australian accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards.
The accounting policies adopted are consistent with those of the previous financial year, unless stated otherwise.
B. Basis of measurement
The financial statements have been prepared on the historical cost basis, modified by the revaluation of
selected non-current assets, and financial assets and financial liabilities for which the fair value basis of
accounting has been applied.
C. Use of estimates and judgements
The preparation of financial statements in conformity with AASB’s requires management to make judgements,
estimates and assumptions that effect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised and in any future periods affected. Information
about critical estimates and judgements in applying accounting policies that have the most significant effect on
the amounts recognised in the financial statements are outlined below:
Impairment
The Group assesses impairment at the end of each reporting period by evaluating conditions specific to the
Group that may lead to impairment of other assets and financial assets. This assessment includes the
recoverable amount of the intangible assets, which comprise the cost of securing a contract to supply electricity
to a strata title property, plus the cost of establishing the metering infrastructure at that site. These costs are
amortised over the life of the contract, which is generally 5 or 10 years. The security provided by these contracts
and the fact that many more customers have been locked in since balance date greatly reduces the level of
uncertainty to future cash flows. Where an impairment trigger exists, the recoverable amount of the asset is
determined. Value-in-use calculations are performed or market based information is obtained in assessing
recoverable amounts that incorporate a number of key estimates.
24
2
BASIS OF PREPARATION (Cont’d)
D. Going concern
The financial statements have been prepared on a going concern basis which contemplates the continuity of
normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of
business. The Group has incurred a net loss after tax for the year ended 30 June 2016 of $8,613,937 and a net
cash outflow from operations of $2,276,304. At 30 June 2016, the Group’s current assets exceeded its current
liabilities by $2,804,326.
The Company has prepared budgets based on its current growth plans and is examining funding opportunities to
fund this growth. These include debtor financing and long term funding.
The ability of the consolidated entity to maintain continuity of normal business activities and to pay its debts as
and when they fall due is dependent on its ability to source sufficient funding from borrowings and the exercise of
options and to achieve its growth targets. Should the consolidated entity not be able to raise capital when required,
there exists a material uncertainty that may cast significant doubt on the consolidated entity’s ability to continue
as a going concern.
3
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, and have been applied by all entities in the Group.
A. Basis of consolidation
The consolidated financial statements comprise the financial statements of Locality Planning Energy Holdings
Limited and its subsidiaries for the year ended 30 June 2016 ("the group"). Subsidiaries are entities (including
structured entities) over which the group has control. The group has control over 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 use its
power to affect those returns. Subsidiaries are consolidated from the date on which control is transferred to the
group and are deconsolidated from the date that control ceases.
All intercompany balances and transactions, including unrealised profits arising from intragroup transactions have
been eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment
of the asset transferred.
B.
Income tax
The charge for current income tax expense is based on the profit/loss for the year adjusted for any non-assessable
or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the
balance date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred
income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination,
where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled. Current and deferred tax is recognised in the profit or loss, except where it relates to items
recognised in the other comprehensive income or directly in equity. In this case the tax is recognised in the other
comprehensive income or directly in equity respectively.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary differences or tax losses can be utilised. To the extent that any rebates are
received from Government taxation authorities, they are recognised in profit or loss as an income tax benefit.
25
3
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
C. Plant and Equipment
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
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 consolidated entity
and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or
loss during the financial period in which they are incurred.
All assets are depreciated on either a straight line basis or diminishing value basis over their useful lives to the
consolidated entity commencing from the time the asset is held ready for use. Leasehold improvements are
depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the
improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate & Method
Plant and equipment
10-50% per annum, straight line or diminishing value
Motor Vehicles 25% per annum, diminishing value
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and
losses are included in the profit or loss.
26
3
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
D. Financial Instruments
Recognition
Financial instruments are initially measured at fair value on trade date, which includes transaction costs, when the
related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as
set out below.
Loans and receivables
These financial assets consist of trade and other receivables, which are measured at cost less any accumulated
impairment losses. There is no significant concentration of credit risk.
Convertible Notes and Loans
At the beginning of the year the Company had on issue 1,350,000 Convertible Notes (the Notes) convertible into
ordinary shares and $150,000 in Stage 1 unsecured loans convertible by agreement (Loans).
These Notes were assigned to new holders during the prior year and the assignment included varying some of
the key terms and conditions of the Notes (subject to shareholder approval), including:
The face value of the Notes has been reduced (from $1.00) to $0.50, resulting in a reduction of the liability
from $1.35m to $675,000.
This was approved by shareholders at the General Meeting held on 2 November 2015 and the reduction
in liability has been recognised in this financial report.
Automatic conversion of the Notes upon the earlier of settlement of the LPE acquisition, or 31 December
2015. This took place in December 2015.
Note conversion = one share plus one option for every two shares issued. Shares were converted at 80%
of the price of the capital raising conducted concurrently with the LPE acquisition. Options were
exercisable at $0.02 and expiring on or before 29 February 2016. This took place in December 2015 and
the options were exercised in February 2016.
Interest calculated at 1.0% per month and paid in shares with a deemed price of $0.01 per share.
$250,000 in Loans were issued during the prior year and were convertible into ordinary shares at $0.006,
with one free attaching option exercisable at $0.02 on or before 29 February 2016 for every share issued.
$100,000 of loans were converted during the prior year and the attached options were exercised in
February 2016.
Financial Assets at fair value through profit or loss
Financial assets are valued at ‘fair value through profit or loss’ when they are either held for trading for the purpose
of short term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid
an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key
management personnel on a fair value basis in accordance with a documented risk management or investment
strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in
profit or loss.
27
3
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Held-to-maturity investments
These investments have fixed maturities, and it is the Group’s intention to hold these investments to maturity. Any
held-to-maturity investments held by the Group are stated at amortised cost.
Available-for-sale financial assets
Available-for-sale financial assets include any financial assets not included in the above categories. Available-for-
sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are
taken directly to equity, except where losses are considered to be prolonged and extensive, in which case such
losses are recognised in profit or loss.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal
payments and amortisation.
Derivative instruments
Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken
to the statement of comprehensive income unless they are designated as hedges. At present, the Group does not
have any derivative instruments.
Fair Value
Fair value is determined based on current bid prices for all quoted investments.
Impairment
At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has
been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the
instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the
statement of comprehensive income.
E.
Intangible assets
Intangible assets include the cost of securing a contract to supply electricity to a strata title property, plus the cost
of establishing the metering infrastructure at that site. These costs are then amortised over the life of the contract,
which is generally 5 or 10 years.
F. Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the year end and
which are unpaid. These amounts are unsecured and have 30-60 day payment terms. They are recognised initially
at fair value and subsequently measured at amortised cost using the effective interest method.
G. Employee entitlements
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to
balance date.
Employee benefits that are expected to be settled within one year have been measured at the amounts expected to
be paid when the liability is settled. Long-term employee benefits are only recognised to the extent that it is considered
probable that employees will reach the eligible service period.
28
3
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
H.
Impairment of Financial Assets
At each reporting date, the Consolidated Entity assesses whether there is objective evidence that a financial
instrument has been impaired. In the case of loans and receivables, the Consolidated entity first assesses whether
objective evidence of impairment exists for financial assets that are individually significant, and individually or
collectively for financial assets that are not individually significant. If the Consolidated entity determines that no
objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it
includes the asset in a Consolidated entity of financial assets with similar credit risk characteristics and collectively
assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss
is or continues to be recognised are not included in a collective assessment of impairment. In the case of available
for sale financial instruments, a significant or prolonged decline in the value of the instrument is considered to
determine whether an impairment has arisen. Losses are recognised in the profit or loss.
I.
Impairment of Non-Financial Assets
At each reporting date, the Consolidated Entity reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed in the profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
J.
Share-based payments
The Consolidated Entity may make share-based payments to directors and employees. The fair value of the equity
to which employees become entitled is measured at grant date and recognised as an expense over the vesting period,
with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price.
The fair value of options is ascertained using a valuation which incorporates all market vesting conditions. The number
of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount
recognised for services received as consideration for the equity instruments granted shall be based on the number
of equity instrument that eventually vest.
K. Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within
short-term borrowings in current liabilities on the statement of financial position.
L. Revenue
Revenue is measured at the fair value of the consideration received or receivable, less any trade or volume discounts.
Interest revenue is recognised using the effective interest rates applicable to the financial assets. Revenue from the
sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards
of ownership of the goods and the cessation of all involvement in those goods. Revenue from rendering of services
is measured by reference to the stage of completion of the service provided.
All revenue is stated net of the amount of goods and services tax (GST).
29
3
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
M. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of expense. Receivables and payables in the Statement of Financial
Position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis,
except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
N.
Issued Capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or options are shown
as a deduction from equity.
O. Earnings per share
The Consolidated Entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS
is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit
or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding,
adjusted for the effects of all dilutive potential ordinary shares.
P. Leases
Leases of property, plant and equipment, where substantially all the risks and benefits incidental to the ownership of
the asset, but not legal ownership, are transferred to the consolidated entity are classified as finance leases.
Finance leases are capitalised recording an asset and a liability equal to the present value of the minimum lease
payments, including any guaranteed residual value. Leased assets are depreciated over the shorter of the asset’s
useful life and the lease term. Lease payments are allocated between the reduction of the lease liability and the lease
interest expense for the period.
Lease payments under operating leases, where substantially all the risks and benefits remain with the lessor, are
charged to the profit or loss on a straight line basis over the period of the lease.
Q. New Accounting Standards issued but not yet applicable
No new or revised Australian Accounting Standards that have been issued but not yet applicable have been applied
in the preparation of these financial statements. The Board has not yet conducted a detailed formal analysis of these
new accounting standards. Preliminary analysis of the most significant new standards is as follows:
AASB 16 Leases
This standard removes the distinction between operating and finance leases, effectively requiring all leases to be
recognised on the Statement of Financial Position. The entity has minimal operating leases that will have to be
brought to account as assets under the new standard.
AASB 15 Revenue from Contracts with Customers
This standard substantially changes the recognition criteria for revenue. Whereas previous revenue was recognised
based on the transfer of legal title or the percentage completion of services, it will now be recognised upon completion
of certain identified “performance obligations.” At this stage, the Board believes that performance obligations in its
contracts with customers will not substantially differ from the percentage completion method currently used.
AASB 9 Financial Instruments
The standard makes numerous changes to naming conventions and classification of financial instrument. There are
also changes to rules in respect of hedge accounting. As the entity only has simple financial instruments such as
cash, receivables and payables, and does not engage in hedging activities, the impact of this standard is expected
to be minimal.
30
4
SEGMENT REPORTING
The Group has identified its operating segments as being the energy retail sector in Australia. Management currently
identifies the energy retail sector as being the Group’s sole operating segment,
There have been no changes in the operating segments during the year. Accordingly, all significant operating
decisions are based upon analysis of the Group as one segment. The financial results from the segment are
equivalent to the financial statements of the Group as a whole.
5
BUSINESS COMBINATION
Locality Planning Energy Pty Ltd
On 1st July 2015 the Group entered into an option agreement to purchase 100% of the issued capital of Locality
Planning Energy Pty Ltd (LPE Pty Ltd).
In accordance with AASB 3 ‘Business Combinations’ the transaction has been accounted for as a reverse acquisition
of LPE Holdings Ltd (LPEH - formerly Stratum Metals Ltd) by LPE Pty Ltd, who was deemed to be the ‘acquirer’ for
accounting purposes. The factors considered included the relative voting rights after the business combinations,
Board and management composition of the consolidated group and other factors, such as operational objectives.
LPE Ltd has been consolidated into the group from the date of control which was 11 December 2015.
Fair value consideration transferred
Market capital
Less:
Cash
Receivables
Other assets
Plant and equipment
Bank overdraft
Payables
Borrowings
Identifiable assets and liabilities assumed
Purchase consideration of LPEH
251,258,414 shares at 2.2 cents each
Excess consideration paid over net assets
Accounting
acquiree’s
carrying amount
$
Fair value
$
356,828
163,085
12,593
1,354
(1,200,000)
(63,239)
(1,225,000)
(1,954,379)
5,527,685
356,828
163,085
12,593
1,354
(1,200,000)
(63,239)
(1,225,000)
(1,954,379)
5,527,685
7,482,064
Since acquisition date the acquiree (LPEH) has contributed revenue of $143,003 and a loss of $6,575,392 to the
consolidated group. Had the acquisition occurred at the beginning of the financial year, the contribution of revenue
and net loss would have been $818,003 and $6,723,823 respectively.
REVENUE AND OTHER INCOME
6
Electricity sales
Proceeds on sale of subsidiaries
Other receipts
Interest revenue
Total revenue and other income
31
Consolidated
Entity
2016
Consolidated
Entity
2015
$
$
1,761,243
110,109
105,482
33,216
2,010,050
59,899
-
-
-
59,899
Consolidated
Entity
Consolidated
Entity
2016
$
2015
$
-
(115,168)
-
(115,168)
-
-
-
-
(8,729,105)
(513,361)
(2,618,732)
(154,008)
1,964,023
(115,168)
654,709
115,168
1,262
-
152,746
-
50,440
12,471
453,270
503,710
207,719
220,190
7
INCOME TAX
Components of tax expense/(benefit) comprise:
Current tax
Prior year tax
Deferred tax
Income Tax Expense/(Benefit)
Numerical reconciliation of income tax benefit to prima facie tax payable
Loss from operations before tax for the year
The prima facie income tax benefit on loss before income tax at a tax rate
of 30% (2015: 30%)
Tax effect amounts which are not (deductible)/taxable in calculating
taxable income:
R & D tax offset
Deferred tax asset not recognised on current year loss
Total income tax benefit
Net unrecognised deferred tax assets
Net Deductible temporary differences
Unused tax losses
Net unrecognised deferred tax asset
The above potential tax benefit of $453,270 for tax losses has not been
recognised in the statement of financial position. These tax losses can only
be utilised in the future if the continuity of ownership test is passed, or failing
that, the same business test is passed.
The above potential tax benefit, which excludes tax losses, for deductible
temporary differences of $50,440 has not been recognised in the statement
of financial position as the recovery of this benefit is uncertain.
The consolidated entity has no franking credits.
32
TRADE & OTHER RECEIVABLES
8
Trade receivables
R & D rebate receivable
Other receivables
GST receivable
$50,737 of trade receivables are past due (2015: nil) because of
metering issues and nil were impaired (2015: nil). No collateral is held
(2015: nil).
OTHER CURRENT ASSETS
9
Bond paid
Prepaid expenses
Prepayments
PLANT & EQUIPMENT
10
Plant & equipment at cost
Accumulated depreciation
Motor vehicles at cost
Accumulated depreciation
Reconciliation
Consolidated
Entity
2016
$
Consolidated
Entity
2015
$
730,081
115,168
59,292
89,600
994,141
3,896
-
23,750
27,646
147,000
(34,175)
112,825
330,091
(28,020)
302,071
414,896
23,969
-
-
18,354
42,323
3,046
2,175
10,000
15,221
58,679
(8,234)
50,445
-
-
-
50,445
Reconciliations of the carrying amount of each class of plant and equipment between the beginning and the end of
the financial year
Plant of equipment
Balance at the beginning of the year
Additions
Depreciation
Write off plant and equipment
Balance at the end of the year
Motor Vehicles
Balance at the beginning of the year
Additions
Depreciation
Balance at the end of the year
50,445
89,615
(26,951)
(284)
112,825
-
330,091
(28,020)
302,071
3,629
55,050
(8,234)
-
50,445
-
-
-
-
33
INTANGIBLES
11
Intangibles at cost – site conversion costs
Accumulated amortisation
Reconciliation
Balance at the beginning of the year
Additions
Amortisation
Write off intangibles
Balance at the end of the year
12
BORROWINGS
Current
Site conversion loans
Owing to related parties
Non-current
Site conversion loans
Owing to related parties
13
ISSUED CAPITAL
Consolidated
Entity
2016
$
Consolidated
Entity
2015
$
1,358,059
(77,369)
1,280,690
110,834
1,243,071
(72,761)
(454)
1,280,690
37,753
18,195
55,948
154,506
67,707
222,213
120,767
(9,933)
110,834
-
120,767
(9,933)
110,834
212,861
-
212,861
225,000
68,134
293,134
On 11 December 2015 the Company acquired all of the issued shares of LPE Pty Ltd resulting in LPE Pty Ltd becoming
a wholly-owned subsidiary of the Company. Pursuant to AASB3: Business Combinations and as described in Note 5,
this transaction represents a reverse acquisition, ie, LPE Pty Ltd is identified as the acquirer for accounting purposes.
The consolidated financial statements represent a continuance of LPE Pty Ltd, but the number of shares on issue
reflect those of the Company.
(a) Issued and paid up capital
Ordinary shares fully paid no par value
(b) Movement in ordinary shares on issue
Balance at 1 July 2014
Issued for repayment of loans and cash
Balance at 30 June 2015
Reverse acquisition of Stratum Metals Ltd
Issued subsequent to reverse acquisition
Balance at 30 June 2016
2016
Number
2015
Number
1,357,135,611
2,800
Number
1,200
1,600
2,800
892,056,195
465,076,616
1,357,135,611
$
1,200
300,443
301,643
5,527,685
8,755,534
14,584,862
34
13
ISSUED CAPITAL (Cont’d)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Share buy-back
There is no current on-market share buy-back.
(c) Share options
At the end of the period, the following options over unissued shares were outstanding:
Number
500,000
600,000
75,000,000
30,000,000
Exercise price
$
0.25
0.25
0.025
0.025
Expiry
15/4/2018
23/1/2017
30/6/2017
30/6/2017
Capital risk management
The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a going
concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an
optimum capital structure to reduce the cost of capital.
In common with many other newly listed companies, the parent raises finance for the consolidated entity’s working
capital and asset development activities. The consolidated entity’s overall strategy remains unchanged from 2015.
The consolidated entity is not subject to externally imposed capital requirements.
35
14 SHARE-BASED PAYMENTS
During the year ended 30 June 2016, as part of the reverse acquisition and merger, the Company issued options to
key personnel and convertible note holders. Details of the terms and conditions of the issue of options can be found
in the Notice of Meeting announcement on 29 September 2015.
Grant date
1/9/2015
2/11/2015
2/11/2015
11/12/2015
11/12/2015
11/12/2015
Number of Instruments
2,200,000
75,000,000
30,000,000
21,093,750
26,000,968
854,400,776
Exercise Price
$
0.020
0.025
0.025
0.02
0.02
n/a
Expiry date
29/2/2016
30/6/2017
30/6/2017
29/2/16
29/2/16
n/a
Fair value expensed
during the period
$
- *
667,500
267,000
78,047
96,204
5,427,239
6,535,990
* Excludes $12,320 from expense as it was incurred by Stratum Metals Ltd before the acquisition.
The fair value of services received in return for share options granted are measured by reference to the fair value
of share options granted. The estimate of the fair value of the services received is measured based on the binomial
pricing model. The contractual life of the option is used as an input into this model.
Fair value at measurement date
Share price on grant date
Exercise price
Expected volatility
(expressed as weighted average volatility used
in the modelling under the binomial option-
pricing model
Option life
(expressed as weighted average life used in the
modelling under the binomial option-pricing
model
Expected dividends
Risk-free interest rate
(based on national government bonds)
Convertible note
options issued on
1/9/2015
$0.0056
$0.02
$0.02
100%
Consultant and
director options
issued on
11/12/2015
$0.00089
$0.02
$0.025
100%
Loan conversion
options issued on
11/12/2015
$0.0037
$0.02
$0.02
100%
6 months
1.5 years
3 months
-
2.75%
-
6.25%
-
2.75%
36
15 RESERVES
Options reserve
Opening balance
Options issued
Closing balance
The option reserve account is to account for share based payments
16
EARNINGS PER SHARE
Weighted average number of shares used as the denominator in
calculating basic and diluted earnings per share
Net loss after tax used in calculating basic earnings per share
Net loss after tax used in calculating diluted earnings per share
Consolidated
Entity
2016
$
Consolidated
Entity
2015
$
-
6,535,990
6,535,990
-
-
-
2016
2015
(Number)
(Number)
845,775,323
167,836
$
(8,613,937)
(8,613,937)
$
(513,361)
(513,361)
17 CONTROLLED ENTITIES
Investments in controlled entities
Locality Planning Energy Pty Limited
Menzies Goldfield Limited *
Riqo Pty Ltd *
*Sold 15 December 2015
Country of
incorporation
Australia
Australia
Australia
%
ownership
2016
100%
0%
0%
%
ownership
2015
0%
100%
80%
Class of shares
Ord
Ord
Ord
37
18
LEASE COMMITMENTS
Total operating lease commitments
Within 1 year
1 to 5 years
Total
Total finance lease payments
Within 1 year
1 to 5 years
Total
Less: Future interest charges
Total
Reconciliation to lease liabilities
Current - Note 12
Non-current – Note 12
Total
Consolidated
Entity
2016
$
Consolidated
Entity
2015
$
95,493
523,320
618,813
58,933
186,300
245,233
(52,974)
192,259
37,942
154,317
192,259
-
-
-
21,889
85,731
107,620
(26,625)
80,995
12,861
68,134
80,995
19 CONTINGENT LIABILITIES AND ASSETS
The Directors are not aware of any contingent liabilities or contingent assets that are likely to have a material
effect on the results of the Group as disclosed in these financial statements.
20
RELATED PARTIES
Key management personnel compensation
Short term employee benefits
Post-employment benefits
Share based payments
Short term advances
Ben Chester
Damien Glanville
Consolidated
entity
2016
$
Consolidated
entity
2015
$
488,471
33,810
3,434,338
3,956,619
-
-
-
-
-
-
-
125,000
100,000
225,000
38
21
CASH FLOW INFORMATION
Reconciliation of cash flow from operations with profit / (loss) after tax
Profit / (loss) after tax
Non-cash flows:
Depreciation and amortisation
Loss on sale
Loss on sale of subsidiaries
Share-based payments
Interest expense settled in shares
Changes in operating assets and liabilities
Increase in receivables
Decrease/(increase) in other assets
(Decrease)/increase in creditors and payables
Increase in employee entitlements
Consolidated
Entity
2016
$
Consolidated
Entity
2015
$
(8,613,937)
(513,361)
127,732
734
7,591
6,535,990
19,543
(1,922,347)
(959,372)
(12,425)
558,634
59,206
15,992
-
-
-
-
(497,369)
(34,175)
-
146,056
19,172
Net cash used in operating activities
(2,276,304)
(366,316)
Cash and Cash equivalents in the Statement of Cash Flows include:
Cash on hand
Cash at Bank
Cash on Deposit
1,517
174,990
2,455,000
2,631,507
1,200
15,644
-
16,844
39
22 FINANCIAL INSTRUMENTS
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expense are recognised, in respect of each class of financial
asset, financial liability, and equity instrument are disclosed in Note 3 to the financial statements.
Financial risk management objectives
The financial risks of the consolidated entity include price risk, credit risk and liquidity risk. The consolidated
entity does not hedge these risk exposures. The Consolidated entity does not enter into or trade financial
instruments, including derivative financial instruments, for speculative purposes.
Market risk
Price risk is the risk of changes to market prices in the supply of electricity. This risk applies to both the price at
which the Company sells electricity to its customers and the price it pays for that electricity. The Company
manages this risk by signing up customers to long-term contracts where possible.
The Consolidated Entity’s activities are also exposed to the financial risks of changes in interest rates on its
borrowings and cash and cash equivalents. It is the policy of the Consolidated Entity to manage their risks by
continuously monitoring interest rates.
(i) Interest risk management
Interest rate risks are caused by fluctuations in interest rates which, in turn, are due to market factors.
Interest rate sensitivity
The Consolidated Entity’s main interest rate risk arises from cash and cash equivalents. The following table
demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held
constant, of the consolidated entity’s profit/loss before taxes through the impact on cash and cash equivalents
and held to maturity investments with a decrease or an increase of 0.25% in interest rates.
Sensitivity
Cash and cash equivalents and other financial assets
Borrowings
Effect on profit or loss before taxes
Increase 0.25%
Decrease 0.25%
Consolidated
Entity
2016
$
Consolidated
Entity
2015
$
2,631,507
(278,161)
2,353,346
16,844
(505,995)
(489,151)
5,883
(5,883)
(1,222)
1,222
40
22 FINANCIAL INSTRUMENTS (Cont’d)
Liquidity risk management
Liquidity risks are caused by the inability to raise the money needed to meet payment of liabilities as and when
they fall due. The Consolidated Entity manages liquidity risk by maintaining of reserves and by continually
monitoring forecast and actual cash flows and cash balances. The Company is actively pursuing financing
possibilities to fund its future growth plans.
At 30 June 2016 current assets exceeded current liabilities by $2,804,326 (2015: current liabilities exceeded
current assets by $313,653). Financial liabilities comprised trade payables, accruals and loans. All trade payables
and accruals have a contractual maturity of 6 months or less.
Credit risk management
In relation to financial assets, credit risk arises from the potential failure of counterparties to meet their obligations
under a contract or arrangements. Credit risk for the Consolidated Entity arises from cash and cash equivalents
and outstanding receivables. The Consolidated Entity partially reduces credit risk by the use of direct debit
facilities with its customers. In addition, the Company has the right to withhold the supply of electricity to secure
payment. All cash & cash equivalents are held with Australian regulated banks. The maximum exposure to credit
risk is the carrying amount of the financial assets recognised in the statement of financial position.
Fair values
The carrying amounts of all financial assets and liabilities primarily comprising cash and cash equivalents, trade
and other receivables, trade and other payables and loans are stated at their fair value.
23 AUDITORS REMUNERATION
Amounts paid/payable for audit or review of the financial statements
Amounts paid/payable for tax and other services
24 SUBSEQUENT EVENTS
Consolidated
Entity
2016
$
Consolidated
Entity
2015
$
45,000
14,716
-
45,000
-
14,716
There have been no other matters or circumstances that have arisen since the end of the year which significantly
affected or could significantly affect the operations of the consolidated entity, the results of those operations or the
state of affairs of the Consolidated Entity in future financial years.
41
25 PARENT ENTITY DISCLOSURES
The following information has been extracted from the books and records of the legal parent entity LPE Holdings
Limited. Accordingly, the information below does not relate to the “Parent Entity” as defined in Note 5.
Result of parent entity
Profit/loss for the year
Other comprehensive income/(loss) for the year
Total comprehensive income before tax
Income tax benefit
Total comprehensive income before tax
Financial position of parent entity at year end
Current Assets
Total assets
Current Liabilities
Total liabilities
Net Assets
Total equity of the parent entity comprising :
Issued capital
Reserves
Convertible note
Accumulated losses
Total equity
2016
$
2015
$
(6,866,765)
-
(6,866,765)
115,168
(6,751,597)
6,624,421
6,624,421
38,874
38,874
(9,816,894)
-
(9,816,894)
-
(9,816,894)
50,505
51,859
2,020,923
2,020,923
6,585,547
(1,969,064)
14,584,862
6,535,990
-
(14,535,305)
6,585,547
11,640,708
961,862
168,400
(14,740,034)
(1,969,064)
42
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
The attached financial statements and notes are in accordance with the Corporations Act 2001,including :-
(a) complying with Australian Accounting Standards (including Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
(b) giving a true and fair view of the financial position as at 30 June 2016 and performance for the year ended on
that date of the consolidated entity,
2.
3.
The financial statements also comply with International Financial Reporting Standards as disclosed in note 2.
The Remuneration Report as set out in the Directors’ Report complies with Section 300A of The Corporations
Act 2001.
4.
The Chief Executive Officer and Chief Financial Officer have declared that:
(a)
the financial records of the company for the financial year have been properly maintained in accordance with
Section 286 of the Corporations Act 2001;
(b)
the financial statements and notes for the financial year comply with the Australian Accounting Standards
(including Australian Accounting Interpretations); and
(c)
the financial statements and notes for the financial year give a true and fair view.
5.
In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
ANDREW PIERCE
Director
Dated this 30th day of September 2016
43