More annual reports from Melbana Energy Limited:
2023 ReportAnnual Report 2016
ABOUT THE COMPANY
About the Company
MEO Australia has a focused objective of growing a material oil and gas business
through a three-pronged strategy:
• Risk-managed exploration
• Commercialisation of the Tassie Shoal Projects
• Low-cost and value accretive acquisitions
The Company has a significant early mover advantage with its onshore Block 9
Production Sharing Contract in Cuba where enormous prospective potential for oil
has been identified, lending itself to an accelerated exploration program, which may
include the identification of early drilling opportunities. MEO also has a high impact
portfolio of exploration opportunities offshore northern Australia and onshore New
Zealand as well as the potential to re-start production at the suspended Puka oil field
should market conditions improve. In addition, MEO continues to seek and assess new
venture opportunities that will enhance the Company’s asset base.
Contents
01 Highlights for the Year
01 MEO Project Areas
02 Chairman’s Message
03 Managing Director’s Message
04 Directors’ report
06 Review of operations
15 Auditor’s independence declaration
16 Remuneration report
26 Corporate governance statement
27 Consolidated statement of comprehensive income
28 Consolidated statement of financial position
29 Consolidated statement of changes in equity
30 Consolidated statement of cash flows
31 Notes to the consolidated financial statements
60 Directors’ declaration
61
Independent auditor’s report
63 Shareholder and Other Information
Forward Looking Statements
This Financial Report includes certain forward-looking
statements that have been based on current expectations
about future acts, events and circumstances. These forward-
looking statements are, however, subject to risks, uncertainties
and assumptions that could cause those acts, events and
circumstances to differ materially from the expectations
described in such forward-looking statements.
These factors include, among other things, commercial and
other risks associated with the meeting of objectives and
other investment considerations, as well as other matters
not yet known to the Company or not currently considered
material by the Company.
MEO AUSTRALIA: ANNUAL REPORT 2016 01
HIGHLIGHTS FOR THE YEAR
Highlights for the Year
• Secured Block 9 Production Sharing Contract,
• New experienced local operator for PEP51153,
onshore Cuba
onshore New Zealand and realigned work program
Early mover advantage in a new onshore block in
proven hydrocarbon area
Potential for both production and high impact
exploration opportunities
•
Identified very significant oil potential in Cuba
Block 9
Results so far from only one of three identified
plays. Reviewing opportunities to accelerate
exploration activities, including early drilling
opportunities
• Beehive prospect (WA-488-P) enhanced by
reprocessing of seismic data
Seeking to farmout to fund potential drilling
• Successful farmout of AC/P50 & AC/P51
MEO carried through next two years work
program
• Transition to new leadership
Refreshed MEO Board with appointment of new
Directors and Chairman
• High-graded exploration portfolio
Expenditure prioritised based on potential
to deliver significant shareholder value with
MEO discontinuing involvement in lowest value
exploration acreage
MEO Project Area’s
MEO AUSTRALIA: ANNUAL REPORT 2016AUSTRALIAAUSTRALIACUBACUBAPEP 51153CUBA BLOCK 9 AC/P50TASSIE SHOALMETHANOL ANDLNG PROJECTS AC/P51WA-488-PNEW ZEALANDNEW ZEALAND 02
CHAIRMAN’S MESSAGE
Chairman’s Letter
It is my pleasure to present MEO Australia’s Annual Report for the 2016
Financial Year, and my first as Chairman of your company.
Similar to the previous year, 2016 was an extraordinarily
difficult one for the energy sector. Over the year the oil
price fell approximately 20% to less than US$50/bbl at
year-end, while the S&P/ASX300 Energy Index declined
approximately 25%. At one point during the year, the
oil price had fallen to a level lower than that during the
Global Financial Crisis in 2008-09.
However, I am pleased to report that your company has
emerged from this time of great turbulence in the oil and
gas sector in a strong position on all fronts.
After a period of change at the Executive and Board
level, your company has a stable and experienced
management team to lead the company through the
coming phase of exploration and growth. During the
year, the Managing Director, Peter Stickland extended
his Employment Agreement and, importantly, agreed to
receive a material portion of his remuneration in shares,
ensuring alignment with shareholders.
The company has also attracted an important
cornerstone shareholder. Leni Gas Cuba invested in
your company in February 2016, becoming MEO’s single
largest shareholder with a 15.8% interest. Leni Gas Cuba
is the first specialist investment company focusing on
Cuba and is listed on the Toronto Stock Exchange as LGC
Capital.
The company’s efforts to improve the risk reward profile
of its exploration portfolio and reduce the financial
commitment required of it is all but complete. The
centre piece of this strategy was the identification of,
and securing the rights to, at low cost, a high impact
acreage position in a proven oil and gas basin. This we
have achieved with our position in Block 9 in Cuba with
the official granting of a Production Sharing Contract
by Cuba Petroleo Union (CUPET), the Cuban national oil
company.
I will let Peter Stickland elaborate on the precise details
but rest assured your Board and Management team are
extremely encouraged by the potential that has been
identified thus far on Block 9. Post the close of the
financial year the initial results of the analysis of the oil
prospectivity of the Block were released to the ASX. This
resulted in, as of the time of this report, a near 200%
increase in the company’s market capitalisation. The
additional funds we recently raised via placements and
the share purchase plan are to allow us to accelerate our
exploration efforts.
The company’s move into Cuba has been timely,
coinciding with a rapprochement with the US. President
Obama’s March 2016 visit to Cuba was the first by a
sitting US president in over eighty-five years. A new
era seems to be dawning for Cuba and MEO is uniquely
positioned.
On behalf of the Board and Management I would like to
thank our employees, retiring directors and shareholders
for their efforts and support though out the year. The
company looks forward to utilising its sound fiscal
position to uncover the true potential of its upstream
portfolio and Block 9 in particular. The coming year’s
activities truly have the potential to transform MEO.
Andrew G Purcell
Chairman
MEO AUSTRALIA: ANNUAL REPORT 2016 03
MANAGING DIRECTOR’S MESSAGE
Managing Director’s Message
After my first full financial year as the company’s Managing Director
I am pleased to report that MEO is transformed. Your company is
now leaner with a lower cost, high impact exploration portfolio and a
potentially company-making asset in Block 9 in Cuba.
MEO has progressed its position onshore in Cuba and
executed a Production Sharing Contract for Block
9. This was the culmination of nearly 3 years work
by the company and our initial review of the Block’s
oil prospectivity is very encouraging. The first of 3
identified oil plays on the Block has been assessed by
MEO to contain over 8 billion barrels of oil-in-place
with a Prospective (Recoverable) Resource of 395
million barrels (unrisked, Best Estimate, 100% basis) of
potentially high quality light oil. The ongoing review of
the 2 remaining play types may yield further material
upside to this estimate.
To allow the company to better allocate capital to
strategic opportunities and reduce risk, MEO has farmed
out its statutory work obligations in AC/P50 and AC/P51
permits, assigned the company’s stake in WA-454-P to
Origin Energy, initiated a farm-out program on WA-488-P
containing the exciting Beehive prospect and exited
several other permits.
Your management team has also worked hard to create
a more efficient organisation focused on deploying
capital into, and maximising the value of, its upstream
assets. This has seen a 70% reduction in total overhead
costs in the last 18 months. Senior staff, including myself
have shown their confidence in the outlook for MEO
by agreeing to a reduction in cash component of their
salaries in exchange for Exercisable Performance Rights.
Work continues in the background on the company’s
Tassie Shoals Projects. Post the close of the Financial
Year the LNG project received updated environmental
approvals which are valid until 2052. The Tassie
Shoals Project represents a high potential long term
opportunity for MEO shareholders with minimal ongoing
expenditure.
The coming 12 months will see a high level of activity in
the company’s upstream portfolio, particularly in Cuba,
with the potential to greatly impact the company’s
market valuation. Your company’s management team
looks forward to updating shareholders in FY16/17 on the
following:
• Further updates to the assessment of the resource
potential of Cuba Block 9 in Q4 2016;
• The preparation of a plan in Q1 2017 for an initial
drilling program for up to two wells on Block 9;
• The conclusion of the farm-out process for the
potentially giant Beehive Prospect in the Bonaparte
Basin by Q4 2016. MEO’s analysis of the Beehive
prospect indicates that it is possibly one of the
largest undrilled hydrocarbon prospects in Australia;
and
• The completion of the assessment of the
prospectivity of PEP 51153 in New Zealand in Q4 2016
to determine the potential for drilling a high impact
exploration well.
Following the investment into the company by Leni Gas
Cuba in FY2016, a successful fund raising completed
shortly after the end of the Financial Year, and with
the support of its highly valued employees, MEO is well
placed to execute on these plans.
Peter Stickland
Managing Director & Chief Executive Officer
MEO AUSTRALIA: ANNUAL REPORT 2016 04
DIRECTOR’S REPORT
Director’s Report
For The Year Ended 30 June 2016
The directors of MEO Australia Limited (variously the
“Company”, “MEO” and “MEO Australia”) submit their
report for the financial year ended 30 June 2016. MEO
Australia is a company limited by shares, incorporated
and domiciled in Australia.
DIRECTORS
The names and details of the Company’s directors in
office during the financial year and until the date of this
report
are as follows. The directors were in office during the
entire period unless otherwise stated.
Andrew G Purcell, B Eng; MBA
Chairman (Appointed Independent Non-Executive
Director 30 July 2015,
appointed Chairman 25 November 2015)
Mr Purcell founded Lawndale Group (formerly Teknix
Capital) in Hong Kong over 10 years ago, a company
specialising in the development and management
of projects in emerging markets across the heavy
engineering, petrochemical, resources and infrastructure
sectors. Prior to this, Mr Purcell spent 12 years working
in investment banking across the region for Macquarie
Bank then Credit Suisse. Mr Purcell also has significant
experience as a public company director, both in
Australia and across Asia.
Mr Purcell is a Non-Executive Director of AJ Lucas Group
Limited (ASX: AJL).
Mr Purcell is Chairman of the Remuneration &
Nomination Committee and a member of the Audit
& Risk Committee.
Peter J Stickland, BSc, Hons (Geology), GDipAppFin (Finsia),
GAICD
Chief Executive Officer (Appointed 19 December 2014)
and Managing Director
(Appointed 30 January 2015)
Peter Stickland has over 25 years’ global experience
in oil and gas exploration. Peter was CEO of Tap Oil
Limited (ASX: TAP) from 2008 until late 2010 during
which time he oversaw the evolution of the company
into a South East Asia/Australia focused E&P Company
and was directly involved in the Finucane, Zola and
Talliganda fields. Prior to joining Tap Oil, Peter had a
successful career with BHP Billiton including a range of
technical and management roles both in Australia and
internationally. Peter has been a member of the Board
of Australian Petroleum Production and Exploration
Association Limited (APPEA) since 2009.
Michael J Sandy, BSC Hons (Geology), MAICD
Independent Non-Executive Director (Appointed 30 July
2015)
Michael Sandy is a geologist with 40 years’ experience in
the resources industry – mostly focused on oil and gas.
Michael had a varied early career with roles in minerals
exploration and research and a role with the PNG
Government based in Port Moresby. In the early 1990s he
was Technical Manager of Oil Search Limited also based
in Port Moresby. Michael was involved in establishing
Novus Petroleum Ltd and preparing that company for its
$186m IPO in April 1995. Over 10 years, he held various
senior management roles with Novus including manager
of assets in Australia, Asia, the Middle East and the USA
MEO AUSTRALIA: ANNUAL REPORT 2016 05
DIRECTOR’S REPORT CONTINUED
COMPANY SECRETARY
Mr Colin Naylor
Chief Financial Officer and Company Secretary
Mr Colin Naylor was appointed Chief Financial Officer on
5 February 2007 and Company Secretary on 23 February
2007. Mr Naylor has previously worked in senior financial
roles in major resource companies and is a Fellow of CPA
Australia.
DIVIDENDS
No dividend has been paid, provided or recommended
during the financial year and to the date of this report
(2015: nil).
PRINCIPAL ACTIVITIES
The principal activities during the year of the
consolidated entities were oil and gas exploration
in Australia, New Zealand and Cuba together with
development concepts for the Tassie Shoal Methanol
Project and Tassie Shoal LNG Project.
and as Business Development Manager was involved in
numerous acquisitions and divestments. He co-managed
the defence effort in 2004 when Novus was taken over
by Medco Energi.
For the last 12 years, Michael has been the principal of
consultancy company Sandy Associates P/L involved
in petroleum, minerals, geothermal, environmental and
disaster management projects and resources industry
start-ups.
He was previously a non-executive director of Tap Oil
Limited (ASX: TAP), Hot Rock Ltd (ASX: HRL), Caspian Oil
and Gas (ASX: CIG) and Pan Pacific Petroleum (ASX:PPP)
and ex-chairman of Burleson Energy Limited (ASX: BUR).
Mr Sandy is Chairman of the Audit & Risk Committee
and a member of the Remuneration & Nomination
Committee.
At MEO’s Annual General Meeting on 25 November
2015, Mr Greg Short retired as MEO’s Chairman and as
a Non-Executive Director and Mr Stephen Hopley did
not seek re-election as a Non-Executive Director. Mr
Andrew Purcell was appointed Chairman of MEO at the
conclusion of the Annual General Meeting.
Mr Short became Chairman of MEO in 2013 after 5 years
as a non-executive director. As at the retirement date,
Mr Short was also a Non-Executive Director of Po Valley
Energy Limited (ASX: PVE) and Metgasco Limited (ASX:
MEL).
Mr Hopley did not hold any other directorships during
the financial year up to the date of retirement.
Interests in the shares and options of the
company
As at the date of this report, the relevant beneficial and
non-beneficial interests of each of the directors in the
shares and share options in the Company were:
At 30 June 2016 the Company had 3 full-time and 6 part-
time employees including directors (2015: 3 full-time and
6 part-time employees including directors). In addition,
the Company engages consultants to assist in the
development and management of its various activities
on an as required basis.
A G Purcell
M J Sandy
P J Stickland
Ordinary Shares
Share Performance
Rights
1,971,531
800,000
5,453,700
–
–
5,333,333
MEO AUSTRALIA: ANNUAL REPORT 2016 REVIEW OF OPERATIONS
Environment, Health and Safety
Your Board believes that all workplace injuries are
avoidable. Policies and procedures are in place to ensure
employees and contractors conduct all activities in a safe
manner. MEO has adopted an environmental, health and
safety policy and conducts its operations in accordance
with the Australian Petroleum Production & Exploration
Association (APPEA) Code of Practice.
Directors specifically address Health, Safety and
Environment issues at each Board meeting and are
pleased to advise there were no reported Lost Time
Injuries or environmental incidents during the year.
Upstream activities including seismic surveys, well
site surveys and drilling operations require a variety
of regulatory approvals as detailed in the applicable
regulatory regime, including environment plans,
safety cases and the preparation of plans to manage
the undertaking of the activities and the contractors
engaged in undertaking the activities.
Any proposed development activities on Tassie Shoal
are subject to environment conditions specified in
the Offshore Petroleum and Greenhouse Gas Storage
Act (2006), associated Regulations and Directions, as
well as the Environment Protection and Biodiversity
Conservation (EPBC) Act (1999).
06
DIRECTOR’S REPORT CONTINUED
Australian Operations
During the year, the company conducted a strategic
review of its exploration portfolio that identified and
prioritised the projects that MEO considers have
the most potential to deliver significant shareholder
value. This resulted in a number of changes to MEO’s
exploration portfolio during the year.
WA-488-P (MEO 100%)
MEO was awarded 100% interest in WA-488-P, located
in the Bonaparte Basin, in May 2013. The permit is
located between the producing Blacktip gas field and the
undeveloped Turtle and Barnett oil fields and contains
the giant Beehive prospect. Beehive was identified as
a follow-up to the 2011 Ungani-1 oil discovery in the
adjacent Canning Basin and represents a new play type
in the Bonaparte Basin.
Beehive is considered prospective for oil at the upper
Carboniferous aged carbonate target and is considered
analogous to the giant Tengiz oil field in the Caspian Sea.
During the year, MEO regained 100% interest in WA-
488-P after reaching a commercial settlement to allow
Rex Bonaparte Gulf Pty Ltd (“Rex BG”), who had held a
30% interest in WA-488-P, to withdraw from its farm–
in into the permit. MEO received US$53,500 as cash
compensation in recognition of the costs incurred by
the company in the process of negotiating the original
transaction to bring Rex BG into WA-488-P earlier in
2015 and its subsequent exit.
In December 2015 the regulator approved a 12 month
extension to Permit Year 2 to enable MEO to undertake
2D seismic reprocessing and inversion studies over
the Beehive prospect. As a result of the work program
changes, the potential drilling of the prospect has also
been deferred until late 2017. Results from the seismic
reprocessing are showing a significant enhancement to
data quality with higher quality definition of key aspects
of the prospect.
A renewed farmout/partial sale process commenced
during the third quarter of 2016.
Net Prospective Resources (100% share)
Beehive – Carboniferous Prospect
CoS*
Low
Best
Mean
Oil Dominant Scenario
Gas Dominant Scenario
Gas
Bscf
Total Liquids
MMstb
Gas
Total Liquids
Bscf
MMstb
MMboe
13%
3%
16%
-
104
415
20
101
-
598
2,374
117
581
-
1,009
3,996
207
982
Aggregate (oil equivalent)**
Barrels Equiv
* CoS = Chance of Geologic Success
High
-
2,182
8,615
457
2,124
** Aggregate Risk Weighted Average (80:20) of Oil Dominant and Gas Dominant Scenarios
These tables should be read with reference to the footnote “Notes regarding Contingent and Prospective resource estimates” on page 14.
MEO AUSTRALIA: ANNUAL REPORT 2016 MEO AUSTRALIA: ANNUAL REPORT 2016
07
DIRECTOR’S REPORT CONTINUED
AC/P50 & AC/P51 (both MEO 100%*)
AC/P50 and AC/P51 are located in the proven Vulcan sub-basin, immediately to the east of the producing Montara oil
field. The area has historically been challenged by structural complexity and poor seismic image quality.
After the close of the financial year (5 July 2016), MEO executed an agreement with Rouge Rock Pty Ltd (“Rouge
Rock”) which grants Rouge Rock an option to acquire a 45% interest in the AC/P50 and AC/P51 Exploration
Permits (“Permits”). In exchange for the grant of the option, Rouge Rock will undertake and fund the remaining
primary statutory work program for each permit consisting of seismic reprocessing and other technical activities
(“Reprocessing Work”).
The Reprocessing Work must be completed in stages no later than as required by timing stated in the primary
statutory work program which currently ends on 18 May 2018 for both Permits. Subject to completing the
Reprocessing Work, Rouge Rock may exercise its option by providing notice to MEO prior 18 May 2018, at which point it
will acquire a 45% interest in the Permits.
Both permits are also subject to an option to acquire a 5% interest in each permit currently held by Far Cape Energy
Pte Ltd (“Far Cape”). Far Cape is the successor to RedRock Pte Ltd who was granted this option in 2010 at the time
MEO acquired AC/P50 and AC/P51. Under this option agreement, MEO will carry Far Cape’s participating interest in the
first well should MEO elect to drill a well in either of the permits.
* As at 30 June 2016, subject to a 5% option granted to Far Cape Energy Pte Ltd.
Prospective Resources (100% share)
Ramble On Prospect
CoS*
Low
Best
Mean
High
Oil Dominant Scenario
Total Liquids
Gas
Gas Dominant Scenario
Aggregate (oil equivalent)**
Gas
Total Liquids
Barrels Equiv
Bscf
MMstb
Bscf
MMstb
MMboe
9%
2%
11%
–
8
29
1
8
–
39
162
6
38
–
56
461
16
63
–
130
1,136
39
150
* CoS = Chance of Geologic Success
** Aggregate Risk Weighted Average (80:20) of Oil Dominant and Gas Dominant Scenarios
Jur’maker Prospect
CoS*
Low
Best
Mean
High
Oil Dominant Scenario
Total Liquids
Gas
Gas Dominant Scenario
Aggregate (oil equivalent)**
* CoS = Chance of Geologic Success
Gas
Total Liquids
Barrels Equiv
Bscf
MMstb
Bscf
MMstb
MMboe
5%
1%
6%
–
3
10
–
3
–
14
54
2
13
–
32
117
4
30
–
73
276
10
70
** Aggregate Risk Weighted Average (80:20) of Oil Dominant and Gas Dominant Scenarios
These tables should be read with reference to the footnote “Notes regarding Contingent and Prospective resource estimates” on page 14.
MEO AUSTRALIA: ANNUAL REPORT 2016
08
DIRECTOR’S REPORT CONTINUED
Tassie Shoal Methanol Project
(TSMP, MEO 100%)
MEO proposes the staged construction of two large
natural gas reforming and methanol production plants,
each with an annual production capacity of 1.75 million
tonnes on its own concrete gravity structure (CGS). Each
TSMP requires ~200 – 220 Million Standard Cubic Feet
per day (MSCFD) of raw gas, preferably with up to 25%
CO2, resulting in a potential total requirement of up to
440 MSCFD and ~4 Trillion Cubic Feet (TCF) of gas over
an initial 25 year period.
During the year MEO maintained dialogue with industry
and regulatory stakeholders regarding the Projects. As
the regional gas supply market consolidates over the
medium term and industry participants rationalise their
global exploration portfolio, there is the potential for
suitable discovered undeveloped gas to become available
for the Projects. MEO continues to work with prospective
partners to secure gas for its proposed projects.
Tassie Shoal LNG Project (TSLNG, MEO 100%)
The TSLNG requires approximately 3 Tcf of low CO2 gas
to operate for 20 years. Gas supply for the LNG plant
could come from one or more of the neighbouring
undeveloped gas fields confronting economic challenges
imposed by long distances from land, high domestic
construction costs and/or high FLNG development
costs. The Greater Sunrise resource represents the most
obvious source of gas for the LNG project. Any LNG
project proposed for gas in the region of Tassie Shoal
has the potential to utilise the TSLNG development path
as an alternative to FLNG or piping gas to an onshore
LNG facility. Due to its proximity to the resource and
modularised construction, TSLNG has a significant cost
advantage when compared to both floating LNG (FLNG)
and onshore Australia development paths.
In August 2016, the company was advised that the
environmental approvals for TSLNG were extended to
2052, and, the limit of 3% CO2 feed gas was removed
with the project now able to receive gas of varying
qualities.
REVIEW OF OPERATIONS (Cont)
AC/P53
During the year, MEO’s assessment of the AC/P53
exploration permit, located in the Vulcan sub-basin,
did not identify any commercially attractive prospect,
and consistent with its strategy of high grading its
exploration portfolio, MEO surrendered the permit.
WA-454-P
During the year, MEO reached agreement to assign
its 50% interest in the WA-454-P exploration permit,
located in the Bonaparte Basin, to Origin Energy
Resources Limited. The assignment follows consideration
by the Company of its strategic focus and allocation of
capital to its asset portfolio. The agreement includes
provisions to effectively back-date the assignment to
December 2015 as consideration for MEO’s 50% interest,
allowing MEO to avoid all expenditure associated with
WA-454-P in 2016 and 2017, when an exploration well
is obligated to be drilled and substantial expenditure
incurred.
NT/P68 – Heron Area
During the year MEO assessed that the Heron discovery
was too small to be a potential gas supply source for the
Tassie Shoal projects and consistent with its strategy
of high grading its exploration portfolio, MEO withdrew
from the NT/P68 permit.
WA-360-P and WA-361-P
During the year, MEO’s assessment of the WA-360-P and
WA-361-P permits, both located in the Carnarvon Basin,
concluded that the remaining exploration prospectivity
in these permits was too high risk relative to MEO’s other
assets and consistent with its strategy of high grading its
exploration portfolio, MEO discontinued its involvement
in the exploration permits.
Tassie Shoal Gas Processing Projects
MEO has Australian Government environmental
approvals to construct, install and operate two stand-
alone world scale 1.75 Mta methanol plants collectively
referred to as the Tassie Shoal Methanol Project (TSMP)
and a single 3 Mta LNG plant known as the Tassie
Shoal LNG Project (TSLNG) on Tassie Shoal, an area of
shallow water in the Australian waters of the Timor Sea
approximately 275 km north-west of Darwin, Northern
Territory. Environmental Approvals are valid until 2052.
MEO AUSTRALIA: ANNUAL REPORT 2016
09
DIRECTOR’S REPORT CONTINUED
International Operations
Cuba
Block 9 (MEO 100%**)
The Production Sharing Contract (PSC) for Block 9, onshore Cuba, was executed on 3 September 2015. The Block 9
PSC area is in a proven hydrocarbon system with multiple discoveries within close proximity, including the multi-billion
barrel Varadero oil field. It also contains the Motembo field - the first oil field discovered in Cuba. As an early mover
into Cuba, MEO is now one of the few western companies with a footprint in the expanding Cuban hydrocarbon sector.
During the year MEO received a considerable quantity of historical technical data for Block 9 and commenced a
detailed assessment of the prospectivity of the Block. In addition, MEO commenced reprocessing a selection of 2D
seismic data in Block 9.
Subsequent to year end (5 July 2016), MEO announced the first of three identified oil plays on Block 9 has been
assessed to contain 8.183 billion barrels of Oil-in-Place, with a Prospective (Recoverable) Resource of 395 million
barrels (Best Estimate, 100% basis)*# of potentially high quality light oil. Further work on the other, shallower oil plays,
which also have significant oil potential, is continuing.
Net Entitlement Interest (based on approximate 67.5% contractor share under Production Sharing Contract)
Block 9 Lower Sheet Leads
Oil
MMstb
A1
A2
B
C1
C2
C3
D
H
I
J
L
N
O
P
CoS*
20%
25%
16%
17%
18%
12%
22%
31%
29%
29%
18%
14%
19%
14%
Low
Best
Mean
High
5
4
6
5
5
1
2
0
1
2
1
2
1
1
33
43
58
30
36
2
11
4
7
16
8
15
3
2
48
65
84
41
50
2
16
6
10
26
11
23
4
3
107
150
195
90
110
4
37
14
23
62
24
52
10
6
Total unrisked
Oil
MMstb
36
268
389
884
* CoS = Chance of Geologic Success
# These estimates should be read with reference to the footnote “Notes regarding Contingent and Prospective resource estimates”
on page 14.
** Subject to Petro Australis dated conditional 40% back-in option
MEO AUSTRALIA: ANNUAL REPORT 2016
010
DIRECTOR’S REPORT CONTINUED
REVIEW OF OPERATIONS (Cont)
New Zealand
PEP51153 (MEO 30%)
In April 2014, MEO farmed into a 30% Participating Interest in PEP51153 onshore New Zealand in the Taranaki Basin.
The permit contains the Puka oil discovery in the Mount Messenger sands. The Puka-1 and Puka-2 exploration wells
were producing oil under a long term production test from this formation, but were temporarily shut-in in January
2015 due to unresolved mechanical problems with the Puka-1 well and the low oil price environment.
PEP51153 also contains the Pukatea (formerly Shannon) prospect, identified on 3D seismic data at a deeper Tikorangi
level below the Puka oil field. Pukatea is updip of where Douglas-1 penetrated the Tikorangi, encountering oil shows,
and is analogous to the nearby producing Waihapa oil field.
During the year, TAG Oil, a Canadian listed, Australasian focused oil and gas production and exploration company, with
extensive operations and production infrastructure in the Taranaki Basin, acquired a 70% interest and Operatorship of
the permit. TAG Oil holds a 100% interest in the nearby producing Cheal Oil Field, which sits in the same Mt Messenger
formation.
The Joint Venture is progressing its assessment of the prospectivity of PEP51153 and in the fourth quarter 2016 will
consider whether to proceed with drilling a high impact exploration well.
Net Contingent Resources (30% share)
Discovery Name
Puka
Gas
Bscf
Total Liquids
MMstb
Barrels Equiv
MMboe
Net Prospective Resources (30% share)
1C
-
0.1
0.1
2C
-
0.2
0.2
3C
-
0.6
0.6
Prospect Name
Pukatea
Prospect
Gas
Bscf
Total Liquids
MMstb
16%
-
0.1
-
1.6
-
2.1
-
4.8
CoS*
Low
Best
Mean
High
* CoS = Chance of Geologic Success
These tables should be read with reference to the footnote “Notes regarding Contingent and Prospective resource estimates” on page 14.
Indonesia
Seruway Production Sharing Contract (PSC) (MEO 100%)
During the year, the surrender of the PSC was formalised with the Indonesian regulatory authorities.
South Madura Production Sharing Contract (PSC) (MEO 90%)
During the year, the surrender of the PSC was formalised with the Indonesian regulatory authorities.
MEO AUSTRALIA: ANNUAL REPORT 2016
011
DIRECTOR’S REPORT CONTINUED
Results For The Year
The net loss of the Group for the financial year, after
provision for income tax, was $10,406,105 (2015: net
loss after tax of $10,042,223). The loss for the year was
mainly due to a write-off of exploration expenditure
totalling $10,774,401 and administration costs of
$1,980,008 partly offset by re-classification to the Profit
and Loss Account of a foreign currency gain previously
recorded in Reserves following closure of a foreign
operation ($2,264,862).
The successful drilling and commercialisation of any
commercial oil and gas discoveries in offshore Australian
exploration permits and onshore overseas acreage and/
or the development/sale of the Group’s methanol and
LNG Projects could ultimately lead to the establishment
of a profitable business. While the Group is in the
exploration/appraisal stage of drilling for hydrocarbons
in offshore Australian exploration permits and overseas
acreage and in the project development phase, funding
will be provided by equity capital raised from the issue
of new shares and/or farm out or joint development
arrangements with other companies.
Review Of Financial Condition
At balance date the Group held cash and cash
equivalents of $4,135,989 (2015: $5,785,454). During
the year the Group decreased the cash balance by
$1,679,570 (before foreign exchange fluctuations)
with funds used to meet exploration cash outflows of
$1,577,994 and net corporate costs of $1,592,445 partly
offset by a share placement of $1,372,992 (net of costs)
and interest received of $117,877.
Share Issues
During the year the Company raised a total of $1,407,166,
before transaction costs of $34,174, from the placement
of 140,716,573 shares at $0.01 per share from a Share
Placement to Leni Gas Cuba Limited.
Corporate
During the year MEO undertook a renewal of the Board,
with the appointment of Mr Andrew Purcell and
Mr Michael Sandy as non-executive directors on 30
July 2015 and the retirement of Mr Greg Short and
Mr Stephen Hopley in November 2015.
MEO’s future prospects are centred on continuing
to secure quality exploration, development and
producing opportunities and seeking to maximise the
value to shareholders of its current portfolio including
the Tassie Shoal Project and/or undertaking a corporate
transaction.
Adequacy of funding will, for the immediate future,
remain a key focus for the Group and its Shareholders.
The Group will look to raise additional funding either
through farm-in/sale and/or capital injection to advance
its projects. In the event that the Group cannot meet its
share of work program commitments, permits may need
to be surrendered.
On 29 February 2016 the Company announced it
had executed a Private Placement Agreement with
London listed Leni Gas Cuba Limited raising $1,407,166,
with funds to be used to advance MEO’s exploration
program in Block 9 onshore Cuba. Under the placement
agreement, MEO issued 140,716,573 shares to Leni Gas
Cuba at A$0.01 per share. The placement of shares to
Leni Gas Cuba falls within MEO’s placement capacity and
Leni Gas Cuba is now MEO’s single largest shareholder
with a 15.8% interest in the Company.
SIGNIFICANT CHANGES IN
THE STATE OF AFFAIRS
Total equity decreased to $5,603,741 from $16,715,234, a
decrease of $11,111,493. The movement was mainly due to
the net loss of $10,406,105.
LIKELY DEVELOPMENTS AND
EXPECTED RESULTS
During FY2017, MEO will continue with farmout/partial
sale opportunities and pursue attractive new venture
opportunities.
SIGNIFICANT EVENTS AFTER THE
BALANCE DATE
On 18 August 2016 MEO announced it had raised
approximately $1.69 million through a placement of
approximately 46.9 million shares at $0.036 per share
to qualified institutional and sophisticated investors
(“Placement”). The company also provided the
opportunity for eligible shareholders to acquire new
shares at the same discounted share price as under the
Placement of $0.036 per share via a non-underwritten
share purchase plan (“SPP”). The SPP closes on 16
September 2016. Funds from the share placement and
SPP will be used to accelerate MEO’s onshore exploration
activities on Block 9 in Cuba, including the preparation of
a drilling program for up to two wells in Block 9 and for
additional working capital purposes.
Other than the above, there has not arisen in the interval
between the end of the financial year and the date of
this report any item, transaction or event of a material
and unusual nature likely, in the opinion of the directors
of the Company, to affect significantly the operations of
the Group, the results of those operations, or state of
affairs of the Group, in future financial years.
MEO AUSTRALIA: ANNUAL REPORT 2016
012
DIRECTOR’S REPORT CONTINUED
BUSINESS STRATEGY
AND PROSPECTS
MEO’s business strategy is to create shareholder value
by successful exploration, development and production
of oil and gas. Key elements of this strategy include
securing a portfolio of attractive upstream oil and gas
growth opportunities and seek to underpin this growth
portfolio with a moderate production base.
Future Prospects
MEO’s future prospects are centred on continuing to
secure quality exploration, development and producing
opportunities and seeking to maximise the value to
shareholders of its current portfolio including the Tassie
Shoal Project.
Business Risks
Oil and gas exploration and appraisal involves significant
risk. The future profitability of MEO and the value
of MEO’s shares are directly related to the results of
exploration and appraisal activities. There are inherent
risks in these activities. No assurances can be given
that funds spent on exploration and appraisal will result
in discoveries that will be commercially viable. Future
exploration and appraisal activities, including drilling
and seismic acquisition, may result in changes in current
prospectivity perceptions of individual prospects, leads
and permits. It may even lead to a relinquishment of the
permit, or a portion of the permit.
Oil and gas drilling activities are subject to numerous
risks, many of which are beyond MEO’s control. Drilling
activities may be curtailed, delayed or cancelled as
a result of weather conditions, mechanical difficulties,
availability of the necessary technical equipment
and appropriately skilled and experienced technicians.
Drilling may result in wells that, whilst encountering
oil and gas, may not achieve commercially
viable results.
Industry operating risks include fire, explosions, blow
outs, pipe failures, abnormally pressured formations
and environmental hazards such as accidental spills
or leakage of petroleum liquids, gas leaks, ruptures,
or discharge of toxic gases. The occurrence of any of
these risks could result in substantial losses to MEO
due to injury or loss of life; damage to or destruction of
property, natural resources, or equipment; pollution or
other environmental damage; clean-up responsibilities;
regulatory investigation and penalties or suspension
of operations. Damages occurring to third parties as a
result of such risks may give rise to claims against MEO.
Permits in which MEO has an interest are subject
to compulsory work or expenditure obligations for
each permit year which must be met in order to
keep the permit in good standing. It is possible for
these commitments to be varied by deferment and
combination with later year requirements on application
of the holders but any such variation is at the discretion
of the relevant Minister administering the relevant
legislation and regulatory authorities in Australia and
foreign jurisdictions. If no variation is approved by the
relevant Minister then a failure to meet compulsory
obligation could lead to forfeiture of the permit.
MEO, in order to meet future ongoing work programs,
may consider raising additional capital. There can be no
assurance that sufficient funding will be available to MEO
on favourable terms or at all. If MEO is unable to raise
necessary finance, there may be a reduction in planned
exploration expenditure which could have a material
adverse effect on MEO’s business, financial condition and
operations. Any additional equity financing may dilute
existing shareholdings.
MEO is also exposed to a range of market, financial,
cultural and governance risks. The Company has risk
management and internal control systems to manage
material business risks which include insurance coverage
over major operational activities and regular review of
material business risks by the Audit & Risk Management
Committee.
SHARE OPTIONS AND SHARE
PERFORMANCE RIGHTS
Options and Share Performance Rights
granted to directors and executives of
the Company
During the financial year, and after receiving shareholder
approval, the company granted 5,333,333 Exercisable
Performance Rights to the Managing Director and
Chief Executive Officer, Mr Peter Stickland under
the Company’s Long Term incentive Plan in return
for reducing the cash component of his annual
remuneration from $400,000 to $320,000 per annum
for the period 1 December 2015 to 30 November 2016.
There is no price payable on exercising the Performance
Rights.
In February 2016, revised remuneration arrangements
were announced for senior staff as part of the cost
reduction initiatives. Senior staff members have
voluntarily agreed to a 20% reduction in the cash
component of their annual remuneration packages
in exchange for Exercisable Performance Rights.
20,940,032 Exercisable Performance Rights were
granted, of which 10,550,131 Rights were granted to Key
Management Personnel. There is no price payable on
exercising the Performance Rights.
There were no share options or performance rights
granted to employees and contractors since the end of
the financial year.
MEO AUSTRALIA: ANNUAL REPORT 2016
013
DIRECTOR’S REPORT CONTINUED
Unissued shares under options and share
performance rights
At the date of this report unissued ordinary shares of the
Company under option and share performance rights
are:
Options
Expiry Date
Exercise Price
3 October 2016
1 December 2016
TOTAL
$0.50
$0.50
Share Performance Rights
Expiry Date
Exercise Price
29 November 2018
31 January 2019
TOTAL
Number of
Shares
1,200,000
2,500,000
3,700,000
Number of
Shares
5,333,333
20,940,032
26,273,365
Shares issued on the Exercise of
Compensation Options or Performance
Rights
During or since the end of the financial year, there
has been no issue of ordinary shares as a result of the
exercise of options or performance rights (2015: nil).
INDEMNIFICATION AND INSURANCE
OF DIRECTORS
The Company has an insurance policy indemnifying all
directors of the Company against legal costs incurred in
defending proceedings as permitted by Section 199B of
the Corporations Act 2001. Under the policy, details of
the premium cannot be disclosed.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed
to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against claims
by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst
& Young during or since the end of the financial year.
BOARD AND COMMITTEE MEETINGS
The following table sets out the members of the Board
of Directors and the members of the Committees of
the Board, the number of meetings of the Board and of
the Committees held during the year and the number
of meetings attended during each Director’s period of
office.
Board of
Directors
Audit & Risk
Committee
Remuneration
& Nomination
Committee
A G Purcell
M J Sandy
P J Stickland
G A Short
S W Hopley
A
10
10
10
3
3
B
10
10
10
3
3
A
3
3
–
2
2
B
3
3
–
2
2
A
1
1
–
2
2
B
1
1
–
2
2
A – Number of meetings attended
B – Number of meetings held during the time the
director held office during the year
In addition to the formally constituted Board of Directors
meetings set out above, Directors held a number of
informal meetings particularly during the transition
period following the appointment of new Non-executive
Directors in July 2015 until the Annual General Meeting
held in November 2015.
MEO AUSTRALIA: ANNUAL REPORT 2016
014
DIRECTOR’S REPORT CONTINUED
Notes regarding Contingent and Prospective resource
estimates
1.
The estimated quantities of petroleum that
may potentially be recovered by the application
of a future development project(s) relate to
undiscovered accumulations. These estimates have
both an associated risk of discovery and a risk of
development. Further exploration appraisal and
evaluation is required to determine the existence
of a significant quantity of potentially moveable
hydrocarbons.
2. The assessments are based on, and fairly represent,
information and supporting documentation
prepared by Mr Peter Stickland, MEO’s Managing
Director & Chief Executive Officer, who is an
employee of the company and has more than
25 years of relevant experience. Mr. Stickland
is a member of the European Association of
Geoscientists and Engineers and the Petroleum
Exploration Society of Australia. Mr Stickland
consents to the publication of the resource
assessments contained herein.
3. Total Liquids = oil + condensate
4. 6 Bcf gas equals 1 MMboe; 1 MMbbl condensate
equals 1 MMboe
5. MEO share can be derived by pro-rating the
resource ranges described in the tables above by its
percentage equity
AUDITOR INDEPENDENCE AND
NON-AUDIT SERVICES
On 18 June 2015, the Board granted approval under
section 324DAA of the Corporation Act 2001 and
the Corporations Legislation Amendment (Audit
Enhancement) Act 2012 for Mr Matthew Honey to
continue, as lead auditor, to play a significant role in the
audit of the Company for one additional financial year,
being the financial year ending 30 June 2016.
The reasons why the Board approved the extension
include:
• Mr Honey, the Lead Audit Partner, has a detailed
understanding of the Group’s business and strategies,
its systems and controls.
• The Audit & Risk Committee was satisfied with the
quality of EY and Mr Honey’s work as auditor.
• At the time of the proposed audit partner rotation,
the Group was pursuing a number of concurrent
strategies, including the proposed merger with Neon
Energy Limited and entry into the Cuba Block 9 area
of interest, and the Board were of the view that the
Group would be well served by continuity of the audit
partner through this process.
• The existing independence and service metrics in
place with EY and Mr Honey are sufficient to ensure
that auditor independence would not be diminished
in any way by such an extension.
• Mr Honey will continue to abide by the independence
guidance provided in APES 110 ‘Code of Ethics
for Professional Accountants’ as issued by the
Accounting Professional and Ethical Standards Board
and EY’own independence requirements.
The directors have received the independence
declaration from the auditor, Ernst & Young, set out on
page 15.
Non Audit Services
The following non-audit services were provided by
the entity’s auditor, Ernst & Young. 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
nature and scope of each non-audit service provided
means that auditor independence was not compromised.
Tax services ($4,471) were provided by Ernst & Young
during the year.
015
INDEPENDENCE DECLARATION
Independence Declaration
MEO AUSTRALIA: ANNUAL REPORT 2016 016
REMUNERATION REPORT (AUDITED)
Remuneration Report (Audited)
This remuneration report for the year ended 30 June
2016 outlines the remuneration arrangements of the
Company in accordance with the requirements of the
Corporations Act 2001 and its regulations.
The information provided in this Remuneration Report
has been audited as required by Section 308 (3C) of the
Corporations Act. This Remuneration Report forms part
of the Directors’ Report.
The remuneration report details the remuneration
arrangements for Key Management Personnel (KMP)
who are defined as those persons having authority and
responsibility for planning, directing and controlling the
major activities of the Company and the group, directly
and indirectly, including any director (whether executive
or otherwise) of the parent company.
The remuneration report is presented under the
following sections:-
1. Key Management Personnel disclosures for FY2016
2. Remuneration Strategy and Board oversight
of remuneration
3. Non-executive director remuneration arrangements
4. Executive remuneration arrangements
5. Remuneration outcomes for FY2016
1. Key Management Personnel (KMP)
for FY2016
The names and positions of the KMP during the 2016
financial year (FY2016) and up to the date of this
remuneration report are listed below.
(i) Directors
A G Purcell
Director (Independent non-executive appointed
30 July 2015) (Appointed Chairman 25 November
2015)
M J Sandy
Director (Independent non-executive.
Appointed 30 July 2015)
P J Stickland
Managing Director and Chief Executive Officer
(Appointed Chief Executive Officer – 19 December
2014 and Managing Director – 30 January 2015)
G A Short
Resigned as Chairman and non-executive director on
25 November 2015
S W Hopley
Retired as non-executive director on 25 November
2015
6. Additional disclosures relating to shares and
(ii) Executives
options
7. Company performance
C H Naylor
Chief Financial Officer and Company Secretary
R Zammit
Executive Manager – Commercial & Business
Development
MEO AUSTRALIA: ANNUAL REPORT 2016 017
REMUNERATION REPORT (AUDITED) CONTINUED
Remuneration consultants and
external advisors
The Corporations Act sets out a detailed regime in
relation to the engagement of external remuneration
consultants to ensure that remuneration consultants
are free from undue influence by any member of the
KMP to whom a ‘remuneration recommendation’ relates,
and requires that certain information be disclosed
in the Remuneration Report where a remuneration
recommendation has been provided. During the
reporting period, the Company did not receive a
‘remuneration recommendation’ in relation to the
quantum or elements of the remuneration packages
of the Company’s KMP within the meaning of the
Corporations Act.
Remuneration strategy
The performance of the Company depends upon the
quality of its directors and executives. To prosper, the
Company must attract, motivate and retain highly skilled
directors and executives.
To this end, the Company embodies the following
principles in its remuneration framework:
• Offer competitive remuneration benchmarked
against the external market to attract high
calibre executives;
• Where appropriate, provide executive rewards linked
to shareholder value; and
• Encourage non-executive directors to hold shares in
the Company.
Remuneration structure
In accordance with best practice corporate governance,
the structure of non-executive director remuneration
and executive remuneration is separate and distinct.
Further details regarding the structure of non-executive
director remuneration and executive remuneration
(including the Managing Director and Chief Executive
Officer) are set out in sections 3 and 4.
2. Remuneration Strategy and Board
oversight of remuneration
Remuneration and nomination committee
The Remuneration and Nomination Committee of the
Board of Directors of the Company is responsible for
determining and reviewing compensation arrangements
for the directors, including the Managing Director and
Chief Executive Officer and making recommendations to
the Board.
It is important that the Board maintains independence
from management when making decisions affecting
executive remuneration, particularly in respect of
the Managing Director and Chief Executive Officer.
Accordingly, the Company’s Remuneration and
Nomination Committee is comprised solely of
non-executive directors and has an independent chair.
The Committee can have access to external advisors
on a ‘case by case’ basis.
The Remuneration and Nomination Committee assesses
the appropriateness of the nature and amount of
remuneration on a periodic basis by reference to
relevant employment market conditions with the overall
objective of ensuring maximum stakeholder benefit from
the retention of high quality directors and the Managing
Director and Chief Executive Officer.
Further details regarding the role, responsibilities and
composition of the Remuneration and Nomination
Committee are set out in the Corporate Governance
Statement on the company’s website.
Remuneration approval process
The Board approves the remuneration arrangements
of the Managing Director and Chief Executive Officer
and awards under short term and long term incentive
arrangements following recommendations from the
Remuneration and Nomination Committee. The Board
also sets the remuneration of non-executive directors
which is within the aggregate amount approved by
shareholders.
The Managing Director and Chief Executive Officer
approves the annual extension of consultants’
contracts and their consulting fees and will make
recommendations to the Remuneration and Nomination
Committee for granting of awards to executives and
contractors under the short term and long term
incentive arrangements.
MEO AUSTRALIA: ANNUAL REPORT 2016 Changes in Remuneration: 2015 – 2016
Following the significant changes in the size of
the organisation during FY2015 in response to the
company’s financial position, the Board implemented
further remuneration changes during FY2016 as follows:
(i) In November 2015, after receiving shareholder
approval, the company granted 5,333,333 Exercisable
Performance Rights to the Managing Director and
Chief Executive Officer, Mr Peter Stickland under
the Company’s Long Term incentive Plan in return
for reducing the cash component of Mr Stickland’s
annual remuneration from $400,000 to $320,000
per annum for the period 1 December 2015 to 30
November 2016.
(ii) In February 2016, the company revised the
remuneration arrangements for senior staff. Senior
staff members voluntarily agreed to a 20% reduction
in the cash component of their annual remuneration
packages in exchange for Exercisable Performance
Rights. 20,940,032 Exercisable Performance Rights
were granted to senior staff, of which 10,550,131
Rights were granted to Key Management Personnel.
(iii) Following a review of fees paid/payable to the
Chairman of peer companies, effective 1st
December 2015, the annual fee payable to the
Chairman was increased from $50,000 (inclusive
of superannuation) to $75,000 (inclusive of
superannuation).
As a result of the above changes, remuneration to Key
Management Personnel decreased by 37% or $650,325
from $1,738,059 in FY2015 (excluding the impact of
termination payments in FY2015 of $643,390) to
$1,087,734 in FY2016.
018
REMUNERATION REPORT (AUDITED) CONTINUED
3. Non-executive director remuneration
arrangements
Remuneration policy and structure
The Board seeks to set remuneration at a level which
provides the Company with the ability to attract and
retain directors of high calibre, at a cost which is
acceptable to shareholders.
The amount of aggregate remuneration approved by
shareholders and the fee structure is reviewed annually
by the Remuneration and Nomination Committee against
fees paid to non-executive directors of comparable
companies. The Remuneration and Nomination
Committee receives independent market data when
undertaking this annual review process.
The Chairman, Mr Andrew Purcell and non-executive
director, Mr Michael Sandy have been engaged by
the Company under consulting contracts. Under such
agreements current at the date of this report, there
are no annual, long service leave, other termination
entitlements or retirement benefits.
The Constitution and ASX Listing Rules specify that
the aggregate remuneration of non-executive directors
shall be determined from time to time by members in a
general meeting. An amount not exceeding the amount
determined is then divided between the directors as
agreed. At the Annual General Meeting held on 18
November 2010 shareholders approved an increase in
the aggregate annual remuneration to $500,000 per
year, with effect from the financial year commencing 1
July 2010.
Non-executive directors are encouraged by the Board to
hold shares in the Company. Shares are purchased on
market at the prevailing market share price.
During FY2016, 2.7 million options previously granted
under the Company’s Long Term Incentive Plan (LTI) to
ex-non-executive directors lapsed. There are currently
no options or performance rights granted to non-
executive directors. Directors may consider the granting
of options or performance rights in the future, subject to
shareholder approval at a General Meeting.
During the year, no additional remuneration was paid to
Directors for service on Board committees.
In addition, Directors are entitled to be paid all
travelling and other expenses they incur in attending
to the Company’s affairs, including attending and
returning from general meetings of the Company or
meetings of the Directors or of Committees of the
Directors.
The remuneration of non-executive directors for the
year ended 30 June 2016 and 30 June 2015 is detailed in
Table 1 and Table 2 of this report.
MEO AUSTRALIA: ANNUAL REPORT 2016 019
REMUNERATION REPORT (AUDITED) CONTINUED
4. Executive remuneration arrangements
The Company aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Company and so as to:
• ensure total remuneration is competitive by market standards;
•
reward executives for exceptional individual performance; and
• align the interests of executives with those of shareholders.
Remuneration mix
The Company’s executive remuneration is structured as a mix of fixed annual remuneration and variable ‘at risk’
remuneration. The mix of these components varies for different management levels.
The table below sets out the relative proportion and components of the senior executives’ total remuneration
packages for FY2016:
% of Total Remuneration
Executives
P J Stickland
C H Naylor
R Zammit
Fixed Remuneration
Performance-based Remuneration
Fixed
Remuneration
Share Performance
Rights
Short
Term
Incentive
Long
Term
Incentive
88.8%
92.8%
91.2%
11.2%
7.2%
8.8%
-
-
-
-
-
-
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the
position and is competitive in the market. Executive contracts of employment do not include any guaranteed base pay
increases.
The fixed component of executives’ remuneration is detailed in Table 1 and Table 2 of this report.
Variable Remuneration – Short Term Incentives
MEO does not have a formal Short Term Incentive Program, however the Company does, when applicable, recognise
exceptional individual performances in any financial year through the award of a cash bonus.
There were no short term incentives awarded in the financial year.
Variable Remuneration – Long Term Incentives
MEO considers the retention of high calibre staff as essential to the growth of the Company. Therefore as an incentive
to recruit high calibre individuals to MEO or retain high calibre staff the Board will grant LTI Securities (which may be
in the form of share options and/or performance rights) under the Company’s Long Term Incentive Plan (LTI Plan).
MEO AUSTRALIA: ANNUAL REPORT 2016 020 REMUNERATION REPORT (AUDITED) CONTINUED
action or capital reconstruction. Without limiting the
foregoing, if:
•
shares are issued pro rata to the Company’s
shareholders generally by way of a bonus issue
(other than an issue in lieu of dividends or by way of
a dividend reimbursement) involving capitalisation of
reserves of distributable profits;
•
shares are issued pro rata to the Company’s
shareholders generally by way of a rights issue; or
• any reorganisation (including consolidated,
subdivision, reduction or return) of the issued capital
of the Company is effected,
then the Board may, in its discretion, adjust:
•
•
the number of performance rights or options to
which each participant is entitled;
the number of shares to which each participant
is entitled upon vesting of performance rights or
exercise of options;
• any amount payable on vesting of the performance
rights or exercise of options; or
• where appropriate, a combination of the above, in
the manner determined by the Board, having regard
to the ASX Listing Rules and the general principle
set out above. Where additional performance
rights or options are granted to a participant, such
performance rights or options will be subject to
the same terms and conditions as the original
performance rights or options granted to the
participant (including any performance conditions)
unless the Board determines otherwise.
Grants made during FY2016
During the financial year, after receiving shareholder
approval, the company granted 5,333,333 Exercisable
Performance Rights to the Managing Director and
Chief Executive Officer, Mr Peter Stickland under the
Company’s Long Term incentive Plan. The vesting
date for the Exercisable Performance Rights is 30
November 2016 and expiry date on 29 November 2018.
The Exercisable Performance Rights vest and become
exercisable after 12 months continuous service ending
29 November 2016. There is no price payable on
exercising the Exercisable Performance Rights.
Overview of the LTI Plan
The LTI Plan was adopted by the Board on 13 September
2011. Under the Plan, the Board may invite Eligible
Executives (being an employee of the MEO Group
(including a director employed in an executive capacity)
or any other person who is declared by the Board to be
eligible to receive a grant of LTI Securities under the
Plan) to participate in a grant of LTI Securities, which
may comprise of performance rights and/or options.
Offers will be made on the terms set out in the Plan and
on any additional terms as the Board determines.
Options and/or performance rights granted under the
Plan will only vest, and in the case of options, become
exercisable, where any performance condition and any
other relevant conditions advised to the participant by
the Board have been satisfied.
On vesting of a performance right or following the
exercise of an option (as the case may be), the Board
will allocate the number of shares in respect of which
the performance right have vested, or the options have
been exercised. Any shares issued under the Plan will
rank equally in all respects with other shares on issue at
that time (except as regards any rights attaching to such
shares by reference to a record date prior to the date of
their issue).
In the event of a takeover, a scheme of arrangement,
other reconstruction or amalgamation of the Company,
a winding up of the Company or other event which is
likely to result in a change of control of the Company,
the Board may, in its absolute discretion, determine that
all or a specified number of a participant’s unvested
performance rights and/or options vest, having regard
to all relevant circumstances, including whether
performance is in line with any applicable performance
condition over the period from the date of grant to
the relevant event, and the portion of any applicable
performance period or period of service that has
expired at the date of the relevant event. Unless the
Board determines otherwise, any vested options will be
exercisable for a period specified by the Board and will
lapse if not exercised within the specified period.
In accordance with the terms of the Plan, prior to
the allocation of shares to a participant upon vesting
of performance rights or exercise of options (as the
case may be), the Board may make any adjustments it
considers appropriate to the terms of a performance
right and/or option granted to a participant in order
to minimise or eliminate any material advantage or
disadvantage to a participant resulting from a corporate
MEO AUSTRALIA: ANNUAL REPORT 2016 021
REMUNERATION REPORT (AUDITED) CONTINUED
On 4 February 2016, the company implemented revised
remuneration arrangements with its senior staff as part
of the Company’s ongoing cost reduction initiatives.
Senior staff voluntarily agreed to a 20% reduction
in the cash component of their annual remuneration
packages in exchange for Exercisable Performance
Rights. 20,940,032 Exercisable Performance Rights
were granted including 10,550,131 to key management
personnel. The vesting date for the Exercisable
Performance Rights is 31 January 2017 and expiry date
on 31 January 2019. The Exercisable Performance Rights
vest and become exercisable after 12 months continuous
service ending 31 January 2017. There is no price payable
on exercising the Exercisable Performance Rights.
Consultants
The Managing Director and Chief Executive Officer
approves the terms and conditions of consultant’s
contracts including fees, taking into account market
conditions for the services that are provided. Consultant
contracts do not include any guaranteed fee increases.
Hedging of equity awards
The Company prohibits executives from entering into
arrangements to protect the value of invested share
options. The prohibition includes entering into contracts
to hedge their exposure to options awarded as part of
their remuneration package.
Executive contractual arrangements
The remuneration arrangements and other terms
of employment for Key Management Personnel are
formalised in employment agreements. The material
terms of the KMP employment agreements are set
out below.
Managing Director and Chief Executive Officer
Remuneration
On 1 December 2015, the Company entered into an
executive agreement with Mr Peter Stickland. Mr
Stickland had previously signed a one-year fixed term
contract on 19th December 2014. The new executive
agreement contains the following major key terms:
• Remuneration: Total Fixed Remuneration is set at
$400,000 (including compulsory superannuation)
which is reviewed on an annual basis. As approved
by shareholders at the 2015 Annual General Meeting,
20% of the Total Fixed Remuneration
(i.e. $80,000) was granted as Exercisable
Performance Rights, thus reducing the cash
component of annual remuneration from $400,000
to $320,000 per annum for the period 1 December
2015 to 30 November 2016.
• Term: From 1 December 2015 until either the
Company or Mr Stickland terminates the Agreement
• Notice: The Company and Mr Stickland may
terminate the Agreement at any time by giving
3 Months’ notice in writing.
• Payments on Termination: If the Executive’s
employment is terminated by reason of Fundamental
Change or by the Company for other reasons,
the Company must pay the Executive a lump sum
amount (Separation Amount) up to the Total Fixed
Remuneration for the 6 months immediately
preceding the Termination Date.
Other Executives
All executives have standard employment contracts.
Each executive is employed until such time as the
Company or the executive terminate by giving
notice. The Company may terminate the executive’s
employment agreement by providing written notice
(ranging from 4 weeks’ notice to 3 months’ notice) or
providing payment in lieu of the notice period (based on
the fixed component of the executive’s remuneration).
The executive may terminate by giving notice under
the employment contract, ranging from 4 weeks’
notice to 2 months’ notice. On termination of notice
by the Company or the executive, any options that
have vested or that will vest during the notice period
will be released. Options that have not vested will be
forfeited. The Company may terminate the contract
at any time without notice if serious misconduct has
occurred. Where termination with cause occurs the
executive is only entitled to that portion of remuneration
that is fixed, and only up to the date of termination.
On termination with cause any unvested options will
immediately be forfeited.
MEO AUSTRALIA: ANNUAL REPORT 2016 022 REMUNERATION REPORT (AUDITED) CONTINUED
5. Remuneration outcomes for FY2016
Remuneration of key management personnel of the Company
Details of the remuneration of KMP (including the non-executive directors) for FY2016 and comparative information for
FY2015 are set out in Tables 1 and 2 below.
Table 1: Remuneration for the year ended 30 June 2016
Short term
Salary &
consultant
fees
$
Directors
fees
$
Post
employment
Share-based
payments
Long term
Total
Performance
related
Super-
annuation
benefits
$
*Performance
Rights
$
Long
service
leave
$
$
%
Non-executive directors
A G Purcell (i)
M J Sandy (i)
S W Hopley (ii)
G A Short (ii)
Sub-total
non-executive
directors
Executive director
41,941
33,582
18,392
29,807
123,722
–
–
–
–
–
–
–
1,747
2,832
4,579
–
–
–
–
–
–
–
–
–
–
41,941
33,582
20,139
32,639
128,301
–
–
–
–
–
P J Stickland
–
328,114
30,000
46,667
12,306
417,087
11.2
Other key management personnel
C H Naylor
R Zammit
Sub-total
executives
TOTAL
–
–
–
198,973
204,273
35,000
35,000
731,360
100,000
123,722
731,360
104,579
19,038
24,526
90,231
90,231
11,704
13,832
264,715
277,631
37,842
959,433
37,842
1,087,734
7.2
8.8
9.4
8.3
* Refer note 19 to the consolidated financial statements for fair value calculation of performance rights.
(i) A G Purcell and M J Sandy were appointed directors on 30 July 2015.
(ii) G A Short resigned as Chairman and non-executive director on 25 November 2015 and S W Hopley retired as non-executive director
on 25 November 2015.
Commentary
Key Management Personnel remuneration decreased from $2,381,449 in FY2015 to $1,087,734 in FY2016. Excluding
the impact of termination payments in FY2015 of $643,390, KMP remuneration decreased by 37% or $650,325 to
$1,087,734 compared to remuneration in FY2015.
MEO AUSTRALIA: ANNUAL REPORT 2016 023 REMUNERATION REPORT (AUDITED) CONTINUED
5. Remuneration outcomes for FY2016 (Cont)
Table 2: Remuneration for the year ended 30 June 2015
Short term
Post
employ-
ment
Share-
based
payments Long term
Termin-
ation
Payments
Perform-
ance
related
Total
Directors
fees
$
Salary and
consultant
fees
$
Non-
monetary
benefits
$
Super-
annuation
benefits
$
*Options
$
Long
service
leave
$
$
$
%
Non-executive directors
S W Hopley
G A Short
22,482
52,022
M J F Sweeney(i)
30,400
Sub-total
non-executive
directors
104,904
–
–
–
–
Executive director
P J Stickland(ii)
J Hendrich(ii) (vi)
–
–
203,804
317,869
Other key management personnel
244,520
234,020
C H Naylor
R J D Gard(iii)(v)(vi)
R Zammit
Sub-total
executives
–
–
–
–
245,033
19,449
35,000
1,245,246
19,449
127,807
Consultants holding key management positions
K Hendrick(iv)
P J Stickland(iv)
Sub-total
consultants
Reversal of long
service leave
provision(vi)
–
–
–
–
129,500
169,159
298,659
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
35,000
15,892
2,888
2,667
2,667
2,666
53,780
8,000
10,004
35,000
32,150
15,653
–
–
–
–
–
–
60,149
70,581
35,954
4.4
3.8
7.4
166,684
4.8
–
–
–
–
–
213,808
510,000
862,869
–
–
–
–
–
–
–
–
–
–
7,303
–
283,973
–
–
133,390
383,063
–
299,482
7,303
643,390 2,043,195
–
–
–
(127,089)
–
–
–
–
129,500
169,159
298,659
(127,089)
–
–
–
–
–
–
–
–
–
–
TOTAL
104,904 1,543,905
19,449
181,587
8,000
(119,786)
643,390 2,381,449
0.3
* Refer note 19 to the consolidated financial statements for fair value calculation of options.
(i) M J F Sweeney resigned 5 January 2015
(ii) J Hendrich ceased employment 31 January 2015, P Stickland appointed Chief Executive Officer on 19 December 2014 and Managing
Director on 30 January 2015.
(iii) R J D Gard ceased employment 30 April 2015.
(iv) Represents fees paid/payable for services provided by entities of the consultants. Fees paid to Mr Stickland as Exploration Manager prior
to appointment as Chief Executive Officer on 19 December 2014.
(v) Includes consulting fees of $3,188 payable to Mr Gard post cessation of employment.
(vi) Reversal of long service provision related to Mr J Hendrich ($83,059) and Mr R J D Gard ($44,030)
MEO AUSTRALIA: ANNUAL REPORT 2016 024 REMUNERATION REPORT (AUDITED) CONTINUED
5. Remuneration outcomes for FY2016 (Cont)
Equity instruments
Table 3: Options and share performance rights awarded, vested and lapsed during the year
Options
30 June 2016
Non-executive directors
Options
awarded
during the
year No.
Fair value
per option at
award date
(cents)
Award
date
Vesting
date
No.
vested
during
year
No.
lapsed
during
year
Expiry
date
G A Short*
S W Hopley*
M J F Sweeney*
27 Oct 2011
27 Oct 2011
27 Oct 2011
–
–
–
–
–
–
–
–
–
–
–
–
900,000
27 Oct 2015
900,000
27 Oct 2015
900,000
27 Oct 2015
* G A Short resigned as Chairman and non-executive director on 25 November 2015, S W Hopley retired as non-executive director on
25 November 2015 and M J F Sweeney resigned 5 January 2015.
Share Performance Rights
30 June 2016
Executives
Share
performance
rights awarded
during the year
No.
Fair value
per share
performance
right at award
date (cents)
Award
date
No.
vested
during
year
No.
lapsed
during
year
Vesting
date
Expiry
Date
P J Stickland
25 Nov 2015
C H Naylor
R Zammit
4 Feb 2016
4 Feb 2016
5,333,333
4,610,519
5,939,612
1.500
0.991
0.991
30 Nov 2016
31 Jan 2017
31 Jan 2017
–
–
–
–
–
–
29 Nov 2018
31 Jan 2019
31 Jan 2019
Table 4: Value of options awarded, exercised and lapsed during the year
*G A Short
*S W Hopley
*M J F Sweeney
Value of options
granted during
the year
$
Value of options
exercised during
the year
$
–
–
–
–
–
–
Value of options
lapsed during
the year
$
63,060
63,060
63,060
* G A Short resigned as Chairman and non-executive director on 25 November 2015, S W Hopley retired as non-executive director on
25 November 2015 and M J F Sweeney resigned 5 January 2015.
Table 5: Value of share performance rights awarded, exercised and lapsed during the year
P J Stickland
C H Naylor
R Zammit
Value of rights
granted during
the year
$
80,000
45,690
58,862
Value of rights
exercised during
the year
$
Value of rights
lapsed during
the year
$
–
–
–
–
–
–
For details on the valuation of the options and share performance rights, including models used and assumptions used
please refer to note 19 to the consolidated financial statements.
Table 6: Share issued on exercise of options and share performance rights
There was no exercise of options during the reporting period (2015: nil).
MEO AUSTRALIA: ANNUAL REPORT 2016 025 REMUNERATION REPORT (AUDITED) CONTINUED
6. Additional disclosures relating to shares and options
Shareholdings of key management personnel
The movement during the reporting period in the number of ordinary shares in MEO Australia Limited held directly,
indirectly or beneficially, by key management personnel, including their related parties, is as follows:
30 June 2016
Held at
1 July 2015
Purchases
Received on
Exercise
of Options
Sales
Held at
30 June 2016
Shares held in MEO Australia Limited (number)
Non-executive directors
A G Purcell
M J Sandy
G A Short
S W Hopley
Executives
P J Stickland
(Executive Director)
C H Naylor
R Zammit
–
–
1,392,444*
950,000*
4,453,700
565,000
1,710,000
1,971,531
800,000
–
–
1,000,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,971,531
800,000
–
–
5,453,700
565,000
1,710,000
*
1,392,444 shares held at resignation date
* 950,000 shares held at retirement date
No shares were granted to key management personnel during the reported period as compensation.
Option holdings of key management personnel
The movement during the reporting period in the number of options over ordinary shares in MEO Australia Limited
held, directly, indirectly and beneficially by key management personnel, including their related parties is as follows:
Held at
1 July 2015
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Held at 30
June 2016
Vested
in 2016
Vested and
exercisable at
30 June 2016
Options (number)
Non-executive directors
G A Short*
S W Hopley*
M J F Sweeney*
900,000
900,000
900,000
Executive Director and other Executives
P J Stickland
C H Naylor
R Zammit
500,000
1,000,000
1,000,000
–
–
–
–
–
–
–
–
–
–
–
–
900,000
900,000
900,000
–
–
–
–
–
–
500,000
1,000,000
1,000,000
–
–
–
–
–
–
–
–
–
500,000
1,000,000
1,000,000
* G A Short resigned as Chairman and non-executive director on 25 November 2015, S W Hopley retired as non-executive director on
25 November 2015 and M J F Sweeney resigned 5 January 2015.
MEO AUSTRALIA: ANNUAL REPORT 2016 026 REMUNERATION REPORT (AUDITED) CONTINUED
6. Additional disclosures relating to shares and options (Cont)
Share performance rights holdings of key management personnel
The movement during the reporting period in the number of share performance rights over ordinary shares in MEO
Australia Limited held, directly, indirectly and beneficially by key management personnel, including their related
parties is as follows:
Held at
1 July 2015
Granted as
Remuneration
Rights
Exercised
Rights
Lapsed
Held at
30 June
2016
Vested
in 2016
Vested and
exercisable at
30 June 2016
Share performance rights (number)
Executive Director and other Executives
P J Stickland
C H Naylor
R Zammit
–
–
–
5,333,333
4,610,519
5,939,612
–
–
–
–
–
–
5,333,333
4,610,519
5,939,612
–
–
–
–
–
–
7. Company performance
The remuneration of MEO executives and contractors is not formally linked to financial performance measures of
the Company. However, as explained on page 19, executives are strongly incentivised to maximise shareholder wealth
because of the fact that the exercise price of the options granted to executives, should they vest, is higher than the
market price on the grant date. In accordance the Section 300A of the Corporations Act 2001 the following table
summarises MEO’s performance over a five year period:
Measure
Net (loss)/profit - $000
Basic (loss)/earnings per share - cents per share
Share price at the beginning of year - $
Share price at end of year - $
Dividends per share – cents
2016
2015
2014
2013
2012
(10,406)
(10,042)
(135,910)
(67,210)
(5,698)
(1.31)
0.015
0.015
Nil
(1.34)
0.03
0.015
Nil
(21.12)
(11.26)
(1.06)
0.06
0.03
Nil
0.25
0.06
Nil
0.18
0.25
Nil
CORPORATE GOVERNANCE STATEMENT
The Company’s Corporate Governance Statement for the year ended 30 June 2016, ASX Appendix 4G (Key to
Disclosure of Corporate Governance Principles and Recommendations) and other ancillary corporate governance
related documents may be accessed from the Company’s website at http://www.meoaustralia.com.au/page/About_
MEO/Governance/.
Signed in accordance with a resolution of the directors
P J STICKLAND
Managing Director and Chief Executive Officer
Melbourne, 8 September 2016
MEO AUSTRALIA: ANNUAL REPORT 2016
027
FINANCIAL REPORT
Financial Report
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For The Year Ended 30 June 2016
Sales revenue
Interest income
Total income
Production costs
Net administration costs
Exploration expenditure written-off/down
Loss on available for sale financial asset
Merger & takeover related costs
Merger break fee
Exchange gains on revaluation of foreign currency
bank accounts
Foreign currency gain on closure of foreign operation
Loss before income tax
Income tax expense
Net loss for the period
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Transfer of foreign currency gain on closure of foreign operation
Other comprehensive income/(loss) for the period, net of tax
Total comprehensive loss for the period
Note
4
2016
$
–
96,562
96,562
–
(1,980,008)
(10,774,401)
–
–
–
30,105
2,264,862
2015
$
330,689
206,668
537,357
(382,480)
(5,368,934)
(5,141,972)
(42,509)
(970,090)
400,000
965,529
–
(10,362,880)
(10,003,099)
5
(43,225)
(39,124)
(10,406,105)
(10,042,223)
10,126
(2,264,862)
(18,124)
–
(2,254,736)
(18,124)
(12,660,841)
(10,060,347)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
6
6
(1.31)
(1.29)
(1.34)
(1.34)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
MEO AUSTRALIA: ANNUAL REPORT 2016 028
FINANCIAL REPORT CONTINUED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For The Year Ended 30 June 2016
CURRENT ASSETS
Cash and cash equivalents
Other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Exploration and evaluation costs
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Note
2016
$
2015
$
7
8
9
10
11
12
13
13
14
14
14
4,135,989
183,652
4,319,641
106,312
–
1,764,514
1,870,826
5,785,454
311,056
6,096,510
150,094
40,854
10,856,110
11,047,058
6,190,467
17,143,568
219,622
205,085
424,707
162,019
162,019
213,286
194,575
407,861
20,473
20,473
586,726
428,334
5,603,741
16,715,234
263,822,525
262,406,308
464,603
3,520,221
(258,683,387)
(249,211,295)
5,603,741
16,715,234
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
MEO AUSTRALIA: ANNUAL REPORT 2016 029
FINANCIAL REPORT CONTINUED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For The Year Ended 30 June 2016
Issued
Capital
$
Share Based
Payments
Reserve
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
Equity
$
Balance at 1 July 2015
262,406,308
1,248,623
2,271,598 (249,211,295)
16,715,234
Net loss for the period
Other comprehensive income/(loss)
Total comprehensive income/(loss)
for the year
Transactions with owners in their
capacity as owners:
Cost of share based payments
Share placement
Costs of issues (net of tax)
Transfer of equity instruments expired
unvested
–
–
–
–
1,407,166
9,051
–
–
–
133,131
–
–
–
(934,013)
–
(10,406,105)
(10,406,105)
(2,254,736)
–
(2,254,736)
(2,254,736)
(10,406,105)
(12,660,841)
–
–
–
–
–
–
–
133,131
1,407,166
9,051
934,013
–
At 30 June 2016
263,822,525
447,741
16,862 (258,683,387)
5,603,741
Issued
Capital
$
Share Based
Payments
Reserve
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
Equity
$
Balance at 1 July 2014
262,367,184
1,690,073
2,289,722 (239,618,522)
26,728,457
Net loss for the period
Other comprehensive income/(loss)
Total comprehensive income/(loss)
for the year
Transactions with owners in their
capacity as owners:
Cost of share based payments
Costs of issues (net of tax)
Transfer of equity instruments expired
unvested
–
–
–
–
–
–
–
–
–
(10,042,223)
(10,042,223)
(18,124)
–
(18,124)
(18,124)
(10,042,223)
(10,060,347)
8,000
39,124
(449,450)
–
–
-
–
–
449,450
8,000
39,124
-
At 30 June 2015
262,406,308
1,248,623
2,271,598 (249,211,295)
16,715,234
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
MEO AUSTRALIA: ANNUAL REPORT 2016 030 FINANCIAL REPORT CONTINUED
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Year Ended 30 June 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Sales proceeds
Production costs
Payments to suppliers and employees
Cost recovery from joint venture partners
Merger and takeover costs
Merger break fee
Interest received
Note
2016
$
–
–
(1,641,391)
65,531
(16,585)
–
117,877
2015
$
330,689
(382,480)
(5,130,954)
98,610
(970,090)
400,000
210,457
Net cash (used in) operating activities
15
(1,474,568)
(5,443,768)
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditure on plant and equipment
Expenditure on exploration tenements
Expenditure on available for sale financial asset
Proceeds from sale of available for sale financial asset
Proceeds from sale of plant and equipment and
motor vehicles
–
(16,899)
(1,577,994)
(5,802,441)
–
–
–
(410,509)
368,000
135,670
Net cash (used in) investing activities
(1,577,994)
(5,726,179)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issues
Transaction costs on issue of shares
Net cash from financing activities
1,407,166
(34,174)
1,372,992
–
–
–
Net decrease in cash and cash equivalents
(1,679,570)
(11,169,947)
Cash and cash equivalents at beginning of period
5,785,454
15,989,872
Net foreign exchange differences
30,105
965,529
Cash and cash equivalents at end of period
7
4,135,989
5,785,454
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
MEO AUSTRALIA: ANNUAL REPORT 2016 031
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For The Year Ended 30 June 2016
NOTE 1 : CORPORATE INFORMATION
The financial report of MEO Australia Limited (“MEO Australia”, or the “Company”) for the year ended 30 June 2016
was authorised for issue in accordance with a resolution of the directors on 8 September 2016.
MEO Australia Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on
Australian Securities Exchange.
The nature of operations and principal activities of the Group are described in note 3.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
The financial report is a general-purpose financial report of a “for-profit” entity, which has been prepared
in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and
other authoritative pronouncements of the Australian Accounting Standards Board, and is presented in Australian
dollars.
(i) Compliance with IFRS
The financial report complies with Australian Accounting Standards issued by the Australian Accounting
Standards Board and International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
(ii) New and amended standards adopted by the Group
The following new standards and amendments to standards are mandatory for the first time for the financial
year beginning 1 July 2015:
Reference
Title
Summary
AASB
2015-3
Amendments to Australian
Accounting Standards arising
from the Withdrawal of AASB 1031
Materiality
The Standard completes the AASB’s
project to remove Australian guidance
on materiality from Australian
Accounting Standards.
Application
date of
standard
Application
date for
Group
1 July 2015
1 July 2015
Adoption of this standard did not have a material effect on the financial position or performance of the Group.
(iii) Early adoption of new Accounting Standards The Group has not elected to early adopt any of the standards
set out under (b) New Accounting Standards and Interpretations’ for the current reporting period.
(iv) Historical cost convention
The financial statements have been prepared under a historical cost convention, except for derivative
financial instruments and available for sale assets which have been measured at fair value.
MEO AUSTRALIA: ANNUAL REPORT 2016
032
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
(b) New Accounting Standards and Interpretations
The following standards and interpretations have been issued by the AASB but are not yet effective for the period
ending 30 June 2016. Adoption of these standards is not expected to have a material effect on the financial position or
performance of the Group however the position will be further reviewed during FY2017.
Reference
Title
Summary
AASB
2014-3
Amendments
to Australian
Accounting
Standards –
Accounting for
Acquisitions of
Interests in Joint
Operations
[AASB 1 & AASB 11]
AASB 15
Revenue from
Contracts with
Customers
AASB
2015-1
Amendments
to Australian
Accounting
Standards – Annual
Improvements
to Australian
Accounting
Standards 2012–2014
Cycle
Application
date of
standard
1 January
2016
Application
date for
Group
1 July 2016
1 January
2018
1 July 2018
AASB 2014-3 amends AASB 11 Joint Arrangements to
provide guidance on the accounting for acquisitions of
interests in joint operations in which the activity constitutes
a business. The amendments require:
(a) the acquirer of an interest in a joint operation in which
the activity constitutes a business, as defined in AASB
3 Business Combinations, to apply all of the principles
on business combinations accounting in AASB 3 and
other Australian Accounting Standards except for those
principles that conflict with the guidance in AASB 11;
and
(b) the acquirer to disclose the information required by
AASB 3 and other Australian Accounting Standards for
business combinations.
This Standard also makes an editorial correction to
AASB 11
AASB 15 Revenue from Contracts with Customers replaces
the existing revenue recognition standards AASB 111
Construction Contracts, AASB 118 Revenue and related
Interpretations. AASB 15 incorporates the requirements
of IFRS 15 Revenue from Contracts with Customers issued
by the International Accounting Standards Board (IASB)
and developed jointly with the US Financial Accounting
Standards Board (FASB).
The subjects of the principal amendments to the Standards
are set out below:
1 January
2016
1 July 2016
AASB 5 Non-current Assets Held for Sale and Discontinued
Operations:
• Changes in methods of disposal – where an entity
reclassifies an asset (or disposal group) directly from
being held for distribution to being held for sale (or
vice-versa), an entity shall not follow the guidance in
paragraphs 27–29 to account for this change.
AASB 119 Employee Benefits:
• Discount rate: regional market issue - clarifies that
the high quality corporate bonds used to estimate the
discount rate for post-employment benefit obligations
should be denominated in the same currency as the
liability. Further it clarifies that the depth of the market
for high quality corporate bonds should be assessed at
the currency level.
AASB 134 Interim Financial Reporting:
• Disclosure of information ‘elsewhere in the interim
financial report’ - amends AASB 134 to clarify the
meaning of disclosure of information ‘elsewhere in the
interim financial report’ and to require the inclusion of a
cross-reference from the interim financial statements to
the location of this information.
Other new Australian accounting standards and Interpretations issued but not yet effective are not relevant to the Group.
MEO AUSTRALIA: ANNUAL REPORT 2016 033
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
(c) Basis of consolidation
The consolidated financial statements comprise the
financial statements of the Group and its subsidiaries
as at 30 June 2016. Control is achieved when the Group
is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to
affect those returns through its power over the investee.
Specifically, the Group controls an investee if and only if
the Group has:
• Power over the investee (i.e. existing rights that give
it the current ability to direct the relevant activities
of the investee)
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
• De-recognises the assets (including goodwill) and
liabilities of the subsidiary
• De-recognises the carrying amount of any
non-controlling interests
• De-recognises the cumulative translation differences
recorded in equity
• Recognises the fair value of the consideration
received
• Exposure, or rights, to variable returns from its
• Recognises the fair value of any investment retained
involvement with the investee, and
• The ability to use its power over the investee to
affect its returns.
When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it
has power over an investee, including:
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components
previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be
required if the Group had directly disposed of the
related assets or liabilities
(d) Significant accounting judgements,
• The contractual arrangement with the other vote
estimates and assumptions
holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an
investee if facts and circumstances indicate that there
are changes to one or more of the three elements of
control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases
when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired
or disposed of during the year are included in the
statement of comprehensive income from the date the
Group gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of other
comprehensive income (OCI) are attributed to the
equity holders of the parent of the Group and to the
non-controlling interests, even if this results in the
non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions
between members of the Group are eliminated in full on
consolidation.
The carrying amounts of certain assets and liabilities
are often determined based on judgements, estimates
and assumptions of future events. The key estimates
and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of certain
assets and liabilities within the next annual reporting
period are:
Share-based payment transactions
The Group measures the cost of equity-settled
transactions with employees by reference to the fair
value of the equity instruments at the date at which
they are granted. The fair value of share options is
determined using a binomial option pricing model, and
using the assumptions detailed in note 19.
Exploration and evaluation costs
Exploration and evaluation costs are accumulated
separately for each area of interest and carried forward
provided that one of the following conditions is met:
•
such costs are expected to be recouped through
successful development or sale; or
• exploration activities have not yet reached a stage
which permits a reasonable assessment of the
existence or otherwise of economically recoverable
reserves, and active and significant operations in
relation to the area are continuing.
MEO AUSTRALIA: ANNUAL REPORT 2016 034
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
Significant judgement is required in determining
whether it is likely that future economic benefits will be
derived from the capitalised exploration and evaluation
expenditure. In the judgement of the Directors, at
30 June 2016 exploration activities in each area of
interest have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of
economically recoverable reserves. Active and significant
operations in relation to each area of interest are
continuing and nothing has come to the attention of the
Directors to indicate future economic benefits will not
be achieved. The Directors are continually monitoring
the areas of interest and are exploring alternatives
for funding the development of areas of interest when
economically recoverable reserves are confirmed.
If new information becomes available that suggests
the recovery of expenditure is unlikely, the amounts
capitalised will need to be reassessed at that time.
(e) Segment reporting
concern, particularly the write-down of capitalised
exploration expenditure should the exploration permits
be ultimately surrendered or cancelled.
Having carefully assessed the potential uncertainties
relating to the Group’s ability to effectively fund
exploration activities and operating expenditures, the
Directors believe that the Group will continue to operate
as a going concern for the foreseeable future. Therefore,
the Directors consider it appropriate to prepare the
financial statements on a going concern basis.
Operating segments are reported in a manner which
is materially 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 Board
of Directors.
(f) Foreign currency translation
(i) Functional and presentation currency
The Group’s consolidated financial statements
are presented in Australian dollars, which is
also the parent company’s functional currency.
Each entity in the Group determines its own
functional currency and items included in
the financial statements of each entity are
measured using that functional currency.
(ii) Transactions and balances
Transactions in foreign currencies are initially
recorded in the functional currency by applying
the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are
retranslated at the rate of exchange ruling at
the balance date. All exchange differences in the
consolidated report are taken to profit or loss.
(iii) Group companies
On consolidation the assets and liabilities of
foreign operations are translated into Australian
dollars at the rate of exchange prevailing at the
reporting date. The exchange differences arising
on translation for consolidation are recognised
in other comprehensive income.
Going concern
The Group is involved in the exploration and evaluation
of oil and gas tenements. Further expenditure will be
required on these tenements to ascertain whether they
contain economically recoverable reserves.
As at 30 June 2016 the Group had cash reserves of
$4,135,989. The cash reserves are expected to meet
the Group’s planned exploration activities for the 12
months from the date of this report. To meet its funding
requirements the Group will rely on taking appropriate
steps, including:
• Meeting its additional obligations by either farm-out
or partial sale of the Group’s exploration interests;
• Raising capital by one of a combination of the
following: placement of shares, pro-rata issue to
shareholders, the exercise of outstanding share
options, and/or further issue of shares to the public;
•
In some circumstances, subject to negotiation and
approval, minimum work requirements may be varied
or suspended, and/or permits may be surrendered or
cancelled; or
• Other avenues that may be available to the Group.
The financial report has been prepared on a going
concern basis which contemplates the continuity of
normal business activities and the realisation of assets
and settlement of liabilities in the ordinary course of
business. No adjustments have been made relating to
the recoverability and reclassification of recorded asset
amounts and classification of liabilities that might be
necessary should the Group not continue as a going
MEO AUSTRALIA: ANNUAL REPORT 2016
035
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
(g) Cash and cash equivalents
Available-for-sale (AFS) financial investments
Cash and cash equivalents in the consolidated statement
of financial position comprise cash at bank and in hand
and short-term deposits that are readily convertible to a
known amount of cash and used for meeting short term
cash needs.
For the purpose of the consolidated statement of cash
flows, cash and cash equivalents consist of cash and
cash equivalents as defined above, net of outstanding
bank overdrafts.
(h) Derivative financial instruments and hedging
The Group uses derivative financial instruments such
as forward currency contracts to hedge its risks
associated with foreign currency fluctuations. Such
derivative financial instruments are initially recognised
at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured to
fair value. Certain derivatives do not qualify for hedge
accounting and changes in the fair value are recognised
immediately in profit or loss in other revenues and
expenses. Derivatives are carried as assets when their
fair value is positive and as liabilities when their fair
value is negative.
Any gains or losses arising from the changes in the
fair value of derivatives, except those that qualify as
cash flow hedges are taken directly to profit or loss
for the year.
The fair values of forward currency contracts are
calculated by reference to current forward exchange
rates for contracts with similar maturity profiles.
(i) Investment and other financial assets
Investments and financial assets in the scope of AASB
139 Financial Instruments: Recognition and Measurement
are categorised as either financial assets at fair value
through profit and loss, loans and receivables, held-to-
maturity investments, or available-for-sale financial
assets. The classification depends on the purpose for
which the investments were acquired or originated.
Designation is re-evaluated at each reporting date,
but there are restrictions on reclassifying to other
categories.
When financial assets are recognised initially, they are
measured at fair value, plus, in the case of assets not
at fair value through profit or loss, directly attributable
transaction costs.
AFS financial investments include equity investments
and debt securities. Equity investments classified as AFS
are those that are neither classified as held for trading
nor designated at fair value through profit or loss. Debt
securities in this category are those that are intended to
be held for an indefinite period of time and that may be
sold in response to needs for liquidity or in response to
changes in the market conditions.
After initial measurement, AFS financial investments
are subsequently measured at fair value with unrealised
gains or losses recognised as Other Comprehensive
Income (OCI) and credited in the AFS reserve until
the investment is de-recognised, at which time the
cumulative gain or loss is recognised in other operating
income, or the investment is determined to be impaired,
when the cumulative loss is reclassified from the AFS
reserve to the statement of profit or loss.
The Group evaluates whether the ability and intention
to sell its AFS financial assets in the near term is still
appropriate. When, in rare circumstances, the Group is
unable to trade these financial assets due to inactive
markets, the Group may elect to reclassify these
financial assets if management has the ability and
intention to hold the assets for the foreseeable future or
until maturity.
(i)
Impairment of financial assets
The Group assesses, at each reporting date,
whether there is objective evidence that a
financial asset or a group of financial assets
is impaired. An impairment exists if one or
more events that has occurred since the initial
recognition of the asset (an incurred ‘loss
event’) has an impact on the estimated future
cash flows of the financial asset or the group of
financial assets that can be reliably estimated.
Evidence of impairment may include indications
that the debtors or a group of debtors is
experiencing significant financial difficulty,
default or delinquency in interest or principal
payments, the probability that they will enter
bankruptcy or other financial reorganisation
and observable data indicating that there
is a measurable decrease in the estimated
future cash flows, such as changes in arrears
or economic conditions that correlate with
defaults.
MEO AUSTRALIA: ANNUAL REPORT 2016
036
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
(j) Plant and equipment
(l) Exploration and evaluation costs
Exploration and evaluation expenditure is carried at
cost. If indication of impairment arises, the recoverable
amount is estimated and an impairment loss is
recognised to the extent that the recoverable amount is
lower than the carrying amount.
Exploration and evaluation costs are accumulated
separately for each current area of interest and carried
forward provided that one of the following conditions is
met:
•
such costs are expected to be recouped through
successful development or sale; or
• exploration activities have not yet reached a
stage which permits a reasonable assessment
of theexistence or otherwise of economically
recoverable reserves, and active and significant
operations in relation to the area are continuing.
Impairment of exploration and evaluation costs
To the extent that capitalised exploration and evaluation
expenditure is determined not to be recoverable in the
future, profits/(losses) and net assets will be varied in
the period in which this determination is made.
Farm-outs
The Group will account for farm-out arrangements
as follows:
• The Group will not record any expenditure made
by the farminee on its behalf;
• The Group will not recognise a gain or loss on the
farm-out arrangement but rather will redesignate
any costs previously capitalised in relation to the
whole interest as relating to the partial interest
retained; and
• Any cash consideration to be received will be
credited against costs previously capitalised in
relation to the whole interest with any excess to be
accounted for by the Group as gain on disposal.
Plant and equipment is stated at cost less accumulated
depreciation and any impairment losses. Depreciation
is calculated on a straight-line basis over the estimated
useful lives of the assets which range from 3 to 15 years.
Impairment
The carrying values of plant and equipment are reviewed
for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
Impairment exists when the carrying value of an asset
exceeds its estimated recoverable amount. The asset is
written down to its recoverable amount.
The recoverable amount of plant and equipment is the
greater of fair value less costs of disposal and value
in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset.
An item of plant and equipment is derecognised upon
disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is
included in the consolidated statement of comprehensive
income in the period the item is derecognised.
(k) Methanol and LNG project costs
Research and feasibility costs are expensed as incurred.
Development expenditure incurred on a project is carried
forward when its future recoverability can reasonably be
regarded as assured.
Following the initial recognition of the development
expenditure, the cost model is applied requiring the asset
to be carried at cost less any accumulated amortisation
and accumulated impairment losses. Any expenditure
carried forward is amortised over the period of expected
future revenue from the related project.
The carrying value of development costs is reviewed for
impairment annually when the asset is not yet in use, or
more frequently when an indicator of impairment arises
during the reporting year indicating that the carrying
value may not be recoverable.
MEO AUSTRALIA: ANNUAL REPORT 2016 037
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
(m) Intangible assets
(o) Interests in joint arrangements
Intangible assets acquired are measured at cost less
any accumulated amortisation and any accumulated
impairment losses.
Intangible assets with finite lives are amortised over
the useful life and assessed for impairment whenever
there is an indication that the intangible asset may be
impaired. The amortisation period and method for an
intangible asset with a finite useful life is reviewed at
least annually. Changes in the expected useful life are
accounted for by changing the amortisation period or
method, which is a change in an accounting estimate.
Amortisation expense is recognised in profit or loss in
the expense category consistent with the function of the
intangible asset.
(n) Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not
quoted in an active market. They are included in current
assets, except for those with maturities greater than 12
months after the balance date which are classified as
non-current assets. Loans and receivables are included
in receivables in the consolidated statement of financial
position.
Recognition and derecognition
Regular purchases and sales of financial assets are
recognised on trade date, the date on which the Group
commits to purchase or sell the asset.
Subsequent measurement
Joint operations
A joint operation is a joint arrangement whereby the
parties that have joint control of the arrangement,
have rights to assets, and obligations for the liabilities of
the joint arrangement. Joint control is the contractual
agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities
require unanimous consent of the parties sharing
control.
The Group accounts for its share of the joint operation
assets, and liabilities it has incurred, its share of any
liabilities jointly incurred with other ventures, income
from the sale or use of its share of the joint operation’s
output, together with its share of the expenses incurred
by the joint operation, and any expenses it incurs in
relation to its interest in the joint operation.
(p) Leases
The determination of whether an arrangement is
or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the
fulfilment of the arrangement is dependent on the use a
specific asset or assets and the arrangement conveys a
right to use the asset.
Leases under which the lessor retains substantially all
of the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease payments
are recognised in the consolidated statement of
comprehensive income on a straight-line basis over the
lease term.
Loans and receivables are carried at amortised cost
using the effective interest method.
(q) Trade and other payables
Impairment
The Group assesses at each balance date whether there
is objective evidence that a financial asset or group of
financial assets is impaired.
Trade and other payables are carried at amortised cost
and represent liabilities for goods and services provided
to the Group prior to the end of the financial year that
are unpaid and arise when the Group becomes obliged to
make future payments in respect of the purchase of the
goods and services.
MEO AUSTRALIA: ANNUAL REPORT 2016 038 FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
(r) Provisions
(s) Share-based payment transactions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past
event, and it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the
amount of the obligation.
The Group provides benefits to employees (including
directors) of, and consultants to, the Group in the form
of share-based payment transactions, whereby services
are rendered in exchange for shares or rights over
shares (‘equity-settled transactions’). The Board adopted
the Long Term Incentive Plan on 13 September 2011.
When the Group expects some or all of a provision to be
reimbursed, for example under an insurance contract,
the reimbursement is recognised as a separate asset
but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the
consolidated statement of comprehensive income net of
any reimbursement.
Provisions are measured at the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the balance date.
If the effect of the time value of money is material,
provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and,
where appropriate, the risks specific to the liability. The
increase in the provision resulting from the passage of
time is recognised in finance costs.
Employee leave benefits
Short term benefits
Liabilities for wage and salaries, including non-monetary
benefits and certain annual leave entitlements expected
to be settled within 12 months of the reporting date
are recognised in provisions in respect of employees’
service up to the reporting date. They are measured at
the amounts expected to be paid when the liabilities are
settled. Liabilities for non-accumulating sick leave are
recognised when the leave is taken and are measured at
the rates paid or payable.
Long term benefits
The liability for long service leave and certain annual
benefits are recognised in the provision for employee
benefits and measured as the present value of expected
future payments to be made in respect of services
provided by employees up to the reporting date 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 reporting date in high quality corporate bonds with
terms to maturity and currencies that match, as closely
as possible, the estimated future cash outflows.
The cost of equity-settled transactions is measured by
reference to the fair value at the date at which they
are granted. The fair value of options and performance
rights with market based performance criteria is
determined using a binomial option pricing model. The
fair value of performance plan rights with non-market
performance criteria is determined by reference to the
Company’s share price at date of grant.
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 recipient
becomes fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled
transactions at each reporting date until vesting date
reflects (i) the extent to which the vesting period has
expired and (ii) the number of awards that, in the opinion
of the directors, based on the best available information
at balance date, will ultimately vest. No adjustment
is made for the likelihood of market conditions being
met as the effect of these conditions is included in
determination of fair value at grant date. The charge
or credit for the period represents the movement in
cumulative expense recognised as at the beginning and
end of the period.
No expense is recognised for awards that do not
ultimately vest, except for awards where vesting is
conditional upon a market condition.
Where the terms of an equity-settled award are modified,
as a minimum an expense is recognised as if the
terms had not been modified. In addition, an expense
is recognised for any increase in the value of the
transaction as a result of the modification, as measured
at the date of modification.
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, as described in the previous
paragraph.
MEO AUSTRALIA: ANNUAL REPORT 2016 039
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
The dilutive effect, if any, of outstanding options is
reflected as additional share dilution in the computation
of earnings per share.
(t) Contributed equity
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax,
from the proceeds.
(u) Revenue
Revenue is recognised to the extent that it is probable
that the economic benefits will flow to the Group and the
revenue can be reliably measured.
Interest income is recognised as it accrues using the
effective interest method.
(v) Income tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount are those
that are enacted or substantially enacted by the reporting
date.
Deferred income tax is provided on all temporary
differences at balance date between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognised for all
taxable temporary differences, except:
• where the deferred income tax liability arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated
with investments in subsidiaries, associates or
interests in joint ventures, and the timing of the
reversal of the temporary differences can be
controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences, and
the carry-forward of unused tax assets and unused tax
losses can be used, except:
• where the deferred income tax asset relating to
the deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
• when the deductible temporary differences is
associated with investments in subsidiaries, associates
or interests in joint ventures, in which case a deferred
tax asset is only recognised to the extent that it is
probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be
available against which the temporary differences can
be applied.
The carrying amount of deferred income tax assets is
reviewed at each balance date and reduced to the extent
that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed
at each reporting date and are recognised to the extent
that it is has become probable that future taxable profit
will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance date.
Deferred tax assets and deferred tax liabilities are offset
only if a legally enforceable right of set off exists to set
off current tax assets against current liabilities and the
deferred tax assets and liabilities relate to the same
taxable entity and the same taxable authority.
Income taxes relating to items recognised directly
in equity are recognised in equity and not in the
consolidated statement of comprehensive income.
Tax consolidation legislation
MEO Australia Limited and its wholly owned subsidiaries
have implemented the tax consolidation legislation as of
1 July 2004.
The head entity, MEO Australia Limited and the
controlled entities in the tax consolidated group continue
to account for their own current and deferred tax
amounts. The Group has applied the group allocation
approach in determining the appropriate amount of
current tax and deferred taxes to allocate to members of
the tax consolidated group.
MEO AUSTRALIA: ANNUAL REPORT 2016 040 FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont)
In addition to its own current and deferred tax amounts,
MEO Australia Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed
from controlled entities in the tax consolidated group.
(x) Earnings per share
Basic earnings per share is calculated as net profit/
(loss) attributable to members divided by the weighted
average number of ordinary shares.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as
amounts receivable from or payable to other entities in
the group.
Any difference between the amounts assumed and
amounts receivable or payable under the tax
funding agreement are recognised as a contribution
to (or distribution from) wholly owned tax
consolidated entities.
(w) Goods and services tax
Revenues, expenses and assets are recognised net of
GST, except receivables and payables which are stated
with GST included. Where GST incurred on a purchase of
goods or services is not recoverable from the taxation
authority, the GST is recognised as part of the cost of
acquisition of the asset or as part of the expense item as
applicable.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the consolidated statement of financial
position.
Cash flows are included in the Consolidated Statement of
Cash Flows on a gross basis and the GST component of
cash flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation
authority is classified as operating cash flows.
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to,
the taxation authority.
Diluted earnings per share is calculated as net profit/
(loss) attributable to members divided by the weighted
average number of ordinary shares and dilutive potential
ordinary shares.
(y) Parent entity financial information
The financial information for the parent entity,
MEO Australia Limited, disclosed in note 22 has been
prepared on the same basis as the consolidated financial
statements, except as set out below.
(i)
Investments in subsidiaries
Investments in subsidiaries are accounted for at
cost less accumulated impairment losses in the
financial statements of MEO Australia Limited.
NOTE 3: SEGMENT INFORMATION
In light of the Group’s focus on exploration, the
Board of Directors does not receive segmented
financial information in respect of methanol and LNG
development. The Group operates in the petroleum
exploration industry within Australia, New Zealand
and Cuba.
The Board of Directors currently receive regular
consolidated cash flow information as well as
Consolidated Statement of Financial Position and
Statement of Comprehensive Income information that
is prepared in accordance with Australian Accounting
Standards.
The Board does not currently receive segmented
Statement of Financial Position and Statement of
Comprehensive Income information. The Board manages
exploration activities of each permit area through review
and approval of budgets, joint venture cash calls and
other operational information. Information regarding
exploration expenditure capitalised for each area is
contained in note 11.
MEO AUSTRALIA: ANNUAL REPORT 2016
041
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 4: NET ADMINISTRATION EXPENSES
Consultants fees and expenses
Non-executive directors remuneration (excluding share based payments)
Salaries and on-costs
Termination payments and on-costs (per minimum contractual commitments)
Share based payments
Administration and other expenses
Audit costs
Securities exchange, share registry and reporting costs
Operating lease expenses
Investor relations and corporate promotion costs
Travel costs
Depreciation and amortisation expense
Loss on sale of motor vehicles
*Office relocation costs
Gross administration costs
Less allocation to exploration activities
Net administration costs
Consolidated
2016
$
219,208
147,051
2015
$
517,214
158,684
1,684,993
2,639,287
–
133,131
229,451
70,000
110,990
748,671
8,000
483,846
74,000
137,237
276,354
366,393
75,484
53,528
84,636
–
–
51,532
161,848
417,481
6,870
658,269
3,084,826
6,429,332
(1,104,818)
(1,060,398)
1,980,008
5,368,934
*
In FY 2015, office relocation costs include costs associated with leasehold asset write-offs ($318,236), leasehold break costs ($275,000),
office equipment write-offs ($24,094) and physical relocation costs ($40,939).
MEO AUSTRALIA: ANNUAL REPORT 2016 042
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 5: INCOME TAX
Statement of Comprehensive Income
Current income tax
Current income tax (expense)/credit
Tax losses recognised/(not recognised)
Deferred income tax
Relating to origination and reversal of temporary differences
Tax losses derecognised
Income tax expense reported in the Statement
of Comprehensive Income
Statement of Changes in Equity
Deferred income tax related to items charged or credited directly to equity
Share issue costs
Share issue costs not recognised as not probable
Amount recognised in respect of prior years share issue costs now considered probable
Income tax benefit reported in equity
Tax Reconciliation
Consolidated
2016
$
2015
$
(232,265)
189,040
(43,225)
1,714,341
(1,662,577)
51,764
2,770,490
(2,770,490)
(90,888)
-
–
(90,888)
(43,225)
(39,124)
Consolidated
2016
$
10,252
(6,151)
39,124
43,225
2015
$
-
-
39,124
39,124
Consolidated
2016
$
2015
$
A reconciliation between tax expense and the product of accounting profit before
income tax multiplied by the Group’s applicable income tax rate is as follows:
Accounting loss before tax
(10,406,105)
(10,003,099)
At the Group’s statutory 30% tax rate (2015: 30%)
3,121,831
3,000,930
Share based payment expense
Non-deductible expenses
Difference in overseas tax rates
Tax losses not brought to account
Income tax expense reported in the Statement
of Comprehensive Income
(39,939)
(67,248)
(422,144)
(2,635,725)
(2,400)
(1,533)
(1,373,543)
(1,662,578)
(43,225)
(39,124)
MEO AUSTRALIA: ANNUAL REPORT 2016 043
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 5: INCOME TAX (Cont)
Deferred Income Tax
Statement of Financial Position
Income Statement
2016
$
2015
$
2016
$
2015
$
Deferred income tax at 30 June relates to the following:
CONSOLIDATED
Deferred tax liabilities
Interest receivable
Exploration and evaluation costs
(2,167)
(8,561)
(529,354)
(3,256,833)
6,394
2,727,479
1,974
131,549
Gross deferred income tax liabilities
(531,521)
(3,265,394)
Deferred tax assets
Accruals
Provisions
Share issue costs
Temporary differences not recognised
as not probable
Tax losses (not brought to account)/brought to
account to offset net deferred tax liability
Gross deferred income tax assets
Net deferred tax asset
Deferred tax expense
Tax losses
–
110,131
49,376
(6,151)
378,165
531,521
–
42,289
64,514
39,124
–
3,119,467
3,265,394
–
(42,289)
45,617
–
(123,643)
(100,768)
–
(2,780,426)
51,764
(43,225)
(39,124)
At balance date, the Group has estimated unused gross tax losses of $158.4 million (2015: $159.2 million) that are
available to offset against future taxable profits subject to continuing to meet relevant statutory tests. To the extent
that it does not offset a net deferred tax liability, a deferred tax asset has not been recognised in the accounts for
these unused losses because it is not probable that future taxable profit will be available to use against such losses.
MEO AUSTRALIA: ANNUAL REPORT 2016 044 FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 6: EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share amounts are calculated by dividing net loss for the year attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings/(loss) per share amounts are calculated by dividing the net loss attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential
ordinary shares into ordinary shares.
The following data was used in the calculations of basic and diluted loss per share:
Net loss
Consolidated
2016
$
2015
$
(10,406,105)
(10,042,223)
Shares
Shares
Weighted average number of ordinary shares used in calculation of basic loss per share
796,624,968
750,488,387
Effect of dilution:
Exercisable Performance Rights
11,743,018
–
Weighted average number of ordinary shares adjusted for the effect of dilution
808,367,986
750,488,387
Other than the placement of 46.9 million shares in August 2016, there have been no transactions involving ordinary
shares or potential ordinary shares that would significantly change the number of ordinary shares or potential
ordinary shares outstanding between the reporting date and the date of completion of these financial statements.
NOTE 7: CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short term deposits
Cash backed bank guarantee for Block 9 Cuba
Consolidated
2016
$
728,107
2,876,926
530,956
4,135,989
2015
$
613,689
5,171,765
–
5,785,454
Cash at bank earns interest at floating rates based on daily bank rates. Short term deposits are made for varying
maturities depending on the immediate cash requirements of the Group, and earn interest at the respective short
term deposit rates.
NOTE 8: TRADE AND OTHER RECEIVABLES
Goods and services tax refund
Interest receivable
Other receivables
Consolidated
2016
$
12,094
7,223
164,335
183,652
2015
$
8,476
28,538
274,042
311,056
At balance date, there are no trade receivables that are past due but not impaired. Due to the short term nature of
these receivables, their carrying value approximates fair value. Trade receivables are non-interest bearing and are
generally on 30-90 day terms. Details regarding the credit risk of current receivables are disclosed in note 16.
MEO AUSTRALIA: ANNUAL REPORT 2016 045
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 9: PROPERTY, PLANT AND EQUIPMENT
Plant and Equipment
At cost
Accumulated depreciation
Motor Vehicles
At cost
Accumulated depreciation
Leasehold Improvements
At cost
Accumulated depreciation
Consolidated
2016
$
661,660
(555,348)
106,312
2015
$
694,481
(544,387)
150,094
–
–
–
–
–
–
–
–
–
–
–
–
Total Property, Plant and Equipment
106,312
150,094
Movement in Plant and Equipment
Net carrying amount at beginning of year
Additions
Reclassification from Leasehold Improvements
Disposals
Depreciation
Movement in Motor Vehicles
Net carrying amount at beginning of year
Disposals
Depreciation
Leasehold Improvements
Net carrying amount at beginning of year
Reclassification to Plant & Equipment
Write-off on relocation
Depreciation
150,094
–
–
–
(43,782)
106,312
–
–
–
–
–
–
–
–
–
195,021
16,899
76,375
(7,596)
(130,605)
150,094
165,384
(141,391)
(23,993)
–
442,274
(76,375)
(318,236)
(47,663)
–
Net carrying amount at end of year
106,312
150,094
The useful life of the plant and equipment is estimated for 2016 and 2015 is 3 to 15 years.
MEO AUSTRALIA: ANNUAL REPORT 2016 046 FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 10: INTANGIBLE ASSETS
Software licences at cost
Accumulated amortisation
Movement in Intangibles
Net carrying amounts at beginning of year
Disposals
Amortisation
Net carrying amount at end of year
The useful life of the intangibles was 4 years.
NOTE 11: EXPLORATION AND EVALUATION COSTS
Balance at beginning of year
Expenditure for the year
Expenditure written-off/down during the year
Consolidated
2016
$
372,963
(372,963)
2015
$
1,197,612
(1,156,758)
–
40,854
40,854
–
(40,854)
–
274,234
(18,160)
(215,220)
40,854
Consolidated
2016
$
10,856,110
1,682,805
(10,774,401)
2015
$
11,330,618
4,667,463
(5,141,971)
1,764,514
10,856,110
Significant judgement is required in determining whether it is likely that future economic benefits will be derived from
capitalised exploration and evaluation expenditure. In the judgement of the Directors, at 30 June 2016 exploration
activities in each area of interest, where costs are carried forward, have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves. Active and significant
operations in relation to each area of interest are continuing and nothing has come to the attention of the Directors to
indicate future economic benefits will not be achieved. The Directors are continually monitoring the areas of interest
and are exploring alternatives for funding the development of areas of interest when economically recoverable
reserves are confirmed.
The exploration write-off for the financial year is $3,151,435, which is mainly due to the write-off of $2,236,280 relating
to WA-454-P and the write-off of $679,381 relating to WA-488-P.
MEO AUSTRALIA: ANNUAL REPORT 2016 047
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 11: EXPLORATION AND EVALUATION COSTS (Cont)
In addition, a write-down of $7,622,966 relating to AC/P50 and AC/P51 was recognised during the financial year.
The write-down is as a result of the execution of the agreement with Rouge Rock which grants Rouge Rock an option
to acquire a 45% interest in each permit in exchange for funding the remaining primary statutory work program for
each permit.
Capitalised exploration and evaluation costs at 30 June 2016 are $1,764,514 (June 2015: $10,856,110) which relate
to the following:
Area of Interest
AC/P50 & AC/P51
WA-454-P
WA-488-P
Block 9 Cuba
TOTAL
NOTE 12: TRADE AND OTHER PAYABLES
Trade and other payables
Trade payables are non-interest bearing and are normally settled on 30 day terms.
NOTE 13: PROVISIONS
CURRENT
Employee benefits
Annual leave entitlement
Long service leave entitlement
NON-CURRENT
Employee benefits
Long service leave entitlement
30 June 2016
30 June 2015
$632,500
-
-
$1,132,014
$8,186,955
$2,062,305
$606,850
-
$1,764,514
$10,856,110
Consolidated
2016
$
219,622
2015
$
213,286
Consolidated
2016
$
133,416
71,669
205,085
2015
$
134,610
59,965
194,575
162,019
20,473
MEO AUSTRALIA: ANNUAL REPORT 2016
048 FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 14: CONTRIBUTED EQUITY AND RESERVES
Issued And Paid Up Capital
2016
Shares
Consolidated
2016
$
2015
Shares
2015
$
Ordinary shares
891,204,960
263,822,525
750,488,387
262,406,308
Movements in Ordinary Shares
Balance at beginning of year
Share Issues:
Share Placement at $0.01 per share
Transaction costs (net of tax)
2016
Shares
2016
$
2015
Shares
2015
$
750,488,387
262,406,308
750,488,387
262,367,184
140,716,573
–
1,407,166
(9,051)
–
–
–
39,124
Balance at end of year
891,204,960
263,822,525
750,488,387
262,406,308
(a) Terms and Condition of Ordinary Shares
Ordinary shares entitle their holder to receive dividends as declared. In the event of winding up the Company,
ordinary shares entitle their holder to participate in the proceeds from the sale of all surplus assets in proportion
to the number of and amounts paid up or which should have been paid up on shares held. Each ordinary share
entitles the holder to one vote, either in person or by proxy, at a meeting of the Company. Ordinary shares issued
during the year and since the end of the year, from date of issue rank equally with the ordinary shares on issue.
(b) Share Options and Performance Rights
At 30 June 2016, 4,200,000 share options and 26,273,365 share performance rights granted to directors,
executives and consultants were outstanding. The options and share performance rights are granted pursuant to
the Senior Executives and Officers Option Plan, details of which are set out in note 19.
(c) Capital Management
Capital is defined as equity. When managing capital, management’s objective is to ensure the entity continues
as a going concern as well as to maintain optimal returns to shareholders and benefits of other stakeholders. All
methods of returning funds to shareholders outside of dividend payments or raising funds are considered within
the context of the Company’s objectives.
The Group will seek to raise further capital, if required, as and when necessary to meet its projected operations.
The decision of how the Group will raise future capital will depend on market conditions existing at that time. It is
the Group’s plan that this capital will be raised by any one or a combination of the following: placement of shares,
pro-rata issue to shareholders, the exercise of outstanding options, and/or a further issue of shares to the public.
Should these methods not be considered to be viable, or in the best interests of shareholders, then it would be the
Company’s intention to meet its obligations by either partial sale of the Company’s interests or farmout, the latter
course of action being part of the Company’s overall strategy.
MEO AUSTRALIA: ANNUAL REPORT 2016
049
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For The Year Ended 30 June 2016
NOTE 14: CONTRIBUTED EQUITY AND RESERVES (Cont)
Accumulated losses
Balance at beginning of year
Net loss for the year
Transfer from share based payments reserve -
cost of equity instruments expired unexercised
Consolidated
2016
$
2015
$
(249,211,295)
(239,618,522)
(10,406,105)
(10,042,223)
934,013
449,450
Balance at end of year
(258,683,387)
(249,211,295)
The Group is not subject to any externally imposed capital requirements.
Other Reserves
Share based payments reserve
The share based payment reserve is used to record the value of share based payments provided to employees and
contractors, including KMP’s as part of their remuneration. Refer to note 19 for further details of the plan.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences for the translation of the financial
statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.
The surrender of the Seruway and South Madura Production Sharing Contracts were formalised during the year.
Exchange differences of $2,264,862 previously recognised in other comprehensive income and accumulated in the
foreign currency translation reserve were reclassified from the reserve to profit or loss on cessation of the foreign
operation.
MEO AUSTRALIA: ANNUAL REPORT 2016
050 FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 15: CASH FLOW STATEMENT RECONCILIATION
Reconciliation of net loss after tax to net cash flows used in operating activities
Net (loss)/profit
Adjustments for:
Loss on available for sale financial asset
Asset write-offs
Exploration expenditure written-off/down
Depreciation and amortisation
Share based payments
Exchange rate adjustments on revaluation of foreign currency bank accounts
Foreign currency gain on closure of foreign operation
Deferred income tax expense
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Consolidated
2016
$
2015
$
(10,406,105)
(10,042,223)
-
-
10,774,401
84,636
133,131
(30,105)
(2,264,862)
43,225
69,123
(30,068)
152,056
42,509
342,330
5,141,971
417,481
8,000
(965,529)
-
39,124
(9,944)
(81,594)
(335,893)
Net cash flows (used in) operating activities
(1,474,568)
(5,443,768)
MEO AUSTRALIA: ANNUAL REPORT 2016 051
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 16: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash and short term deposits, the main purpose of which is to
finance the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables
and trade payables which arise directly from its operations. The main risks arising from the Group’s financial
instruments are credit risk, interest rate risk, exchange rate risk and liquidity risk. The Board of Directors has reviewed
each of those risks and has determined that they are not significant in terms of the Group’s current activities. The
Group also enters into derivative financial instruments, principally forward currency contracts. The purpose is to
manage the currency risks arising from the Group’s operations. Speculative trading in derivatives is not permitted.
There are no derivatives outstanding at 30 June 2016 (2015: $nil).
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 expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 2 to the consolidated financial statements.
Credit risk
The Group trades only with recognised, creditworthy third parties. Receivable balances are monitored on an ongoing
basis with the results being that the Group’s exposure to bad debts is not significant.
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and
other receivables. The Group’s exposure to credit risk arises from potential default of the counter party, with a
maximum exposure equal to the carrying amount of these instruments. No collateral is held as security. Exposure at
balance date is the carrying value as disclosed in each applicable note.
Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s cash and
cash equivalents with a floating interest rate. Short term deposits are made for varying periods depending on the
immediate cash requirements of the group, and earn interest at the respective short term deposit rates.
Taking into account the current cash balance, a +/- 1.0% movement from the year-end Australian interest rates will not
have a material impact on the profit or loss and cash balances of the group.
Foreign currency risk
The Group’s exposure to exchange rate risk relates primarily to trade payables and cash denominated in US dollars.
Where a payable is significant, US dollars are purchased on incurring the liability or commitment. The Group also
manages its currency risk through the active management of its exposures which may include entering into various
forward currency contracts throughout the year.
The Group’s exposure to its unhedged financial assets and liabilities is as follows:
USD
Cash
Total Financial Assets
Trade Creditors
Total Financial Liabilities
Consolidated
2016
$
985,817
2015
$
902,168
985,817
902,168
2016
$
12,707
12,707
2015
$
–
–
MEO AUSTRALIA: ANNUAL REPORT 2016 052
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 16: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont)
The following sensitivity analysis is based on the foreign currency risk exposure in existence at the balance date, with
all other variables remaining constant:
Consolidated Net Profit
2016
$
2015
$
10% strengthening in AUD/USD rate (for 2016 from 0.7522 to 0.8274 and for 2015
from 0.7680 to 0.8448) with all other variables held constant
(117,608)
(106,791)
10% weakening in AUD/USD rate (for 2016 from 0.7522 to 0.6770 and 2015 from
0.7680 to 0.6912) with all other variables held constant
143,743
130,522
A sensitivity of 10% has been selected as this is considered reasonable given the current level of exchange rates and
the volatility observed both on a 5 year historical basis and market expectations for potential future movement.
There is no impact on equity other than the above net profit sensitivities on retained earnings/accumulated losses.
Liquidity Risk
The Group’s exposure to financial obligations relating to corporate administration and exploration expenditure, are
subject to budgeting and reporting controls, to ensure that such obligations do not exceed cash held and known cash
inflows for a period of at least 1 year.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built in an
appropriate liquidity risk framework for the management of the Group’s short, medium and longer term funding
and liquidity management requirements. The Group manages liquidity risk by maintaining adequate equity funding
through the monitoring of future cash flow forecasts of its operations, which reflect management’s expectations of the
settlement of financial assets and liabilities.
The Group has limited financial resources and will need to raise additional capital from time to time and such fund
raisings may be subject to factors beyond the control of the Company and its directors. When MEO requires further
funding for its programs, then it is the Company’s intention that the additional funds will be raised by any one or a
combination of the following: placement of shares, pro-rata issue to shareholders, the exercise of outstanding options,
and/or a further issue of shares to the public. Should these methods not be considered to be viable, or in the best
interests of shareholders, then it would be the Company’s intention to meet its obligations by either partial sale of the
Company’s interests or farmout, the latter course of action being part of the Company’s overall strategy.
At balance date, the group holds $219,622 (2015: $213,286) of financial liabilities consisting of trade and other
payables. All financial liabilities have a contractual maturity of 30 days. The fair values of the financial assets and
liabilities approximate the carrying values in the statement of financial position.
MEO AUSTRALIA: ANNUAL REPORT 2016 053
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 17 COMMITMENTS AND CONTINGENCIES
Commitments
Operating Lease
Future minimum rentals payable under operating lease for office premises at
balance date:
Payable not later than one year
Payable later than one year but not later than five years
Consolidate
2016
$
2015
$
123,863
–
123,863
349,186
122,045
471,231
Guarantee
The Group has provided guarantees of $70,752 (2015: $70,752) at 30 June 2016 for lease of premises.
Exploration Commitments
In order to maintain rights of tenure to petroleum exploration tenements, the Group has discretionary exploration
requirements up until the expiry of the primary term of the tenements. These requirements, which are subject to
renegotiation, are not provided for in the financial statements. If the economic entity decides to relinquish certain
tenements and/or does not meet these obligations, assets recognised in the Statement of Financial Position may
require review in order to determine the appropriateness of carrying values. The commitments for exploration
expenditure of $20,014,286 include the minimum expenditure requirements that the Consolidated Entity is required to
meet in order to retain its present permit interests. These obligations may be subject to renegotiation, may be farmed
out or may be relinquished.
The majority of MEO’s exploration permits are located in the jurisdiction of the Commonwealth of Australia and have
been awarded on the basis of an exploration work program bid, although there is an increase in focus on international
permits held in Cuba and NZ. The first three-years of a work program are referred to as the primary term. The work
program is guaranteed and cannot be reduced. Later years (4, 5 and 6) are referred to as the secondary term and
the work program for each year becomes guaranteed upon entry to that year. Whilst failure to complete a guaranteed
work program does not result in a financial penalty, it is grounds for cancellation of the permit. Further, the default
may be considered by the Regulator in relation to future interactions with the defaulting party for a period of 5 years.
AC/P50 (MEO 100%)
AC/P50 was renewed for a further 5 year term commencing 19 May 2015 and the minimum work program requirement
during the 3 year Primary Term consists of:-
Year 1 (ending 18 May 2016) - geological and geophysical studies; Status – Work program completed
Year 2 (ending 18 May 2017) - seismic data reprocessing and Year 3 (ending 18 May 2018) - geological and
geophysical studies.
As announced on 5 July 2016, MEO will be “free-carried” through the Year 2 and Year 3 work programs following an
agreement with Rouge Rock Pty Ltd which grants Rouge Rock an option to acquire a 45% interest in the Permit in
exchange for undertaking and funding the remaining work program.
MEO AUSTRALIA: ANNUAL REPORT 2016 054 FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 17 COMMITMENTS AND CONTINGENCIES (Cont)
AC/P51 (MEO 100%)
AC/P51 was renewed for a further 5 year term commencing 19 May 2015 and the minimum work program requirement
during the 3 year Primary Term consists of:
Year 1 (ending 18 May 2016) - geological and geophysical studies – Work program completed.
Year 2 (ending 18 May 2017) - seismic data reprocessing and Year 3 (ending 18 May 2018) - geological and
geophysical studies.
As announced on 5 July 2016, MEO will be “free-carried” through the Year 2 and Year 3 work programs following an
agreement with Rouge Rock Pty Ltd which grants Rouge Rock an option to acquire a 45% interest in the Permit in
exchange for undertaking and funding the remaining work program.
WA-488-P (MEO 100%)
In 2013, MEO was awarded WA-488-P for a six year period with a minimum commitment being the three year primary
term ending 21 May 2016. The Permit Year 1 work program (ending 21 May 2014) was 400km 2D seismic; and has
been satisfied. During the financial year the Regulator approved a suspension of the Permit Year 2 work program
conditions by twelve months to 21 November 2016 with the work program varied to include 150km 2D broadband
reprocessing and 2D seismic inversion. As a result, Permit Year 3, which has a work program of one exploration well
now commences 22 November 2016.
PEP51153 (MEO 30% interest)
In June 2016, MEO advised that TAG Oil Ltd had acquired the 70% interest in, and became Operator for, onshore
exploration permit PEP51153, which was previously held by Kea Oil and Gas Limited. The minimum work program
for PEP51153 has also been revised and approved by the New Zealand regulator as follows:
Period
Work Commitment
No later than 23 March 2017
No later than 23 February 2018
Acquire, process and interpret a minimum of 28.5km of gravity data across the
permit
Drill one well to a location and depth agreed between the permit holder and the
Chief Executive; OR
Surrender the permit
PEP51153 expires on 23 September 2018.
Cuba Block 9 (MEO 100% interest)
In September 2015, MEO executed the Cuba Block 9 Production Sharing Contract (PSC) with the national oil company
Cuba Petróleo Union (CUPET).
The exploration period of the Block 9 PSC is split into four sub-periods with withdrawal options at the end of each sub-
period. The first sub-period, which is currently scheduled to conclude in March 2017, involves evaluating the existing
exploration data in the block and reprocessing selected 2D seismic data before determining whether to proceed with a
subsequent 24-month exploration sub-period that includes acquisition of new 2D seismic data. MEO is well advanced
on meeting its obligations for the first sub-period.
There are no material commitments or contingencies other than as set out in this note.
Summary
Should MEO proceed with its share of exploration commitments, they are currently estimated to be $20,014,286 of
which $14,286 is estimated within one year and $20,000,000 is estimated after one year but not more than five years.
MEO AUSTRALIA: ANNUAL REPORT 2016 055
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 18: RELATED PARTY DISCLOSURES
Subsidiaries
The consolidated financial statements include the financial statements of MEO Australia Limited,
and the following subsidiaries.
North West Shelf Exploration Pty Ltd
Methanol Australia Pty Ltd
LNG Australia Pty Ltd
TSP Arafura Petroleum Pty Ltd
Oz-Exoil Pty Ltd
Innovative Energy Pty Ltd
Offshore Methanol Pty Ltd
Gastech Systems Pty Ltd
Vulcan Exploration Pty Ltd
MEO International Pty Ltd*
Drysdale Offshore Exploration Pty Ltd
Finniss Offshore Exploration Pty Ltd
Seruway Offshore Exploration Limited
Rayong Offshore Exploration Limited
MEO Malaysia Pty Ltd
MEO New Zealand Pty Limited
Country of Incorporation
Equity Interest
2016
%
2015
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
British Virgin Islands
British Virgin Islands
Australia
New Zealand
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
*MEO International Pty Ltd holds:-
•
•
•
•
100% interest in Seruway Offshore Exploration Limited.
100% interest in MEO Malaysia Pty Ltd.
100% interest in MEO New Zealand Pty Limited
100% interest in Rayong Offshore Exploration Limited
Compensation of key management personnel by category:
Short term employee benefits and fees
Post-employment benefits
Share-based payments
Long service leave expense
Long service leave reversal
Termination payments
Consolidated
2016
$
855,082
104,579
90,231
37,842
–
–
2015
$
1,668,258
181,587
8,000
7,303
(127,089)
643,390
1,087,734
2,381,449
During the year there were no payments for consulting services to non-executive directors, other than director fees,
which were paid to entities controlled by directors (2015: nil).
MEO AUSTRALIA: ANNUAL REPORT 2016 056 FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 19: SHARE BASED PAYMENT PLANS
MEO Long Term Incentive Plan
Share Options
There were no share options granted to senior executives and non-executive directors during the financial year (2015:
Nil). Each share option is an option to acquire one ordinary share in the Company. Any new shares which are issued in
satisfaction of options will be issued at the prevailing market price at the time of issue.
Movements in share options on issue during the year:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
2016
Options
2015
Options
11,080,000
16,530,000
–
–
6,880,000
5,450,000
–
–
4,200,000
11,080,000
•
In July 2011, 500,000 share options were granted to a contractor exercisable at a price of 50 cents per option on
or before 1 July 2016. These options vested 50% on 1 July 2012 and 50% on 1 July 2013.
The fair value of the options at date of grant was estimated to be 7.12 cents for the options vesting on 1 July 2012 and
8.10 cents for options vesting on 1 July 2013. The fair value was determined using a Binomial pricing model, taking into
account the terms and conditions upon which the options were granted, and using the following inputs to the model:
Expected volatility
94%
Contractual life (years)
5
Risk-free interest rate
4.8%
Dividend yield
0%
Early exercise multiple/estimated life for options expiring 1 July 2012 – 3.0 years
Early exercise multiple/estimated life for options expiring 1 July 2013 – 3.5 years
There was no expense in the year relating to these share options (2015: nil).
•
•
In October 2010, 1,500,000 share options were granted to an executive exercisable at a price of 50 cents per
option on or before 4 October 2015. During the year these options lapsed.
In October 2011, 2,075,000 share options were granted to executives exercisable at a price of 50 cents per option
on or before 3 October 2016 of which 875,000 options lapsed in FY2014. These options vested 50% on
3 October 2012 and 50% on 3 October 2013.
The fair value of the options at date of grant was estimated to be 5.83 cents for the options vesting on
3 October 2012 and 6.68 cents for options vesting on 3 October 2013. The fair value was determined using a Binomial
pricing model, taking into account the terms and conditions upon which the options were granted,
and using the following inputs to the model:
Expected volatility
94%
Contractual life (years)
Risk-free interest rate
3.5%
Dividend yield
5
0%
Early exercise multiple/estimated life for options expiring 3 October 2012 – 3.0 years
Early exercise multiple/estimated life for options expiring 3 October 2013 – 3.5 years
There was no expense in the year relating to these share options (2015: nil).
MEO AUSTRALIA: ANNUAL REPORT 2016 057
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 19: SHARE BASED PAYMENT PLANS (Cont)
•
In October 2011, 3,600,000 share options were granted to non-executive directors exercisable at a price of
50 cents per option on or before 27 October 2015. During FY2016 2,700,000 options lapsed (FY2015, 600,000
options lapsed and FY2014, 300,000 options lapsed).
There was no expense in the year relating to these share options (2015: $8,000).
•
In December 2011, 4,580,000 share options were granted to executives and staff exercisable at a price of
50 cents per option on or before 1 December 2016. These options vested 50% on 1 December 2012 and 50% on 1
December 2013. During FY2016 1,180,000 Options lapsed (FY2015 650,000 options lapsed and in FY 2014 250,000
options lapsed).
There was no expense in the year relating to these share options (2015: nil).
•
In April 2012, 1,500,000 share options were granted to an executive exercisable at a price of 50 cents per option
on or before 3 April 2017. During the year these options lapsed.
There was no expense in the year relating to these share options (2015: nil).
Share Performance Rights
Movements in share performance rights on issue during the year:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Outstanding at the end of the year
2016
Rights
–
26,273,365
2015
Rights
350,000
–
–
(350,000)
26,273,365
–
In November 2015, 5,333,333 Exercisable Performance Rights were granted to the Managing Director and Chief
Executive Officer, Mr Peter Stickland under the Company’s Long Term incentive Plan. The vesting date for the
Exercisable Performance Rights is 30 November 2016 and expiry date on 29 November 2018. The Exercisable
Performance Rights vest and become exercisable after 12 months continuous service ending 29 November 2016.
There is no price payable on exercising the Exercisable Performance Rights. The Exercisable Performance Rights are
valued at $80,000 of which $46,667 was expensed in the year.
In February 2016, the company implemented revised remuneration arrangements with its senior staff as part of
the Company’s ongoing cost reduction initiatives. Senior staff voluntarily agreed to a 20% reduction in the cash
component of their annual remuneration packages in exchange for Exercisable Performance Rights. 20,940,032
Exercisable Performance Rights were granted. The vesting date for the Exercisable Performance Rights is 31 January
2017 and expiry date on 31 January 2019. The Exercisable Performance Rights vest and become exercisable after
12 months continuous service ending 31 January 2017. There is no price payable on exercising the Exercisable
Performance Rights. The Exercisable Performance Rights are valued at $207,515 of which $86,464 was expensed in
the year.
MEO AUSTRALIA: ANNUAL REPORT 2016
058 FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 20: AUDITORS’ REMUNERATION
Consolidated
2016
$
2015
$
Amounts received or due and receivable by Ernst & Young (Australia) for:
Audit and review of the financial reports
70,000
74,000
Tax services in relation to the entity and other entities in the consolidated group
Investigating Accountant Report for the Scheme of Arrangement
4,471
–
74,471
24,966
52,000
150,966
NOTE 21: INTERESTS IN JOINT OPERATIONS
MEO Australia, through its wholly-owned subsidiary, MEO New Zealand Pty Limited, holds a 30% interest in
the PEP51153 in New Zealand. The principal activity of the joint operation is the exploration, development and
production of hydrocarbons.
Commitments related to joint operation assets
Commitments relating to the joint operation assets are set out in note 17 to the accounts.
Contingent liabilities
As at 30 June 2016, there are no contingent liabilities relating to PEP51153.
NOTE 22: PARENT ENTITY INFORMATION
Information relating to MEO Australia Limited
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Share based payments reserve
Accumulated losses
Total shareholders’ equity
Loss of the parent entity
Total comprehensive loss of the parent entity
Details of any guarantees entered into by the parent entity in relation to the debts
of its subsidiaries
Details of any contingent liabilities of the parent entity
Details of any contractual commitments by the parent entity for the acquisition of
property, plant or equipment.
2016
$
4,117,462
6,089,044
383,450
545,469
2015
$
5,700,357
16,829,737
342,682
363,155
260,753,544
259,380,552
447,741
1,248,623
(255,657,710)
(244,162,593)
5,543,575
(12,429,130)
(12,429,130)
16,466,582
(5,131,279)
(5,131,279)
n/a
n/a
n/a
n/a
n/a
n/a
MEO AUSTRALIA: ANNUAL REPORT 2016 059
FINANCIAL REPORT CONTINUED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont)
For The Year Ended 30 June 2016
NOTE 23: EVENTS SUBSEQUENT TO BALANCE DATE
On 18 August 2016 MEO announced it had raised approximately $1.69 million through a placement of approximately
46.9 million shares at $0.036 per share to qualified institutional and sophisticated investors (“Placement”). The
company also provided the opportunity for eligible shareholders to acquire new shares at the same discounted share
price as under the Placement of $0.036 per share via a non-underwritten share purchase plan (“SPP”). The SPP closes
on 16 September 2016. Funds from the share placement and SPP will be used to accelerate MEO’s onshore exploration
activities on Block 9 in Cuba, including the preparation of a drilling program for up to two wells in Block 9 and for
additional working capital purposes.
Other than the above, there has not arisen in the interval between the end of the financial year and the date of this
report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the
Company, to affect significantly the operations of the Group, the results of those operations, or state of affairs of the
Group, in future financial years.
MEO AUSTRALIA: ANNUAL REPORT 2016 060 DIRECTORS’ DECLARATION
Directors’ Declaration
In accordance with a resolution of the directors of MEO Australia Limited, I state that:
1.
In the opinion of the Directors:
(a) The financial statements and notes of MEO Australia Limited for the financial year ending 30 June 2016
are in accordance with the Corporations Act 2001, including:
(i) Giving a true and fair view of the Company’s and the consolidated entity’s financial position as at
30 June 2016 and of its performance for the year ended on that date; and
(ii) Complying with Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001.
(b) The financial statements and notes also comply with International Financial Reporting Standards as disclosed
in Note 2 (a)(i).
(c) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors from the
Managing Director and Chief Executive Officer and Chief Financial Officer & Company Secretary in accordance with
Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2016.
On behalf of the Board
P J STICKLAND
Managing Director & Chief Executive Officer
Melbourne, 8 September 2016
MEO AUSTRALIA: ANNUAL REPORT 2016
061
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s Report
MEO AUSTRALIA: ANNUAL REPORT 2016 062
INDEPENDENT AUDITOR’S REPORT CONTINUED
MEO AUSTRALIA: ANNUAL REPORT 2016 063 SHAREHOLDER AND OTHER INFORMATION
Shareholder and Other Information
Compiled as at 9 September 2016
(A) DISTRIBUTION OF EQUITY SECURITIES
(i) Ordinary Share Capital
938,104,960 fully paid ordinary shares are held by 7,235 individual shareholders.
All issued ordinary shares carry one vote per share and carry rights to dividends. On a show of hands, every
member at a meeting of shareholders shall have one vote and upon a poll each share shall have one vote.
(ii) Unquoted Options on Issue
3,700,000 options are held by 4 individual option holders.
There are no voting rights attached to these options.
(iii) Unquoted Share Performance Rights on Issue
26,273,365 options are held by 5 individual option holders.
There are no voting rights attached to these options.
The number of shareholders, by size of holding and the total number of shares on issue:
Ordinary Shares
No. of Holders
No. of Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL ON ISSUE
452
1,287
1,304
3,055
1,137
7,235
140,499
4,508,401
10,578,578
116,841,874
806,035,608
938,104,960
3,615 holders holding 22,695,822 shares held less than a marketable parcel of ordinary shares.
There is no current on-market buy-back.
(B) SUBSTANTIAL SHAREHOLDER
The Company has one Substantial Shareholder as at 9 September 2016 – Leni Gas Cuba Limited with a holding of
140,716,573 shares representing 15.0% of total ordinary issued shares.
MEO AUSTRALIA: ANNUAL REPORT 2016
064 SHAREHOLDER AND OTHER INFORMATION CONTINUED
(C) 20 LARGEST HOLDERS OF ORDINARY SHARES
Holder
Ordinary Shares % of total on issue
HSBC Custody Nominees (Australia) Limited
145,406,604
15.50%
Mrs Cathy Ann Bender
HSBC Custody Nominees (Australia) Limited-GSCO ECA
Mr John Oldani
ABN AMRO Clearing Sydney Nominees Pty Ltd
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