ANNUAL FINANCIAL REPORT
For the year ending 30 June 2021
ABN 65 078 301 505
CORPORATE DIRECTORY
NORWEST ENERGY NL
Registered Office
ABN 65 078 301 505
ACN 078 301 505
Directors
Mr Ernest Anthony Myers
(Non-Executive Chairman)
Level 2, 30 Richardson Street
West Perth WA 6005
Tel: + 61 8 9227 3240
Fax: + 61 8 9227 3211
Share Registry
Mr Bruce Frederick William Clement
(Non-Executive Director)
Computershare Investor Services Pty Ltd
GPO Box D182
Perth WA 6840
Managing Director
Mr Iain Peter Smith
Company Secretary
Ms Jo-Ann Long
Internet Address
www.norwestenergy.com.au
Shareholder Enquiries
Level 11
172 St Georges Terrace
Perth WA 6000
Telephone: 1300 850 505
Auditors
Rothsay Auditing
Level 1, Lincoln House
4 Ventnor Avenue
West Perth WA 6005
info@norwestenergy.com.au
Australian Securities Exchange
NWE
Contents
Directors’ Report
Lead Auditor’s Independence Declaration
Corporate Governance Statement
Independent Audit Report
Directors’ Declaration
Statement of Profit or Loss and other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
5
14
15
21
25
26
27
28
29
30
2
Directors’ Report
The Directors of Norwest Energy NL (“Norwest” or “the Company”) herein present their financial report of the Company
and its subsidiaries (“Consolidated entity” or “Group”), for the financial year ended 30 June 2021.
1. DIRECTORS AND OFFICERS
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. Directors were in office for this entire period unless otherwise stated.
Ernest Myers (Independent Non-Executive Chairman) CPA
Mr Myers became a Director of Norwest on 28 November 2018. Mr Myers, an Accountant by profession, has held senior
management and executive roles within a number of ASX listed companies. During his career he has been instrumental in
the capital raisings and financial management of these companies. With skills and knowledge gained from vast experiences
in corporate, exploration and operational areas, Mr Myers has played a key role in maintaining the Company’s financial
stability. Mr Myers is an executive director and CEO of Pancontinental Oil & Gas NL.
Iain Smith (Managing Director) BSc, MSc, GD-BA
Mr Smith joined Norwest Energy on 2 April 2019. Mr Smith is a petroleum geoscientist with 32 years’ broad experience of
the upstream oil & gas industry, both internationally and in Australia. His early career saw him work offshore UK North
Sea, before joining Premier Oil as a New Ventures Explorationist. Thereafter, Mr Smith spent seven years in the geoscience
services sector, before joining Woodside Energy in a commercial role. At Woodside he worked within the Exploration &
New Ventures group, and subsequently the Browse LNG project, with responsibilities including commercial analysis and
asset divestment. In 2008 Mr Smith joined private exploration company Neon Energy, as Commercial Manager, and was
responsible for the subsequent merger with ASX-listed Salinas Energy. He managed the commercial and investor relations
aspects of the company’s activities in Southeast Asia and California, including the high profile farmout of Neon’s two
offshore Vietnam projects. In 2016 Mr Smith joined Pilot Energy as Managing Director, overseeing an aggressive new
ventures campaign that resulted in the low-cost acquisition of six exploration permits within Western Australia, including
within the onshore and offshore Perth Basin.
Bruce Clement (Non-Executive Director) BEng, BSc, MBA (Appointed 18 December 2019)
Mr Clement became a Director on 18 December 2019. Mr Clement has 41 years’ oil and gas industry experience having
held engineering, senior management, and board positions with a variety of companies including ExxonMobil, Ampolex,
Roc Oil, AWE and Santos. He has extensive experience and knowledge of the Perth Basin, previously managing development
of the Cliff Head oil field for Roc Oil and, more recently, overseeing the discovery of the Waitsia gas field as Managing
Director of AWE. Mr Clement is a non-executive director of Horizon Oil Limited.
Jo-Ann Long (Company Secretary and Chief Financial Officer) B.Comm, FCA, GAICD
Ms Long was appointed CFO and Company Secretary on 2 April 2019. Ms Long has over 32 years of experience building,
leading and advising corporations on financial management, restructuring, international expansion, acquisitions and risk
management, initially with Deloitte’s and subsequently with 23 years spent in the Oil and Gas industry with Woodside, and
a number of junior Oil & Gas companies. Ms Long has specialised expertise in joint venture operations, commercial
agreements, tax strategies, risk management and governance. With strong broad commercial and business skills Ms Long
brings a strong discipline of financial management and a track record of documented contributions of improved financial
performance, heightened productivity and enhanced internal controls. Ms Long is Managing Director of Eco Smart Designs
and West Perth Accounting and holds non-executive directorships with Yijiyangu Corporation Limited and B2 Yaramarri
Direct Benefits Trust.
3
2. DIRECTORS' INTERESTS
As at the date of this report the Director’s interests in the securities of the Company are as follows:
Iain Smith (Managing Director)
Ernest Myers (Non-Executive Chairman)
Bruce Clement (Non-Executive Director)
3. EARNINGS PER SHARE
Ordinary Shares
4,285,715
4,285,715
-
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2021
(0.01)
(0.01)
Options over Ordinary Shares
92,142,857
17,142,857
15,000,000
2020
(0.19)
(0.19)
4. CORPORATE INFORMATION
Corporate Structure
The Company is a no liability company that is incorporated and domiciled in Australia.
Nature of Operations and Principal Activities
The principal activity of the Consolidated entity during the course of the financial year was exploration for hydrocarbon
resources. Norwest is Operator of the TP/15 Joint Venture via its subsidiary Westranch Holdings Pty Ltd.
4
5. OPERATING AND FINANCIAL REVIEW
Operational Review
As at the date of this report, the Group holds interests in the following North Perth Basin exploration permits (see
Figure 1):
•
•
•
20% working interest in EP368
22.22% working interest in EP426
25% working interest in TP/15 (as Operator)
Figure 1: Norwest Energy Perth Basin Permit Interests
Exploration Permits EP368 & EP426
During the reporting period the EP368 Joint Venture secured the Ensign 970 drilling rig to drill the Lockyer Deep-1
conventional gas prospect, situated on trend with the significant gas discoveries made at Waitsia, West Erregulla and
Beharra Springs Deep. These discoveries have greatly enhanced the prospectivity of exploration permits EP368 and EP426.
Drilling of Lockyer Deep-1 commenced in July 2021 and resulted in a significant gas discovery within the Kingia Formation
at a depth of 4,041 metres (MDRT). The well will be completed for production testing, the results of which will inform the
future appraisal program that may include seismic data acquisition and the drilling of additional wells.
5
Significant additional prospectivity is present within EP368 and EP426, including the Greater Springy Creek oil prospect
(gross, high case prospective resources up to 61 MMbbls oil, refer ASX announcement of 8 July 2019) and a variety of
conventional gas leads which will be matured through the acquisition of additional 2D seismic data (Refer figure 2).
Figure 2: Exploration Permits EP368 and EP426 Prospects & Leads
EP368 JV Participants
Westranch Holdings Pty Ltd1
Energy Resources Ltd2
EP426 JV Participants
Westranch Holdings Pty Ltd
Energy Resources Ltd
20%
80%
(Operator)
22.22%
77.78%
(Operator)
1 Westranch Holdings Pty Ltd is a wholly owned subsidiary of Norwest Energy NL.
2 Energy Resources Ltd is a wholly owned subsidiary of Mineral Resources Ltd.
Exploration Permit TP/15
The TP/15 Joint Venture has re-evaluated the permit's prospectivity in light of the gas discoveries which have been made
onshore in recent years within Permian sandstone reservoirs, and has identified the large Texel prospect, which offers
potential for oil to be accumulated within the Irwin River Coal Measures and the Kingia/High Cliff Sandstones. Additional
2D seismic data is required to mature this prospect for drilling, and the Joint Venture received approval from the
Department of Mines, Industry Regulation & Safety (DMIRS) to replace the year three appraisal well work commitment
with geological studies and seismic feasibility studies. A decision will be made in late 2021 whether to proceed into the
next permit year, with an associated work commitment to acquire 100 line kms of shallow marine 2D seismic data.
6
Figure 3: Exploration Permit TP/15
TP/15 JV Participants
Westranch Holdings Pty Ltd
3C Group
Triangle Xanadu Pty Ltd3
25%
30%
45%
(Operator)
3 Triangle Xanadu Pty Ltd is a wholly owned subsidiary of Triangle Energy Ltd
COVID-19
The impact of the COVID-19 pandemic upon the Company's operations has been limited due to the fact that there has
been only minor operational activity since the onset of the pandemic in Western Australia. During the reporting period
the Company implemented precautionary measures to protect its personnel, including the ability to work remotely
whenever necessary. Subsequent to the reporting period the Company experienced a slight delay and small additional
cost during the early stages of drilling the Lockyer Deep-1 gas prospect, due to COVID-19 related interstate border
restrictions and an associated effect upon crew scheduling.
7
Financial Review
Focus of the Business
Norwest Energy is focused on developing its exploration interests in the north Perth Basin, Western Australia. The Company
may seek to farm out project interests where appropriate in order to manage its capital, de-risk its exposure and facilitate
successful exploration and development.
Financial Results
The net loss of the Consolidated entity for the year ended 30 June 2021 of $445,255 was lower than the loss of the prior
year 2020 ($7,846,201). The main contributing factors were:
• No further significant impairment of the Company’s exploration permits; and
• Disposal of the Exploration Permit EP413 and write back of the associated Restoration Provision
Financial Position
At 30 June 2021, the Group had cash reserves of $3.5m (2020: $3.1m). At 30 June 2021, the Group had net assets of $4.6m
(2020: $3.1m) an increase of $1.5m from the previous year. These changes are largely attributable to the following:
Capital raising of approximately $2.0 million via a share placement;
Exploration expenditure on EP368 and EP426; and
•
•
• Receipt of approximately $174,000 under the R&D Tax Incentive Scheme.
Performance Indicators and Risk Management
Management and the Board regularly monitor the Group's overall performance by:
•
•
•
assessing whether exploration activity and expenditure is adding value to the asset portfolio;
analysis of financial budgets versus actual results; and
the Company’s share price.
The underlying drivers which contribute to the Company’s performance are directly controlled using a disciplined approach
to reducing the Group’s non-essential costs and allocating funds to those activities which will add to shareholder value. The
Company's share price may be influenced by factors outside the control of management and the Board, such as market
conditions and commodity prices.
The Board takes a pro-active approach to risk management and is responsible for ensuring that both risks and opportunities
are identified in a timely manner so that the Company's activities are focused on mitigating risks to the fullest extent
possible while taking maximum advantage of opportunities.
6. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the opinion of Directors there were no significant changes in the state of affairs of the Group that occurred during the
financial year.
7. SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Other than the events outlined in note 24 of the financial statements, at the date of this report, there are no matters or
circumstances which have arisen since 30 June 2021 that have significantly affected, or may significantly affect, the
operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.
8. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
There were no likely developments in the operations of the Group that were not finalised at the date of this report.
9. ENVIRONMENTAL AND HEALTH & SAFETY
Norwest Energy is subject to significant environmental regulation in respect of exploration activities within the permits
which it operates and is committed to undertaking all operational activities in an environmentally responsible manner. The
Directors believe that the Company has adequate systems in place for managing its environmental commitments and is not
aware of any breach under its obligations.
Similarly, Norwest Energy operates under strict health and safety guidelines and regulations, and regards the wellbeing of
its personnel, contractors, partners and all stakeholders as a priority. The Directors believe that the Company has adequate
systems in place for ensuring it maintains its excellent track record with regards to health and safety and note that during
the reporting period there were no lost-time injuries related to its operational activities.
8
10. CLIMATE RISK
Norwest Energy believes that a wide variety of energy sources will be required over the coming decades to meet global
energy demand while transitioning to a fully renewable energy economy. As a junior explorer primarily focused on
natural gas, we regard gas as a critical component of the ongoing transition, and the Board of Directors has identified
various climate-related risks to the business of Norwest Energy, as follows:
• Public perception towards the natural gas industry, including financial institutions and the investment community
• Demand for natural gas, both domestically and overseas
•
•
•
The potential for enhanced carbon pricing legislation
Increased shareholder activism
Increasing insurance costs
The Board is committed to:
•
•
Identifying, managing and mitigating material climate risks to the business
Ensuring that the company's practices and procedures integrate consideration of climate-related risks into
investment and project decision-making, and
• Constant monitoring of changes in climate policy.
We believe that the significance of natural gas as part of the global transition to sustainable energy presents
opportunities to the Company. Norwest Energy acknowledges the increasing interest of the community and the
Company's stakeholders regarding the possible risks and opportunities presented by climate change and the increasing
momentum towards a low carbon economy.
11. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Constitution of the Company requires the Company, to the extent permitted by law, to indemnify any person who has
been an officer of the Company or Group for any liability caused as such by an officer and any legal costs incurred in
defending an action for any liability. During or since the end of the financial year, no amounts have been paid by the
Company or Group in relation to the above indemnities. During the financial year, an annualised insurance premium was
paid to provide insurance cover for Directors and Officers against any potential liability and the associated legal expenses
of any proceeding.
12. DIVIDENDS
No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has
been made.
13. REMUNERATION REPORT - Audited
This Remuneration Report, which forms part of the Directors’ Report, outlines the remuneration of the Key Management
Personnel (“KMP”) of Norwest. For the purposes of this report, the KMP are the Directors and the Company Secretary.
Remuneration Policy
The Group’s remuneration policy for its KMP has been developed by taking into account the size of the management team
for the Group, the nature and stage of development of the current operations and market conditions and comparable salary
levels for companies of a similar size and operating in a similar sector.
In addition, the Board in determining the remuneration policy for KMP places emphasis on the following: the fact that the
Group is currently undertaking only exploration activities, the risks associated with undertaking these activities and (other
than profit from asset sales) the Company does not expect to achieve profitable operations until sometime in the future.
Executive Remuneration
The Group’s remuneration policy for its executive officers is to provide a fixed component and a performance-based
component (short- and long-term incentives). The Company aims to:
•
•
•
reward executives with a level and mix of remuneration commensurate with their position and responsibilities
within the Company.
align the interests of executives with those of shareholders and business objectives; and
ensure total remuneration is competitive by market standards.
9
Fixed remuneration is reviewed regularly by the Board. The process consists of a review of Company and individual
performance, comparative remuneration externally and, where appropriate, external advice on policies and practices. It
also takes into account any change to the scope of the role performed by the executive and any other relevant factors of
influence.
Employment Contracts with Executives
Mr Iain Smith, Managing Director – from 2nd April 2019
Mr Smith has a Services Agreement (“the agreement”) which specifies the duties and obligations to be fulfilled in his role.
As of 1 August 2020 Mr Smith, receives a fixed remuneration component of $300,000 per annum for the position of
Managing Director. The Company or the Managing Director may terminate the agreement by providing 6 months and 3
months’ notice respectively. The Company has implemented a Short-Term Incentive Plan and Mr Smith has been granted
Incentive Share Options, as approved by shareholders.
Ms Jo-Ann Long Chief Financial Officer and Company Secretary – from 15 September 2017
Ms Long provides the services of part time Chief Financial Officer and Company Secretary under a services agreement that
specifies the duties and obligations to be provided in her role. The contract may be terminated by either party by giving 14
days’ notice. Ms Long receives a retainer of $3,000 per month and an hourly rate for certain specialised duties.
Non-Executive Director Remuneration
The Board’s policy is for fees to Non-Executive Directors to be no greater than market rates for comparable companies for
time, commitment and responsibilities and seeks to set remuneration at a level which provides the Company with the ability
to attract and retain directors of the highest calibre, whist incurring a cost which is acceptable to shareholders. The Board
determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice,
duties and accountability. Independent external advice is sought when required.
The non-executive directors receive a fixed fee for their services. The maximum aggregate amount of fees that can be paid
to Non-Executive Directors is subject to approval by shareholders at a General Meeting (this is currently $400,000 per
annum). Fees for Non-Executive Directors are not linked to the performance of the Group. However, to align Directors’
interests with shareholder interests, the Directors are encouraged to hold shares in the Company and given the current
size, nature and opportunities of the Company, Non-Executive Directors may receive Incentive Options subject to
shareholder approval.
Fees for the Chairman are presently $48,000 per annum (2020: $48,000) and fees for Non-Executive Directors are presently
set at $36,000 per annum (2020: $36,000). These fees cover main board activities and Non-Executive Directors may receive
additional remuneration for other services provided to the Company, including but not limited to, membership of
committees.
10
Emoluments of Directors and Other KMP
Short term
Salary
& Fees
Post-
Employment
Superannuation
Short Term
Incentive
Payment
Share-based
Payments
Options
$
$
$
Total
$
Performance
related
%
296,000
276,000
-
-
25,000
-
60,000
60,000
381,000
336,000
48,000
43,000
-
22,500
32,877
17,764
114,825
163,224
491,702
522,488
-
-
-
-
10,000
10,000
-
-
3,123
1,688
-
3,123
1,688
-
-
-
-
10,000
10,000
10,000
10,000
95,000
90,000
58,000
53,000
-
22,500
46,000
29,452
124,825
173,224
609,825
614,176
15.75
17.24
21.74
8.01
Directors
Iain Smith
2021
2020
Ernest Myers
2021
2020
Henry D Kennedy (1)
2021
2020
Bruce Clement (2)
2021
2020
Other KMP
Jo-Ann Long
2021
2020
TOTAL 2021
TOTAL 2020
(1) Mr Kennedy resigned as a Director on 31st March 2020. (2) Mr Clement was appointed as a Director on 18 December 2019.
Options and rights granted to KMP
During the financial year ended 30 June 2021 the Company did not grant any options over unissued ordinary shares, (30 June
2020: 135,000,000) in the Company to directors and executives as part of their remuneration.
Details of the values of options granted, exercised or lapsed for each KMP of the Group during the past two financial years
are as follows:
Value of Options
granted (A)
$
Value of Options
exercised (B)
$
Value of Options
lapsed (C)
$
Value of vested
Options included
in remuneration
report
$
Remuneration
that consists of
Options
%
2021
Iain Smith
Ernest Myers
Bruce Clement
Jo-Ann Long
2020
Iain Smith
Ernest Myers
Bruce Clement
Jo-Ann Long
-
-
-
-
150,000
25,000
25,000
50,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60,000
10,000
10,000
10,000
60,000
10,000
10,000
10,000
15.75
17.24
21.74
8.01
17.85
18.86
33.95
5.77
A. The value of options granted is the fair value of the options calculated at grant date using an appropriate option pricing
model.
B. The value of options exercised during the year (if any) is calculated as the market price of the shares of the Company on
the ASX at the close of trading on the date the options were exercised after deducting the price paid to exercise the option.
C. The value of options that lapsed during the year (if any) represents the benefit forgone and is calculated at the date of
option issue using option pricing model.
For details on the valuation of the options, including models and assumptions used, please refer to Note 17 to the financial
statements.
11
Option holdings of Key Management Personnel
2021
Iain Smith
Ernest Myers
Bruce Clement
Jo-Ann Long
2020
Iain Smith
Ernest Myers
Bruce Clement
David Kennedy
Jo-Ann Long
Held at 1 July
32,142,857
7,142,857
5,000,000
6,428,572
Held at 1 July
-
-
-
-
-
Granted as
Remuneration
Exercised
Vested during the
year
Vested and
exercisable at 30 June
-
-
-
-
Granted as
Remuneratio
90,000,000
15,000,000
15,000,000
-
15,000,000
-
-
-
-
Exercised
-
-
-
-
-
30,000,000
5,000,000
5,000,000
5,000,000
Net Other
Change(1)
2,142,857
2,142,857
-
4,300,000
1,428,572
62,142,857
12,142,857
10,000,000
11,428,572
Vested and
exercisable at 30 June
32,142,857
7,142,857
5,000,000
4,300,000
6,428,572
Note (1): Listed options issued as a result of management participation in the share placement dated 19th November 2019
Shareholdings of Key Management Personnel
Held at 1 July
Purchases
Sales
Net Other Change
Held at 30 June
2021
Iain Smith
Ernest Myers
Bruce Clement
Jo-Ann Long
2020
Iain Smith
Ernest Myers
David Kennedy
Jo-Ann Long
4,285,715
4,285,715
-
2,857,144
-
-
-
-
-
-
197,650,380
-
4,285,715
4,285,715
114,400,000
2,857,144
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(30,156,250)
-
4,285,715
4,285,715
-
2,857,144
4,285,715
4,285,715
281,894,130
2,857,144
No loans were provided to or received from Key Management Personnel during the year ended 30 June 2021 (2020:
$1,000,000).
Other Transactions with KMP
Nil.
End of Remuneration Report.
12
14. SHARE OPTIONS
At 30 June 2021 unissued ordinary shares under options were:
Expiry date (Options Listed)
24 Jan 2022
Total outstanding as at 30 June 2021
Expiry date (Options Unlisted)
30 June 2024
30 June 2024
30 June 2025
30 June 2025
30 June 2026
30 June 2026
Total outstanding as at 30 June 2021
Exercise price
$0.006
Exercise price
$0.0089
$0.0107
$0.0089
$0.0107
$0.0089
$0.0107
Number of options
726,187,131
726,187,131
Number of options
42,000,000
10,000,000
42,000,000
10,000,000
42,000,000
10,000,000
156,000,000
15. DIRECTORS’ MEETINGS
The number of Board meetings held during the year and the number of meetings attended by each Director was as follows:
Mr Ernest Anthony Myers (Non-Executive Chairman)
Mr Iain Smith
Mr Bruce Clement
(Managing Director)
(Non-Executive Director)
Number eligible to
attend
4
4
4
Number attended
4
4
4
In addition to formal Board meetings, the Directors are in continual communication with regards to the Company's activities
and strategy. As such, various matters are resolved via Circular Resolutions of the Board of Directors. During the reporting
period two such circular resolutions were approved.
Committee membership
As at the date of this report, the Company did not have any formal committees.
16. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 14 and forms part of the Directors’ Report for the year ended 30
June 2021.
17. NON-AUDIT SERVICES
The Company’s auditor, Rothsay Auditing did not provide any non-audit services during the year (2020: nil).
Dated this 23rd Day of September 2021 in accordance with a resolution of the Directors and signed for and on behalf of the
Board by Mr Ernest Anthony Myers
Signed
Ernest Anthony Myers
Non-Executive Director and Chairman
13
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001
As lead auditor of the audit of Norwest Energy NL for the year ended 30 June 2021, I declare that,
to the best of my knowledge and belief, there have been:
• no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
• no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Norwest Energy NL and the entities it controlled during the year.
Rothsay Auditing
Donovan Odendaal
Partner
23 September 2021
Liability limited by a scheme approved under Professional Standards Legislation
Corporate Governance Statement
This Corporate Governance Statement has been prepared on the basis of disclosure under the 3rd Edition of the ASX
Corporate Governance Council's Corporate Governance Principles and Recommendations (“ASX Principles and
Recommendations”).
The Company has followed each recommendation where the Board has considered the recommendation to be an
appropriate benchmark for corporate governance practices, taking into account factors such as the size of the Company and
the Board, resources available and activities of the Company. Where, after due consideration, the Company's corporate
governance practices depart from the ASX Principles and Recommendations, the Board has offered full disclosure of the
nature of and reason for the departure.
The Company's website (www.norwestenergy.com.au) contains a corporate governance section that includes copies of the
Company’s corporate governance policies and practices mentioned in this statement.
Recommendation
Principle 1 – Lay solid foundations for management and oversight
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Disclose the respective roles and responsibilities of the Board and management and disclose those
matters expressly reserved to the Board and those delegated to management.
Undertake appropriate checks before appointing a Director or putting forward for their election and
provide security holders with all material information in its possession relevant to their election or
re-election as a director.
Written agreement with each director and senior executive setting out the terms of their
appointment.
The Company Secretary should be accountable to the Board through the Chair, on all matters to do
with the proper functioning of the Board.
Have a diversity policy with the measurable objectives for achieving gender diversity and to assess
annually both the objectives and the entity's progress in achieving them. The proportion of men and
woman on the Board, Senior Management and the whole organisation should be disclosed.
Disclose a process for periodically evaluating the performance of the Board, its committees and
individual directors and disclose whether a performance evaluation was undertaken during the
reporting period.
Disclose a process for periodically evaluating the performance of the senior executives and disclose
in relation to each reporting period whether an evaluation took place during the reporting period.
Principle 2 – Structure the Board to add value
2.1
2.2
2.3
2.4
2.5
2.6
If the entity does not have a Nomination Committee disclose that fact and the processes it employs
to address board succession issues and to ensure the Board has the correct mix of directors to enable
it to discharge its duties and responsibilities effectively.
Disclose a Board skills matrix setting out the mix of skills and diversity that the Board has or would
like to achieve.
Disclose the names of the independent Directors, along with the length of service of each director.
A majority of the Board should be independent.
The Chair of a Board should be an independent director and should not be the same person as the
Managing Director.
Have a program for inducting new directors and provide appropriate professional development
opportunities for directors to develop and maintain the skills and knowledge needed to perform their
role as directors effectively.
Principle 3 – Act ethically and responsibly
3.1
Establish a code of conduct for its directors, senior executives and employees.
Comply
Yes/No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
15
Principle 4 – Safeguard integrity in corporate reporting
4.1
4.2
4.3
If the entity does not have an Audit Committee disclose that fact and the processes it employs that
independently safeguard the integrity of its corporate reporting, including the processes for the
appointment and removal of the external auditor and the rotation of the audit engagement partner.
Before the Board approves its’ financial statements, it should receive from its CFO and Managing
Director a declaration that in their opinion the financial records have been maintained properly and
that the financial records comply with the appropriate accounting standards and the opinion has been
formed on the basis of a sound system of risk management and internal control.
Ensure that its external auditor attends its AGM and is able to answer questions from security holders
relevant to the audit.
Yes
Yes
Yes
Principle 5 – Make timely and balanced disclosure
5.1
The entity should have a written policy for complying with its continuous disclosure obligations under
the Listing Rules.
Yes
Principle 6 – Respect the rights of the shareholders
6.1
6.2
6.3
6.4
6.5
Provide information about the entity and its governance to investors via its website.
Design and implement an investor relations program to facilitate effective two-way communication.
Disclose the policies and processes to facilitate and encourage participation at meetings of
shareholders.
Ensure all substantive resolutions at a meeting of security holders are decided by a poll rather than
by a show of hands.
Give shareholders the option to receive and send communications to the entity and it share registry
electronically.
Principle 7 – Recognise and manage risk
7.1
7.2
7.3
7.4
If the entity does not have a Risk Committee disclose that fact and the processes it employs for
overseeing the entity’s risk management framework.
The Board should review the entity's risk management framework at least annually to satisfy itself
that it continues to be sound and disclose when the review is undertaken.
If the entity does not have an internal audit function, disclose that fact and the processes it employs
for evaluating and improving the effectiveness of its risk management and internal control processes.
Disclose whether it has any material exposure to economic, environmental, and social sustainability
risks and if it does, how it manages or intends to manage those risks.
Principle 8 – Remunerate fairly and responsibly
8.1
8.2
8.3
If the entity does not have a Remuneration Committee disclose that fact and the processes it employs
for setting the level and composition of remuneration for directors and senior management and
ensuring that such remuneration is appropriate.
Separately disclose its policies and practices regarding the remuneration of non-executive directors,
executive directors, and other senior executives.
If the entity has an equity-based remuneration scheme, it should have a policy on whether
participants are permitted to enter into derivative or other transactions to limit their risk.
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
16
Further information required and non-compliance explanations
Recommendation 1. 5 - Diversity Policy with measurable objectives
The Company’s primary objectives with regard to diversity are as follows:
•
•
the Company’s composition of the Board, executive, management and employees to be as diverse as practicable;
and
to provide equal opportunities for all positions within the Company and continue the Company’s commitment
to employment based on merit.
The measurable objectives set by the Company with regard to diversity have been met, as described below:
•
•
•
blend of skills – wide range of backgrounds; geology, engineering, finance and corporate experience;
gender – both male and female members; and
age – the age range spans over 25 years.
The above points relate to the composition of the Board and full-time employees.
The Company’s annual reporting on the percentage of females in the organisation is as follows:
Full Time Employees
Executive Employees & Board Members
Recommendation 1.6 and 1.7 – Performance evaluation
% Female
2021
50%
25%
2020
50%
25%
During the year an evaluation of the Board and its individual directors was not carried out. The Board and management’s
suitability, overall structure and composition to carry out the Company's objectives is however, discussed and reviewed on
an as-required basis.
Performance evaluation of the Managing Director, senior executives and employees is undertaken annually through a
performance appraisal process which involves reviewing and assessment of performance against agreed corporate, industry
and individual key performance indicators.
Recommendation 2.1 – Nomination Committee
The Board does not have a separate Nomination Committee, rather the full Board considers those matters that would usually
be the responsibility of a Nomination Committee. Given the size and composition of the Board, it is not practicable for a
separate committee to be formed.
To assist it in carrying out its function in relation to nomination matters, the Board has adopted a Nomination Committee
Charter which includes the following responsibilities:
-
-
-
-
board succession planning;
performance evaluation of the Board and individual directors;
director induction and professional development; and
appointment and re-election of directors.
Recommendation 2.2 – Board skills matrix – composition of the Board
The names of the Directors of the Company in office at the date of this statement and information regarding Director’s skills,
experience and expertise are set out in the Directors’ Report. The Company seeks to maintain a Board which brings together
a diverse range of skills, experience, and perspectives to support the strategic direction of the Company and enable effective
management oversight and governance.
17
The below is the preferred combination of capabilities, skills and experience for the Board:
-
-
-
-
-
-
-
-
technical disciplines of upstream oil and gas exploration, development and production;
finance, taxation, treasury and accounting;
company strategy and business planning;
risk and governance knowledge;
business growth and corporate development;
corporate social responsibility including sustainability and community stakeholder;
local and international experience; and
ASX listed public company administration.
Each of these skills are currently represented on the Board and the Board considers that collectively it has the appropriate
range of skills and experience to direct the Company.
Recommendation 2.3– Name of independent Directors and length of service of each Director
In considering the independence of a director, the “Factors relevant to assessing the independence of a director” in Box 2.3
of the ASX Principles and Recommendations ("Independence Criteria") have been applied.
Recommendation 2.4 – Majority of the Board should be independent
As at 30 June 2021, Ernest Myers and Bruce Clement are considered to be independent.
Given the size and scope of the Company's operations the Board considers that it is appropriately structured to discharge its
duties in a manner that is in the best interests of the Company. Further, mechanisms are in place so that if a director considers
it necessary, they may obtain independent professional advice.
Recommendation 4.1 – Audit Committee
The Board does not have a separate Audit Committee, rather the full board fulfils the function of an audit committee and
therefore no separate audit committee has been formed in accordance with the compositional recommendation. Given the
size and composition of the Board, it is not practicable that a separate audit committee be formed.
To assist it in carrying out its function in relation to audit matters, the Company has adopted an Audit Committee Charter to
assist it to fulfil its role as the Audit Committee, which includes the following responsibilities:
- monitor and review the integrity of the financial reporting of the Company;
-
- monitor, review and oversee the external audit function including matters concerning appointment,
review the Company’s internal financial control system; and
remuneration, independence and non-audit services.
The Charter provides that independent directors may meet with the external auditor.
Recommendation 7.1 – Risk Committee
The Company believes that it is crucial for all Board members to be a part of overseeing the risk management process, and
as such the Board has not established a separate committee to oversee risk. This along with the size and composition of the
Board has meant that the full Board fulfils the function of a risk committee. The Board is responsible for reviewing the
Company’s policies on risk oversight and management and satisfying itself that management has developed a sound system
of risk management and internal control.
Recommendation 7.2 – Risk Management Framework review
The Company takes a proactive approach to risk management. The Board is responsible for ensuring that risks and
opportunities are identified on a timely basis and that the Company’s objectives and activities are aligned with the risks and
opportunities identified by the Board. The Company has a risk management policy in place.
18
The Board is ultimately responsible for risk management, however, implementation of the risk management system and day
to day management of risk is the responsibility of the Managing Director, with the assistance of senior management.
Management reports to the Board annually, or more frequently as required, on the Company’s key risks and the extent to
which it believes these risks are being managed.
The Board has a number of active mechanisms in place to ensure that management's objectives and activities are aligned
with the business risks identified. These include the following:
•
Implementation of approved operating plans and cash flow forecasts and Board monitoring of progress against
these plans and forecasts;
• Management reporting on specific business risks, including matters such as environmental issues and occupational
•
health and safety concerns.
The Company has advised each director, manager and employee that they must comply with a set of ethical
standards maintaining appropriate core company values and objectives. Such standards ensure shareholder value
is maintained and developed. Standards cover legal compliance, conflict resolution, employment best practices,
privileged information and fair dealing.
Recommendation 7.3 – Internal Audit function or process for reviewing internal controls
The Company does not have a dedicated internal audit function, however strong internal control policies and procedures are
in place to effectively manage potential risks and detect any control breakdowns. These are reviewed (and if necessary
improved) on an annual basis, as well as when any new risks are identified, or changes occur in the business or industry.
The processes for the review are as follows:
-
External auditors independently evaluating the Company’s internal control environment and its compliance with
the International Financial Reporting Standards on an annual basis;
- Ongoing oversight of strategic matters by executive management and of operational matters ensuring that risks
identified are assessed and proactively managed;
- Written internal control assurance from the Managing Director and CFO prior to sign off of financial statements
by the Board; and
- Monthly reporting and review of financial and budgetary information.
Recommendation 7.4 – Material exposure to economic, environmental and social sustainability risks
The Company has identified a series of business risks (economic, environmental and social sustainability risks) which the
Group believes to be inherent in the industry.
Economic risks
-
Ability to gain additional funding or a farm-out partner
The Company is not in production as yet and the development of its permits will require substantial additional financing.
Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration and any development
or a loss of equity in permits and licences. However, the Board is experienced in capital markets and financing resource
projects as well as having an extensive reach for potential farm-in partners.
There are various other economic risks including commodity risk, exchange rate risk and market risk (these risks are examined
in Note 7).
Environmental and social sustainability risks
-
Impact on the environment and community from Company activities
The Board and management are committed to developing and building a sustainable business, ensuring the Company is an
active and responsible member of the communities in which we operate. Corporate environmental policies and procedures
are in place and communicated to and adhered to by all employees.
External impact-assessment surveys and audits are conducted using third-party consultants who are specialists in their field.
- Native title risk in relation to claims over the permits held by the Company
Norwest works closely with the respective parties associated with any claim to come to a mutually beneficial agreement.
19
Recommendation 8.1 – Remuneration Committee
The Board does not have a separate Remuneration Committee, rather the non-executive directors fulfil the function of a
remuneration committee and therefore no remuneration committee has been formed in accordance with the compositional
recommendation. Given the size and composition of the Board, it is not practicable that a separate remuneration committee
be formed.
To assist it in carrying out its function in relation to remuneration matters, the Company has adopted a Remuneration
Committee Charter to assist it to fulfil its role as the Remuneration Committee, which states the function of the committee
is to assist the Board in fulfilling its corporate governance responsibilities with respect to remuneration by reviewing and
making appropriate recommendations on:
-
-
Remuneration packages of directors and senior executives; and
Employee incentive and equity-based plans.
Recommendation 8.2 – Remuneration policies and practices
The Company’s remuneration policy has been developed by taking into account the size of the management team, the nature
and stage of development of the current operations and market conditions and comparable salary levels for companies of a
similar size and operating in a similar sector.
For details of the Company’s policies and practices regarding the remuneration of directors and senior executives refer to
the Remuneration Committee Charter on the Company’s website as well as the Remuneration Report included within the
Directors’ Report which includes the remuneration paid to Key Management Personnel and other relevant information.
Recommendation 8.3 – Transactions to limit exposure to economic risk from participating in equity-based remuneration
schemes
The Company prohibits executives entering into arrangements to limit their exposure to Incentive Options granted as part
of their remuneration package.
20
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
NORWEST ENERGY NL
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Norwest Energy NL (“the Company”) and its controlled entity (“the
Group”) which comprises the statement of financial position as at 30 June 2021, the statement of profit or
loss and other comprehensive income, the statement of changes in equity and the statement of cash flows
for the year then ended on that date and notes to the financial statements, including a summary of
significant accounting policies and the directors’ declaration of the Company.
In our opinion the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under these
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report
section of this report. We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the “Code”) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
NORWEST ENERGY NL (continued)
Key Audit Matter – Cash and Cash Equivalents
How our Audit Addressed the Key Audit Matter
The Group’s cash and cash equivalents make up 68%
of total assets by value and are considered to be the
key driver of the Group’s operations.
Our procedures over the existence of the Group’s
cash and cash equivalents included but were not
limited to:
We do not consider cash and cash equivalents to be
at a high risk of significant misstatement or to be
subject to a significant level of judgement.
However due to their materiality in the context of
the financial statements as a whole, they are
considered to be the area which had an effect on
our overall strategy and allocation of resources in
planning and completing our audit.
Key Audit Matter – Exploration and evaluation
expenditure
•
•
•
Documenting and assessing the processes and
controls in place to record cash transactions;
Testing a sample of cash payments to
determine they were bona fide payments,
were properly authorised and recorded in the
general ledger; and
Agreeing balances to independent
confirmations.
We have also assessed the appropriateness of the
disclosures included in the financial report.
How our Audit Addressed the Key Audit Matter
The Group has capitalised a significant amount of
exploration and evaluation expenditure during the
year.
Our procedures
in assessing exploration and
evaluation expenditure included but were not limited
to the following:
We do not consider exploration and evaluation
expenditure to be at a high risk of significant
misstatement, or to be subject to a significant level
of judgement.
• We assessed exploration and evaluation
expenditure with reference to AASB 6
Exploration for and Evaluation of Mineral
Resources.
However due to the materiality in the context of the
financial statements as a whole, this is considered to
be an area which had an effect on our overall
strategy and allocation of resources in planning and
completing our audit.
• We tested a sample of exploration and
evaluation
supporting
expenditure
documentation to ensure they were bona
fide payments; and
to
• We documented and assessed the processes
and controls in place to record exploration
and evaluation transactions.
We have also assessed the appropriateness of the
disclosures included in the financial report.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
NORWEST ENERGY NL (continued)
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2021, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Directors’ Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with the Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or cease operations,
or have no realistic alternative but to do so.
Auditor’s Responsibility for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: www.auasb.gov.au/Home.aspx.
We communicate with the directors regarding, amongst other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
NORWEST ENERGY NL (continued)
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe those matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communications.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June 2021.
In our opinion the remuneration report of Norwest Energy NL for the year ended 30 June 2021 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Rothsay Auditing
Dated 23 September 2021
Donovan Odendaal
Partner
Directors’ Declaration
The Directors of the Company declare that, in the opinion of the Directors:
(a)
The attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the financial position and performance of the consolidated entity; and
(ii) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements.
The financial statements and notes thereto also comply with International Financial Reporting Standards, as disclosed
in Note 1 and other mandatory professional reporting requirements.
The Directors have been given the declarations required by s.295A of the Corporations Act 2001.
There are reasonable grounds to believe that Norwest Energy NL will be able to pay its debts as and when they become
due and payable.
(b)
(c)
(d)
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.
Dated in Perth on this 23rd Day of September 2021.
Signed
Ernest Anthony Myers
Non-Executive Director and Chairman
25
Statement of Profit or Loss and Other Comprehensive
Income for the year ended 30 June 2021
Note
Consolidated Entity
2021
$
2020
$
Continuing Operations
Interest income
Oil Sales
Other Income
Depreciation
Audit fees
Legal expense
Exploration expense and Exploration write off
Operating costs to P & L
Provision for Restoration
Employee, consulting, and administration expenses
2
2
2
21
10
10
14
691
-
577,784
1,237
2,537
1,174,388
578,475
1,178,162
(81,329)
(41,000)
(999)
(26,369)
-
(77,248)
(49,500)
(18,810)
(6,895,952)
(255,265)
(275,000)
(1,452,588)
263,820
(1,137,853)
(Loss) from continuing operations before income tax
(445,255)
(7,846,201)
Income tax benefit
4
-
-
(Loss) from continuing operations for the year
(445,255)
(7,846,201)
Other Comprehensive Income
Exchange differences on translation of foreign operations
Net change in fair value of available for sale financial assets transferred to
profit and loss
-
-
-
-
Total Comprehensive (Loss) attributable to Members of Norwest Energy NL
(445,255)
(7,846,201)
Profit/(Loss) per share attributable to the ordinary equity holders of the
company:
Basic and diluted earnings/(loss) per share (Cents)
5
(0.01)
(0.19)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
26
Statement of Financial Position
as at 30 June 2021
Current Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total Current Assets
Non-Current Assets
Property, plant, and equipment
Exploration and evaluation expenditure
Other Assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provision for Annual Leave
Provision for Long Service Leave
Other Liabilities
Total Current Liabilities
Non-Current Liabilities
Provision for Long Service Leave
Provision for Restoration
Other Liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
Note
Consolidated Entity
2021
$
2020
$
6
8
9
10
11
12
13
14
13
3,524,952
204,161
-
3,729,113
3,054,835
30,697
-
3,085,532
2,008
1,394,382
81,188
1,477,578
6,422
408,677
158,103
573,202
5,206,691
3,658,734
499,863
7,134
13,287
91,440
611,724
-
11,180
-
11,180
77,523
5,037
-
78,219
160,779
11,259
275,000
84,523
370,782
622,904
531,561
4,583,785
3,127,173
15(a)
16
16
65,822,236
320,000
(61,558,451)
4,583,785
63,920,369
320,000
(61,113,196)
3,127,173
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
27
Statement of Changes in Equity
for the year ended 30 June 2021
Consolidated Entity
Balance at 1 July 2020
Comprehensive income for the year
Contributed
Equity
$
Share-Based
Payment
Reserve
$
Accumulated
Losses
$
Total Equity
$
63,920,369
320,000
(61,113,196)
3,127,173
Profit/(Loss) for the year
-
-
(445,255)
(479,075)
Total Comprehensive Income for the Year 63,920,369
320,000
(61,558,451)
2,648,098
Transactions with owners in their capacity
as owners:
Share issue (net of costs)
1,901,867
-
-
1,901,867
Balance at 30 June 2021
65,822,236
320,000
(61,558,451)
4,549,65
Balance at 1 July 2019
Comprehensive income for the year
59,645,137
10,400
(53,266,995)
6,388,542
Profit/(Loss) for the year
-
(7,846,201)
(7,846,201)
Total Comprehensive Income for the Year 59,645,137
10,400
61,113,196
(1,457,659)
Transactions with owners in their capacity
as owners:
Share issue (net of costs)
4,275,232
-
Share options expired/exercised (1)
Share based payments expense
-
-
(10,400)
320,000
-
-
4,275,232
(10,400)
320,000
Balance at 30 June 2020
63,920,369
320,000
(61,113,196)
3,127,173
(1)
During the year options valued at $10,400 expired.
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
28
Statement of Cash Flows
for the year ended 30 June 2021
Cash Flows from Operating Activities
Payments to suppliers and employees
Oil Sales
Joint Venture Operator Management fees
R&D Incentive Grant
Recoveries and Government Grants
Interest received
Net Cash Used In Operating Activities
Cash Flows from Investing Activities
Payments for property, plant, and equipment
Proceeds from sale of Production Assets
Payments for exploration and evaluation expenditure
Net Cash Used In Investing Activities
Cash Flows from Financing Activities
Proceeds from share issue
Share issue costs
Proceeds from Convertible Note
Repayment of convertible Note
Net Cash Provided by Financing Activities
Net Increase/ (Decrease) in Cash Held
Note
Consolidated Entity
2021
$
2020
$
(1,208,227)
-
81,702
174,278
237,789
691
6(b)
(713,767)
(1,394,774)
2,537
119,354
192,504
162,587
1,238
(916,554)
100
-
(704,885)
(704,775)
227
700,000
(807,320)
(107,093)
2,033,858
(145,190)
-
-
1,888,668
4,383,310
(358,078)
250,000
(750,000)
3,525,232
470,117
2,501,585
Cash and Cash Equivalent at the Beginning of the Financial Year
Effects of exchange rate changes on cash held
Cash and Cash Equivalents at 30 June
3,054,835
-
3,524,952
553,250
-
3,054,835
6(a)
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
29
Notes to the Financial Statements
ABOUT THIS FINANCIAL REPORT
1
Reporting Entity
This financial report of Norwest Energy NL (‘the Company’) for the year ended 30 June 2021 comprises the Company and its
subsidiary (collectively referred to as ‘the consolidated entity’ or ‘Group’). Norwest Energy NL is a company limited by shares
incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange.
The notes to the financial statements are organised into the following sections:
(a) Key Performance: Provides a breakdown of the key individual line items in the statement of comprehensive income
that is most relevant to understanding performance and shareholder returns for the year:
Notes
2
3
4
5
Revenue from continuing operations
Segment information
Income tax expense
Profit/(Loss) per share
(b) Financial Risk Management: Provides information about the Consolidated Entity’s exposure and management of
various financial risks and explains how these affect the Consolidated Entity’s financial position and performance:
Notes
6
7
Cash and cash equivalents
Financial risk management
(c) Other Assets and Liabilities: Provides information on other balance sheet assets and liabilities that do not materially
affect performance or give rise to material financial risk:
Notes
Trade and other receivables
8
9
Property, plant, and equipment
10 Exploration and evaluation expenditure
11 Other assets
12 Trade & other payables
13 Other liabilities
14 Provision for restoration
(d) Capital Structure: This section outlines how the Consolidated Entity manages its capital structure and related
financing costs (where applicable), as well as capital adequacy and reserves. It also provides details on the dividends
paid by the Company:
Notes
15 Contributed equity
16 Reserves and accumulated Losses
17 Share-based payments
(e) Consolidated Entity Structure: Provides details and disclosures relating to the parent entity of the Consolidated
Entity, controlled entities, investments in associates and any acquisitions and/or disposals of businesses in the year.
Disclosure on related parties is also provided in the section:
Notes
18 Parent entity information
19
20 Key management personnel disclosures & related party transactions
Investment in controlled entities
(f) Other: Provides information on items which require disclosure to comply with Australian Accounting Standards and
other regulatory pronouncements, however, are not considered significant in understanding the financial
performance or position of the Consolidated Entity:
Notes
21 Remuneration of auditors
22 Commitments for expenditure
23 Contingencies
24 Events occurring after reporting date
30
Basis of Preparation
1a
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations, and the
Corporations Act 2001. Norwest Energy NL is a for-profit entity for the purposes of preparing the financial statements.
Compliance with IFRSs
The financial statements of Norwest Energy NL also comply with International Financial Reporting Standards (IFRSs) as issued
by the International Accounting Standards Board (IASB).
New Accounting standards and interpretations
Standards and Interpretations applicable to 30 June 2021
In the year ended 30 June 2021, the Directors have reviewed all of the new and revised Standards and Interpretations issued
by the AASB that are relevant to the Company and effective for the current annual reporting period. As a result of this review,
the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the
Company and, therefore, no material change is necessary to Group accounting policies.
Standards and Interpretations in issue not yet adopted
The Directors have also reviewed all Standards and Interpretations in issue not yet adopted for the year ended 30 June 2021.
As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations
in issue not yet adopted on the Company and, therefore, no change is necessary to Group accounting policies.
Principles of Consolidation
1b
The consolidated financial statements incorporate the assets and liabilities of the Company as at 30 June 2021 and the results
of its subsidiaries for the year then ended. The Company and its subsidiaries are referred to in this financial report as Reward
or the Consolidated Entity.
All inter-company balances and transactions between entities in the Consolidated Entity, including any unrealised profits or
losses, have been eliminated on consolidation.
GST
1c
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated as inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Statement of
Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.
REVENUE FROM CONTINUING OPERATIONS
2
Interest income
Oil sales
JV Operator fees and other recoveries
Proceeds of Sale of Exploration Asset
Proceeds of Sale of Production Asset
Research and development tax rebate received
2021
$
2020
$
691
-
303,506
100,000
1,237
2,537
281,884
-
-
700,000
174,278
578,475
192,504
1,178,162
31
3
SEGMENT INFORMATION
The Group has adopted AASB 8 Operating Segments which requires operating segments to be identified on the basis of
internal reports of the Group that are reviewed by the chief operating decision-maker in order to allocate resources to
the segment and to assess its performance.
The Board of Norwest reviews internal reports prepared as Consolidated financial statements and strategic decisions of
the Group are determined upon analysis of these internal reports. During the period the Group operated in one business
segment, being the oil and gas sector. Accordingly, under the management approach outlined only one operating sector
has been identified and no further disclosures are required in the notes to the Consolidated financial statements.
4
INCOME TAX EXPENSE
(a)
The major components of income tax expense are
Income statement
Current income tax:
Current income tax benefit
Deferred income tax:
Relating to origination and reversal of temporary differences
Unused tax losses not recognised as a DTA
Income tax (expense)/income reported in the income statement
2021
$
2020
$
512,972
419,180
(344,641)
(168,331)
1,636,286
(2,055,466)
-
-
The aggregate amount of income tax attributable to the financial period differs from the amount calculated on the
operating loss.
The differences are recorded as follows:
Accounting loss
Prima facie tax payable at 26% (2020:27.5%)
Non-deductible expenses
Add tax effect of items not brought to account:
Non-deductible and non-assessable permanent items
Tax losses not brought to account
2021
$
(445,255)
(115,766)
324
2020
$
(7,846,201)
(2,157,705)
(52,889)
168,331
-
102,239
2,055,466
-
32
(b) Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Tax effect of exploration expenses
Tax effect of other
Set-off against carry forward losses
Deferred tax liability balance
Deferred tax assets
Tax value of carry forward losses
Set off against deferred tax liability
Deferred tax assets – temporary differences
Non-recognition of deferred tax asset
Deferred tax asset balance
(c) Tax losses
Deferred tax assets
Tax losses – revenue
Tax losses – capital
2021
$
2020
$
362,539
23,991
(386,530)
-
112,386
43,478
(155,864)
-
11,847,579
(386,529)
125,568
(11,586,617)
-
12,080,191
(155,864)
154,034
(12,078,361)
-
10,006,026
1,841,553
11,847,579
10,132,394
1,947,797
12,080,191
At 30 June 2021, the Consolidated entity has $45,567,612 (2020: $43,927,968) of tax losses that are available indefinitely for
offset against future taxable profits of the Company. A net deferred tax asset balance has not been recognised on the
Statement of Financial Position in respect of the amount of these losses.
The recognition and utilisation of losses is subject to the loss recoupment rules being satisfied. The potential deferred tax
asset will only be obtained if:
- assessable income is derived of a nature and of amount sufficient to enable the benefit from the deductions to be realised
or the benefit can be utilised by the Company and/or the Consolidated entity providing that;
- the conditions for deductibility imposed by the law are complied with; and
- no changes in tax legislation adversely affect the realisation of the benefit from the deductions.
(d) Tax consolidation legislation
The Company had not elected to consolidate for tax purposes at balance date.
PROFIT/(LOSS) PER SHARE
5
Basic loss per share
The profit/(loss) for the year and the weighted average number of ordinary
shares used in the calculation of basic loss per share are as follows:
Loss for the year after income tax
2021
Cents Per Share
(0.01)
2020
Cents Per Share
(0.19)
2021
$
2020
$
(445,255)
(7,846,201)
2021
No.
2020
No.
Weighted average number of ordinary shares for the purposes of basic
earnings per share
4,834,127,428
4,097,914,388
33
6
CASH AND CASH EQUIVALENTS
Reconciliation of Cash
6a
For the purposes of the Statements of Cash Flows, cash includes cash on hand and in
banks. Cash at the end of the financial year as shown in the Statement of Cash Flows is
reconciled to the related items in the Statement of Financial Position as follows:
Cash and short-term deposits
3,524,952
3,054,835
2021
$
2020
$
6b
Reconciliation of Net Cash used In Operating Activities to Operating
Profit/(Loss) after Income Tax
Profit/(Loss) for the year
Depreciation
Exploration costs expensed included in investing activities
Equity settled share-based payment
Rental adjustment for right of use asset
Interest Lease Liability Office
Accrued expenditure
Profit/(Loss) on Sale of Investment
Production Expenditure
Change in assets and liabilities during the financial year:
Trade and other receivables
Investments and assets
Provisions
Borrowings
Trade and other payables
(445,255)
81,329
26,369
-
(84,549)
13,248
(294,089)
-
-
(173,463)
-
(259,697)
-
422,340
(7,846,201)
77,248
6,895,952
309,600
(71,253)
(700,000)
255,265
48,792
58
276,677
-
(162,692)
Net cash inflow/(outflow) from operating activities
(713,767)
(916,554)
7
FINANCIAL RISK MANAGEMENT
The consolidated entity's activities expose it to a variety of financial risks: market risk, credit risk, liquidity risk and cash flow
interest rate risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity.
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting
policies to these financial statements, are as follows:
Financial Assets
Cash and cash equivalents
Loans and receivables
Total Financial Assets
Financial Liabilities
Financial liabilities at amortised cost
Trade and other payables
Note
2021
$
2020
$
6a
8
3,524,952
204,161
3,054,835
30,697
3,729,311
3,085,532
12
499,863
77,523
Total Financial Liabilities
499,863
77,523
Risk management is carried out by the Board of Directors, who identify, evaluate and manage financial risks as they consider
appropriate.
34
7a Market Risk
(i)
Cash Flow Interest Rate Risk
Refer to (d) below.
Credit Risk
7b
The Group does not have any significant concentrations of credit risk. Credit risk is managed by the Board and arises from
cash and cash equivalents as well as credit exposure including outstanding receivables and committed transactions.
All cash balances held at banks are held at internationally recognised institutions. The majority of receivables are immaterial
to the Group. Given this, the credit quality of financial assets that are neither past due nor impaired can be assessed by
reference to historical information about default rates. The maximum exposure to credit risk at reporting date is the carrying
amount of the financial assets as summarised at the start of this note.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about counterparty default rates. Financial assets that are neither past due
nor impaired are as follows:
Cash and cash equivalents
‘AA’ S&P rating
2021
$
2020
$
3,524,952
3,054,835
Liquidity Risk
7c
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and, the availability of
funding through the ability to raise further equity or through related party entities. Due to the dynamic nature of the
underlying businesses, the Board aims at maintaining flexibility in funding through management of its cash resources. The
Group has no financial liabilities at the year-end other than normal trade and other payables incurred in the general course
of business. All financial liabilities mature in less than 6 months.
Cash Flow Risk
7d
As the Group has significant interest-bearing assets in the form of cash, the Group's income and operating cash flows are
exposed to changes in market interest rates.
Based on the year-end balances, a 1% increase in interest rates would have decreased the consolidated loss by $35,250
(2020: $30,548) and increased the cash balances by a corresponding amount. There were no other amounts included in Net
Assets subject to material interest rate risks.
TRADE AND OTHER RECEIVABLES
8
GST receivable
Trade and other receivables
2021
$
2020
$
6,471
197,690
7,287
23,410
204,161
30,697
No receivables are impaired or past due but not impaired. Refer to Note 7 for Financial Risk considerations. The carrying
value of all receivables approximates their fair value.
35
9
PLANT AND EQUIPMENT
Office Furniture and Equipment at cost
Accumulated depreciation
2021
$
2020
$
262,374
(260,366)
262,374
(255,952)
2,008
6,422
Movements in carrying amounts
Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the
current financial year.
2021
Balance at the beginning of the year
Additions
Disposals
Depreciation
Balance at end of the Year
2020
Balance at the beginning of the year
Additions
Disposals
Depreciation
Balance at end of the Year
10 EXPLORATION AND EVALUTION EXPENDITURE
Exploration and evaluation phase:
Carrying amount at the beginning of the year
Additions
Exploration expenditure impairment
Carrying amount at the end of the year
Production phase:
Carrying amount at the beginning of the year
Additions
Operating costs to P & L
Balance at 30 June 2021
Office
Furniture and
Equipment
$
6,422
-
-
(4,414)
2,008
Total
$
6,422
-
-
(4,414)
2,008
8,065
-
(284)
(1,359)
6,422
8,065
-
(284)
(1,359)
6,422
2021
$
2020
$
1,394,382
408,677
408,677
1,012,074
(26,369)
6,540,305
764,324
(6,895,952)
1,394,382
408,677
-
-
-
-
212,268
42,997
(255,265)
-
The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development
and commercial exploitation or sale of the respective area of interest. This is assessed at balance date on an annual basis.
36
11
OTHER ASSETS
Right to Use Asset
Accumulated Depreciation
The right to use asset relates to the capitalisation of the Office lease under AASB 16
12
TRADE AND OTHER PAYABLES
Trade Payables
Accrued Expenses
Other payable
13
OTHER LIABILITIES
Lease Liability (Office Lease) - Current
Lease Liability (Office Lease) – Non-Current
2021
$
2020
$
233,992
(152,804)
233,992
(75,889)
81,188
158,103
2021
$
2020
$
103,596
389,089
7,178
32,753
38,000
6,770
499,863
77,523
2021
$
2020
$
91,440
78,218
-
84,523
The lease liability relates to the capitalisation of the Office lease under AASB 16 (See note 11)
14
PROVISION FOR RESTORATION
Balance at 1 July 2020
Provision made during the year
Balance at 30 June 2021
15
CONTRIBUTED EQUITY
15a
Issued capital
2021
$
2020
$
275,000
(263,820)
-
275,000
11,180
275,000
2021
$
2020
$
5,073,443,410 fully paid ordinary shares (30 June 2020: 4,734,467,074)
65,822,237
63,920,369
37
15b
Movements in Ordinary Shares during the past two years
Date
Details
01-Jul-19
Opening balance
20-Nov-19
Share Placement
18-Dec-19
15-Jan-20
03-Feb-20
Share Placement
Share Placement
Share Placement
10-Mar-20
Convertible Note Repayment Share Issue
29-Jan-21
Share Placement
Share Issue Costs
No. of Ordinary
Shares
3,382,092,727
661,670,831
227,171,370
359,685,976
3,846,170
100,000,000
338,976,336
5,073,443,410
Issue price $
$
0.0035
0.0035
0.0035
0.0035
0.0025
0.0060
59,645,137
2,315,848
795,100
1,258,901
13,462
250,000
2,033,858
(490,069)
65,822,237
15c Terms of Conditions of Ordinary Shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate
in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
15d Unissued Capital - Options
There are no unissued Options as at 30 June 2021.
15e Capital Risk Management
The Group defines its Capital as total equity of the Group, being $4,583,785 for the year ended 30 June 2021 (2020:
$3,127,173). The Group manages its capital to ensure that it can continue as a going concern while financing the development
of it projects through primarily equity-based financing. The Board’s policy is to maintain a strong capital base to maintain
investor, creditor and market confidence and to sustain future development of the business. Given the stage of development
of the Group, the Board’s objective is to minimise debt and to raise funds as required through the issue of new shares.
There were no changes in the Consolidated entity’s approach to capital management during the year. During the next 12
months, the Group will continue to explore farm-out opportunities and additional issues of equity.
16
RESERVES AND ACCUMULATED LOSSES
Accumulated Losses
16a
Accumulated losses at the beginning of the year
Net loss for the year
Other comprehensive income
Transfer of reserves due to cancelled incentive options
Accumulated Losses at the end of the year
16b
Reserves
Share based payments reserve (i)
(i)
Share-Based Payments Reserve
The share-based payments reserve is used to recognise the fair value of
incentive options issued by the Group.
Balance at beginning of the year
Expired during the year
Exercised during the period
Balance at the End of the Year
2021
$
2020
$
(61,113,196)
(445,255)
-
-
(53,266,995)
(7,846,201)
-
-
(61,558,451)
(60,113,196)
320,000
320,000
320,000
320,000
320,000
-
-
320,000
10,400
(10,400)
320,000
320,000
38
17
SHARE-BASED PAYMENTS
(a) Recognised Share-based Payments Expense
The Group provides Incentive Options to officers, employees, and consultants as part of remuneration and incentive
arrangements from time to time. The number of options granted, and the terms of the options are determined by the
Board. Shareholder approval is sought where required. During the past two years, the following equity settled share-based
payments have been recognised:
(b) Summary of Incentive options granted as Share-based payments
The following table illustrates the number and weighted average exercise prices (“WAEP”) of Incentive Options granted as
share-based payments at the beginning and end of the financial year.
Number
2021
Outstanding at the beginning of year
Expired/lapsed during the year
Exercised during the year
Granted during the year
Outstanding and exercisable at end of year
156,000,000
-
-
156,000,000
WAEP
2021
0.0092
Number
2020
5,200,000
(5,200,000)
156,000,000
156,000,000
WAEP
2020
0.006
0.0092
(c) Valuation models and key assumptions used
The fair value of the equity-settled share options granted is estimated as at the date of grant using a Binomial option
valuation model taking into account the terms and conditions upon which the options were granted.
The table below lists the inputs to the valuation model used for the share options granted by the Group that are currently
on issue and outstanding at the end of year:
Number of options
Fair value at grant date
Share price at grant date
Exercise price
Expected volatility¹
Expected life²
Dividend yield (%) ³
Risk-free interest rate
Jan 2020
156,000,000
$0.002
$0.003
Various – see
below
150%
4 years
Nil
1.75%
¹: The expected volatility is indicative of future trends, which may not necessarily be the actual outcome.
²: The dividend yield reflects the assumption that the current dividend pay-out will remain unchanged.
³: The expected life of the options is based on the expiry date of the options as there is limited track record of early
exercise of options.
(d) Weighted Average Remaining Contractual Life
As 30 June 2021, the weighted average remaining contractual life of Incentive Options on issue that had been granted as
share-based payments was 3.67 years (2020: 4 years).
(e) Range of Exercise Prices
At 30 June 2021, the range of exercise prices of Incentive Options granted as share-based payments is $0.0089 - $0.0107.
(f) Weighted average Fair Value
The weighted average fair value of Incentive Options granted as share-based payments by the Group is $0.0092 (2020:
$0.0092).
39
18
PARENT ENTITY INFORMATION
18a
Summary Financial Information
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial Performance
Profit/(Loss) for the year
Other comprehensive income
Parent
2021
$
2020
$
3,604,755
1,874,829
2,800,479
1,726,158
5,479,584
4,526,637
244,752
-
158,053
325,782
244,752
483,835
65,822,239
320,000
(60,907,407)
63,920,372
320,000
(60,197,569)
5,234,832
4,042,803
(709,838)
(6,368,796)
Total comprehensive profit/ (loss) for the year
(709,838)
(6,368,796)
18b Guarantees
Norwest Energy NL has not entered into any guarantees in relation to the debts of its subsidiary.
18c Other Commitments and Contingencies
Norwest Energy NL has no commitments to acquire property, plant, and equipment. Refer to Note 24 for the Company’s
contingent liabilities.
19
INVESTMENT IN CONTROLLED ENTITIES
Name of Entity
Country of
Incorporation
Class of Shares
Westranch Holdings Pty Ltd
Australia
Ordinary
Equity Holding
2021
%
100
2020
%
100
40
20
KEY MANAGEMENT PERSONNEL DISCLOSURES & RELATED PARTY
TRANSACTIONS
20a Details of Remuneration of Key Management Personnel
Short-term salary and fees
Post-employment benefits
Share-based payments
Detailed remuneration disclosures are provided in the remuneration report.
REMUNERATION OF AUDITORS
21
Australia – Rothsay Auditing
2021
$
2020
$
491,702
3,123
90,000
609,825
522,488
1,688
90,000
614,176
41,000
41,000
49,500
49,500
No non-audit services have been provided to the Group by the auditor. The Audit fees for 2021 are $32,000.
$49,500 includes the previous year’s fees that were not accrued at 30 June 2020s.
22
22a
COMMITMENTS FOR EXPENDITURE
Exploration expenditure commitments
Within one year
One year or later and no later than five years
Later than five years
3,570,000
4,277,640
-
2,694,440
-
-
7,847,640
2,694,440
In order to maintain current rights of tenure to exploration permits, the Consolidated entity is required to perform minimum
exploration work to meet the minimum expenditure requirements specified by various Governments. These obligations are
subject to renegotiation. Notwithstanding the minimum requirements management has estimated the commitments for
expenditure based on reasonable expectation of activities on the exploration permits. These obligations are not provided for
in the financial report.
The permit commitments above will be met through either capital raisings, free carry from farm-in partners, or asset sales.
In order to ensure that the Group’s permits remain in good standing, discussions and negotiations with the relevant
regulatory bodies take place as required to manage the timing of permit commitments where possible. Should the Group
not be permitted to amend the timing of the permit commitments, or have sufficient funds to satisfy those commitments,
the Group risks having to relinquish title to those permits and return the permit(s) to the relevant regulatory body.
22b Other commitments
Management have identified the operating lease for the registered office and insurance as commitments (other than the
exploration commitments disclosed above):
Within one year
One year or later and no later than five years
Later than five years
131,327
-
-
126,396
379,188
-
131,327
505,584
41
23
CONTINGENCIES
23a Contingent Assets
There are no contingent assets at reporting date.
23b Contingent Liabilities
There are no contingent liabilities at reporting date.
24
EVENTS OCCURRING AFTER REPORTING DATE
On 30th August 2021 the Company completed a capital raising of $2.75 million (before costs) through a placement of shares
to a range of sophisticated and professional investors.
On 8th September 2021 the Company announced that preliminary drilling results of Lockyer Deep-1 indicated a significant
conventional gas discovery with gas encountered in excellent quality Kingia Sandstones. The apparent absence of gas
water contact in the Kingia supports the case for a large resource across the greater Lockyer Deep/North Erregulla Deep
structure.
No matters or circumstances have arisen other than the above, since the end of the financial year which significantly
affected or may significantly affect the operations of the Consolidated Entity, the results of the Consolidated Entity, or the
state of affairs of the Consolidated Entity as reported to the year ended 30 June 2021.
25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
25a Historical Cost Convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of
available-for-sale financial assets.
Critical Accounting Estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed
in Note 27.
Income Tax
25b
The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense is based on the
profit adjusted for any non-assessable or disallowed items.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised, or liability is
settled. Deferred tax is credited in the Statement of Profit or Loss and Other Comprehensive Income except where it relates
to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against
which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse
change will occur in income taxation legislation and the anticipation that the consolidated entity will derive sufficient future
assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
Leases
25c
At the lease commencement, the Company recognises a right-of-use asset and associated lease liability for the lease term.
The lease term includes extension periods where the Company believes it is reasonably certain that the option will be
exercised.
42
The right-of-use asset is measured using the cost model where cost on initial recognition comprises of the lease liability,
initial direct costs, prepaid lease payments, estimated cost of removal and restoration less any lease incentives received.
The right-of-use asset is depreciated over the lease term on a straight-line basis and assessed for impairment in accordance
with the impairment of assets accounting policy.
The lease liability is initially measured at the present value of the remaining lease payments at the commencement of the
lease. The discount rate is the rate implicit in the lease, however where this cannot be readily determined then the
Company’s incremental borrowing rate is used.
Subsequent to initial recognition, the lease liability is measured at amortised cost using the effective interest rate method.
The lease liability is remeasured whether there is a lease modification, change in estimate of the lease term or index upon
which the lease payments are based (e.g. CPI) or a change in the Company's assessment of lease term.
Where the lease liability is remeasured, the right-of-use asset is adjusted to reflect the remeasurement or is recorded in
profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Exceptions to lease accounting
The Company has elected to apply the exceptions to lease accounting for both short-term leases (i.e. leases with a term of
less than or equal to 12 months) and leases of low-value assets. The Company recognises the payments associated with
these leases as an expense on a straight-line basis over the lease term.
25d Adoption of new and revised accounting standards
The Company has adopted all standards which became effective for the first time at 31 December 2019.
The Company has adopted AASB 16 Leases using the modified retrospective approach from 1 July 2019 but has not
restated comparatives for the 2019 reporting period, as permitted under the specific transition provisions in the standard.
The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening
balance sheet on 1 July 2019. The new accounting policies are disclosed in note 25c.
On adoption of AASB 16, the Company recognised lease liabilities in relation to leases which had previously been classified
as ‘operating leases’ under the principles of AASB 117 Leases. These liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 July 2020.
The weighted average incremental borrowing rate applied to the lease liabilities on 1 July 2020 was 2.6%.
25e Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for major business
activities as follows:
(i)
(ii)
Interest Income
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial
assets.
Other Services
Other debtors are recognised at the amount receivable and are due for settlement within 30 days from the end of the
month in which services were provided.
Exploration and Evaluation Expenditure
25f
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs
are only carried forward to the extent that they are expected to be recouped through the successful development of the area
or where activities in the area have not yet reached a stage which permits reasonable assessment of the economically
recoverable reserves.
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Accumulated costs in relation to an abandoned area are written off in full against operating results in the year in which the
decision to abandon the area is made. When production commences the accumulated costs for the relevant area of interest
are classified as development costs and amortised over the life of the project area according to the rate of depletion of the
economically recoverable reserves.
Where independent valuations of areas of interest have been obtained, these are brought to account. Subsequent
expenditure on re-valued areas of interest is accounted for in accordance with the above principles. A regular review is
undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that
area of interest.
At 30 June 2021 the Directors considered that the carrying value of the oil and gas tenement interests of the consolidated
entity was as shown in the Statement of Financial Position and no further impairments arises other than that already
recognised.
Plant and Equipment
25g
Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and
impairment losses.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to the Statement of Comprehensive Income
during the financial period in which they are incurred.
The carrying amount of plant and equipment is reviewed annually by the Directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that
will be received from the assets’ employment and subsequent disposal. The expected net cash flows have been discounted
to their present values in determining recoverable amounts.
Depreciation
The depreciable amount of all plant and equipment is depreciated on a diminishing value over their useful lives to the
consolidated entity commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and Equipment
Depreciation Rate
27% Declining Balance
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's
carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the Statement of Comprehensive Income. When revalued assets are sold, amounts included in the revaluation
reserve relating to that asset are transferred to retained earnings.
Trade Receivables
25h
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less allowance for
doubtful debts. Trade receivables are due for settlement no more than 30 days from the date of recognition.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off.
An allowance for bad debts is established when there is objective evidence that the consolidated entity will not be able to
collect all amounts due according to the original terms of receivables. The amount of the provision is recognised in the
Statement of Comprehensive Income. They are recognised initially at fair value and subsequently at amortised cost.
Deposits with maturity periods in excess of three months but less than twelve months are included in receivables and not
discounted if the effect of discounting is immaterial.
Trade and Other Payables
25i
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year and which are unpaid, together with assets ordered before the end of the financial year. The amounts are unsecured
and are usually paid within 30 days of recognition.
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Employee Entitlements
25j
(i) Wages, salaries and annual and sick leave
A liability for wages, salaries and annual leave expected to be settled within 12 months of the reporting date is
recognised in other payables and is measured as the amount unpaid at balance date at current pay rates in respect of
employees’ services up to that date. No liability exists for sick leave.
(ii)
Long service leave
A liability for long service leave is recognised in the provision for employee benefits and is measured as the present
value of expected future payments to be made in respect of services provided by employees’ up to balance date.
Equity-Based Payments
25k
Equity-based compensation benefits are provided to Directors and executives.
The fair value of options granted to Directors and executives is recognised as an employee benefit expense with a
corresponding increase in contributed equity. The fair value is measured at grant date and recognised over the period during
which the Directors and/or executives becomes unconditionally entitled to the options. Where options are issued to
consultants the fair value of the options given is valued by the market value of the service being provided.
The fair value at grant date is independently determined using an option pricing model that takes into account the exercise
price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the
option, the share price at grant date and expected price volatility of the underlying share, the expected divided yield and the
risk-free interest rate for the term of the option.
25l
(i)
(ii)
Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to equity holders of the company, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
25m Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker has been identified as the steering committee that makes strategic decisions.
The standard requires a ‘management approach’, under which segment information is presented on the same basis as that
used for internal reporting purposes. The segments are reported in a manner that is consistent with the internal reporting
provided to the chief operating decision maker.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and
incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All
operating segments’ operating results are regularly reviewed by the Group’s Managing Director to make decisions about
resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
Segment results that are reported to the Managing Director include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company’s
headquarters), head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and
intangible assets other than goodwill.
Impairment of Assets
25n
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that
are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units).
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Cash and Cash Equivalents
25o
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the Statement of Financial Position.
25p Provisions
Provisions are recognised when the consolidated entity has a present legal or constructive obligation as a result of past
events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has
been reliably estimated.
Contributed Equity
25q
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a
business, are included in the cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, e.g., as the result of a share buy-back, those instruments are deducted
from equity and the associated shares are cancelled. No gain or loss is recognised in the Statement of Comprehensive Income
and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly
in equity.
Comparative Figure
25s
When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for
the current financial year.
25t Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received, and the Group satisfies all attached conditions.
When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a
systematic basis to the costs that it is intended to compensate.
When the grant relates to an asset, the fair value is credited to a deferred income account and is released to the Consolidated
Statement of Profit or Loss and other Comprehensive Income over the expected useful life of the relevant asset by equal
annual instalments.
Where a grant is received in relation to the tax benefit of research and development costs, the grant shall be credited to
other income in the Consolidated Statement of Profit or Loss and other Comprehensive Income in the year of receipt.
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i)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart
from those involving estimations, which have the most significant effect on the amounts recognised in the financial
statements:
Capitalisation of exploration and evaluation expenditure
The Group has capitalised significant exploration and evaluation expenditure on the basis either that this is expected
to be recouped through future successful development (or alternatively sale) of the Areas of Interest concerned or
on the basis that it is not yet possible to assess whether it will be recouped. As at 30 June 2021, the carrying value of
capitalised exploration expenditure is $1,394,382.
ii)
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often based on estimates and assumptions of future events.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of certain assets and liabilities within the next annual reporting period are:
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Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the
related exploration and evaluation asset through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future technological
changes, costs of drilling and production, production rates, future legal changes (including changes to environmental
restoration obligations) and changes to commodity prices.
Valuation of share-based payments
The Group measures the cost of equity settled share-based payments at fair value at the grant date using the Black-
Scholes model taking into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date, the expected volatility of the underlying share, the expected dividend yield and risk-free interest rate
for the term of the option.
Where options are issued to consultants, the Group values the service provided based on market rates. In the absence
of market rates, the share-based payments are valued as above.
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Registered Office
Level 2, 30 Richardson Street
West Perth Western Australia 6005
Telephone: +61 8 9227 3240
Facsimile: +61 8 9227 3211
Email: info@norwestenergy.com.au
www.norwestenergy.com.au
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