.
.
OCTANEX LIMITED
ABN 61 005 632 315
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2019
.
OCTANEX LIMITED
ABN 61 005 632 315
CORPORATE DIRECTORY
CONTENTS
Corporate Directory……………………..…2
Chairman’s Letter………………………….3
Operations Report…………...…………......6
Auditor’s Independence Declaration……....9
Directors’ Report…………………………...10
Corporate Governance ................................. 12
Remuneration Report ................................... 13
Directors’ Declaration .................................. 15
Audit Report ................................................ 16
Statement of Profit or Loss and Other
Comprehensive Income ............................... 19
Statement of Financial Position ................... 20
Statement of Changes in Equity ................... 22
Statement of Cash Flows ............................. 23
Notes to the Financial Statements ................ 24
Shareholder Information…………….…..…50
Directors
Mr Geoffrey Albers
Chairman & Chief Executive Officer
Ms Raewyn Clark
Executive Director
Datuk Kevin Kow How
Non-Executive Director
Mr James Willis
Independent Non-Executive Director
Company Secretary
Mr Robert Wright
Registered Office
Level 21, 500 Collins Street
Melbourne, Victoria 3000, Australia
+61 (03) 8610 4702
Telephone:
+61 (03) 8610 4799
Facsimile:
admin@octanex.com.au
E-mail:
Auditor
Grant Thornton Audit Pty Ltd
GPO Box 4736
Melbourne, Victoria 3008 Australia
Website:
www.octanex.com.au
Share Registry
Automic Pty Ltd
Level 3, 50 Holt Street
Surry Hills, NSW 2010, Australia
Telephone: 1300 288 664 (within Australia)
Telephone: +61 (2) 9698 5414 (outside Australia)
Website: www.automic.com.au
Stock Exchange
ASX Limited
Level 45, South Tower, Rialto,
525 Collins Street,
Melbourne Victoria 3000 Australia
ASX Code: OXX
Incorporated in Victoria on 13 March 1980
Octanex Annual Report - Page | 2
OCTANEX LIMITED
ABN 61 005 632 315
Chairman’s Letter
Dear Shareholders
2018/19 saw the cessation of our development-focused activities relating to the Ophir field, offshore
Malaysia, as well as the Cornea field offshore Western Australia, and a return to our initial exploration-
focused business model.
Octanex’s initial business model, implemented successfully for more than 20 years, was to seek prospective
acreage and to upgrade that acreage through the development of targets with the intention of attracting
international companies as farminees. That model relied on the ability of our farminees to either make an
attractive discovery that would re-rate our company or to generate sufficient interest to enable us to
continually generate attractive prospects to ensure a flow of farmin deals and capital recoupments until our
company was re-rated.
By 2013 we had observed that fundamental changes had appeared in the offshore petroleum industry. We
questioned our ability to continue to implement this business model and decided we could no longer rely
upon this strategy. Times had changed. We broadened our strategy to include the acquisition of near term
production assets. Our involvement in the Ophir development was as a contractor via a 50% interest in Ophir
Production Sdn Bhd (OPSB). It was intended to be a country-entry to Malaysia and the cornerstone of the
new strategy.
Despite the Ophir development being successfully developed, far under original budget, production was
uneconomic and the Risk Service Contract (RSC) under which it had been developed and operated was
terminated in June 2018. Pursuant to the RSC, PETRONAS as guarantor under the RSC, was required to
assume responsibility for the field, accept novation of contracts and reimburse to OPSB capital and operating
costs met by OPSB and not previously reimbursed, and did so.
OPSB had funded the Ophir development via syndicated term loan banking facilities, with the balance of
expenditure funded by OPSB’s shareholders in proportion to their equity interest in OPSB (50% in
Octanex’s case). Octanex’s contributions to OPSB were largely funded by a Convertible Note facility (drawn
to US$8Million) from Sabah International Petroleum (SIP). The PETRONAS reimbursements enabled full
repayment of OPSB’s banking facilities and also partial repayment of shareholder loans. However, the
partial repayment was estimated to be insufficient to enable Octanex to redeem the SIP Convertible Note
facility in full. Accordingly, Octanex negotiated with SIP to find a mutually agreed solution and
subsequently entered into a Deed of Settlement and Release in March 2019 whereby Octanex in return for
certain payments and assignments was released from all of its obligations to SIP pursuant to the Convertible
Note Subscription Agreement. Thus, bringing to an end our involvement with the Ophir project.
Octanex Annual Report - Page | 3
OCTANEX LIMITED
ABN 61 005 632 315
Our participation in the Cornea field, offshore Western Australia, where we had an 18.75% joint venture
interest also came to an end during the year. Our experience in the development of the Ophir field was
always considered as a precursor and a test of our ability to develop a marginal oil field like Cornea. While
production from Ophir failed, our ability to successfully develop an offshore field, complete with production
facilities and FPSO conversion was proven. The big lesson we learned from Ophir was not to underestimate
production and reserve risks with a marginal oil field.
Octanex had previously participated in an application for a Retention Lease over the marginal Cornea oil
field, which was granted in May 2014 for a five year-term. In order for that Retention Lease to be renewed,
the Commonwealth-Western Australia Joint Authority (JA) must be satisfied that the accumulation is “not
presently commercial but is likely to be commercially viable within 15 years”. The Cornea JV lodged an
application to renew the Retention Lease for a further five years, demonstrating that the field was clearly not
presently commercially viable, and identifying the oil price, production and cost parameters necessary for the
field to become commercially viable. It identified numerous avenues by which the field’s viability could be
improved and proposed a work program focused on strategies for accessing both more oil volumes and
lowering the development cost.
A renewal of the Retention Lease would have allowed for the possibility that oil demand would result in oil
prices recovering sufficiently over the next five years to meet or exceed the necessary threshold oil price
needed to justify any further substantial investment in either drilling or development.
However, following receipt of correspondence regarding the renewal application from the National Offshore
Petroleum Titles Administrator (NOPTA), the Joint Venture withdrew its renewal application, having
concluded that NOPTA did not support our proposed program and was unlikely to support renewal of the
Retention Lease on any reasonable commercial basis, and that, as a result, the JA would therefore be unlikely
to grant such renewal other than on non-commercial terms.
During the year we continued evaluation activities in relation to our 100% interest in the Ascalon gas field
offshore Western Australia, held via two exploration permits. We fielded some large entity enquiries, bit
without any continuing interest.
Following the disappointing outcomes at Ophir and Cornea, we have determined that there is more merit in
applying our initial business model to other natural resources where future requirements and pricing appear
more attractive and where administrators are more supportive and commercially realistic.
Octanex Annual Report - Page | 4
OCTANEX LIMITED
ABN 61 005 632 315
We have therefore very recently expanded our strategy to include those natural resources considered to offer
potential for creating shareholder value. We have commenced the integration of data aimed at understanding
regional geology, including recent government data and research, together with historical exploration results
with the objective of targeting large resource exploration project areas with the following attributes:
•
•
•
•
•
proximal to recent discoveries within underexplored parts of proven and neglected provinces;
major regional faults close to regional anticlines, greenstone belts, domal granite intrusions and
fault bends where deposits are known to accumulate;
undrilled soil anomalies from limited historical company exploration so as to provide an early focus
for geophysical assessment, drilling and exploration generally;
areas with transported cover at depths that still allow for cost-effective geochemical screening for
underlying large deposit signatures; and
hosting structural targets identified from aeromagnetic or other geophysical data.
We can see a future for the Company using our previous successful business model, with the benefit of a
markedly reduced risk level.
I extend my thanks to our staff and contractors. I thank my co-directors and shareholders for their ongoing
support of Octanex.
E.G.Albers
Chairman
18 October 2019
Octanex Annual Report - Page | 5
OCTANEX LIMITED
ABN 61 005 632 315
Operational Review
Assets and Activities
Overview
Ascalon Gas, Bonaparte Basin
Figure 1 Ascalon gas accumulation location map
The Ascalon gas accumulation is located mostly within
exploration permit WA-407-P and extends into the
adjacent WA-420-P.
Ascalon has an aerial extent of 320 km2, a proven
source/charge, trap, seal and a high reservoir pressure
(10,500 psi), which is 3,500 psi over normally
pressured and may be due to a much deeper closing
contour and greater gas in place.
Proximity to existing infrastructure and gas resources
presents opportunities for the future development of
Ascalon options. Located in shallow water (68 m),
wells can be drilled using a jack-up rig, while
unmanned wellhead platform development options
indicate reduced CAPEX and OPEX potential.
Figure 2 Ascalon proximity to gas infrastructure
Ascalon-1A, drilled in 1995 by Mobil, encountered
155m TVD1 gross section in the same Permian
formation as the Petrel and Tern Gas accumulations.
the shallower
However, approximately 60% of
reservoir was not flow tested due to mechanical issues.
Octanex’s activities during
included
technical studies focussed on support for development
of a drilling objective for an Ascalon appraisal well.
the quarter
During the quarter the Joint Authority granted a
variation and nine month suspension and extension for
both permits. Octanex continued to seek a joint venture
party to join it in appraising Ascalon.
Ophir Oil Development Project, Malaysia
In March 2019 Octanex ended its involvement with the
Ophir oil development project in Malaysia.
The Ophir field was developed by Ophir Production
Sdn Bhd (OPSB) under a Risk Service Contract (RSC)
with PETRONAS. Octanex held a 50% shareholding
interest in OPSB via its subsidiary, Octanex Pte Ltd.
and
facilities,
The Ophir development was successfully completed
production
(subsurface, wells,
operations) on time and significantly under-budget,
through the most challenging oil price environment.
However, production was short-lived, with
the
development proving to be uneconomic, and on 6 June
2018 OPSB exercised its right to terminate the RSC,
providing PETRONAS with 90 days written Notice of
Termination.
The RSC provided that following
Termination, PETRONAS would assume responsibility
for the field, accept novation of contracts and reimburse
to OPSB capital and operating costs met by OPSB and
not previously reimbursed.
Octanex Annual Report - Page | 6
OCTANEX LIMITED
ABN 61 005 632 315
Accordingly, OPSB was relieved of most further
project expenditure following novation of FPSO
contracts entered into in relation to the project and
focussed on project close-out activities, including final
operating quarter PETRONAS cost recovery audit,
GST reimbursements and loan facility close-out steps.
Reimbursement of costs from PETRONAS was
structured as three payments pursuant to the RSC.
OPSB funded the Ophir development via syndicated
term loan facilities (Project Financing Facilities), with
the balance of expenditure funded by OPSB’s
shareholders in proportion to their equity interest in
OPSB (50% in Octanex’s case). Advances made to
OPSB by Octanex and other OPSB shareholders were
subordinated to OPSB’s Project Financing Facilities,
and as such, reimbursements from PETRONAS were
directed first to repayment of OPSB’s loan facility.
Octanex’s contributions to OPSB were partly funded
by a Convertible Note facility (drawn to US$8Million)
with Sabah International Petroleum (SIP). It was
structured for the purpose of meeting Octanex’s
contributions
to OPSB and for working capital
requirements.
The quantum of funds available for repayment of
shareholder loans following repayment of OPSB’s
project financing facilities was estimated to be
the SIP
to enable redemption of
insufficient
Convertible Note facility. Accordingly, Octanex
and SIP entered into a Deed of Settlement and
Release in March 2019 whereby Octanex was
released from all of its obligations under the
Convertible Note Subscription Agreement. The
consideration for the settlement and release was the
transfer to SIP of all of the issued shares in Octanex
Pte Ltd (the 50% shareholder in OPSB), the
assignment
the
intercompany debt owed by Octanex Pte Ltd to
Octanex, the transfer of funds by Octanex to SIP
totaling US$2,089,449, as well as mutual release of
any and all obligations.
the benefit of
to SIP of
This concluded Octanex’s activities in connection
with the Ophir development project in Malaysia.
SIP remains a substantial shareholder of Octanex
and is represented on the board by Datuk Kevin
How.
Greater Cornea Fields, Browse Basin
The five year term of the WA-54-R Cornea
Retention Lease in which Octanex had an 18.75%
joint venture interest ended during the year on 5
May 2019.
In order for a Retention Lease to be granted and
subsequently renewed, the Commonwealth-Western
Australia Joint Authority (JA) must be satisfied that
the accumulation is “not presently commercial but
is likely to be commercially viable within 15 years”.
The Cornea JV initially lodged an application to
renew the Retention Lease for a further five years,
predicated on the work completed over the initial
lease term, especially the last two years of the lease.
Its application was accompanied by detailed oil, gas
and water production simulation forecasts generated
from an integrated reservoir model prepared by a
independent specialists comprising a
team of
petrophysicist,
and
reservoir engineers. The development concept and
cost estimates were prepared by an independent
engineering firm.
geophysicists
geologists,
The Cornea accumulation has had 18 wells drilled
into it and its immediate environs. The renewal
application and our studies demonstrated that the
field is not presently commercially viable, even
adopting an extremely cost efficient development
concept of a platform and subsea storage unit. The
renewal application demonstrated the oil price,
production and cost parameters required for the field
to be commercially viable. It identified numerous
avenues by which the field’s commercial viability
could be improved. The submission proposed a
work program focused on strategies for accessing
more oil volumes and lowering the development
cost.
A renewal of the Retention Lease would have
allowed for the possibility that oil demand would
result in oil prices recovering sufficiently over the
next five years to meet or exceed the necessary
threshold oil price needed to justify any further
substantial
in either drilling or
development.
investment
Octanex Annual Report - Page | 7
OCTANEX LIMITED
ABN 61 005 632 315
that “insufficient
The National Offshore Petroleum Titles Administrator
(NOPTA) provided a “request for further information”
in relation to the renewal application, as is typical with
this
titles administration matters. However,
all
“request” was unusual in that it did not in fact request
any information or seek any clarifications. Rather, it
information has been
advised
provided to demonstrate that recovery of petroleum
from the lease area is likely to become commercially
viable within 15 years, and therefore to support a
recommendation to renew Petroleum Retention Lease
WA-54-R” with extremely wide and general reasons
cited without reference
the detailed
supporting content provided by the Joint Venture in its
reviewed NOPTA’s
renewal application. Having
“request”, the Joint Venture considered that NOPTA
was unlikely to support renewal of WA-54-R and that
the JA is therefore unlikely to grant such renewal.
to any of
retention
WA-54-R presented an unusual
lease
circumstance, having been granted over an oil
accumulation, rather than a gas accumulation. The
Cornea JV’s decision to apply for a Retention Lease in
2013 reflected advice from the Joint Authority in early
2013 that it should do so. In September 2013 the
Coalition Government’s Policy for Resources and
Energy was released with measures aimed at ensuring
that Retention Leases are held for “a legitimate need to
secure gas for long-lived production projects”. The
Cornea JV lodged its application for Retention Lease
the next month (October 2013) and WA-54-R was
granted in May 2014, reflecting the Joint Authority’s
earlier advice to the Cornea JV, notwithstanding the
September 2013 policy change.
The Cornea JV believes that NOPTA and the JA
intended to apply the September 2013 policy and deny
a renewal of the Cornea Retention Lease, despite the
Cornea JV’s significant investment in Cornea. This
investment includes the drilling of Cornea-3, in which
Octanex participated. The Cornea JV increased its
investment over the course of the Retention Lease,
recently completing an integrated reservoir model in
accordance with the work program variation approved
by the JA.
Resource exploration
During the year Octanex broadened its strategy;
returning to its initial business model as a grass-roots
focussed explorer, but expanding that focus to include
other natural resources considered to offer potential for
creating shareholder value.
initial business model,
Octanex’s
implemented
successfully over many years, was to seek prospective
acreage and to upgrade that acreage through the
development of targets with the intention of attracting
international companies as farminees. That business
model relied on the Company’s ability to either make
an attractive discovery that would re-rate the company
or
to continually generate sufficiently attractive
prospects to ensure a flow of farmin deals and capital
recoupments. In 2013, in response to changes observed
in the petroleum industry which led to the company
question its ability to continue to implement its
business model, Octanex broadened its strategy to
include the acquisition of near term production assets.
Following the completion of Octanex’s involvement
with the Ophir oil project in Malaysia, Octanex has
determined that applying its initial business model to
other natural resources has considerable merit.
Octanex has thus expanded its strategy to include the
objective of developing green-fields gold exploration
projects. To this end it has commenced the integration
of data aimed at understanding regional geology,
including recent government data and research,
together with historical exploration results and is
targeting large exploration project areas with the
following attributes:
•
proximal
recent discoveries within
underexplored parts of proven gold provinces;
to
• major
regional
faults close
regional
anticlines, greenstone belts, domal granite
intrusions and fault bends where gold deposits
are known to accumulate;
to
•
undrilled gold-in-soil anomalies from limited
historical company exploration in order to
provide an early focus for drilling and
exploration; areas with thin transported cover
in order to enable cost-effective geochemical
large deposit
screening
signatures; and
for underlying
•
hosting structural
aeromagnetic data
targets
identified
from
Octanex Annual Report - Page | 8
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Octanex Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Octanex
Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been:
a
b
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.
Grant Thornton Audit Pty Ltd
Chartered Accountants
B L Taylor
Partner – Audit & Assurance
Melbourne, 26 September 2019
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
9
OCTANEX LIMITED
ABN 61 005 632 315
Directors’ Report
Directors
Mr Geoff Albers LL.B, FAICD
Executive Chairman
Appointed 2 October 1984
Mr Albers has over thirty five years oil and gas
industry experience, having first became involved
in oil exploration in 1977. Mr Albers is a law
graduate of the University of Melbourne and has
had extensive experience as a director and
administrator
law, petroleum
corporate
exploration and resource sector investment.
in
Mr Albers founded Octanex Limited and is a
substantial shareholder in the company. He is also
a director and substantial shareholder in the ASX
listed Peako Limited (ASX: PKO) and Enegex
Limited (ASX: ENX).
Ms Rae Clark
B.Bus(dist), CA, MAICD, AGIA, ACIS
Executive Director
Appointed 17 October 2014
Ms Clark has more than twenty years experience
focussed primarily on the natural resource sector.
She has wide operational, commercial and project
development knowledge and her experience
financial
includes
modelling and analysis, capital raising and
mergers and acquisitions, as well as managing
joint venture partners, government, regulator and
investor relations.
development,
business
Ms Clark was previously Commercial Manager of
Octanex. Having commenced her career with
Deloitte in 1997, Ms Clark has worked with oil
and gas companies since 2005. She is also a
Director of Peako Limited (ASX: PKO) and
Enegex Limited (ASX: ENX).
Ms Clark holds a Bachelor of Business (with
distinction), a Graduate Diploma (ICAA) and
Graduate Diploma
in Applied Corporate
Governance.
Datuk Kevin Kow How FCA
Non-Executive director
Appointed 18 December 2014
the
Datuk Kevin How Kow is a director of Sabah
Development Bank. He is a member of the
Malaysian Institute of Accountants, the Malaysian
Institute of Certified Public Accountants and a
fellow member of the Institute of Singapore
Chartered Accountants and
Institute of
Chartered Accountants in England & Wales. He
was made a partner of Ernst & Young (“EY”),
Malaysia in 1984 and served as the partner-in-
charge
and
offices
Sarawak. Later, from 1996 onwards, he was the
partner-in-charge of EY’s practice in Sabah and
Labuan until his retirement at the end of 2003. He
also serves as a Director of Cahya Mata Sarawak
Berhad, K&N Kenanga Holdings Berhad, Kenanga
Investment Bank Berhad, Saham Sabah Berhad,
Sarawak Cable Berhad, M3nergy Berhad and
several private limited companies.
in Sabah
of EY’s
Mr James Willis LL.M (Hons), Dip Acc
Independent Non-Executive Director
Appointed 18 August 2009
Previously an executive director of Octanex (2009-
2011) Mr Willis
is an upstream petroleum
consultant who has held governance positions with
and consulted to various participants in the oil and
gas exploration sector. Mr Willis is a former
partner in the leading New Zealand law firm of
Bell Gully where his practice speciality was in the
upstream oil and gas area, particularly relating to
the
issues concerning gas contracting and
development of oil and gas reserves, joint ventures
and upstream petroleum related acquisitions.
Mr Willis is a director of New Zealand Energy
Corp, a company with New Zealand operations and
listed on the TSX Venture exchange.
Resignation of Directors
G. Guglielmo resigned 17 July 2018. SK Kler
resigned 18 July 2019.
Octanex Annual Report - Page | 10
OCTANEX LIMITED
ABN 61 005 632 315
Company Secretary
Future Developments
Mr Robert Wright B Bus, CPA
Mr Wright is a senior financial professional with
over 30 years commercial experience in the
resource, energy and manufacturing industries
gained at various companies and
locations,
including 14 years at BHP.
He is the Chief Financial Officer (CFO) and the
Company Secretary of Octanex and CFO and
company secretary of
listed companies,
Enegex Limited and Peako Limited. Mr Wright is
a member of CPA Australia.
the
Principal Activities
The principal activities of the consolidated entity
during the year were exploration and development
and investment in the natural resources sector.
Financial Results
The net loss of the consolidated entity for the
financial year was $4,264,324 (2018: loss of
$21,501,847).
Dividends
No dividend was declared or paid during the year
and to the date of this report.
Review of Operations
A review of the consolidated entity’s Operations
during the financial year is provided in the
Operational Review.
Surrendered and expired interests
On 5 May 2019 WA-54-R expired. On 20 March
2019 Octanex transferred its interest in the Ophir
project
in
settlement of a Convertible Note facility used to
partly fund Octanex’s capital contributions to the
Ophir project.
to Sabah International Petroleum
Change in State of Affairs
Other than as described in these annual financial
statements there have been no changes in the state
of affairs of the company.
Subsequent Events
Since the end of the financial year there have been
no subsequent events.
Future developments in the company’s operations
and the expected result from those operations are
dependent on exploration and development
success in the permit areas in which the group
holds interests.
Directors’ Meetings
The following table sets out the number of
meetings held during the year and the number of
those meetings that were attended by each director.
Other matters
formal Board
resolutions were dealt with via written circular
resolutions. In addition, the directors met and
corresponded at numerous times throughout the
financial year to discuss the Group’s affairs.
required
that
Board Meetings
Audit Committee
Meetings
EG Albers
RL Clark
KK How
JMD Willis
Eligible
2
Attended
2
Eligible
1
Attended
1
2
2
2
2
1
2
1
1
1
1
1
1
Nominations
Remuneration
Committee Meetings
Attended
Eligible
Share Capital
Ordinary Shares
The Company’s
share capital consists of
242,823,840 ordinary fully paid shares (excluding
29,889,107 shares held by the Trustee of the
Octanex Trustee Share Scheme).
Trustee Stock Scheme
As at 30 June 2019 and to the date of this report,
29,889,107 ordinary shares, previously issued to
the Trustee pursuant to the Scheme, remain
unsold. The Trustee does not exercise voting
rights in respect of the shares held pursuant to the
Scheme.
Octanex Annual Report - Page | 11
OCTANEX LIMITED
ABN 61 005 632 315
Unlisted Options
The following options were granted and remained
on issue at 30 June 2019 to Octanex directors,
staff and other individuals.
Number
Expiry Date
7,170,000
24 November 2019
Exercise
price
$0.08
Vesting
criteria
No
2019
2018
Unlisted Options
Balance at beginning of year 13,770,000
(6,600,000)
Options expired
7,170,000
Balance at end of year
21,270,000
(7,500,000)
13,770,000
Convertible Notes
(“SIP”)
On 20 March 2019, Octanex executed a Deed of
Settlement and Release with Sabah International
Petroleum
the SIP
convertible note facility. Pursuant to the Deed,
Octanex was released from all of its obligations
under
the Convertible Note Subscription
Agreement.
relation
in
to
Indemnification
Officeholders
of
Directors
and
During the year and to the date of this report, the
company did not pay premiums in respect of
contracts insuring officers or auditors of the
company against liabilities arising from their
position of officers or auditor of the company.
The Company has entered into Deeds of Access
and Indemnity with each of the Directors referred
to in this report who held office during the year
indemnifying each against all liabilities incurred
in their capacity as directors of the Company to
the full extent permitted by law.
Corporate Governance
The Board is responsible for the strategic
direction of the Company, the identification and
implementation of corporate policies and goals,
and the monitoring of the business and affairs of
the Company on behalf of its shareholders.
The Board delegates responsibility for the day-to-
day management of Octanex
the Chief
Executive Officer. All Directors have unrestricted
access to Company records
and information and
receive detailed financial
and operational reports.
to
The Board is currently comprised of two Non-
Executive Directors and two Executive Directors.
In accordance with the Company’s Constitution
and the ASX Listing Rules, the Directors (other
than the Chief Executive Officer) are subject to
re-election by shareholders every three years.
The Board meets regularly throughout the year.
Where appropriate, presentations are given to the
Board from management who may be questioned
technical,
directly by Board members on
operational and commercial issues.
Details of the Company’s corporate governance
the Corporate
practices
Governance statement found on the Company’s
website.
included
are
in
Auditor
services
independence
and
non–audit
A copy of the auditor’s independence declaration,
as
the
required under Section 307C of
Corporations Act 2001, is attached and forms part
of this Directors’ Report for the year ended 30
June 2019.
No fees were paid to the auditor for non-audit
services.
This Directors’ Report is made in accordance with
a resolution of the directors and forms part of the
financial statements.
On behalf of the Directors:
E.G. Albers
Director
26 September 2019
Octanex Annual Report - Page | 12
OCTANEX LIMITED
ABN 61 005 632 315
Remuneration
Report
This Remuneration Report for the year ended 30
June 2019 outlines the key management personnel
remuneration arrangements of the Company in
accordance with
the
Corporations Act 2001 (Act) and its regulations.
The disclosures in this Remuneration Report have
been audited as required by section 308(3C) of the
Act.
requirements of
the
Key Management Personnel
For the purpose of this report, Key Management
Personnel (KMPs) of the Company are defined as
those persons having authority and responsibility
for planning, directing and controlling the major
activities of the Company directly or indirectly.
The following have been identified as KMPs at 30
June 2019 for the purpose of this Remuneration
Report:
Executive Directors
EG Albers
RL Clark
Chairman & Chief Executive
Officer
Executive Director & Chief
Operating Officer
Non-executive Directors
JMD Willis
KK How
Director
Director
is
and
reviewing
responsible
for
The board of directors
determining
compensation
arrangements for the directors and executives.
The board assesses the appropriateness of the
nature and amount of emoluments on a periodic
basis by reference to relevant employment market
conditions, with the overall objective of ensuring
maximum stakeholder benefit from the retention
of a high quality board and executives.
qualified
The remuneration
directors and executives.
structures explained below are designed to attract
suitably
the
achievement of strategic objectives and achieve the
broader outcome of creation of value
for
shareholders. The remuneration structure takes
into account:
candidates,
reward
•
•
•
The capability and experience of the directors
and executives;
The ability of directors and executives to
control the entity’s performance; and
The requirement
that directors apply a
portion of their remuneration to the purchase
of shares in the company, at market price, so
as to align the interests of directors with that
of shareholders.
non-executive
In accordance with the company’s constitution,
remuneration was
directors’
approved by shareholders on 28 November 2014
at $250,000 per annum. During the year, non-
executive director remuneration of $nil was paid
Total director
or payable
remuneration (exclusive of consulting fees which
are included at note 19) of $227,074 was paid and
payable during the year (2018: $225,570).
(2018: $nil).
There is no performance related remuneration for
directors. Remuneration paid to directors covers all
board activities, including serving on committees.
Apart from a retirement benefit for the chairman
and four weeks annual leave for RL Clark, the
other directors do not receive employee benefits
such as annual leave and long service leave, but
remuneration may include the grant of options over
shares of the company to align directors’ interests
with that of the shareholders.
is
no
There
between
remuneration and the company’s performance for
the last five years.
relationship
direct
Remuneration levels for directors and executives of
the company are competitively set to attract and
retain appropriately qualified and experienced
Octanex Annual Report - Page | 13
OCTANEX LIMITED
ABN 61 005 632 315
Components of directors’ compensation paid are disclosed below:
Short Term
Post Employment
EG Albers
JMD Willis
RL Clark
S K Kler(1)
K How
G Guglielmo(1)
TOTAL
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Directors Fees
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Salary
$
-
-
-
-
207,374
206,000
-
-
-
-
-
-
207,374
206,000
Super-
annuation
$
-
-
-
-
19,700
19,570
-
-
-
-
-
-
19,700
19,570
Retirement
Benefits
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Equity
Settled
Options
Total
$
$
-
-
-
-
-
-
-
-
- 227,074
225,570
-
-
-
-
-
-
-
-
-
-
-
-
-
- 227,074
- 225,570
(1) G. Guglielmo resigned 17 July 2018. SK Kler resigned 18 July 2019.
Interests in Equity Instruments
The disclosures relating to equity instruments of directors includes equity instruments of personally related
entities, being relatives and the spouses of relatives of the director and any entity under the joint or several
control or significant influence of the director. All equity transactions with directors, other than options granted
as remuneration, have been entered into under terms and conditions, applicable to all shareholders.
Interests in fully paid ordinary shares
Net Change
Balance
Balance
Interests in unlisted options
Held at
Net
Change
EG Albers(1)
RL Clark
G Guglielmo(2)
KK How
SK Kler(2)
JMD Willis
1/7/2018
149,247,634
57,551
3,120,000
50,000
50,000
3,117,382
3,125,440
-
(3,120,000)
50,000
(50,000)
-
30/6/2019
152,373,074
1/7/2018
-
57,551 4,300,000
940,000
880,000
880,000
3,117,382 1,750,000
-
100,000
-
-
-
(940,000)
-
(880,000)
-
Held at
30/6/2019
-
4,300,000
-
880,000
-
1,750,000
Vested and
exerciseable
30/6/2019
-
4,300,000
-
880,000
-
1,750,000
(1) Net change in shares for the year is all through on-market purchases.
(2) G. Guglielmo resigned 17 July 2018. SK Kler resigned 18 July 2019.
End of Remuneration Report.
Octanex Annual Report - Page | 14
OCTANEX LIMITED
ABN 61 005 632 315
Directors Declaration
The directors of the company declare that:
The financial statements, comprising the statement of profit or loss and other comprehensive income,
1.
statement of financial position, statement of cash flows, statement of changes in equity, and accompanying
notes, are in accordance with the Corporations Act 2001 and:
(a)
(b)
(c)
comply with Australian Accounting Standards and the Corporations Regulations 2001; and
give a true and fair view of the consolidated entity’s financial position as at 30 June 2019
and of its performance for the year ended on that date.
the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1(a).
In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay
2.
its debts as and when they become due and payable.
The remuneration disclosures included in pages 13 to 14 of the directors’ report, (as part of audited
3.
Remuneration Report), for the year ended 30 June 2019, comply with section 300A of the Corporations Act
2001.
The directors have been given the declarations by the chief executive officer and chief financial officer
4.
required by section 295A.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on
behalf of the directors by:
E.G. Albers
Director
Melbourne
26 September 2019
Octanex Annual Report - Page | 15
Collins Square, Tower 5
727 Collins Street
Melbourne Victoria 3008
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T 61 3 8320 2222
F 61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Octanex Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Octanex Limited (the Company) and its subsidiaries (the Group), which comprises
the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year
ended on that date; and
b 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 those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
16
Key audit matter
How our audit addressed the key audit matter
Exploration and Evaluation Assets Valuation (Note 9)
The tenements held by Octanex Limited and its subsidiaries
are in the exploration stage and exploration expenditure is
capitalised in accordance with Australian Accounting Standard
AASB 6 Exploration for and Evaluation of Mineral Resources.
The Group is required to assess at each reporting date if there
are any triggers for impairment which may suggest the
carrying value is in excess of the recoverable value. Any
impairment losses are then measured in accordance with
AASB 136 Impairment of Assets.
AASB 6 Exploration for and Evaluation of Mineral Resources
requires exploration and evaluation asset to be assessed for
impairment when there are indicators of impairment. AASB 6
provides a list of 4 indicators, however that list is not
exhaustive and therefore subjectivity is involved in the
assessment.
This area is a key audit matter as significant judgement is
required in determining whether the facts and circumstances
suggest that the carrying amount of an exploration and
evaluation asset may exceed its recoverable amount, and
then consequently in measuring any impairment loss.
Our procedures included, amongst others:
Obtaining the management prepared reconciliation of
capitalised exploration and evaluation expenditure and
agreeing to the general ledger;
Selecting a sample of capitalised exploration and
evaluation expenditure and obtaining documentation to
support the amount capitalised in line with AASB 6;
Critically reviewing management's assessment of
impairment indicators for the Group’s capitalised
exploration assets under AASB 6 by:
Assessing the period for the right to explore the
areas of interest have not expired or will not expire in
the near future without an expectation of renewal;
Enquiring of management regarding their intentions
to carry out exploration and evaluation activity in the
relevant exploration area, including review of
managements’ budgeted expenditure;
Understanding whether any data exists that indicates
the carrying value of exploration and evaluation
assets is unlikely to be recovered from successful
development or by sale; and
Considering any other available evidence of
impairment.
Assessing management's consequent determination of
impairment loss; and
Reviewing related financial statement disclosures.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2019, 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 we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
17
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities 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 the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 11 to 12 of the Directors’ report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of Octanex Limited, for the year ended 30 June 2019 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.
Grant Thornton Audit Pty Ltd
Chartered Accountants
B L Taylor
Partner – Audit & Assurance
Melbourne, 26 September 2019
18
OCTANEX LIMITED
ABN 61 005 632 315
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Year Ended 30 June 2019
Interest income
Other income
Interest and finance costs
Expenses
NOTE
2
3
2019
$
4,796
11,134,972
2018
$
2,061
54,800
(631,760)
(616,419)
(1,481,458)
(1,360,352)
Impairment of exploration assets
9,26
(7,262,178)
(23,652,138)
Share of loss of Ophir Production Sdn Bhd
Share of loss of Peako Limited
Impairment of advance to Ophir Production Sdn Bhd
Loss before tax
Income tax benefit
Net Loss after tax
6
4
(1,756,751)
(2,973,794)
-
(11,054)
(4,270,353)
(607,917)
(4,262,732)
(29,164,813)
(1,592)
7,662,966
(4,264,324)
(21,501,847)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operation
Income tax effect
Foreign currency translation reserve realised on sale of foreign
subsidiaries
Items that will not be reclassified subsequently to profit or loss
Changes in financial assets at fair value through other
comprehensive income
Income tax on items of comprehensive income
15
15
15
15
Other comprehensive income for the year net of tax
Total comprehensive income for the year
117,420
-
636,368
-
(1,286,141)
-
(5,308)
(15,923)
1,592
(1,172,437)
4,776
625,221
(5,436,761)
(20,876,626)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
24
24
(1.756)
(1.756)
(8.857)
(8.857)
The above Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the
accompanying notes.
Octanex Annual Report - Page | 19
OCTANEX LIMITED
ABN 61 005 632 315
Consolidated Statement of Financial Position
As at 30 June 2019
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Advance to Ophir Production Sdn Bhd
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Financial assets at fair value through other
comprehensive income
Exploration and evaluation assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Derivative financial liability
Borrowings
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issue capital
Reserves
Accumulated losses
TOTAL EQUITY
NOTE
2019
$
2018
$
5
6
6
7
9
10
11
13
12
14
15
1,790,892
1,331,845
108,702
140,798
-
10,300,698
1,899,594
11,773,341
17,696
23,004
9,382,098
16,399,197
9,399,794
16,422,201
11,299,388
28,195,542
392,928
131,658
-
-
524,586
1,289,241
131,886
109
10,562,743
11,983,979
524,586
11,983,979
10,774,802
16,211,563
68,867,927
68,867,927
207,722
1,380,159
(58,300,847)
(54,036,523)
10,774,802
16,211,563
The above Statement of Financial Position is to be read in conjunction with the accompanying notes
Octanex Annual Report - Page | 20
OCTANEX LIMITED
ABN 61 005 632 315
Consolidated Statement of Changes in Equity
Year Ended 30 June 2019
CONSOLIDATED ENTITY
At 1 July 2018
Loss after tax
Other comprehensive income
Exchange differences of translation of foreign operations
net of tax
Foreign currency translation reserve realised on sale of
foreign subsidiaries
Changes in fair value on financial assets at fair value
through other comprehensive income net of tax
Total other comprehensive income
Total comprehensive income for the year
Contributed
equity
Accumulated
losses
Financial
assets at fair
value through
other
comprehensive
income
Foreign
currency
translation
reserve
Option
reserve
Total
$
$
$
$
$
$
68,867,927
(54,036,523)
-
(4,264,324)
(826,125)
-
1,168,721
-
1,037,563
-
16,211,563
(4,264,324)
-
-
-
-
-
-
-
117,420
-
117,420
-
-
(1,286,141)
-
(1,286,141)
-
(3,716)
-
-
(3,716)
-
(3,716)
(1,168,721)
(4,264,324)
(3,716)
(1,168,721)
-
-
(1,172,437)
(5,436,761)
At 30 June 2019
68,867,927
(58,300,847)
(829,841)
-
1,037,563
10,774,802
The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes.
Octanex Annual Report - Page | 21
OCTANEX LIMITED
ABN 61 005 632 315
Consolidated Statement of Changes in Equity
Year Ended 30 June 2018
CONSOLIDATED ENTITY
At 1 July 2017
Loss after tax
Other comprehensive income
Contributed
equity
Accumulated
losses
Financial
assets at fair
value through
other
comprehensive
income
Foreign
currency
translation
reserve
Option
reserve
Total
$
$
$
$
$
$
68,856,339
(32,534,676)
-
(21,501,847)
(814,978)
-
532,353
1,037,563
37,076,601
-
-
(21,501,847)
Exchange differences of translation of foreign operations
net of tax
Changes in fair value on financial assets at fair value
through other comprehensive income net of tax
Total other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners
-
-
-
-
-
-
636,368
-
636,368
-
-
(21,501,847)
(11,147)
(11,147)
(11,147)
636,368
636,368
-
-
(11,147)
-
-
-
-
625,221
(20,876,626)
12,071
(483)
12,071
(483)
-
-
-
-
-
-
68,867,927
(54,036,523)
(826,125)
1,168,721
1,037,563
16,211,563
Octanex Annual Report - Page | 22
Trustee Share sale
Cost of sale
At 30 June 2018
OCTANEX LIMITED
ABN 61 005 632 315
Consolidated Statement of Cash Flows
Year Ended 30 June 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Administration fees received
Interest received
Payments to suppliers
Net cash outflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to suppliers - exploration
Loans to Ophir Production Sdn Bhd
Proceeds from loan repayment by Ophir Production Sdn Bhd
Proceeds from sale of investments
Net cash inflow / (outflow) from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowing
Proceeds from share issue
Cost of share issue
Net (outflow) / inflow from financing activities
Net increase / (decrease) in cash and cash equivalents
Exchange gains
Cash and cash equivalents at beginning of the year
CASH AND CASH EQUIVALENTS AT 30 JUNE
NOTE
2019
$
2018
$
49,334
4,796
(897,075)
(842,945)
55,836
2,061
(1,091,117)
(1,033,220)
(228,991)
-
4,391,144
(371,310)
(3,197,351)
-
-
106,302
4,162,153
(3,462,359)
(2,924,092)
-
-
(2,924,092)
395,116
63,931
1,331,845
1,790,892
-
12,071
(483)
11,588
(4,483,991)
149,057
5,666,779
1,331,845
(i)
12
14
14
5
(4,264,324)
126,333
266,425
115,543
(607,248)
(i) RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES WITH LOSS AFTER INCOME TAX
Loss after income tax
(21,501,847)
Non cash items:
Borrowing Costs
Exchange rate changes on the balances held in a foreign
currency
Employee Provisions expense
Gain on sale of shares
Extinguishment of Convertible Notes
Share of loss and impairment of Peako Limited
Share of loss of Ophir Production Sdn Bhd
Finance costs
Impairment of exploration assets
Reversal of impairment of OPSB advance
Changes in assets and liabilities:
Decrease in receivables
Decrease in tax liabilities
Increase in payables
Net Cash outflow from Operating Activities
(228)
-
(9,726,131)
-
1,756,751
-
7,262,178
4,270,353
(6,122)
(39,009)
-
11,054
2,973,794
490,086
23,652,138
607,917
40,878
(7,662,969)
8,102
(1,033,220)
(83,447)
1,592
432,016
(842,945)
26
The above Statement of Cash Flows is to be read in conjunction with the accompanying notes
Octanex Annual Report - Page | 23
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 June 2019
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Octanex Limited (“Octanex” or “the company”) is a
for-profit company incorporated and domiciled in
Australia with its registered office and principal place
of business located at Level 21, 500 Collins Street,
Melbourne, Victoria 3000. The consolidated financial
report of the company for the year ended 30 June
2019 comprises the company and its subsidiaries
(together referred to as the “consolidated entity” or
“the group”) and the consolidated entity’s interest in
joint operations. Financial information for Octanex
Limited as an individual entity is included in Note 25.
The financial report was authorised by the directors
for issue on 26 September 2019.
(a) Statement of compliance
financial report
The consolidated
is a general
purpose financial report which has been prepared in
accordance with Australian Accounting Standards,
including the Accounting Interpretations issued by
the Australian Accounting Standards Board (‘AASB’)
and the Corporations Act 2001. The consolidated
statements and notes comply with
financial
International Financial Reporting Standards and
Interpretations
International
Accounting Standards Board.
issued
the
by
(b) Basis of preparation
The financial report is presented in Australian
dollars, which is the consolidated group’s functional
currency, rounded to the nearest dollar. It has been
prepared under the historical cost convention as
modified by the revaluation of the available for sale
investments at fair value.
The preparation of a financial report in conformity
with Australian Accounting Standards requires
management to make judgements, estimates and
assumptions that affect the application of policies and
reported amounts of assets and liabilities, income
and expenses.
The estimates and associated
assumptions are based on historical experience and
various other
factors that are believed to be
reasonable under the circumstances, the results of
which form the basis of making the judgements about
carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results
may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing
basis. Revisions
to accounting estimates are
recognised in the period in which the estimate is
revised if the revision affects only that period, or in
the period of the revision and future periods if the
revision affects both current and future periods.
Judgements made by management in the application
of Australian Accounting Standards that have a
significant effect on the financial report and estimates
with a significant risk of material adjustment in the
next year are discussed in note 1(q). The accounting
policies set out below have been applied consistently
to all periods presented in the financial report.
New and revised accounting standards applicable for
the first time to the current half-year reporting period
The company has adopted all new and revised
Australian Accounting Standards and Interpretations
that became effective for the first time and are
relevant to the company. The adoption of the new
and revised Australian Accounting Standards and
Interpretations, including AASB 15 Revenue from
Contracts with Customers, has had no impact on the
company’s accounting policies or the amounts
reported during the current year.
(c) Early adoption of standards
From 1 July 2010 the group has elected to apply
AASB 9 Financial Instruments (as issued in December
2009) and AASB 2009-11 Amendments to Australian
Accounting Standards arising from AASB 9 from 1
July 2010, because the new accounting policies
provide more reliable and relevant information for
users to assess the amounts, timing and uncertainty
of future cash flows. Refer Note 1(l) for further
details on the impact of the change in accounting
policy. The entity is now adopting the final version of
impairment
AASB 9 (2014 version),
requirements As permitted under the transitional
provisions, the group has elected not to adopt the
December 2010 revised version of AASB 9, which
addresses the accounting for financial liabilities and
derecognition of financial assets and liabilities.
including
(d) Principles of consolidation
consolidated
The
statements
consolidate those of the company and all of its
subsidiaries as at year end.
financial
entity
Octanex Annual Report - Page | 24
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 June 2019
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(i) Subsidiaries
The company controls a subsidiary if it is exposed, or
has rights, to variable returns from its involvement
with the subsidiary and has the ability to affect those
returns through its power over the subsidiary. The
financial statements of the subsidiaries are prepared
for the same reporting period as the parent company
using consistent accounting policies.
The financial statements of subsidiaries are included
in the consolidated financial statements from the date
that control commences until the date that control
ceases. Investments in subsidiaries are carried at
their cost of acquisition in the parent entity note.
All transactions and balances between companies
within the consolidated entity are eliminated on
consolidation, including unrealised gains and losses
on transactions between group companies. Where
unrealised losses on intra-group asset sales are
reversed on consolidation, the underlying asset is
also tested for impairment from a consolidated entity
Amounts reported in the financial
perspective.
statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting
policies adopted by the consolidated entity. Profit or
loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are
recognised from the effective date of acquisition, or
up to the effective date of disposal, as applicable.
(ii) Investments in associates and joint ventures
Associates are
consolidated entity
influence but which are not subsidiaries.
the
is able to exert significant
those entities over which
that
joint venture
is an arrangement
A
the
consolidated entity controls jointly with one or more
other investors, and over which the consolidated
entity has rights to a share of the arrangement’s net
assets rather than direct rights to underlying assets
and obligations for underlying liabilities. A joint
arrangement in which the consolidated entity has
direct rights to underlying assets and obligations for
underlying liabilities is classified as a joint operation.
Interests in joint operations are accounted for by
recognising the consolidated entity’s assets and
liabilities (including its share of any assets and
liabilities held jointly), its revenue from the sale of its
jointly). Any goodwill or
share of the output arising from the joint operation,
and its expenses (including its share of any expenses
fair value
incurred
adjustment attributable to the consolidated entity’s
share in the associate or joint venture is not
recognised separately and is included in the amount
recognised as investment. The carrying amount of the
investment
is
increased or decreased to recognise the consolidated
entity’s share of the profit or
loss and other
comprehensive income of the associate and joint
venture, adjusted where necessary
to ensure
consistency with the accounting policies of the
consolidated entity.
in associates and
joint ventures
When the consolidated entity’s share of
losses
exceeds its interest in the associate or joint venture
the entity discontinues recognising its share of
further losses. The interest in an associate or joint
venture is the carrying amount of the investment in
the associate or joint venture together with long-term
interests that in substance form part of the entity’s
net investment in the associate or joint venture.
Unrealised gains and losses on transactions between
the consolidated entity and its associates and joint
ventures are eliminated to the extent of the
consolidated entity’s interest in those entities. Where
unrealised losses are eliminated, the underlying asset
is also tested for impairment.
(iii) Joint operations
The interest of the company and of the consolidated
entity in unincorporated joint operations and joint
to account by
operated assets are brought
recognising in its financial statements the assets it
controls, the liabilities that it incurs, the expenses it
incurs and its share of income that it earns from the
sale of goods or services by the joint operation.
The financial statements of the unincorporated joint
operations and assets are prepared for the same
reporting period as the parent company using
consistent accounting policies.
Octanex Annual Report - Page | 25
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 June 2019
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(iv) Transactions eliminated on consolidation
income and expenses arising
Intragroup balances and any unrealised gains and
losses or
from
intragroup transactions, are eliminated in preparing
the consolidated financial statements. Unrealised
gains arising from transactions with associates are
eliminated to the extent of the consolidated entity’s
interest in the entity with adjustments made to the
‘Investment in associates’ and ‘Share of associates’
net profit accounts. Unrealised losses are eliminated
in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment. Gains
and losses are recognised as the contributed assets
are consumed or sold by the associates or, if not
consumed or sold by the associate, when the
consolidated entity’s interest in such entities is
disposed of.
(e) Taxes
Income Tax
Income
taxes are accounted
comprehensive balance sheet
whereby:
for using
the
liability method
The tax consequences of recovering (settling) all
assets (liabilities) are reflected in the financial
statements;
Current and deferred tax is recognised as income or
expense except to the extent that the tax related to
equity items or to a business combination;
• A deferred tax asset is recognised to the extent
that it is probable that future taxable profit will
be available to realise the asset;
• Deferred tax asset and liabilities are measured
at the tax rates that are expected to apply to the
period where the asset is realised or the liability
settled.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of
the amount of GST, except where the amount of GST
from the taxation
incurred
is not recoverable
authority.
In these circumstances, the GST is
recognised as part of the cost of acquisition of the
asset or as part of the expense. Receivables and
payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable
to, the ATO is included as a current asset or liability
in the balance sheet. The GST components of cash
flows arising from investing and financing activities
which are recoverable from, or payable to, the ATO
are classified as operating cash flows. Commitments
and contingencies are disclosed net of the amount of
GST recoverable from, or payable to, the taxation
authority.
Tax Consolidation
The company and its wholly owned resident entities
are part of a
tax-consolidated group. As a
consequence, all members of the tax-consolidated
group are taxed as a single entity. The head entity
within the tax-consolidated group is Octanex Limited.
Current tax expense / income, deferred tax liabilities
and deferred tax assets arising from temporary
differences of the members of the tax-consolidated
group are recognised
in the separate financial
statements of the members of the tax-consolidated
group using the ‘separate taxpayer within group’
approach by reference to the carrying amounts of the
assets and
financial
statements of each entity and the tax values applying
under tax consolidation. Any current tax liabilities (or
assets) and deferred tax assets arising from unused
tax losses of the subsidiaries are assumed by the head
entity
tax-consolidated group and are
recognised by the Company as amounts payable
(receivable) to / (from) other entities in the tax-
consolidated group in conjunction with any tax
funding arrangement amounts..
in the separate
liabilities
the
in
The Company recognises deferred tax assets arising
from unused tax losses of the tax-consolidated group
to the extent that is probable that future taxable
profits of the tax-consolidated group will be available
against which the asset can be utilised. Any
subsequent period adjustments to deferred tax assets
arising from unused tax losses as a result of revised
assessments of the probability of recoverability is
recognised by the head entity only.
(f) Foreign Currency Translation
The functional and presentation currency of Octanex
Limited and its Australian subsidiaries is Australian
dollars (A$).
Octanex Annual Report - Page | 26
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 June 2019
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
from restating
Foreign currency transactions are translated into the
functional currency using the exchange rates ruling
at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the
reporting date. Foreign exchange gains and losses
resulting from settling foreign currency transactions,
as well as
foreign currency
denominated monetary assets and liabilities, are
recognised in the Statement of Profit or Loss and
Other Comprehensive Income, except when they are
deferred in equity as qualifying cash flow hedges or
where they relate to differences on foreign currency
borrowings that provide a hedge against a net
investment in a foreign entity. Non-monetary items
measured at fair value in a foreign currency are
translated using the exchange rates at the date when
fair value was determined.
(j) Trade and other receivables (relates to
period ending 30 June 2018 and earlier)
Trade receivables are recognised at original invoice
amounts less an allowance for uncollectible amounts
and have repayment terms between 30 and 90 days.
Collectability of trade receivables is assessed on an
ongoing basis. Debts which are known to be
uncollectible are written off. An allowance is made
for doubtful debts where there is objective evidence
(such as significant financial difficulties on the part
of the counterparty or default or significant delay in
payment) that the company will not be able to collect
all amounts due according to the original terms.
(k) Trade and other receivables and contract
assets (relates to period beginning 1 July 2018)
Group companies
On consolidation, the assets and liabilities of foreign
operations are translated into dollars at the rate of
exchange prevailing at the reporting date and their
Statements of Profit or Loss
and Other
Comprehensive Income are translated at exchange
rates prevailing at the dates of the transactions. The
exchange differences arising on translation for
consolidation
other
comprehensive income. On disposal of a foreign
operation, the component of other comprehensive
income relating to that particular foreign operation
is recognised in profit or loss.
recognised
are
in
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances
and at call bank deposits. Bank overdrafts that are
repayable on demand and form an integral part of
the company’s cash management are included as a
component of cash and cash equivalents for the
purpose of the cash flow statement.
(i) Payables
Trade, accruals and other payables are recorded
initially at fair value and subsequently at amortised
cost. Trade and other payables are non-interest
bearing and are normally settled on 60-day terms.
The company makes uses of a simplified approach in
accounting for trade and other receivables as well as
contract assets and records the loss allowance as
losses. These are the
lifetime expected credit
expected shortfalls
flows,
considering the potential for default at any point
during the life of the financial instrument. In
its historical
calculating,
experience, external indicators and forward-looking
information to calculate the expected credit losses
using a provision matrix.
in contractual cash
company uses
the
(l)
Equity investments
All equity investments are measured at fair value.
Equity investments that are held for trading are
measured at fair value through profit or loss. For all
other equity investments, the group can make an
irrevocable election at initial recognition of each
investment to recognise changes in fair value
through other comprehensive income (“OCI”) rather
than profit or loss. At initial recognition, the group
measures a financial asset at its fair value plus, in
the case of a financial asset not at fair value through
profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset.
Octanex Annual Report - Page | 27
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 June 2019
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Transaction costs of financial assets carried at fair
value through profit or loss are expensed as profit or
loss. The group subsequently measures all equity
investments at fair value. The directors have elected
to present fair value gains and losses on equity
investments
is no subsequent
reclassification of fair value gains and losses to profit
or loss. Dividends from such investments continue to
be recognised in profit or loss as other revenue when
the group’s right to receive payments is established
and as long as they represent a return on investment.
in OCI. There
(m) Share capital
Ordinary share capital is recognised at the fair value
of the consideration received by the company.
Transactions costs arising on the issue of ordinary
shares are recognised directly
in equity as a
reduction of the consideration received, net of any
income tax benefit. Ordinary shares are classified as
equity.
Costs directly attributable to the issue of new shares
or options are shown as a deduction from the equity
proceeds, net of any income tax benefit. Costs directly
attributable to the issue of new shares or options
associated with the acquisition of a business are
included as part of the purchase consideration
(n) Impairment
At each reporting date the Group assesses whether
there is any indication that individual assets are
impaired. Where
indicators exist,
impairment
recoverable amount is determined and impairment
losses are recognised in the profit or loss where the
asset's carrying value exceeds
its recoverable
amount.
(i) Calculation of recoverable amount
Recoverable amount is the greater of fair value less
costs to sell and value in use. It is determined for an
individual asset, unless the asset’s value in use cannot
be estimated to be close to its fair value less costs to
sell and it does not generate cash inflows that are
largely independent of those from other groups or
assets, in which case, the recoverable amount is
determined for the class of assets to which the asset
belongs.
(ii) Reversals of impairment
Impairment losses are reversed when there is an
indication that the impairment loss may no longer
exist and there has been a change in the estimate
used to determine the recoverable amount.
An impairment loss is reversed only to the extent that
the asset’s carrying amount does not exceed the
carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment
loss had been recognised.
(o) Restoration, rehabilitation and environment
expenditure
Restoration, rehabilitation and environmental costs
necessitated by exploration and evaluation activities
are provided for as part of the cost of those activities.
Costs are estimated on the basis of current legal
requirements, anticipated technology and future
costs that have been discounted to their present
value. Estimates of future costs are reassessed at
each reporting date.
(p) Exploration and evaluation assets
Exploration and evaluation assets, including the costs
of acquiring permits or licences, are capitalised as
exploration and evaluation assets on an area of
interest basis. Exploration and evaluation assets are
only recognised if the rights to tenure of the area of
interest are current and either:
i.
ii.
the expenditures are expected to be recouped
and
through
exploitation of
interest, or
alternatively, by its sale or partial sale: or
the area of
development
successful
activities in the area of interest have not at the
reporting date, reached a stage which permits a
reasonable assessment of the existence or
otherwise of economically recoverable reserves
and active and significant operations in, or in
relation to, the area of interest are continuing.
Octanex Annual Report - Page | 28
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The tests contained in AASB6.20 are applied to
determine whether exploration and evaluation
assets are assessed for impairment:
i. the exploration and evaluation tenure right has
expired or are expected to expire in the near
future, and is not expected to be renewed.
ii. substantive expenditure on further exploration
for and evaluation of mineral resources in the
specific area is neither budgeted nor planned.
iii. exploration
for and evaluation of mineral
resources in the specific area have not led to the
discovery of commercially viable quantities of
mineral resources and the entity has decided to
discontinue such activities in the specific area.
iv. sufficient data exist to indicate that, although a
development in the specific area is likely to
proceed, the carrying amount of the exploration
and evaluation asset is unlikely to be recovered
in full from successful development or by sale
Proceeds from the sale of exploration permits or
recoupment of exploration costs
farmin
arrangements are credited against exploration costs
previously capitalised. Any excess of the proceeds
overs costs recouped are accounted for as a gain on
disposal.
from
Farmouts in the exploration and evaluation phase
The group does not record any expenditure made by
the farminee on its account. It also does not
recognise any gain or loss on its exploration and
evaluation farmout arrangements, but redesignates
any costs previously capitalised in relation to the
whole interest as relating to the partial interest
retained. Any additional cash consideration received
directly from the farminee is credited against costs
previously capitalised in relation to the whole
interest, with any excess accounted for as a gain on
disposal.
(q) Accounting estimates and judgements
Management determine the development, selection
and disclosure of the company’s critical accounting
policies and estimates and the application of these
policies and estimates.
Other than as disclosed in these notes, there are no
estimates and judgements that are considered to
have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year. There is,
however, a risk that actual expenditure to achieve
minimum work obligations could differ
from
estimates disclosed in the notes to the financial
statements (see Note 16).
Work requirements achieved by farm-ins materially
reduce the level of expenditure incurred by the
company
program
to
commitments.
comply with work
Per Note 1(p), management exercises judgement as
to the recoverability of exploration expenditure. Any
judgment may change as new information becomes
available. If, after having capitalised exploration and
evaluation expenditure, management concludes,
once activities in the area of interest have reached a
stage which permits a reasonable assessment of
technical feasibility and commercial viability, that
is unlikely to be
the capitalised expenditure
recovered by future sale or exploitation, then the
relevant capitalised amount will be written off
through the statement of profit or loss and other
comprehensive income.
The consolidated entity is subject to income taxes in
numerous jurisdictions. The determination of the
consolidated entity's provision for current income
tax as well as deferred tax assets and liabilities
involves significant judgements and estimates on
certain matters and transactions, for which the
ultimate outcome may be uncertain. If the final
outcome differs from the consolidated entity's
estimates, such differences will impact the current
and deferred income tax assets and liabilities in the
period in which such determination is made.
Octanex Annual Report - Page | 29
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(r) Revenue
the
is recognised at
Revenue
fair value of
consideration received or receivable. Amounts
disclosed as revenue are net of returns, trade
allowances and duties and taxes paid. The following
specific recognition criteria must also be met before
revenue is recognised:
(s) Share-based payment transactions
Equity settled transactions
The fair value of options granted are recognised as an
expense with a corresponding increase in equity. The
fair value is measured at grant date and recognised
over the period during which the grantee become
unconditionally entitled to the options. 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 impact of
dilution, the share price at grant date and expected
price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the
term of the option.
Equity settled transactions
The fair value of options granted are recognised as an
expense with a corresponding increase in equity. The
fair value is measured at grant date and recognised
over the period during which the grantee become
unconditionally entitled to the options.
is
independently
The fair value at grant date
determined using an option pricing model that takes
into account the exercise price, the term of the
option, the impact of dilution, the share price at grant
date and expected price volatility of the underlying
share, the expected dividend yield and the risk free
interest rate for the term of the option.
vesting
The fair value of the options granted is adjusted to
reflect market vesting conditions, but excludes the
impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-
in
conditions
market
assumptions about the number of options that are
expected to become exercisable. At each reporting
date, the entity revises its estimate of the number of
options that are expected to become exercisable. The
expense recognised each period takes into account
the most recent estimate. The impact of the revision
to original estimates, if any, is recognised in the
included
are
statement of profit or loss and other comprehensive
income with a corresponding adjustment to equity.
(t) Fair value
Fair values may be used for financial asset and
for sundry
liability measurement as well as
disclosures.
Fair values for financial instruments traded in active
markets are based on quoted market prices at
reporting date. The quoted market price for financial
assets is the current bid price and the quoted market
price. The fair value of financial instruments that are
not traded in an active market are determined using
valuation techniques. Assumptions used are based on
observable market prices and rates at reporting date.
Estimated discounted cash
flows are used to
determine fair value of the remaining financial
instruments.
are
assumed
and payables
The carrying value less impairment provision of trade
to
receivables
approximate their fair values due to their short-term
nature. The fair value of financial liabilities for
disclosure purposes is estimated by discounting the
future contractual cash flows at the current market
interest rate that is available to the company for
similar financial instruments.
(u) Convertible Notes
The conversion feature of the convertible notes
represents an embedded derivative (Note 13) in a
host liability (Note 12). The embedded derivative is
recognised separately from the host liability. On
initial recognition the derivative was measured at fair
value, with the residual face value of the convertible
notes assigned to the host liability. Subsequently, the
embedded derivative is measured at fair value
through profit and loss, and the host liability is
measured at amortised cost using the effective
interest rate method.
Octanex Annual Report - Page | 30
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(v) Earnings per Share
Basic earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to members of Octanex by the
weighted average number of ordinary shares
outstanding during the financial year, adjusted for
bonus elements in ordinary shares during the year.
In calculating the weighted average number of
ordinary shares outstanding, the partly paid shares
are accounted for on a pro-rata basis according to
the amount of call outstanding in relation thereto.
Diluted earnings per share
Earnings used to calculate diluted earnings per
share are calculated by adjusting the basic earnings
by the after-tax effect of dividends and interest
associated with dilutive potential ordinary shares.
The weighted average number of shares used is
adjusted for the weighted average number of
ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary
shares into ordinary shares.
(w) New and revised accounting standards
issued not yet effective
The Directors do not believe that new and revised
standards issued by AASB (that are not as yet
effective, will have any material financial impact on
the financial statements, including AASB 16 Leases,
which does not apply to leases to explore for or use
minerals, oil, natural gas and similar non-regenerative
resources
Octanex Annual Report - Page | 31
NOTE
19(ii)
12
21
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 2 OTHER INCOME
Sundry income – director related
Foreign currency translation reserve realised on sale of
foreign subsidiary
Extinguishment of Convertible Notes
Total income
NOTE 3 EXPENSES
Audit fees
Consulting
Foreign exchange Loss
Management fees
Reporting, registry and stock exchange
Office expenses
Other expenses
Project costs
Salaries
Total expenses
NOTE 4 INCOME TAX
Components of income tax benefit
Current tax expense
Current period
Deferred tax expense
Origination and reversal of temporary differences
Total
Tax losses do not expire under current tax legislation.
2019
$
122,700
1,286,141
9,726,131
11,134,972
2018
$
54,800
-
-
54,800
45,647
9,531
561,531
40,000
28,115
199,472
112,034
(3,156)
488,284
1,481,458
62,004
37,058
343,269
23,000
36,692
220,657
168,279
89,006
380,387
1,360,352
1,592
(7,662,966)
-
1,592
-
(7,662,966)
Deferred tax assets have not been recognised in respect of tax losses because there is presently no
expectation of future taxable profit against which the Group could utilise such benefits.
Octanex Annual Report - Page | 32
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 4 INCOME TAX (CONTINUED)
Reconciliation between tax benefit and pre-tax loss
Loss before tax
Income tax benefit using statutory income tax rate of 30%
Tax effect of adjustment recognised in the period for:
Prospectus costs
Tax losses not brought to account
Non-assessable income
Equity accounted loss – non deductible
Impairment of OPSB advance – non deductible
Other non–deductible expenses
Income tax benefit
Unrecognised deferred tax asset
The estimated deferred tax asset arising from tax losses and
temporary differences not brought to account at balance date
as realisation of the benefit is not probable:
Tax losses carried forward
Temporary differences
Franking credit balance:
NOTE
2019
$
2018
$
(4,262,732)
(1,278,820)
(29,164,813)
(8,749,444)
(3,005)
2,216,557
(3,421,806)
524,025
1,796,292
168,349
1,592
(3,005)
(282,682)
(4,237)
892,138
182,375
301,889
(7,662,966)
5,937,726
(2,765,278)
3,172,448
5,010,389
(4,904,677)
105,712
Franking account balance as at end of year
1,741,532
1,741,532
NOTE 5 CASH AND CASH EQUIVALENTS
Cash at bank and on hand
1,790,892
1,331,845
Cash at bank and on hand includes Nil held with the OCBC Bank in Singapore (2018: $458,019).
Financing arrangements with Sabah International Petroleum ceased during the year.
Cash and cash equivalents are subject to interest rate risk as they earn floating rates. In the year to 30
June 2019 the average floating rate for the consolidated entity was 1.2% (2018: 0.12%). Details of
interest rate risk and sensitivity can be found in Note 20. At 30 June 2019 all bank deposits are at call.
NOTE 6 TRADE AND OTHER RECEIVABLES
Current
Other receivables
Director-related entities - other receivables
Advance to Ophir Production Sdn Bhd (1)
19(ii)
15,012
93,690
-
126,526
14,272
10,300,698
108,702
10,441,496
The carrying amount of all receivables is equal to their fair value as they are short term. At 30 June 2019 no
receivables are impaired or past due. All receivables are non-interest bearing.
Octanex Annual Report - Page | 33
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE
Consolidated
2019
$
2018
$
NOTE 6 TRADE AND OTHER RECEIVABLES (Continued)
(1) On 20 March 2019, Octanex executed a Deed of Settlement and Release with Sabah International Petroleum
(“SIP”) in relation to the SIP convertible note facility. Pursuant to the Deed of Settlement and Release, Octanex
has been released of its obligations under the Convertible Note Subscription Agreement (Note 12). In
consideration for the release from the Convertible Notes obligation, Octanex transferred to SIP of all of the
shares in Octanex Pte Ltd (the 50% shareholder in Ophir Production Sdn Bhd “OPSB” (Note 8)) and assigned to
SIP the benefit of any future repayments of the Advance to OPSB. The value of the advance at 20 March 2019 was
$4,270,353 and was fully impaired at that date.
NOTE 7 OTHER FINANCIAL ASSETS (NON-CURRENT)
Financial Assets at fair value through other comprehensive income
Investment in director-related equities
At cost:
Shares in controlled entities
7(a)(b)
7(c)
(a) Director-related Entities:
Enegex Limited
Principal activity is oil and gas exploration (Note 21)
(b) Reconciliation of the carrying amount of Financial
Assets at fair value through other comprehensive income
Balance at beginning of year
Net revaluation increment (decrement)
Details of market price risk and sensitivity can be found in Note 20.
(c) Shares in Controlled Entities
United Oil & Gas Pty Ltd
17,695
1
17,695
23,003
1
23,004
17,696
23,003
23,003
(5,308)
17,695
38,927
(15,924)
23,003
1
1
United Oil & Gas Pty Ltd, a company incorporated in Australia, is owned 50% by Octanex and 50% by a fully
owned subsidiary of Octanex, Strata Resources Pty Ltd.
The consolidated entity did not consolidate United Oil & Gas Pty Ltd on the grounds that balances were not
considered material.
Octanex Annual Report - Page | 34
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE
Consolidated
2019
$
2018
$
NOTE 8 INVESTMENT IN A JOINT VENTURE COMPANY
The consolidated entity had a 50% interest in Ophir Production Sdn Bhd (OPSB), a joint venture company,
incorporated in Malaysia and previously involved with offshore oilfield development in Malaysia.
Pursuant to the terms of a Deed of Settlement and Release signed 20 March 2019 Octanex transferred to Sabah
International Petroleum Ltd (SIP) all of the issued shares in Octanex Pte Ltd, its former subsidiary, the 50%
shareholder in Ophir Production Sdn Bhd (OPSB). This transfer concluded Octanex’s activities in connection with
the Ophir development project in Malaysia.
Octanex cumulated share of OPSB losses at end of year (50%
share of cumulative loss equity accounted as required by
accounting standards)
Cost of OPSB equity investment
Carrying amount of OPSB equity investment
Octanex’s share of OPSB losses, net of application Octanex’s
equity investment in OPSB
OPSB – Commitments
OPSB’s capital and operating expenditure commitments are as follows:
Payable not later than one year
Payable later than one year but not later than three years
-
(8,493,882)
-
-
1,458,920
-
-
(7,034,962)
-
-
-
9,507,709
-
9,507,709
Octanex Annual Report - Page | 35
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 9 EXPLORATION AND EVALUATION ASSETS
Carrying amount at beginning of year
Impairment of exploration assets
Cost incurred during the year
Carrying amount at end of year
NOTE
26
Consolidated
2019
$
2018
$
16,399,197
(7,262,178)
245,079
9,382,098
39,657,763
(23,652,138)
393,572
16,399,197
Ultimate recovery of exploration and evaluation assets is dependent upon exploration success and/or the
company maintaining appropriate funding to support continued exploration activities. Exploration and
evaluation assets relate to the areas of interest in the exploration and evaluation phase for petroleum
exploration permits as shown in the table below:
30/06/2019 30/06/2018 Notes
Exploration Permits
WA-407-P
WA-420-P
-
WA-407-P Held by wholly-owned subsidiary, Octanex Bonaparte Pty Ltd
WA-420-P
Held by wholly-owned subsidiary, Octanex Bonaparte Pty Ltd
WA-387-P Permit cancelled 5 February 2019
Retention Lease
-
WA-54-R Permit expired 5 May 2019.
NOTE 10 TRADE AND OTHER PAYABLES
Financial liabilities at amortised cost
Current
Trade creditors and accruals
Director-related entities - other payables
19
57,348
335,580
392,928
998,814
290,427
1,289,241
Trade and other payables are current liabilities of which the fair value is equal to the current carrying amount.
Information about the company’s exposure to foreign exchange risk in relation to trade payables, including
sensitivities to changes in foreign exchange rates, is provided in Note 20.
Octanex Annual Report - Page | 36
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 11 PROVISIONS
Current
Annual Leave
Directors’ retirement benefit (1)
Long service leave
NOTE
Consolidated
2019
$
2018
$
8,906
82,125
40,627
131,658
9,503
82,125
40,258
131,886
(1) On the 29th October 1997 a Deed of Appointment was signed by EG Albers. The Deed detailed terms of
continuation of his appointment as chairman of Octanex Limited. Amongst other things, it provides for a
payment of a retirement benefit to EG Albers as chairman. A deed of variation was signed 16 August 2016, and
effective 30 June 2016, that varied the terms of calculation of the Retirement Benefit under the original Deed.
The amount reflects the 28 years of service EG Albers has provided to the company.
NOTE 12 CURRENT BORROWINGS
On 20 March 2019, Octanex executed a Deed of Settlement and Release with Sabah International Petroleum
(“SIP”) in relation to the SIP convertible note facility. Pursuant to the Deed, Octanex was released from all of its
obligations under the Convertible Note Subscription Agreement.
Convertible notes
Carrying amount at beginning of year
Repayment of convertible notes
Movements in exchange rates
Reversal of interest accrued
Effective Interest expense
Less interest paid / accrued
Extinguishment of convertible notes
Carrying amount at end of year
NOTE 13 DERIVATIVE FINANCIAL LIABILITY
Convertible notes
At inception
Changes in fair value
Balance at end of year
10,562,743
(2,924,092)
673,778
1,344,416
514,109
(444,823)
(9,726,131)
-
10,162,204
-
423,559
-
876,573
(899,593)
10,562,743
Consolidated
2019
$
2018
$
264,564
(264,564)
-
264,564
(264,455)
109
Octanex Annual Report - Page | 37
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 14 CONTRIBUTED EQUITY
Issued Capital
Ordinary shares fully paid (a)
Ordinary shares issued pursuant to trustee
stock scheme(b)
Balance at end of year
2019
Shares
242,823,840
29,889,107
2018
Shares
2019
$
2018
$
242,823,840
29,889,107
68,867,927
-
68,867,927
-
272,712,947
272,712,947
68,867,927
68,867,927
(a) Ordinary shares fully paid
Balance at beginning of year
Trustee shares sold
Issue costs
Balance at end of year
242,823,840
-
-
242,823,840
242,712,947
110,893
-
242,823,840
68,867,927
-
-
68,867,927
68,856,339
12,071
(483)
68,867,927
(b) Ordinary Shares Issued Pursuant to Trustee Stock Scheme
Balance at beginning of year
Trustee shares sold
Balance at end of year
29,889,107
-
29,889,107
30,000,000
(110,893)
29,889,107
-
-
-
-
-
-
In November 2015, the members of Octanex voted to extend the existing trustee stock scheme by five years to 30
November 2020.
The company has unlimited authorised capital with no par value.
Terms and Conditions of Contributed Equity
Ordinary shares confer on the holder 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
(irrespective of the 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.
Octanex Annual Report - Page | 38
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 14 CONTRIBUTED EQUITY (CONTINUED)
Trustee Stock Scheme
Octanex is party to a Trustee Stock Scheme, pursuant to which ordinary shares ranking equally with other
ordinary shares on issue were issued to a trustee. When those shares are sold by the trustee the net proceeds
are paid to the Company by way of subscription moneys. The trustee does not exercise voting rights in respect of
shares held pursuant to the scheme.
Unlisted Options - (Share Based Payment)
Existing options are
Number
Expiry Date
7,170,000 24 November 2019
Exercise price
$0.08
Vesting criteria
No
Unlisted Options
Balance at beginning of year
Options expired / cancelled
Balance at end of year
NOTE 15 RESERVES
Financial assets at fair value through other comprehensive
income reserve
Option reserve
Foreign currency translation reserve
value
Financial assets at
fair
comprehensive income reserve
Balance at beginning of financial year
Changes in fair value on financial assets at fair value
through other comprehensive income
Income tax on other comprehensive income
through other
2019
Options
2018
Options
13,770,000
(6,600,000)
7,170,000
21,270,000
(7,500,000)
13,770,000
NOTE
Consolidated
2019
$
2018
$
(829,841)
(826,125)
1,037,563
-
207,722
1,037,563
1,168,721
1,380,159
(826,125)
(5,308)
1,592
(829,841)
(814,978)
(15,923)
4,776
(826,125)
The financial assets at fair value through other comprehensive income reserve represents the changes in fair
value on the group’s equity instruments including realised gains or losses on those investments. Further
information on the investments is set out in Notes 7 and 20.
Octanex Annual Report - Page | 39
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 15 RESERVES (CONTINUED)
Option reserve
Balance at beginning of financial year
Share based payment expense
NOTE
Consolidated
2019
$
2018
$
1,037,563
-
1,037,563
1,037,563
-
1,037,563
The options reserve relates to share options granted to the company secretary, the directors and individuals.
Foreign currency translation reserve
Balance at beginning of financial year
Movement for the year
1,168,721
(1,168,721)
-
532,353
636,368
1,168,721
The foreign currency translation reserve relates to the consolidation of foreign currency denominated fully
owned subsidiary entities. All foreign denominated entities have been disposed of as at 30 June 2019.
NOTE 16 EXPLORATION AND EVALUATION EXPENDITURE COMMITMENTS
The consolidated entity share of minimum work requirements in exploration permit and retention lease
interests held by the consolidated entity or in joint operations is estimated at reporting date:
Payable not later than one year
Payable later than one year but not later than three years
99,400
-
99,400
193,750
-
193,750
Estimated expenditure, arising from retention lease work programme which, may, subject to negotiation and
approval, be varied. They may also be satisfied by farmout, sale, relinquishment or surrender.
NOTE 17 INTEREST IN UNINCORPORATED JOINT OPERATIONS
The consolidated entity has an interest in the assets, liabilities and output of joint operations for the exploration
and development of petroleum in Australia. The consolidated entity has taken up its share of joint operations
transactions based on its contributions to the joint operations. The consolidated entity’s interests in the joint
operations:
Joint Operation
Cornea
Permit expired 5 May 2019.
2019
Interest
18.75%
2018
Interest
18.75%
Permits
WA-54-R
Octanex Annual Report - Page | 40
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE
Consolidated
2019
$
2018
$
NOTE 17 INTEREST IN UNINCORPORATED JOINT OPERATIONS (CONTINUED)
Assets and liabilities of the joint operations are included in the financial statements as follows:
CURRENT ASSETS
Cash and cash equivalents
Receivables
NON-CURRENT ASSETS
Exploration and evaluation assets
CURRENT LIABILITIES
Payables
Payables – director-related entity
5,887
1,408
4,477
492
-
7,241,291
4,269
1,741
248
5,078
9
10
10, 19
There are no contingent liabilities in any of the joint operations. Minimum work requirements in exploration
permit and retention lease interests held in joint operations is estimated at reporting date:
Payable not later than one year
Payable later than one year but not later than three years
-
-
-
93,750
-
93,750
NOTE 18 KEY MANAGEMENT PERSONNEL
Executive Directors Non-Executive Directors
EG Albers
RL Clark
KK How
JMD Willis
Individual compensation disclosures
Information regarding individual director’s compensation is provided in the remuneration report section of the
directors’ report. There are no employees who meet the definition of key management personnel other than the
executive directors of the company. A summary of the remuneration report is shown below.
Short Term
Post Employment
Equity Settled
Total
Directors
Fees
$
-
Salary Superannuation
$
207,737
-
206,000
$
19,700
19,570
TOTAL
2019
2018
Retirement
Benefits
$
-
-
Options
$
-
-
$
227,437
225,570
Octanex Annual Report - Page | 41
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 19 RELATED PARTY DISCLOSURES
The consolidated financial statements of the Group include:
Name
United Oil & Gas Pty Ltd
Goldsborough Pty Ltd
Octanex Bonaparte Pty Ltd
Braveheart Energy Pty Ltd
Octanex Cornea Pty Ltd
Octanex Winchester Pty Ltd
Winchester Exploration Pty Ltd
Octanex Pte Ltd (1)
Octanex Operations Pty Ltd
Strata Resources Pty Ltd
Octanex Exmouth Pty Ltd
(1) Pursuant to the terms of a Deed of Settlement and Release signed 20 March Octanex transferred to Sabah
International Petroleum Ltd (SIP) all of the issued shares in Octanex Pte Ltd, its former subsidiary, the 50%
shareholder in Ophir Production Sdn Bhd (OPSB).
Country
of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Australia
2019
Interest
100%
100%
100%
100%
100%
100%
100%
0%
100%
100%
100%
2018
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Director-related Entities
Companies in which an Octanex director controls or significantly influences, that provide services to the group or
to a joint operation in which the group has an interest, or that also hold an interest in those joint operations or in
which the group holds an investment.
(i)Providers of Services by Related Party
During the year services and/or facilities were provided under normal commercial terms and conditions by
director-related entities as disclosed below together with amounts payable to related parties including those
under joint operation arrangements:
Entity
Exoil Pty Ltd
Service
Related
director
EG Albers Office services and amenities
in
Melbourne
Payable at
Amounts paid
2018
2019
$
$
199,723 222,176 56,542
30/06/19
$
30/06/18
$
58,378
Natural Resources
Group Pty Ltd
Upstream
Consulting Limited
Petroleum
Advisors
Samika Pty Ltd
EG Albers Management
and
administration
33,938 46,750 279,038
231,924
services
JMD Willis Management
services
to Ophir
-
6,500
project
G Guglielmo Management
services
to Ophir
- 16,700
-
-
-
-
RL Clark
project
Management of retention lease
1,595
-
235,256 295,008 335,580
2,962
125
290,427
As a participant of the Cornea Joint Venture the group holds interests in petroleum joint operations with
director-related entities As a participant of the Cornea Joint Venture with Cornea Petroleum Pty Ltd, Cornea Oil &
Gas Pty Ltd, Coldron Pty Ltd, Octanex Cornea Pty Ltd, Moby Oil & Gas Pty Ltd, Enegex Limited, Cornea Resources
Pty Ltd and Auralandia Pty Ltd, all director-related entities of EG Albers.
Octanex Annual Report - Page | 42
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 19 RELATED PARTY DISCLOSURES (Continued)
(ii)Providers of Services to Related Party
During the year accounting services were provided under normal commercial terms and conditions as disclosed
below:
Entity
Related director
Enegex Limited
Exoil Pty Ltd
Cornea Resources Pty Ltd
Cue Petroleum Pty Ltd
Ophir Production Sdn Bhd
Peako Limited
EG Albers
EG Albers
EG Albers
EG Albers
Note 19 (iii))
EG Albers (Note 19 (iv))
(iii) Advance to OPSB
Receivables
Sundry Revenue
2018
2019
$
$
11,010
21,475
-
20,625
13,125
1,885
-
18,865
- 122,050
30/06/19
$
10,225
8,580
1,885
10,285
-
59,850 18,615 62,715
122,700 164,800 93,690
30/06/18
$
5,043
-
770
-
-
8,459
14,272
Pursuant to a Deed of Settlement and Release, signed 20 March 2019, Octanex was released from all of its
obligations under the Convertible Note Subscription Agreement (Note 12). The consideration for the settlement
and release was the transfer to SIP of all of the issued shares in Octanex Pte Ltd (the 50% shareholder in OPSB),
the assignment to SIP of the benefit of the intercompany debt owed by Octanex Pte Ltd to Octanex, the transfer of
funds by Octanex to SIP totalling US$2,089,449, as well as mutual release of any and all obligations. As a result
the value of the Advance to OPSB at 30 June 2019 was $nil (2018: $10,300,698).
(iv) Investments in director-related companies
At 30 June 2019, the company carried an investment in an ASX listed company Enegex Limited, (Note 7), which is
a director-related entity of EG Albers.
Octanex Annual Report - Page | 43
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 20 FINANCIAL INSTRUMENTS
Categories of Financial Instruments
Financial Assets
Cash & cash equivalents
At fair value through other comprehensive income
Trade and other receivables – current ex prepayments
NOTE
2019
$
2018
$
1,790,892
1,331,845
17,696
108,892
23,004
25,145
Trade and other receivables – non current
6
-
10,300,698
1,917,480
11,680,692
Financial Liabilities
Financial Liabilities at amortised cost
Trade and other payables
Convertible Notes
At fair value through profit and loss
12
392,928
-
-
1,289,241
10,562,743
109
392,928
11,852,093
Recognition and derecognition
Purchases and sales of financial assets and financial liabilities are recognised on trade date which is the date on
which the consolidated entity commits to purchase or sell the financial assets or financial liabilities. Financial
assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the group has transferred substantially all the risks and rewards of ownership. Exposure to
credit, interest rate, liquidity, foreign currency, market price and currency risks arises in the normal course of
the consolidated entity’s business. The consolidated entity’s overall risk management approach is to identify the
risks and implement safeguards which seek to minimise potential adverse effects on the financial performance of
the consolidated entity’s business.
The board of directors are responsible for monitoring and managing the financial risks of the consolidated entity.
Fair value
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes.
AASB 13 requires disclosure of fair value measurements by level of the fair value hierarchy, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The consolidated entity’s financial assets measured and recognised at fair value at 30 June 2019 and 30 June
2018 on a recurring basis are as follows:
Octanex Annual Report - Page | 44
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 20 FINANCIAL INSTRUMENT (Continued)
30 June 2019
Assets
Listed securities and debentures
Liabilities
Derivative financial liability
Net fair value
30 June 2018
Assets
Listed securities and debentures
Liabilities
Derivative financial liability
Net fair value
Credit risk
Level 1
$
17,696
-
17,696
Level 1
$
23,004
-
23,004
Level 2
$
Level 3
$
Total
$
-
-
-
-
-
-
17,696
-
17,696
Level 2
$
Level 3
$
Total
$
-
-
-
-
(109)
(109)
23,004
(109)
22,895
Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails
to meet its contractual obligations. At the reporting date there were is no credit risk as the consolidated entity
has no trade sales or trade receivables.
Interest rate risk
All financial liabilities and financial assets at floating rates expose the company to cash flow interest rate risk The
consolidated entity has no exposure to interest rate risk at reporting date, other than in relation to cash and cash
equivalents which attract an interest rate. Convertible notes are at a fixed rate of interest.
Sensitivity Analysis
At reporting date a 1% (100 basis point) increase/decrease in the interest rate would increase/decrease the
consolidated entity loss by $9,323 (2018: $9,323).
Octanex Annual Report - Page | 45
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 20 FINANCIAL INSTRUMENTS (Continued)
Liquidity risk
Liquidity risk is monitored to ensure sufficient monies are available to meet contractual obligations as and when
they fall due.
The following are the contractual maturities of the financial liabilities, including interest payments. Contractual
amounts have not been discounted.
Consolidated
Carrying
Amount
$
Contractual
cash flows
$
0-12
months
$
1-2 years
$
2-10
years
$
30 June 2019
Non-derivative Financial Liabilities
Trade and other payables
Convertible notes
392,928
-
392,928
392,928
-
392,928
392,928
-
392,928
-
-
-
Carrying
Amount
$
Contractual
cash flows
$
0-12
months
$
1-2 years
$
2-10
years
$
30 June 2018
Non-derivative Financial Liabilities
Trade and other payables
Convertible notes
1,289,241
10,562,743
11,851,984
1,289,241
11,428,661
12,717,902
1,289,241
11,428,661
12,717,902
-
-
-
-
-
-
-
-
-
Foreign currency risk
The consolidated entity is exposed to foreign currency risk arising from purchases of goods and services that are
denominated in a currency other than the Australian dollar functional currency. Seismic and well drillings costs
are usually denominated in US dollars. To this extent, the consolidated entity is exposed to exchange rate
fluctuations between the Australian and US dollar. At 30 June 2019 the consolidated entity has a foreign currency
exposure by holding US dollars in bank accounts totalling US$63 (2018: $878,656) and an advance to Ophir
Production Sdn Bhd of US$nil (2018: US$13,262,098) and borrowings of US$nil (2018: US$8,000,000). A one
cent movement in the USD/AUD exchange rate would move consolidated equity by AUD$2 (2018: $77,638).
Octanex Annual Report - Page | 46
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 20 FINANCIAL INSTRUMENTS (Continued)
Equity price risks
Equity price risk applies at fair value through other comprehensive income investments. The investments are
subject to movements in prices of the investment markets.
Financial Assets at fair value through other comprehensive income
Investments in listed equities
Enegex Limited
2019
$
2018
$
17,696
23,004
The consolidated entity and company investments in listed equities are listed on the Australian Securities
Exchange. A 10% increase / decrease at the reporting date in closing share price of each share held would have
increased/decreased consolidated equity by $1,770 (2018: $2,300). There would have been no effect on profit.
Capital Management
When managing capital, the directors’ objective is to ensure the entity continues as a going concern as well as to
maintain optimal returns to shareholders and benefits for other stakeholders.
It is the company’s plan that capital, as and when required, further, will be raised by any one or a combination of
the following manners: placement of shares to excluded offerees, pro-rata issue to shareholders, the exercise of
outstanding options, and/or a further issue of shares. Should these methods not be considered to be viable, or in
the best interests of shareholders, then it would be the consolidated entity’s intention to meet its exploration
obligations by either partial sale of its interests or farmout.
No company in the consolidated entity is subject to any externally imposed capital requirements.
NOTE 21 AUDITOR’S REMUNERATION
Amounts received or due and receivable by:
Grant Thornton Audit Pty Ltd - Auditor of the
consolidated entity and company
Related practices of the parent company auditor
Audit and review of the financial reports
Grant Thornton Singapore – Auditor of Octanex Pte Ltd
NOTE 22 SEGMENT INFORMATION
2019
$
2018
$
45,647
52,000
-
45,647
8,631
60,631
Under AASB 8 Operating Segments, segment information is presented using a 'management approach', i.e.
segment information is provided on the same basis as information used for internal reporting purposes by the
board of directors
At regular intervals the board is provided management information at a group level for the group’s cash position,
the carrying values of exploration permits and a group cash forecast for the next twelve months of operation. On
this basis, no segment information is included in these financial statements.
All interest received has been derived in Australia. All exploration and evaluation assets are held in Australia.
Octanex Annual Report - Page | 47
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 23 EVENTS AFTER THE END OF THE REPORTING PERIOD
There are no significant after balance date events to the date of signing of this report.
NOTE 24 LOSS PER SHARE
The following reflects the income and share data used in the calculations of basic and diluted earnings per share:
Net loss
Weighted average number of shares
2019
$
2018
$
(4,262,732)
(21,501,847)
Number of
Shares
242,766,840
Number of
Shares
242,766,840
Unlisted options outstanding during the year (Refer Note 14) are not dilutive at the 30th June 2019 as the
exercise price is higher than the average share price for the year then ended.
NOTE 25 PARENT ENTITY INFORMATION
The following details information related to the parent entity, Octanex Limited at 30 June 2019. The information
presented here has been prepared using consistent accounting policies as presented in Note 1, except for the use
of the cost method for investment in subsidiary companies by the parent.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Options reserve
Financial assets at fair value through other comprehensive income
reserve
Accumulated losses
Total equity
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
No dividends were paid by the parent entity in 2019 (2018: Nil).
1,896,283
21,958,213
23,854,496
516,564
13,013,440
13,530,004
68,867,927
1,037,563
(639,113)
11,771,085
27,670,938
39,442,023
11,946,597
12,447,135
24,393,732
68,867,927
1,037,563
(639,113)
(58,941,885)
10,324,492
(54,218,066)
15,048,311
(4,723,819)
(40,902,064)
-
-
(4,723,819)
(40,902,064)
Octanex Annual Report - Page | 48
OCTANEX LIMITED
ABN 61 005 632 315
Notes to the Financial Statement
30 JUNE 2019
NOTE 25 PARENT ENTITY INFORMATION (Continued)
2019
$
2018
$
The company’s share of minimum work requirements contracted for under exploration permit interests held in
joint operation is estimated at reporting date:
Payable not later than one year
Payable later than one year but not later than three years
-
-
-
51,250
-
51,250
NOTE 26 IMPAIRMENT OF EXPLORATION AND EVALUATION ASSET
On 5 May 2019 WA-54-R expired. Capitalised exploration and evaluation costs of $7,262,178 were written off.
Octanex Annual Report - Page | 49
OCTANEX LIMITED
ABN 61 005 632 315
Shareholder Information (compiled as at 16 October 2019)
Ordinary share capital
As at 16 October 2019 the company had on issue the following shares:
Fully Paid Ordinary Shares
272,712,947 held by 1,356 holders
All issued fully paid ordinary shares
carry one vote per share
Trustee Shares
29,889,107 held by Doravale Enterprises Pty Ltd (the
Trustee)1
Other than in extremely limited circumstances, the Trustee
has bound itself by the deed of covenant entered into in
association with the Scheme not to vote at the meetings of
members of Octanex.
Options
As at 16 October 2019 the company had on issue 7,170,000 options held by 6 option holders. Options do not
carry any voting right or rights to dividends. Distribution of holders
Holding Ranges
Holders
Total Units
% Issued
Share Capital
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
Over 100,000
Totals
* Based on the price per security, number of holders with an unmarketable holding: 1,198
53,556
1,593,287
1,067,710
11,212,107
258,786,287
272,712,947
171
628
135
322
100
1,356
0.02%
0.58%
0.39%
4.11%
94.89%
100.00%
Substantial shareholders
Substantial shareholders as disclosed in substantial shareholding notices given to the Company are as follows:
Shareholder
Interest in voting
rights
%
of Voting Rights
The Albers Group
Sabah International Petroleum
155,019,083
40,332,663
56.84
14.79
1 These ordinary shares were issued to the Trustee on trust for sale in accordance with a scheme of arrangement
approved by the Supreme Court of Victoria on 17 November 2010 in Matter SCI 210 04962 (the Scheme). As
previously advised to the ASX and to members, those shares are ordinary shares held on trust for sale by the trustee on
the basis that the net proceeds of sale will present the subsection moneys thereof. The shares may be sold as fully paid
up or as partly paid up. Until sold, by the terms of the Scheme, the Trustee will not participate in dividends or
distributions are to the account of the members of Octanex pro rata their respective shareholdings.
Octanex Annual Report - Page | 50
OCTANEX LIMITED
ABN 61 005 632 315
Twenty largest shareholders as at 16th October 2019*
Holder
Number of shares
Sabah International Petroleum Ltd
Gascorp Australia Pty Ltd
Mr Ernest Geoffrey Albers & Mrs Pamela Joy Albers
Mr Ernest Geoffrey Albers
Sacrosanct Pty Ltd
Great Missenden Holdings Pty Ltd
National Gas Australia Pty Ltd
Great Australia Corporation Pty Ltd
Bass Strait Group Pty Ltd
Cue Petroleum Pty Ltd
The Albers Companies Incorporated Pty Ltd
Australis Finance Pty Ltd
Fugro Exploration Pty Ltd
Mrs Pamela Joy Albers
Miller Anderson Pty Ltd
Bond Street Custodians Limited
Great Missenden Group Pty Ltd
Albers Family Custodian Pty Ltd
Seaquest Petroleum Pty Ltd
Wilstermere Corporation Pty Ltd
Total Top 20
* Excluding 29,889,107 Trustee Shares held by Doravale Enterprise Pty Ltd
40,332,663
35,200,014
25,868,034
17,297,794
14,436,081
12,946,004
7,200,000
6,291,000
6,059,049
5,763,357
3,780,491
3,773,188
3,691,721
3,062,500
3,000,000
2,819,512
2,765,060
2,542,875
2,248,000
2,106,500
201,183,843
% of Fully
Paid Shares
14.79%
12.91%
9.49%
6.34%
5.29%
4.75%
2.64%
2.31%
2.22%
2.11%
1.39%
1.38%
1.35%
1.12%
1.10%
1.03%
1.01%
0.93%
0.82%
0.77%
73.77%
Octanex Annual Report - Page | 51