Tlou Energy Limited
ABN 79 136 739 967
Annual Report
and
Consolidated Financial Statements for the year ended 30 June 2022
Tlou Energy Limited – Annual Report 2022
Corporate Directory
ABN
Directors
79 136 739 967
Martin McIver
Anthony Gilby
Gabaake Gabaake
Colm Cloonan
Hugh Swire
Company Secretary
Solomon Rowland
Administration & Registered Office
Telephone:
Solicitors
Auditors
Bankers
Share register
210 Alice Street
Brisbane
QLD 4000
Australia
+61 7 3040 9084
Delphi Partners
Level 23
307 Queen Street
Brisbane QLD 4000
BDO Audit Pty Ltd
Level 10
12 Creek Street
Brisbane QLD 4000
Westpac Banking Corporation
GPO Box 3433
Sydney NSW 2001
Australian Securities Exchange Ltd (ASX Code: TOU)
AIM Stock Exchange UK (AIM Code: TLOU)
Botswana Stock Exchange (BSE Code: TLOU)
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Tlou Energy Limited – Annual Report 2022
Contents
Chairman’s letter ................................................................................................................................................ 4
Managing Director's Report ............................................................................................................................... 5
Directors' report .................................................................................................................................................. 6
2022 Annual Reserves Statement ................................................................................................................... 21
Auditor’s independence declaration ................................................................................................................. 24
Consolidated Statement of Comprehensive Income........................................................................................ 25
Consolidated Statement of Financial Position ................................................................................................. 26
Consolidated Statement of Changes in Equity ................................................................................................ 27
Consolidated Statement of Cash Flows ........................................................................................................... 28
Notes to the financial statements ..................................................................................................................... 29
Directors' declaration ........................................................................................................................................ 58
Independent Auditor’s Report .......................................................................................................................... 59
Corporate Governance Statement ................................................................................................................... 63
Additional Information ...................................................................................................................................... 76
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Tlou Energy Limited – Annual Report 2022
Chairman’s letter
Dear Shareholders,
We continue to make excellent progress towards establishing ourselves as a key power player in Botswana and
Southern Africa through the exploration and development of gas and solar.
During the year we signed an initial five-year 10MW power purchase agreement (PPA) with the Botswana Power
Corporation (BPC), a major step forward for Tlou.
Following on from the signing of the PPA, Tlou commenced the construction of the 100 km transmission line from the
Lesedi project to the grid. Completion of the transmission line is expected in mid-2023. Substations at either end of
the transmission lines are expected to be completed in the second half of 2023, with sale of electricity thereafter.
Connecting the Lesedi project to the grid is expected to open additional offtake opportunities across Botswana and via
the Southern African Power Pool.
Tlou’s two production wells, Lesedi 3 and Lesedi 4, continued to produce gas during the reporting period. Lesedi 3 has
been temporarily shut in while Lesedi 4 is still dewatering. Gas flow rates are expected to continue to increase,
particularly when additional wells are drilled to assist with dewatering of the reservoir as part of a full field
development. Tlou’s current 2P gas reserves stand at approximately 41 billion cubic feet (~7.2m BOE).
The Company has also acquired land in the Lesedi project area where work is underway on developing a new
purpose-built operations facility including accommodation and associated infrastructure. The new facility will support
the delivery and expansion of the Lesedi project.
The Company’s Mamba and Boomslang project areas are located adjacent to the Lesedi project. Tlou will continue to
develop these projects and successful exploration and development of these projects could allow the Company to
progress these areas separately to Lesedi, with the potential for gas-fired power, solar power and hydrogen
production.
We are privileged to have the continued support of the government of Botswana and the inclusion of coal bed
methane (CBM) as part of the country’s forward plan to combat power deficiency.
The Company signed a heads of agreement with Synergen Met Pty Ltd (SM) for the construction and commissioning
of a hydrogen and solid carbon prototype to be installed at the Lesedi Project. SM is a specialist in plasma torch and
pyrolysis technology. Leveraging on the Company’s gas and solar developments, a successful prototype would
expand commercial offtake opportunities available to the Company.
In November 2021, the Company successfully raised USD 5 million through a convertible note with the Botswana
Public Officers Pensions Fund (BPOPF). The funds raised will allow the company to progress the development of the
Lesedi project, including the construction of the overhead transmission lines to connect the project to the electricity
grid.
This has been a highly active year for Tlou. We look forward to another successful year ahead. I would like to take this
opportunity to thank the Tlou Board, management, field staff and advisers, and most importantly our shareholders for
their continued support during this exciting time for Tlou.
Yours faithfully,
Martin McIver
Chairman
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Tlou Energy Limited – Annual Report 2022
Managing Director's Report
Dear Shareholders,
Tlou Energy has steadily advanced the Lesedi Gas-to-Power Project over the past year.
Funding was secured from Botswana Public Officers Pension Fund (BPOPF) to build a transmission line connecting
the project to the existing electricity grid. Work on the power line route commenced earlier this year and is scheduled
for completion in 2023.
The Lesedi 3 and 4 production wells have flowed gas for a prolonged period. A review of the geotechnical data
suggests that only a fraction of the lateral well bores have successfully dewatered to date. It is apparent that with
further drilling to shield the production wells from water influx along with some modifications of the lateral well path,
significantly increased gas flow rates are probable.
Gas is becoming an increasingly valuable commodity of late particularly when discovered reserves are in an advanced
state of development such as Tlou’s. During 2022, energy supplies and power markets have experienced severe
dislocation stemming initially from post-COVID reflation policies and subsequently from the Ukrainian situation with its
associated sanctions.
As a result, global power prices have had extreme surges. In the U.K. consumers are seeing substantial increases in
gas and electricity bills from pre-pandemic levels. In August, Sasol as South Africa’s main natural gas supplier,
doubled gas prices and has regulatory room to increase them again.
Within Europe the extreme price dislocations have been compounded by policies whereby countries have sought to
rely on highly intermittent renewable energies, such as solarPV and wind power, to provide essential 24/7 base-load
and peaking power. This potential policy misstep is being recognised more widely, including within Africa.
This situation is seeing a fundamental global reassessment of the benefits of natural gas. Specifically within Southern
Africa, it is also being recognised as a ’transition fuel’ - enabling the installation of renewables, such as solarPV, by
providing the supporting flexibility of the essential base-load and peaking power. Tlou Energy is now well positioned to
meet the growing energy requirements of Southern Africa via an optimal mix of gas and solarPV power.
Risks still exist within the Lesedi project and include the ultimate gas flow rate, government bureaucracy and adequate
funding to name a few. Tlou continues to work on reducing these risks as we progress.
Successful completion of our proposed drilling campaign targeted for the first half of next year could lead to a
significant increase in gas flow rates over and above those already achieved. Such a result would substantially
advance the Company’s fortunes. Tlou plans to have the Lesedi Power Project producing its first electricity into the
grid towards the end of next year and is focussed on meeting that objective.
Yours faithfully,
Anthony (Tony) Gilby
Managing Director
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Tlou Energy Limited – Annual Report 2022
Directors' report
The Directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the 'consolidated entity' or the ‘Group’) consisting of Tlou Energy Limited (referred to hereafter as the
'Company' or 'parent entity') and the entities it controlled at 30 June 2022.
General Information
Directors
The following persons were directors of Tlou Energy Limited during the whole of the financial year and up to the date
of this report, unless otherwise stated:
Martin McIver
Anthony Gilby
Non-Executive Chairman
Managing Director & Chief Executive Officer
Gabaake Gabaake
Executive Director
Colm Cloonan
Hugh Swire
Finance Director
Non-Executive Director
Dividends
There were no Dividends recommended or paid during the financial year.
Principal activities
The principal activity of the consolidated entity is to develop power solutions in Sub-Saharan Africa through Coalbed
Methane (CBM) gas-fired power, solar power, and hydrogen projects. No revenue from these activities has been
earned to date, as the consolidated entity is still in the exploration and evaluation or pre-development stage.
Significant changes in the state of affairs
There were no other significant changes to the state of affairs of the consolidated entity other than those disclosed in
the financial report and notes thereof.
Review and results of operations
The loss for the year after interest amounted to $4,329,116 (30 June 2021: $2,054,237).
The loss is higher than the prior period which is due in part to the return to more normal operating conditions post the
COVID-19 pandemic restrictions. In addition to the increased activity and associated costs, a number of mainly non-
cash items are included on the statement of comprehensive income that were not in the prior period. This includes
impairment of previously capitalised exploration and evaluation expenditure relating to non-core project areas, interest
on the convertible notes issued during the year, share based payments re performance rights, and an expense in
relation to the fair value of financial instruments. These items alone account for approximately $1.3m of the loss for
the year.
Operationally the focus during the year was on further development of the Lesedi project and in particular construction
of a transmission line to connect the Lesedi project to the existing grid. The transmission line work began in 2022 and
costs to date are classed as contract assets on the statement of financial position.
Spending on exploration and evaluation, transmission lines and other assets was approximately $2.9m for the period.
Capital proceeds of US$5m were received from Tlou’s largest shareholder, Botswana Public Officer’s Pension Fund,
via the issue of a convertible note. Cash at the end of the year amounted to approximately $7.87m.
Gas-to-power
The Company’s operations during the year were based on development of the Lesedi Power Project (Lesedi). Lesedi
is the Company’s most advanced project. The Lesedi project area consists of three Prospecting Licences (PL) and a
Production Licence. The first stage of development is a 10MW power generation facility which will be located in the
Production Licence area.
Electricity generated at the 10MW gas fired power facility will be sold under a Power Purchase Agreement (PPA) with
Botswana Power Corporation (BPC), the national power utility in Botswana. To connect to Botswana’s power grid, a
100 km transmission line is being built from Lesedi to join the grid near the town of Serowe. Work is underway on this
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Tlou Energy Limited – Annual Report 2022
project and the line is scheduled for completion in mid-2023. Substations are also required at either end of the
transmission line. These are expected to be completed in the second half of 2023. Sale of electricity can start
thereafter. Once in full production, 10MW of generation could provide annual revenue of approximately US$10m.
Work is also underway on developing a new purpose-built operations facility including accommodation and associated
infrastructure required for the initial 10MW development and to allow for rapid project expansion thereafter.
Gas will be required to generate electricity for sale. Two production wells Lesedi 3 and Lesedi 4 continued to produce
gas during the year. Lesedi 3 has been temporarily shut-in and Lesedi 4 continues to produce. Lesedi 3 (when back in
production) and Lesedi 4 are expected to produce increased gas flow rates particularly when additional wells are
drilled to assist with dewatering of the reservoir as part of a full field development and to provide sufficient gas for the
10MW development. Tlou’s current 2P gas reserves stand at approximately 41 billion cubic feet (~7.2m BOE).
The transmission line currently under construction is expected to have a capacity of up to 25MW. With 10MW already
committed under the PPA with BPC, the Company is also marketing the additional 15MW of power to other potential
off-takers.
In addition to the Lesedi project area, the Company also holds six other prospecting licences (PL) at varying stages of
exploration and evaluation. These include the Mamba project which consists of five PL’s covering an area of
approximately 4,500 Km2 and the Boomslang licence (approx. 1,000 Km2). Both Mamba and Boomslang areas are
situated adjacent to Lesedi. In the event of a gas field development by Tlou, these areas provide the Company with
flexibility and optionality.
Other opportunities
Gas-to-power is the Company’s key focus. However other potential revenue generating avenues are continually being
investigated and will be pursued if commercially viable.
Tlou continues to advance plans for development of solar power. Solar generation can work as a standalone project
and in addition to the planned gas-fired generation. Botswana is an ideal location for solar power with high levels of
irradiation. A standalone solar project can assist with power requirements during daylight hours, however Tlou’s solar
and gas could be combined to provide reliable baseload power, with solar generation during daylight hours and gas-
fired power used when solar is unavailable. This approach could reduce carbon emissions compared to Botswana’s
existing coal and diesel fired generation, plus a combined solar and gas approach also reduces potential grid stability
issues.
Tlou is also looking into hydrogen production. The hydrogen economy is rapidly developing and could open additional
business opportunities. Tlou is developing a hydrogen strategy in conjunction with its partners with the aim of
producing hydrogen as well as carbon black or graphite via methane pyrolysis.
In addition to the above Tlou is looking at monetising currently flared gas. One potentially viable option is the mining of
crypto currencies, and the Company has successfully completed a small crypto mining trial at its field camp. The trial
used excess field camp electricity to run crypto mining units to produce Bitcoin. This has established proof of concept
and built in-house technical expertise. The next stage will involve powering the crypto miners using electricity
generated from the Lesedi 4 production well, i.e., using gas which would otherwise be flared. Following this and
subject to results, the Company may expand the project.
Matters subsequent to the end of the financial year
There has not been any matter or circumstance, other than that referred to in this report and disclosed in the financial
statements or notes thereto, that has arisen since the end of the period, that has significantly affected, or may
significantly affect, the operations of the consolidated entity, the results of these operations, or the state of affairs of
the consolidated entity in future financial years.
Likely developments, risks and expected results of operations
The Company has drilled development wells in the Lesedi project area which have produced CBM gas. These wells
were designed to achieve enhanced gas flow rates in the area proposed for the Company’s initial project
development. The gas flow rates from these wells are vitally important to assess the viability of the Lesedi project and
management are confident that commercial gas flows can be achieved. However, at the date of this report the level of
gas that can and will be produced from the project and if it will be at commercial rates is not yet known. In addition,
further wells will also be required to produce sufficient gas for the planned Lesedi project.
The Company is advancing plans to develop solar, hydrogen, solid carbon and crypto mining projects in addition to
the gas-fired power project. These projects may be subject to regulatory approvals. No guarantee can be given in
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Tlou Energy Limited – Annual Report 2022
relation to the results of the Company’s operations, gas flow rates, regulatory approvals being granted or the ability to
secure the funds required to progress all or any of the Company’s existing or planned operations.
The Company is subject to risks which may have a material adverse effect on operating and financial performance.
Tlou’s Risk Management Policy can be found on the Company’s website. It is not possible to identify every risk that
could affect the business or shareholders. Any actions taken to mitigate these risks cannot provide complete
assurance that a risk will not materialise or have a material adverse effect on the business, strategies, assets or
performance of the Company. A list of risks currently considered material and mitigation strategies are set out below.
This is not an exhaustive list and risks are outlined in no particular order.
Risk
Funding
Description
Mitigation
The Company will need to raise additional debt
and/or equity funds to support its ongoing
operations or implement its planned activities
and strategies. This includes but is not limited to
funding to complete the infrastructure necessary
to connect to the power grid and generate
electricity at the Lesedi project and funds to
facilitate drilling of additional gas wells to deliver
sufficient gas for development of the proposed
10MW power project. There can be no
assurance that such funding will be available
when required or on satisfactory terms or at all.
Inability to find sufficient funds may result in the
delay or abandonment of certain activities which
would likely have an adverse on the Company’s
progress.
The Company has operated in Botswana for
over a decade with extensive local and
international investor relationships who have
supported the Company
The Company actively manages its capital
requirements and maintains close relationships
with potential investors. The Company
continues to explore sources of both equity and
debt capital.
Health and
Safety
The project operations are in a remote location,
in a sometimes-harsh environment and involves
the use of heavy machinery and equipment.
Freedom to
Operate
The Company has licences to operate over
approximately 8,000 square km and has had
continued access to key licence areas when
required. Negative sentiment towards the project
or industry may impair Tlou's freedom to
operate. Changes to key Government personnel
and/or national policy could also impact ability to
operate effectively.
The Company employs highly skilled and
experienced personnel where possible. The
Chief Operations Officer is supported by a
dedicated Safety, Health and Environment
(SHE) officer and a paramedic is also on duty
at all times at the field operations. The
Company has a training and safety
management system and external audits of the
safety management system are conducted. All
visitors to site are given a safety briefing.
The Company continues to support regular and
extensive Government engagement activities
to interest and educate lawmakers to the
country's natural resource opportunities as well
as keep up to date with changing national
power strategies and requirements.
Tlou supports and interacts with a wide
network of local stakeholders including farmers
and landowners to try and ensure that the
needs of the community are being met and that
the project can provide benefits for all
stakeholders including providing long term and
sustainable employment opportunities.
8
Environment Botswana’s natural habitat, water and wildlife
needs to be protected. Botswana rigorously
enforces its environmental regulations so the
risk of fines or other liabilities for noncompliance
is commensurately high.
Power Sales
The Company has signed a 10MW Power
Purchase Agreement (PPA) with Botswana
Power Corporation (BPC) with the aim for first
power to be supplied into the national grid in
2023. There is a risk completion that the grid
connection infrastructure could be delayed
thereby postponing first power sales. No other
agreements are currently in place for sale of
power or gas to other parties.
Geological
Risk
The Company has approximately 8,000 square
km of licence areas part of which has not had
significant CBM operations to date. There
remains significant geological risk in these areas
and subject to operational results these areas
may not be commercial.
Remote
Operations
The Company operates over 100km from
established medical and engineering support
facilities in the closest urban area which
increases costs and risks as well as requiring
adequate insurance.
People
The Company may lose key executives and
management. The Company operates in a
competitive environment in relation to talented
corporate and technical personnel.
Tlou Energy Limited – Annual Report 2022
Tlou has full environmental approval in place
for development of the gas-to-power project.
The Company aims to not just meet
environmental requirements but exceed them.
The Company uses local specialists to support
its ongoing permit renewals, environmental
assessments and licence applications.
Continual monitoring of actual and potential
impacts on the environment is practiced to try
and ensure that any impact on the natural
habitat is eliminated or minimised.
The Company works closely with its
contractors and engineers to progress
infrastructure projects in a timely manner.
Management continues to explore
opportunities with other potential customers
across the region, potentially via the Southern
African Power Pool or within Botswana. The
Company also aims to diversify its products
including potentially producing solar power,
hydrogen, solid carbon products and mining
crypto currencies.
Tlou has invested in seismic surveys and core
hole drilling to identify areas of lower risk prior
to conducting further exploration and
evaluation. This strategy is planned for
undeveloped areas of the project. After a
decade of operating in the region and
supported by external resource certifications,
the operations team have and continue to
develop an excellent knowledge of the
geological area to help de-risk future
exploration and evaluation operations.
The Company has on-site paramedic support
and has invested in its own stock of equipment
so that it can operate as autonomously as
possible over a greater range of activities. A
purpose-built field operations camp is under
construction which will be suitable for full
development of the initial 10MW project and for
further expansion.
The Company continues to search for skilled
staff to grow the team to satisfy the Company’s
needs and ideally to have a lead person and
back-up support person for all key positions. In
addition, implementation of appropriate staff
training and succession plans is a key target.
The Company offers incentives and
development opportunities for key executives
and management to attract the best talent to
the Company.
Environmental regulation
The Directors are satisfied that adequate systems are in place for the management of its environmental
responsibilities and compliance with its various licence requirements and regulations. The Directors are not aware of
any breaches of these requirements and to the best of their knowledge, all activities have been undertaken in
compliance with environmental regulations.
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Tlou Energy Limited – Annual Report 2022
Information on Directors
Martin McIver
Special Responsibilities
MBA
Interest in Shares and options
Non-Executive Chairman
Member of the Audit Committee
Member of the Risk Committee
Chairman of the Nomination & Remuneration Committee
812,102 Ordinary Shares
750,000 Performance Rights
Experience
Martin holds an MBA (International) from the American Graduate School of International Management, a Graduate
Diploma in Applied Finance and Valuations (FINSIA/Kaplan) and a Bachelor of Business (Marketing) from the
Queensland University of Technology.
Martin has over 15 years’ experience as General Manager for mining services companies including bulk and
dangerous goods logistics, and drilling services. Martin was the Executive General Manager of the Mitchell Group, a
vertically integrated coal and coal seam gas company with investments and operations across Australia, Asia and
Africa. Prior to joining the Mitchell Group, Martin was a Director in Mergers and Acquisitions with
PricewaterhouseCoopers.
Martin was appointed Non-Executive Director in September 2010 and is currently the Chief Financial Officer of PWR
Holdings Limited (ASX:PWH). During the past three years Martin has not served as a director of any other ASX listed
companies.
Anthony Gilby
Special Responsibilities
B.Sc. (First Class Honours)
Interest in Shares and options
Managing Director and Chief Executive Officer
Member of the Audit Committee
Member of the Nomination & Remuneration Committee
34,489,580 Ordinary Shares
750,000 Performance Rights
Experience
Tony was appointed Managing Director and Chief Executive Officer in March 2012 and has over 30 years’ experience
in the oil and gas industry. He is a founding director of Tlou Energy Limited.
Tony was awarded a Bachelor of Science (First Class Honours) degree in Geology from the University of Adelaide in
1984, and also won the University Medal in Geology (Tate Memorial Medal). Tony began his career working as a well-
site geologist for Delhi Petroleum in the Cooper Basin. He subsequently joined ESSO Australia. His roles with ESSO
included exploration geology, geophysics, petrophysics and a period of time working in the Exxon Production
Research Centre in Houston studying the seismic application of sequence stratigraphy.
On his return to Australia, he continued to work with ESSO in a New Ventures capacity working on a variety of
projects prior to relocating to Brisbane where he worked for MIM Petroleum and the Louisiana Land and Exploration
Company (LL&E). In 1996, he left LL&E to take on a consulting role as well as the acquisition of prospective
Queensland acreage in a private capacity. This work culminated with the founding of Sunshine Gas Limited where he
remained Managing Director until its sale in late 2008. He is a former Non-Executive director of ASX listed Comet
Ridge Limited.
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Tlou Energy Limited – Annual Report 2022
Gabaake Gabaake M.Sc.
Special Responsibilities
Interest in Shares and options
Executive Director
Member of the Risk Committee
Member of the Nomination & Remuneration Committee
385,999 Ordinary Shares
2,750,000 Performance Rights
Experience
Gabaake graduated with a Bachelor of Science degree in Geology from the University of Botswana in 1986 followed
by a Masters degree in groundwater hydrology from the University College of London in 1989.
Gabaake is a Botswana citizen based in Gaborone. He is a former Botswana Government senior public servant
having worked as Permanent Secretary at the Ministry of Minerals, Energy and Water Resources. Prior to that, he
served at the Ministry of Local Government.
Gabaake has served on various private company boards including De Beers Group, Debswana Diamond Company
(Pty) Limited and Diamond Trading Company Botswana. During the past three years, Gabaake has not served as a
director of any other ASX listed companies.
Colm Cloonan
Special Responsibilities
FCCA
Interest in Shares and options
Finance Director
Member of the Audit Committee
Member of the Nomination & Remuneration Committee
1,931,112 Ordinary Shares
4,750,000 Performance Rights
Experience
Colm is a Fellow of the Association of Chartered Certified Accountants (FCCA) with 20 years’ experience in various
finance roles.
Colm joined Tlou in 2009 at the early stages of the Company’s activities and has been with the Company through all
phases of its operations and development to date. Colm has worked in Europe and Australia in a range of finance
roles including audit and business services, as well as providing financial and management accounting services to
clients in various industries including power generation in Australia.
Colm studied accountancy at the Galway-Mayo Institute of Technology in Ireland. During the past three years Colm
has not served as a director of any other ASX listed companies.
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Tlou Energy Limited – Annual Report 2022
Hugh Swire
Special Responsibilities
BA (Hons)
Interest in Shares and options
Non-Executive Director
Chair of the Risk Committee
Member of the Nomination & Remuneration Committee
10,065,921 Ordinary Shares
500,000 Performance Rights
Experience
Hugh started his career working with Mahon China, an established investment management and advisory partnership
based in Beijing. Active in China since 1985, Mahon China have over 3 decades of experience advising foreign
companies with investments and corporate activities in China. Hugh has remained a Partner of the firm and now
supports UK / EU companies from London looking to expand and find partners in China or increasingly support
Chinese companies looking to make investments internationally.
After leaving Mahon China, Hugh spent a decade working for Investment funds and international banks in Hong Kong
and Tokyo where he worked for Nomura as well as in London for JP Morgan where he was Vice President.
Since 2010, Hugh has been focused on supporting fast growing UK companies in the low carbon and technology
sectors by investing growth capital in Water Powered Technologies Ltd, a leading innovator in zero energy water
management systems as well as MWF Ltd, one of the largest suppliers of renewable heat in the UK, which has since
been sold to Aggregated Micro Power Holdings plc. Hugh also helped found a leading technology education company
Black Country Atelier Ltd, which provides specialist training courses to students globally in 3D printing (CAM) digital
electronics and CAD.
Hugh still travels to China after studying Chinese at Oxford University graduating with a BA Hons. During the past
three years Hugh has not served as a director of any other ASX listed companies.
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Tlou Energy Limited – Annual Report 2022
Remuneration Report - audited
This report outlines the remuneration arrangements in place for the key management personnel of the consolidated
entity.
Remuneration policy
Ensuring that the level of Director and Executive remuneration is sufficient and reasonable is dealt with by the full
Board. The Remuneration Policy of Tlou Energy Limited has been designed to align the objectives of key
management personnel with shareholder and business objectives. The Board of Tlou Energy Limited believes the
remuneration policy to be appropriate and effective in its ability to attract and retain the best key management
personnel to run and manage the consolidated entity, as well as create shared goals between key management
personnel and shareholders.
The Board's policy for determining the nature and amount of remuneration for the executive Directors and senior
executives of the consolidated entity is as follows:
• The remuneration policy is developed by the Board after seeking, if appropriate, professional advice from
independent external consultants.
• Executives employed by the consolidated entity receive a base salary (which is based on factors such as
length of service and experience), inclusive of superannuation, fringe benefits, options, and performance
incentives where appropriate. If performance incentives are put in place these will generally only be paid once
predetermined key performance indicators have been met.
• Executives engaged through professional service entities are paid fees based on an agreed market based
hourly rate for the services provided and may also be entitled to options and performance-based incentives.
•
Incentives paid in the form of options or performance rights are intended to align the interests of management,
the Directors and Company with those of the shareholders. In this regard, executives are prohibited from
limiting risk attached to those instruments by use of derivatives or other means.
The Board reviews executive remuneration arrangements annually by reference to the consolidated entity’s
performance, executive performance and comparable information from industry sectors.
Key management personnel including Non-executive Directors located in Australia and employed executives receive
the superannuation guarantee contribution required by the Commonwealth Government, which is currently 9.5% and
do not receive any other retirement benefits. Individuals, however, can chose to sacrifice part of their salary to
increase payments towards superannuation.
Non-Executive Director Remuneration
The Board's policy is to remunerate Non-Executive Directors for time, commitment, and responsibilities. The Board
determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market
practice, duties, and accountability. Independent external advice is sought when required.
The maximum aggregate amount of fees that can be paid to Non-Executive Directors is $500,000 per year. This was
approved by shareholders at a general meeting held on 10 July 2012.
Fees for Non-Executive Directors are not linked to the performance of the consolidated entity, however, to align
Directors interests with shareholder interests, where possible the Directors are encouraged to hold shares in the
Company. There is no minimum holding prescribed in the Constitution.
Performance conditions linked to remuneration
The Board provides advice on remuneration and incentive policies and practices and specific recommendations on
remuneration packages and other terms of employment for executive Directors, other senior executives, and Non-
Executive Directors. The aim is to ensure that reward for performance is competitive and appropriate for the results
delivered.
Remuneration and the terms and conditions of employment for executive Directors and Company executives are
reviewed annually having regard to performance and relative comparative information and are approved by the Board
following independent professional advice, as required. In this respect, consideration is given to normal commercial
rates of remuneration for similar levels of responsibility.
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Tlou Energy Limited – Annual Report 2022
Key management personnel during the financial year ended 30 June 2022
Directors
Martin McIver
Anthony Gilby
Gabaake Gabaake
Colm Cloonan
Hugh Swire
Executives
Solomon Rowland
Non-Executive Chairman
Managing Director and Chief Executive Officer
Executive Director
Finance Director
Non-Executive Director
Company Secretary
There were no other key management personnel of the consolidated entity during the financial year ended 30 June
2022.
Details of remuneration
Details of remuneration of each of the Directors and executives of the consolidated entity during the financial year are
set out in the table below.
Benefits and Payments for the year ended 30 June 2022
Short-term
benefits
Salary &
Fees
Cash
Bonus
Post
Employment
benefits
Superannuation
Long
term
benefits
Share
based
payments
Leave
Benefits
Total Cash
Remuneration
Performance
Rights
Equity
Compensation
Total
$
$
$
$
$
$
Directors
M McIver
A Gilby
44,000
152,365
G Gabaake
106,210
C Cloonan
119,367
H Swire
Total
Directors
44,000
465,942
Executives
S Rowland
Total
Executives
Total
160,254
160,254
626,196
-
-
-
-
-
-
-
-
-
4,400
6,545
10,621
34,256
-
55,822
16,025
16,025
71,847
-
-
-
-
-
-
-
-
-
48,400
158,910
116,831
153,623
44,000
521,764
-
-
77,400
154,800
-
232,200
0.0%
0.0%
39.8%
50.2%
0.0%
176,279
176,279
0.0%
-
-
698,043
232,200
$
48,400
158,910
194,231
308,423
44,000
753,964
176,279
176,279
930,243
During the 2022 year, performance rights were issued to key management personnel as outlined later in this report
under the heading Performance Rights. No key management personnel received other performance related bonuses,
cash bonuses, termination benefits or non-cash benefits during the year.
14
Benefits and Payments for the year ended 30 June 2021
Tlou Energy Limited – Annual Report 2022
Short-term
benefits
Salary &
Fees
Cash
Bonus
Post
Employment
benefits
Superannuation
Long
term
benefits
Leave
Benefits
Total Cash
Remuneration
Total
Directors
M McIver
A Gilby
G Gabaake
C Cloonan
H Swire
L Mohohlo
Total Directors
Executives
S Rowland
Total
Executives
Total
$
12,000
146,787
83,596
132,456
12,000
11,000
397,839
141,027
141,027
538,866
-
-
-
-
-
-
-
-
-
-
$
$
$
$
1,410
6,353
13,614
23,548
-
-
-
7,575
2,756
-
-
-
44,925
10,331
13,410
160,715
99,966
156,004
12,000
11,000
453,095
$
13,410
160,715
99,966
156,004
12,000
11,000
453,095
13,398
13,398
30,001
30,001
184,426
184,426
184,426
184,426
58,323
40,332
637,521
637,521
During the 2021 year, no proportion of the remuneration of any key management personnel was performance based.
No key management personnel received cash bonuses, performance related bonuses, termination benefits or non-
cash benefits during the year.
Service agreements
The following outlines the remuneration and other terms of employment for the following personnel during the
reporting period which are formalised in employment contracts for services.
Anthony Gilby
Term of Agreement:
Base Fee:
Termination Benefit:
Termination Notice:
Solomon Rowland
Term of Agreement:
Base Fee:
Termination Benefit:
Termination Notice:
Managing Director and Chief Executive Officer
Mr Gilby's services are provided in a personal capacity. The agreement has no fixed
term.
Mr Gilby waived 75% of his contracted rate up to the end of the reporting period. The
amount waived will not be payable by the Company at a future date. The annual cost
to the Company excluding share-based payments (if any), after taking account of the
75% deduction, adjustments for industry standards and CPI was approximately
$159,000. From 1 July 2022 Mr Gilby’s salary will revert to 50% of his contracted rate.
No termination benefit is payable if terminated for cause.
The Company may give Mr Gilby three months’ notice or pay 1.5 times his contracted
salary in lieu of notice to terminate the Agreement.
Company Secretary
Mr Rowland’s services are provided in a personal capacity. The agreement has no
fixed term.
Mr Rowland has agreed to waive up to 25% of his current contracted rate up to the
end of the reporting period. The amount waived will not be payable by the Company
at a future date. The annual cost to the Company excluding share-based payments (if
any), after taking account of the 25% deduction, adjustments for industry standards
and CPI was approximately $176,000.
No termination benefit is payable if terminated for cause.
The Company may give the Company Secretary six months’ notice of its intention to
terminate the Agreement.
15
Service agreements (continued)
Tlou Energy Limited – Annual Report 2022
Gabaake Gabaake
Term of Agreement:
Base Fee:
Termination Benefit:
Termination Notice:
Colm Cloonan
Term of Agreement:
Base Fee:
Termination Benefit:
Termination Notice:
Executive Director
Mr Gabaake’s services are provided in a personal capacity. The agreement has no
fixed term.
Mr Gabaake has agreed to waive up to 22% of his current contracted rate up to the
end of the reporting period. The amount waived will not be payable by the Company
at a future date. The annual cost to the Company excluding share-based payments (if
any), after taking account of the 22% deduction, adjustments for industry standards
and CPI was approximately $117,000.
No termination benefit is payable if terminated for cause.
The Company may give the Executive Director six months’ notice of its intention to
terminate the Agreement.
Finance Director
Mr Cloonan's services are provided in a personal capacity. The agreement has no
fixed term.
Mr Cloonan waived 50% of his contracted rate up to the end of the reporting period.
The amount waived will not be payable by the Company at a future date. The annual
cost to the Company excluding share-based payments (if any), after taking account of
the 50% deduction, adjustments for industry standards and CPI was approximately
$154,000. From 1 July 2022 Mr Cloonan’s salary will revert to his full contracted rate.
No termination benefit is payable if terminated for cause.
The Company may give the Finance Director six months’ notice of its intention to
terminate the Agreement.
Key management personnel shareholdings
The number of ordinary shares in Tlou Energy Limited held by each key management person of the consolidated
entity during the financial year is set out below. These figures do not include any shares issued post year end.
30 June 2022
Balance at
beginning of year
Granted as
remuneration
during the year
Additions
Disposals
Balance at date
of resignation /
appointment
Balance at end
of year
M McIver
A Gilby
G Gabaake
C Cloonan
H Swire
S Rowland
812,102
34,489,580
385,999
1,931,112
10,065,921
475,000
48,159,714
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
812,102
34,489,580
385,999
1,931,112
10,065,921
475,000
48,159,714
Key management personnel Options
The number of options in Tlou Energy Limited held by each key management person of the consolidated entity during
the financial year is set out below. These figures do not include any options issued post year end. The options in this
table are attaching options to shares that were issued.
30 June 2022
Balance at
beginning of
year
Granted as
remuneration
during the
year
Additions
Expired
Balance at date
of resignation /
appointment
Balance at end
of year
-
M McIver
A Gilby
G Gabaake
C Cloonan
H Swire
S Rowland
-
-
-
-
-
-
-
Note: All the above options expired on 20 July 2022. There are no options outstanding at the date of this report.
6,249,999
27,571
375,000
2,750,415
87,500
9,490,485
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,249,999
27,571
375,000
2,750,415
87,500
9,490,485
16
Tlou Energy Limited – Annual Report 2022
Performance rights
Performance Rights are linked to the share price performance of the Company, ensuring alignment with the interests
of the Company's shareholders. For the Performance Rights to vest and, therefore, become exercisable by a
participant, certain performance conditions are required to be met as set out below. On vesting, holders of
Performance Rights will be entitled to acquire Tlou Energy Limited ordinary shares at nil cost.
Performance rights held by key management personnel at 30 June 2022 are as set out below:
Tranche
Issue Date
Opening
Balance
Issued
Value
Exercised Lapsed Balance at Year
Unvested
(i)
(ii)
(iii)
(i)
(ii)
(iii)
(i)
(ii)
(iii)
(iv)
(v)
(i)
(ii)
(iii)
(iv)
(v)
(i)
(ii)
(i)
(ii)
(iii)
19-Oct-18
19-Oct-18
31-Jan-17
19-Oct-18
19-Oct-18
31-Jan-17
19-Oct-18
19-Oct-18
31-Jan-17
15-Dec-21
15-Dec-21
19-Oct-18
19-Oct-18
31-Jan-17
15-Dec-21
15-Dec-21
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
- 21,575
- 21,575
- 34,000
- 21,575
- 21,575
- 34,000
- 21,575
- 21,575
- 34,000
- 1,000,000
- 1,000,000
41,800
35,600
250,000
250,000
250,000
- 21,575
- 21,575
- 34,000
- 2,000,000
- 2,000,000
83,600
71,200
19-Oct-18
19-Oct-18
250,000
250,000
- 21,575
- 21,575
19-Oct-18
19-Oct-18
31-Jan-17
250,000
250,000
250,000
- 21,575
- 21,575
- 34,000
4,250,000 6,000,000 661,100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
End
250,000
250,000
250,000
-
250,000
250,000
250,000
-
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
1,000,000
1,000,000
-
250,000
250,000
250,000
2,000,000
2,000,000
250,000
250,000
250,000
1,000,000
1,000,000
250,000
250,000
250,000
2,000,000
2,000,000
-
250,000
250,000
250,000
250,000
-
250,000
250,000
250,000
250,000
250,000
250,000
10,250,000 10,250,000
Performance conditions and expiry date
To vest the share price needs to be AUD $0.165 or greater for a period of 10 consecutive
trading days. These performance rights expire on 31/01/2025.
To vest the share price needs to be AUD $0.22 or greater for a period of 10
consecutive trading days. These performance rights expire on 31/01/2025.
To vest the share price needs to be AUD $0.28 or greater for a period of 10 consecutive
trading days. These performance rights expire on 31/01/2024.
To vest the share price needs to be AUD $0.10 or greater for a period of 10 consecutive
trading days. These performance rights expire on 31/01/2025.
To vest the share price needs to be AUD $0.165 or greater for a period of 10 consecutive
trading days. These performance rights expire on 31/01/2025.
Shares issued on exercise of performance rights
Other than as shown in the table above, no other shares were issued on exercise of performance rights up to the date
of this report.
17
30 June
2022
M McIver
A Gilby
G Gabaake
C Cloonan
H Swire
S Rowland
Total
Tranche
(i)
(ii)
(iii)
(iv)
(v)
Tlou Energy Limited – Annual Report 2022
Relationship between remuneration and Company performance
The factors that are considered to affect shareholder return during the last five years is summarised below:
Share price at end of financial year ($)
Market capitalisation at end of financial year ($M)
Loss for the financial year ($)
Cash spend on exploration programs ($)
2022
0.028
17
(4,329,116)
(1,991,033)
2021
0.039
23
(2,054,237)
(797,340)
2020
0.040
18
(12,950,601)
(1,766,761)
2019
0.12
52
(3,216,695)
(6,942,758)
2018
0.10
35
(2,810,730)
(3,330,951)
Director and Key Management Personnel remuneration
($)
930,243
637,521
1,033,623
1,560,338
1,168,943
Given that the remuneration is commercially reasonable, the link between remuneration, Company performance and
shareholder wealth generation is tenuous, particularly in the exploration and development and pre-development stage.
Share prices are subject to market sentiment towards the sector and increases or decreases may occur independently
of executive performance or remuneration.
The Company may issue options or performance rights to provide an incentive for key management personnel which,
it is believed, is in line with industry standards and practice and is also believed to align the interests of key
management personnel with those of the Company’s shareholders.
No remuneration consultants were used in the 2022 financial year.
Other transactions with key management personnel and their related parties
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a director-related entity of
Anthony Gilby.
2022
$
2021
$
12,900
12,000
Terms and conditions: Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated. There were no amounts payable as at 30
June 2022 (2021: Nil).
(End of Remuneration Report)
18
Tlou Energy Limited – Annual Report 2022
Company secretary
Mr Solomon Rowland was appointed Company Secretary on 19 August 2015 and continues in office at the date of this
report. Mr Rowland is a commercial lawyer with over 20 years’ experience in various private, government and in-
house legal roles. Solomon holds a Juris Doctor from the University of Queensland.
Prior to joining Tlou Energy Limited as Legal Counsel in February 2013, Solomon worked for Crown Law representing
various Queensland government departments in a range of legal matters. During his time in government, Solomon
was involved in advising government departments on commercial, corporate governance and policy matters as well as
representing the state in various courts, tribunals, and commissions of inquiry. Solomon brings many years of
experience in commercial, advocacy, administrative and planning and environment law.
Meetings of directors
The number of meetings of the consolidated entity's Board of Directors and committees held during the year ended 30
June 2022, and the number of meetings attended by each Director are listed below. The Nomination & Remuneration
committee comprises the full board.
Board / Nomination &
Remuneration
Committee
Attended
11
11
10
11
11
Held
11
11
11
11
11
Audit Committee
Risk Committee
Attended
2
2
-
2
2
Held
2
2
-
2
2
Attended
4
-
4
-
4
Held
4
-
4
-
4
M McIver
A Gilby
G Gabaake
C Cloonan
H Swire
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Shares under option
There were no unissued ordinary shares of Tlou Energy Limited under option at the date of this report.
Grant date
Expiry date
Exercise price
1/07/2021
Issued
Exercised*
Expired
16/09/2022
20-Jul-20
57,509,400
*Shares issued on 18 July 2022 following exercise of options.
20-Jul-22
$0.08
-
6,250 57,503,150
-
Issued performance rights at the date of this report are as follows:
Vesting Date
19 October 2018
19 October 2018
31 January 2017
15 December 2021
15 December 2021
Vesting Price
$0.165
$0.22
$0.28
$0.10
$0.165
1/07/2021
2,225,000
2,225,000
2,275,000
Issued
- 3,000,000
- 3,000,000
6,000,000
6,725,000
- - - 2,225,000
- - - 2,225,000
- - - 2,275,000
- - 3,000,000
- - 3,000,000
- - 12,725,000
Expired
16/09/2022
Exercised
Shares issued on the exercise of options and performance rights
Other than those disclosed in the tables above there were no ordinary shares of Tlou Energy Limited issued during or
since the year ended 30 June 2022 on the exercise of options or performance rights granted or up to the date of this
report.
Indemnity and insurance of officers
The consolidated entity has indemnified the Directors and executives of the consolidated entity for costs incurred, in
their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of
good faith.
During the financial year, the consolidated entity paid a premium in respect of a contract to insure the Directors and
executives of the consolidated entity against a liability to the extent permitted by the Corporations Act 2001. The
contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.
19
Tlou Energy Limited – Annual Report 2022
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Currency and rounding
The financial report is presented in Australian dollars and amounts are rounded to the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 can be
found on page 24.
Auditor
BDO Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Company and/or the consolidated entity are important.
The Board of Directors has considered the position and, in accordance with advice received from the Audit
Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of
non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed to ensure they do not impact the impartiality and objectivity of the
auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants.
Details of the amounts paid or payable to the auditor for non-audit services provided during the year are set out below.
2022
2021
$
$
Non-audit services – BDO Australia
Tax consulting and compliance services 9,575 13,900
Total
9,575 13,900
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the Directors
Anthony Gilby
Director
Brisbane, 19 September 2022
20
Tlou Energy Limited – Annual Report 2022
2022 Annual Reserves Statement
Tlou Energy Limited is pleased to present its Annual Reserves Statement for the period ending 30 June 2022. There
has been no adjustment to the net gas reserves and contingent resources of the Company since the last upgraded
reserves were announced on 20 February 2018. Please refer to the ASX announcement on 20 February 2018 for full
details of the consolidated entity’s gas reserves and contingent resources.
An independent review of the Company’s gas reserves and contingent resources is planned which may result in an
upgrade or downgrade of the current gas reserves and contingent resources. Having conducted an internal review of
its gas reserves and resources position during the reporting period and satisfying itself that there was no new data
available that might materially increase or decrease the reserves or resources estimates reported during the reporting
period, the Company hereby presents the net gas reserves and contingent resources on a combined basis as well as
for each of its individual tenements as at 30 June 2022.
Location
Project
Tlou
Interest
Gas Reserves (BCF)
Lesedi CBM
(all coal seams)
PL001/2004,
ML 2017/18L
Mamba CBM
(Lower Morupule
coal)
PL238/2014 –
PL241/2014
PL003/2004,
PL037/2000
Karoo
Basin
Botswana
Karoo
Basin
Botswana
Karoo
Basin
Botswana
Total
Location
Project
Lesedi CBM
(all coal seams)
PL001/2004,
ML 2017/18L
Mamba CBM
(Lower Morupule
coal)
PL238/2014 –
PL241/2014
PL003/2004,
PL037/2000
Karoo
Basin
Botswana
Karoo
Basin
Botswana
Karoo
Basin
Botswana
Total
30/06/2022 30/06/2021 30/06/2022 30/06/2021 30/06/2022 30/06/2021
100%
1P*
0.34
1P
0.34
2P*
25.2
2P
25.2
3P
252
3P
252
100%
0.01
0.01
15.5
15.5
175
175
100%
-
-
-
-
-
-
Tlou
Interest
100%
100%
100%
0.35
0.35
40.7
40.7
427
427
Gas Contingent Resource (BCF)
30/06/2022 30/06/2021 30/06/2022 30/06/2021 30/06/2022 30/06/2021
1C
4.6
1C
4.6
2C**
214
2C**
214
3C
3,043
3C
3,043
-
-
-
-
-
-
-
-
-
-
-
-
4.6
4.6
214
214
3,043
3,043
21
Tlou Energy Limited – Annual Report 2022
ASX Listing Rules Annual Report Requirements
*Listing Rule 5.39.1:
• All 1P and 2P petroleum reserves recorded in the table are undeveloped and are attributable to unconventional
gas.
• 100% of all 1P and 2P petroleum reserves are located in the Karoo Basin in Botswana.
*Listing Rule 5.39.2:
• All 1P and 2P petroleum reserves reported are based on unconventional petroleum resources.
Listing Rule 5.39.3:
• The table shows the 2P and 3P petroleum reserves as at 30 June 2022 and comparative petroleum reserves
certified at 30 June 2021.
Governance Arrangements and Internal Controls Listing Rule 5.39.5:
• Tlou Energy has obtained all its gas reserves and resources reported as at 30 June 2022 from external
independent consultants who are qualified petroleum reserves and resource evaluators as prescribed by the ASX
Listing Rules.
• Tlou Energy estimates and reports its petroleum reserves and resources in accordance with the definitions and
guidelines of the Petroleum Resources Management System 2007, published by the Society of Petroleum
Engineers (SPE PRMS).
• To ensure the integrity and reliability of data used in the reserves estimation process, the raw data is reviewed by
senior reservoir and geological staff and consultants at Tlou Energy before being provided to the independent
reserve certifiers. Tlou Energy has not and does not currently intend to conduct internal reviews of petroleum
reserves preferring to appoint independent external experts prior to reporting any updated estimates of reserves
or resources to ensure an independent and rigorous review of its data.
• Tlou Energy reviews and updates its gas reserves and resources position on an annual basis to ensure that if
there is any new data that might affect the reserves or resources estimates of the Company steps can be taken to
ensure that the estimates are adjusted accordingly.
** Listing Rule 5.40.1:
• All 2C contingent resources recorded in the table are undeveloped. 100% of the reported 2C contingent
resource is attributable to unconventional gas.
• The geographical areas where the 2C contingent resources are located is the Karoo Basin in Botswana.
Listing Rule 5.40.2:
• The table shows the 2C and 3C contingent resources as at 30 June 2022 as against the previous year. The
net 2C and 3C contingent resources did not increase from the 2021 year to the 2022 year.
• There were no other changes to the 2C and 3C contingent resources since the announcement on 20 February
2018.
Listing Rule 5.44:
• The estimates of Reserves and Contingent Resources appearing in the 2022 Annual Reserves Statement for
Tlou Energy Limited and its subsidiaries are based on, and fairly represent, information and supporting
documentation determined by the various qualified petroleum reserves and resource evaluators listed below.
• The gas reserves and resource estimates for the Lesedi CBM Project provided in this report were released to
the Market on 20 February 2018 (‘Announcement’). Tlou Energy confirms that it is not aware of any new
information or data that materially affects the information included in the Announcement and that all the
material assumptions and technical parameters underpinning the estimates in the Announcement continue to
apply and have not materially changed. The gas reserve and resource estimates are based on and fairly
represents, information and supporting documentation and were determined by Dr. Bruce Alan McConachie of
SRK Consulting (Australasia) Pty Ltd, in accordance with Petroleum Resource Management System
guidelines which were issued in 2007 and were in use in February 2018. The most recent changes to these
guidelines, which revised those 2007 guidelines, was issued in June 2018. These revised guidelines will form
the basis of any future assessments. The guidelines were re-affirmed by Mr Carl D’Silva of SRK. Mr D’Silva is
considered to be a qualified person as defined under the ASX Listing Rule 5.42 and has given his consent to
the use of the resource figures in the form and context in which they appear in this report.
22
Tlou Energy Limited – Annual Report 2022
Notes to Net Reserves and Resources Table:
1) Gas Reserve and Resource numbers have been rounded to the nearest whole number.
2) Gas Resource numbers have been rounded to the nearest tenth for amounts less than 100 BCF, otherwise to the
nearest whole number.
3) Tlou’s Gas Reserves have not been adjusted for fuel or shrinkage and have been calculated at the wellhead
(which is the reference point for the purposes of Listing Rule 5.26.5).
4) Contingent Gas Resources are (100%) Unrisked Gross and are derived from the SRK certification at 31 March
2015 for all coal seams (as previously announced by Tlou on 9 April 2015) with adjustment for the gas volumes
which have now been certified by SRK in the Gas Reserves category.
5) ASX Listing Rule 5.28.2 Statement relating to Prospective Resources:
The estimated quantities of petroleum gas that may potentially be recovered by the application of a future
development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of
discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the
existence of a significant quantity of potentially moveable hydrocarbons.
6) Prospective Gas Resources are (100%) Unrisked Gross and are derived from a report to Tlou from Netherland,
Sewell and Associates Inc (NSAI) dated 16th February 2012 regarding certification for all coal seams located in
the remaining prospecting licences (as previously announced by Tlou in its prospectus dated 20 February 2013).
23
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY T R MANN TO THE DIRECTORS OF TLOU ENERGY LIMITED
As lead auditor of Tlou Energy Limited for the year ended 30 June 2022, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Tlou Energy Limited and the entities it controlled during the period.
T R Mann
Director
BDO Audit Pty Ltd
Brisbane, 19 September 2022
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
24
Tlou Energy Limited – Annual Report 2022
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2022
Interest income
Other income
Expenses
Employee benefits expense
Depreciation expense
Impairment - exploration and evaluation assets
Foreign exchange gain/(loss)
Share issue costs
Interest expense
Share based payment expense
Professional fees
Occupancy costs
Other expenses
Fair value gain/(loss) on financial instruments
LOSS BEFORE INTEREST AND TAX
Income tax
LOSS FOR THE PERIOD
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Tax effect
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)
TOTAL COMPREHENSIVE INCOME/(LOSS)
Earnings per share
Basic loss per share
Diluted loss per share
Consolidated
Note
June 2022
$
June 2021
$
9
-
482
50,000
(683,630)
(547,217)
(166,054)
(153,643)
-
(241,917)
(232,200)
(284,451)
(18,048)
(1,311,694)
(690,271)
(4,329,116)
(603,271)
(597,189)
-
122,403
-
-
-
(202,317)
(12,000)
(812,345)
-
(2,054,237)
-
-
(4,329,116)
(2,054,237)
(1,717,869)
(303,597)
-
-
(1,717,869)
(6,046,985)
(303,597)
(2,357,834)
Cents
(0.7)
(0.7)
Cents
(0.4)
(0.4)
3
9
7
13
3
3
14
4
5
5
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying
notes.
25
Consolidated Statement of Financial Position
as at 30 June 2022
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Exploration and evaluation assets
Other non-current assets
Property, plant and equipment
Contract assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Derivatives
Lease liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Convertible notes
Derivatives
Lease liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Tlou Energy Limited – Annual Report 2022
Note
6
7
8
9
10
11
14
12
13
14
12
15
Consolidated
June 2022
$
June 2021
$
7,875,025
424,220
178,887
8,478,132
49,232,167
602,112
366,492
948,446
51,149,217
59,627,349
563,599
696,153
13,792
319,903
1,593,447
7,263,643
67,600
56,530
113,000
7,500,773
9,094,220
6,385,384
267,258
2,201
6,654,843
48,855,466
626,352
844,336
-
50,326,154
56,980,997
135,127
-
13,167
297,636
445,930
-
-
73,153
114,000
187,153
633,083
50,533,129
56,347,914
106,763,927
(6,716,016)
(49,514,782)
106,763,927
(5,230,347)
(45,185,666)
50,533,129
56,347,914
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
26
Tlou Energy Limited – Annual Report 2022
Consolidated Statement of Changes in Equity
for the year ended 30 June 2022
Contributed
Equity
Share
Based
Payments
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Total
$
$
$
$
$
Consolidated
Balance at 1 July 2020
Loss for the period
Other comprehensive income, net of tax
Total comprehensive income
99,753,504
736,587
(5,852,354)
(43,131,429)
51,506,308
-
-
-
-
-
-
-
(2,054,237)
(303,597)
-
(2,054,237)
(303,597)
(303,597)
(2,054,237)
(2,357,834)
Transactions with owners in their capacity as owners
Share based payments
Shares issued, net of costs
7,010,423
-
189,017
-
7,010,423
189,017
-
-
-
-
-
-
189,017
7,010,423
7,199,440
Balance at 30 June 2021
106,763,927
925,604
(6,155,951)
(45,185,666)
56,347,914
Balance at 1 July 2021
106,763,927
925,604
(6,155,951)
(45,185,666)
56,347,914
Loss for the period
Other comprehensive income, net of tax
Total comprehensive income
Transactions with owners in their capacity as owners
Share based payments
-
-
-
-
-
-
-
-
-
(4,329,116)
(1,717,869)
-
(4,329,116)
(1,717,869)
(1,717,869)
(4,329,116)
(6,046,985)
232,200
232,200
-
-
-
-
232,200
232,200
Balance at 30 June 2022
106,763,927
1,157,804
(7,873,820)
(49,514,782)
50,533,129
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
27
Consolidated Statement of Cash Flows
for the year ended 30 June 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST and VAT)
Interest received
Other receipts
GST and VAT received
NET CASH USED IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation assets
Payment for subsidiaries, net of cash acquired
Payment for contract assets
Payment for property, plant and equipment
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from issue of convertible debt securities
Issue costs
Payments of lease liabilities
NET CASH PROVIDED BY FINANCING ACTIVITIES
Net (decrease)/increase in cash held
Cash at the beginning of the period
Effects of exchange rate changes on cash
Tlou Energy Limited – Annual Report 2022
Consolidated
Note
June 2022
$
June 2021
$
25
13
(2,461,808)
9
-
93,187
(2,368,612)
(1,515,086)
482
50,000
41,953
(1,422,651)
(1,991,033)
(797,340)
-
(647,967)
(274,654)
(2,913,654)
-
-
(42,556)
(839,896)
-
7,725,754
7,036,000
(167,973)
(15,997)
6,852,030
1,569,764
6,385,384
(80,123)
-
(526,314)
(12,217)
7,187,223
4,924,676
1,576,471
(115,763)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
6
7,875,025
6,385,384
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
28
Tlou Energy Limited – Annual Report 2022
Notes to the financial statements
Note 1.
Significant accounting policies
Introduction
This financial report includes the consolidated financial statements of Tlou Energy Limited (the “Company”) and its
controlled entities (together referred to as the “consolidated entity” or the "group").
The separate financial statements of the parent entity, Tlou Energy Limited, have not been presented within this
financial report as permitted by the Corporations Act 2001. Supplementary information about the parent entity is
disclosed in note 28.
Tlou Energy Limited is a public company, incorporated and domiciled in Australia. Its registered office and principal
place of business is 210 Alice St, Brisbane, QLD 4000, Australia.
The following is a summary of the material and principal accounting policies adopted by the consolidated entity in the
preparation of the financial report. The accounting policies have been consistently applied to all the years presented,
unless otherwise stated.
Operations and principal activities
The principal activity of the consolidated entity is to develop power solutions in Sub-Saharan Africa through Coalbed
Methane (CBM) gas-fired power, solar power, and hydrogen projects. No revenue from these activities has been
earned to date, as the consolidated entity is still in the exploration and evaluation or pre-development stage.
Currency
The financial report is presented in Australian dollars, rounded to the nearest dollar, which is the functional and
presentation currency of the parent entity.
Authorisation of financial report
The financial report was authorised for issue on 19 September 2022.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Tlou Energy
Limited is a for-profit entity for the purposes of preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of Tlou Energy Limited also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Historical cost convention
The consolidated financial statements have been prepared on an accruals basis and are based on historical costs
except for derivative financial instruments which are measured at fair value.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant
to the financial statements are disclosed in note 2.
Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss. Refer to Note 16 for accounting policy on translation of foreign operations.
29
Notes to the financial statements (continued)
Note 1 Significant accounting policies (continued)
Tlou Energy Limited – Annual Report 2022
Going Concern
The consolidated financial statements have been prepared on a going concern basis which contemplates that the
consolidated entity will continue to meet its commitments and can therefore continue normal business activities and
the realisation of assets and settlement of liabilities in the ordinary course of business.
Because of the nature of the operations, exploration or pre-development companies, such as Tlou Energy Limited,
find it necessary on a regular basis to raise additional cash funds for future exploration and development activity and
meet other necessary corporate expenditure. The Company has recently completed a capital raising by way of
convertible note (refer to note 13) which is expected to fund ongoing operations and working capital requirements for
the next 12 months. Subject to the results of these operations the consolidated entity may need to raise additional
capital to expand and develop the project further. Accordingly, the consolidated entity is in the process of investigating
various options for the raising of additional funds which may include but is not limited to an issue of shares or the sale
of exploration assets where increased value has been created through previous exploration activity. The Consolidated
Entity does not expect the COVID-19 pandemic to adversely impact its ability to raise further capital.
At the date of this financial report, none of the above fund-raising options have been concluded and no guarantee can
be given that a successful outcome will eventuate. The directors have concluded that as a result of the current
circumstances there exists a material uncertainty that may cast significant doubt regarding the consolidated entity's
and the Company's ability to continue as a going concern and therefore the consolidated entity and Company may be
unable to realise their assets and discharge their liabilities in the normal course of business. Nevertheless, after taking
into account the current status of the various funding options currently being investigated and making other enquiries
regarding other sources of funding, the directors have a reasonable expectation that the consolidated entity and the
Company will have adequate resources to fund its future operational requirements and for these reasons they
continue to adopt the going concern basis in preparing the financial report.
The financial report does not include adjustments relating to the recoverability or classification of recorded assets
amounts or to the amounts or classification of liabilities that might be necessary should the consolidated entity not be
able to continue as a going concern.
COVID-19 Impacts
The Company’s field operations remained relatively unaffected by COVID-19, however corporate and administrative
functions were partly impacted. Staff worked remotely when possible and followed enhanced social distancing and
health and safety procedures. Access to Botswana by external staff and consultants was restricted for some time but
the situation has now returned to normal.
Accounting Policies
Principles of consolidation
(a)
Subsidiaries are all entities (including structured entities) over which the consolidated entity has control. The
consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They
are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the consolidated entity.
Intercompany transactions, balances, and unrealised gains on transactions between consolidated entity companies
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the consolidated entity.
30
Notes to the financial statements (continued)
Note 1 Significant accounting policies (continued)
Tlou Energy Limited – Annual Report 2022
Income recognition
(b)
Interest
Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Other income
Other income is recognised when it is received or when the right to receive payment is established.
Impairment of non-financial assets
(c)
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset
or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Goods and Services Tax ('GST') and other similar taxes
(d)
Revenues, expenses, and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the consolidated
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
Comparative figures
(e)
When required by accounting standards comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
31
Tlou Energy Limited – Annual Report 2022
Notes to the financial statements (continued)
Note 1 Significant accounting policies (continued)
Financial Instruments
(f)
Classification
The group classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value (either through OCI, or through profit or loss); and
those to be measured at amortised cost.
The classification depends on the group’s business model for managing the financial assets and the contractual terms
of the cash flows.
Measurement
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 (FVPL), transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows
are solely payment of principal and interest.
Impairment
The group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried
at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in
credit risk.
For trade receivables, the group applies the simplified approach permitted by AASB 9, which requires expected
lifetime losses to be recognised from initial recognition of the receivables.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The fair value adjustment is through profit or loss.
32
Notes to the financial statements (continued)
Note 1 Significant accounting policies (continued)
Tlou Energy Limited – Annual Report 2022
Leases
(g)
The Group leases office space and a leasehold property. Office contracts are typically made for fixed periods of 1 to 5
years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of
different terms and conditions. Leasehold property is for periods up to 50 years.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease Liabilities
Lease liabilities include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
➢
➢ variable lease payment that are based on an index or a rate, initially measured using the index or rate as at
the commencement date;
➢ amounts expected to be payable by the Group under residual value guarantees;
➢
the exercise price of a purchase option if the group is reasonably certain to exercise that option; and
➢ payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases that relate to building premises, the entity’s incremental borrowing
rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security, and
conditions.
To determine the incremental borrowing rate, the Group uses recent third-party financing received by the individual
lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received,
making adjustments specific to the lease (e.g., term, country, currency, and security).
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over
the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use Assets
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability;
➢
➢ any lease payments made at or before the commencement date less any lease incentives received;
➢ any initial direct costs; and
➢
restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a
straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Low Value Assets
Payments associated with leases of low value assets are recognised on a straight-line basis as an expense in profit or
loss. Low value assets comprise small items of office equipment.
33
Notes to the financial statements (continued)
Note 1 Significant accounting policies (continued)
(h)
Borrowings
Tlou Energy Limited – Annual Report 2022
Financial liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost using
the effective interest method.
The Consolidated entity’s financial liabilities measured at amortised cost include trade and other payables and the
host liability of convertible notes.
Convertible notes
The conversion feature included in convertible notes is assessed to determine if it satisfies or fails the fixed-for-fixed
requirement to be classified as a compound financial instrument containing an equity component. If this requirement is
failed the notes are separated into the host liability and the derivative liability component of the notes.
Subsequent to initial recognition any changes in fair value of the derivative liability at each balance date are
recognised in profit or loss.
The host liability is subsequently recognised on an amortised cost basis until extinguished on conversion or maturity of
the notes.
34
Notes to the financial statements (continued)
Note 1 Significant accounting policies (continued)
(i)
Revenue
Tlou Energy Limited – Annual Report 2022
The consolidated entity currently does not recognise any revenue from the sale of gas but may do in future.
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the
consolidated entity: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time value of
money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone
selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance
obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Contract costs
The consolidated entity has recognised an asset in relation to contract costs in relation to the Power Purchase
Agreement (PPA) entered into with the Botswana Power Corporation (BPC). As part of that agreement the
consolidated entity entered into a Connection Agreement whereby Tlou Energy Limited is to develop, construct and
finance a 66kV transmission line for the connection of the gas fuelled power plant to the BPC network and transfer
same to BPC. Expenditure on the transmission line is considered a contract cost under AASB 15 as it was an
incremental cost of obtaining the PPA 10MW contract with BPC.
This is presented within non-current assets in the statement of financial position – refer Note 10.
The asset will be amortised on a straight-line basis over a 10-year period, consistent with the pattern of recognition of
the associated revenue once revenue from the contract begins (construction of the transmission line has not yet been
completed as at 30 June 2022).
The consolidated entity updates the amortisation if there's a significant change in the consolidated entity’s expected
timing of transfer to the customer of the goods or services to which the asset relates. Such a change is accounted for
as a change in accounting estimate.
The consolidated entity recognises an impairment loss in profit or loss to the extent that the carrying amount of an
asset recognised exceeds: the remaining amount of consideration that the consolidated entity expects to receive in
exchange for the goods or services to which the asset relates; less the costs that relate directly to providing those
goods or services and that have not been recognised as expenses.
The consolidated entity recognises in profit or loss a reversal of some or all of an impairment loss previously
recognised when the impairment conditions no longer exist or have improved. The increased carrying amount of the
asset will not exceed the amount that would have been determined (net of amortisation) if no impairment loss had
been recognised previously.
New Accounting Standards and Interpretations
(j)
There were no new or revised accounting standards adopted that had any impact on the Group’s accounting policies
and required retrospective adjustments.
New Standards and Interpretations not yet adopted
(k)
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2022
reporting periods. The consolidated entity has decided against early adoption of these standards. The consolidated
entity has assessed the impact of these new standards that are not yet effective and determined that they are not
expected to have a material impact on the consolidated entity in the current or future reporting periods and on
foreseeable future transactions.
35
Notes to the financial statements (continued)
Note 2.
Critical accounting judgements, estimates and assumptions
Tlou Energy Limited – Annual Report 2022
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets and liabilities. Management bases its judgements, estimates and assumptions on
historical experience and on other various factors, including expectations of future events, management believes to be
reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the
related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Exploration & evaluation assets
The consolidated entity performs regular reviews on each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area of interest. These reviews are based on detailed surveys and
analysis of drilling results performed to reporting date.
Deferred Tax assets
The Company is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant
judgement is required in determining the worldwide provision for income taxes. There are certain transactions and
calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain.
The consolidated entity estimates its tax liabilities based on the consolidated entity’s understanding of the tax law.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such
differences will impact the current and deferred income tax assets and liabilities in the period in which such
determination is made.
In addition, the consolidated entity has recognised deferred tax assets relating to carried forward tax losses to the
extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority
and the same subsidiary against which the unused tax losses can be utilised. However, utilisation of the tax losses
also depends on the ability of the entity, which is not part of the tax consolidated group, to satisfy certain tests at the
time the losses are recouped. Due to the parent entity acquiring the entity that holds the losses it is expected that the
entity will fail to satisfy the continuity of ownership test and therefore must rely on the same business test. As at 30
June 2022 the consolidated entity has not received advice that the losses are unavailable, however should this
change in the future the consolidated entity may be required to derecognise these losses.
36
Notes to the financial statements (continued)
Note 3.
Expenses
Tlou Energy Limited – Annual Report 2022
Loss before income tax includes the following specific expenses:
Employee benefits expense
● Defined contribution superannuation expense
● Performance rights
● Other employee benefits expense
Other expenses include the following specific items:
● Travel and accommodation costs
● Consultants
● Stock exchange, advisory, secretarial fees
●
Insurance
Note 4.
Income Tax
Consolidated
June 2022
$
June 2021
$
64,637
232,200
618,993
915,830
75,695
443,082
258,001
73,156
47,767
-
555,504
603,271
8,407
277,753
298,061
80,146
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and unused tax losses and under and over provision in prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction, affects
neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with investments in subsidiaries, associates or interests
in joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available
for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent
that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities; and they relate to the same taxable authority on either the same taxable entity or
different taxable entities which intend to settle simultaneously.
37
Notes to the financial statements (continued)
Note 4 Income tax (continued)
Tlou Energy Limited – Annual Report 2022
Loss before income tax
Tax at the domestic tax rates applicable to profits in the country concerned
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Other non-deductible items
Difference in overseas tax rates
Deferred tax asset not recognised
Income tax benefit
Recognised deferred tax assets
Unused tax losses
Recognised deferred tax liabilities
Assessable temporary differences
Consolidated
June 2022
$
June 2021
$
(4,329,116)
(2,054,237)
(1,298,735)
(616,271)
1,142,896
(97,877)
253,716
-
6,327,074
6,327,074
6,327,074
6,327,074
71,431
(233,976)
778,816
-
6,924,354
6,924,354
6,924,354
6,924,354
Net deferred tax liability recognised
-
-
Unrecognised temporary differences and tax losses
Unused tax losses and temporary differences for which no deferred tax asset has been
recognised
45,777,185
42,174,829
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets
have not been recognised in respect of these items because it is not probable that future taxable profit will be
available against which the consolidated entity can utilise these benefits.
Note 5.
Earnings per share
Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Tlou Energy Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
Consolidated
June 2022
$
June 2021
$
Reconciliation of earnings used in calculating basic and diluted loss per share:
Loss for the year attributable to owners of Tlou Energy Limited
Loss used in the calculation of the basic and dilutive loss per share
(4,329,116)
(4,329,116)
(2,054,237)
(2,054,237)
Weighted average number of ordinary shares used as the denominator
Number used in calculating basic and diluted loss per share
Number
600,199,039
Number
538,346,800
Options and performance rights are considered to be "potential ordinary shares" but were anti-dilutive in nature and
therefore the diluted loss per share is the same as the basic loss per share.
38
Notes to the financial statements (continued)
Note 6.
Cash and Cash Equivalents
Tlou Energy Limited – Annual Report 2022
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
Cash at bank
Note 7.
Exploration and Evaluation Assets
Consolidated
June 2022
$
June 2021
$
7,875,025
7,875,025
6,385,384
6,385,384
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Such
expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include
overheads or administration expenditure not having a specific nexus with a particular area of interest. These costs are
only carried forward to the extent that they are expected to be recouped through the successful development of the
area or where activities in the area have not yet reached a stage which permits reasonable assessment of the
existence of economically recoverable reserves and active or significant operations in relation to the area are
continuing.
Accumulated costs in relation to an area no longer considered viable are written off in full in the year the decision is
made. Regular reviews are undertaken on each area of interest to determine the appropriateness of continuing to
carry forward costs in relation to that area of interest.
Exploration and evaluation assets
Movements in exploration and evaluation assets
Balance at the beginning of period
Exploration and evaluation expenditure during the year
Impairment expense
Foreign currency translation
Balance at the end of period
Consolidated
June 2022
$
June 2021
$
49,232,167
49,232,167
48,855,466
48,855,466
48,855,466
1,926,164
(166,054)
(1,383,409)
49,232,167
48,163,968
912,029
-
(220,531)
48,855,466
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is
dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of
interest.
There is a risk that one or more of the exploration licences will not be extended, or that the terms of the extension are
not favourable to Tlou. This could have an adverse impact on the performance of Tlou. The consolidated entity is not
aware of any reasons why the licences will not be renewed.
The group has relinquished one prospecting licence and the related expenditure previously capitalised has been fully
impaired and written off.
39
Notes to the financial statements (continued)
Note 8.
Other non-current assets
Tlou Energy Limited – Annual Report 2022
Inventory and well consumables are valued at lower of cost and net realisable value. Inventory and well consumables
are allocated to exploration and evaluation expenditure when the assets are used in operations.
Inventory and well consumables - at cost
Note 9.
Property, Plant and Equipment
Consolidated
June 2022
$
June 2021
$
602,112
602,112
626,352
626,352
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation and amortisation is calculated on a straight-line basis to write off the net cost of each item of plant and
equipment and right of use assets over their expected useful lives as follows:
Plant and equipment
Right-of-use assets
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit
to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to
profit or loss.
3-7 years
over the actual or expected term of the lease
Right-of-use assets, plant and equipment at cost
Accumulated depreciation
Consolidated
June 2022
$
June 2021
$
4,186,262
(3,819,770)
366,492
4,249,527
(3,405,191)
844,336
Movements in Carrying Amounts
Movement in the carrying amounts between the beginning and the end of the current financial year:
Balance at the beginning of year
Additions
Depreciation and amortisation
Foreign exchange movements
Carrying amount at the end of year
844,336
104,254
(547,217)
(34,881)
366,492
1,273,953
175,194
(597,189)
(7,622)
844,336
Included in property, plant and equipment are right-of-use assets with a carrying value of $70,323 (2021: $82,114).
40
Notes to the financial statements (continued)
Contract costs
Note 10.
Contract costs - transmission line
Tlou Energy Limited – Annual Report 2022
Consolidated
June 2022
$
948,446
948,446
June 2021
$
-
-
The Company entered a contract during the reporting period for the construction of transmission line from the
Company’s Lesedi Power Project to the town of Serowe in Botswana. The expected cost of this contract is
approximately BWP 60m (~$7m). Of this expected total, $948,446 has been capitalised at 30 June 2022.
Once the transmission line and associated infrastructure is completed and approval is granted by the relevant
authority in Botswana, the transmission line will be connected to the existing power grid in Botswana. Under current
legislation, on connection to the existing grid all ownership, rights and responsibilities for the transmission line and
associated infrastructure will transfer to Botswana Power Corporation, the national power utility in Botswana and
current owner of the existing power grid.
Note 11.
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Current
Trade payables
Accruals
Other payables
Consolidated
June 2022
$
June 2021
$
445,994
95,337
22,268
563,599
47,320
78,911
8,896
135,127
The carrying values of trade and other payables approximate fair values due to short-term nature of the amounts.
These are non-interest bearing.
41
Notes to the financial statements (continued)
Note 12.
Provisions
Tlou Energy Limited – Annual Report 2022
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a
past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be
made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the reporting date, taking into account the risks and uncertainties
surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax
rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance
cost.
Rehabilitation
The provision represents the estimated costs to rehabilitate wells in licences held by the consolidated entity. This
provision has been calculated based on the number of wells which require rehabilitation and the expected costs to
rehabilitate each well, taking into consideration the type of well and its location.
Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12
months of the reporting date are recognised in current liabilities in respect of employees' services up to the reporting
date and are measured at the amounts expected to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional
right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the
present value of expected future payments to be made in respect of services provided by employees up to the
reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market yields at the reporting date on national
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash
outflows.
Employee benefits – Botswana Severance
A provision has been recognised for employee benefits relating to severance pay payable in Botswana.
Severance pay
As per the Botswana Labour a provision is calculated for each Botswana based employee of one day per month of
service, which can be paid out after 60 months or when employment ends. The benefit rises to two days per month
after the first 60 months.
Current
Employee benefits
Employee benefits - Botswana severance
Non-current
Rehabilitation
Movements in rehabilitation provision during the year
Balance at the beginning of the year
Completed during the year
Carrying amount at the end of the year
Consolidated
June 2022
$
189,912
129,991
319,903
June 2021
$
199,738
97,898
297,636
113,000
113,000
114,000
114,000
114,000
(1,000)
113,000
114,000
-
114,000
42
Notes to the financial statements (continued)
Note 13.
Convertible notes
Tlou Energy Limited – Annual Report 2022
The parent entity issued convertible notes totalling US$5,000,000 on 24 January 2022. The notes are convertible into
ordinary shares of the parent entity, at the option of the holder at the higher of:
(a) A 10% discount to the weighted average traded price of the Company’s shares on the ASX over the 90 days
prior to the Conversion Date; and
(b) A$0.06
The notes incur interest at 7.75% and the Company may capitalise interest for the first 18 months, thereafter, interest
must be paid at each six-month anniversary of issue date. The notes expire on 24 January 2027, being 5 years after
issue.
The notes fail the fixed-for-fixed requirement to be classified as a compound financial instrument containing an equity
component. As a result, the notes have been separated into the host liability and the derivative liability component of
the notes.
On initial recognition the fair value of the embedded derivative has been calculated first with the residual value being
assigned to the host liability, as shown below:
Face value of notes issued
Derivative – refer note 14
Issue costs
Host liability on initial recognition
Interest expense
Interest paid
Effect of foreign exchange movement
Non-current host liability
Total Borrowings
Consolidated
June 2022
$
June 2021
$
7,036,000
(73,482)
(167,673)
6,794,845
241,917
-
226,881
7,263,643
7,263,643
-
-
-
-
-
-
-
-
Interest expense is calculated by applying the effective interest rate of 8.08% to the host liability component.
The initial fair value of the derivative portion of the note was determined using a binomial option model on issue date.
The host liability is subsequently recognised on an amortised cost basis until extinguished on conversion or maturity of
the notes.
The derivative is subsequently recognised at fair value at each reporting date – refer note 14 for further details.
43
Notes to the financial statements (continued)
Note 14.
Derivatives
Tlou Energy Limited – Annual Report 2022
Current
Opening balance
Fair value movement recognised in profit or loss
Closing balance
Non-current
Opening balance
On initial recognition
Fair value movement recognised in profit or loss
Closing balance
Consolidated
June 2022
$
June 2021
$
-
696,153
696,153
Consolidated
June 2022
$
June 2021
$
-
73,482
(5,882)
67,600
-
-
-
-
-
-
-
Current derivatives relate to a forward contract entered by the Company to sell USD and purchase BWP.
Non-current derivatives relate to the conversion feature included in the convertible notes issued on 24 January 2022 –
refer Note 13. The initial fair value and the value as at 30 June 2022 of the derivative portion of the note was
determined using a binomial option model.
Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (level 2), and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The fair value of the consolidated entity’s derivatives is determined using valuation techniques as they are not traded
in an active market. These valuation techniques maximise the use of observable market data where it is available and
rely as little as possible on entity specific estimates. The conversion feature derivative is considered to be a level 3
measurement as the binomial pricing model includes unobservable inputs.
Foreign currency forward contracts have been valued using the present value of future cash flows based on the
forward exchange rates at balance date. The foreign currency forward contract is considered to be a level 3
measurement as the valuation model includes unobservable inputs.
Changes in the value of the derivatives that have been recognised are included in the tables above.
44
Notes to the financial statements (continued)
Note 15.
Contributed equity
Tlou Energy Limited – Annual Report 2022
Issued and paid-up capital is recognised at the fair value of the consideration received by the consolidated entity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
Consolidated
Opening balance
Issue of ordinary shares during the year
Share issue costs
Ordinary shares ‑ fully paid
June 2022
Shares
600,199,039
June 2021
Shares
450,180,185
- 150,018,854
-
-
June 2022
$
106,763,927
-
-
600,199,039
600,199,039
106,763,927
June 2021
$
99,753,504
7,725,754
(715,331)
106,763,927
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of, and amounts paid on, the shares held. The fully paid ordinary shares have no par value.
On a show of hands every member present at a meeting, in person or by proxy, shall have one vote and upon a poll,
each share shall have one vote. The Company does not have authorised capital or par value in respect of its issued
shares.
Capital risk management
The capital structure of the consolidated entity consists of equity attributable to equity holders of the parent entity,
comprising issued capital and reserves as disclosed in the Consolidated Statement of Changes in Equity.
When managing capital, management’s objective is to ensure the parent entity continues as a going concern and to
maintain a structure that ensures the lowest cost of capital available and to ensure adequate capital is available for
exploration and evaluation of tenements. In order to maintain or adjust the capital structure, the consolidated entity
may seek to issue new shares. Consistent with other exploration companies, the consolidated entity, including the
parent entity monitors capital on the basis of forecast exploration and development expenditure required to reach a
stage which permits a reasonable assessment of the existence or otherwise of an economically recoverable reserve.
45
Notes to the financial statements (continued)
Note 16.
Reserves
Tlou Energy Limited – Annual Report 2022
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled
entities.
The financial report is presented in Australian dollars rounded to the nearest dollar, which is Tlou Energy Limited's
functional and presentation currency.
Foreign operations
The assets and liabilities of foreign operations are translated into functional currency using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into functional currency using the
average exchange rates, which approximate the rate at the date of the transaction, for the period. All resulting foreign
exchange differences are recognised in the foreign currency translation reserve in equity. The foreign currency
reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Share Based Payments Reserve
The share-based payments reserve is used to record the share-based payment associated with options and
performance rights granted to employees and others under equity-settled share-based payment arrangements.
Note 17.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees and other service
providers.
Equity-settled transactions are awards of shares, options or performance rights over shares that are provided to
employees or other service providers in exchange for the rendering of services. Cash-settled transactions are awards
of cash for the exchange of services, where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes 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, together with
non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award,
the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The
amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less
amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met provided all other
conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the
total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee
and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled
and new award is treated as if they were a modification.
46
Notes to the financial statements (continued)
Note 17 Share based payments (continued)
Tlou Energy Limited – Annual Report 2022
Employee Share Options and Performance Rights
Share Options and Performance Rights may be granted to certain personnel of the Company on terms determined by
the directors or otherwise approved by the Company at a general meeting.
Share options are granted for no consideration. Options and entitlements to the options are vested on a time basis
and/or on specific performance-based criteria such as share price increases or reserves certification. Options granted
as described above carry no dividend or voting rights. When exercisable, each option is convertible to one ordinary
share.
Performance Rights are linked to the share price performance of the Company, ensuring alignment with the interests
of the Company's shareholders. For the Performance Rights that are issued but not yet exercised at the date of this
report to vest and, therefore, become exercisable by a participant, certain performance conditions are required to be
met as set out below. On vesting, holders of Performance Rights will be entitled to acquire Tlou Energy Limited
ordinary shares at nil cost.
Options
At 30 June 2022, the following options for ordinary shares in Tlou Energy Limited were on issue. 6,250 of these
options were converted to ordinary shares in July 2022. All the remaining options expired on 20 July 2022.
Issued to:
Shareholders
Service providers
Grant Date
20-Jul-20
20-Jul-20
Exercise Price Expiry Date
30/06/2022
$0.08
$0.08
20-Jul-22
20-Jul-22
37,509,400
20,000,000
30/06/2021
37,509,400
20,000,000
57,509,400
57,509,400
Options may be granted on terms determined by the directors or otherwise approved by the company at a general
meeting. The options are granted for no consideration. Options and entitlements to the options are vested on a time
basis and/or for services provided or on specific performance-based criteria. Options granted as described above
carry no dividend or voting rights. When exercisable, each option is convertible to one ordinary share.
The fair value of options at grant date is determined using generally accepted valuation techniques that take into
account exercise price, the term of the option, the impact of dilution, the share price at grant date, the expected price
volatility of the underlying share, the expected dividend yield and the risk-free rate for the term of the
option/performance right and an appropriate probability weighting to factor the likelihood of the satisfaction of non-
vesting conditions. The expected volatility is based on historic volatility, adjusted for any expected changes to future
volatility due to publicly available information.
47
Tlou Energy Limited – Annual Report 2022
Notes to the financial statements (continued)
Note 17 Share based payments (continued)
Performance Rights
At 30 June 2022, the following performance rights were on issue.
No. of
Performance
Rights
2,225,000
2,225,000
2,275,000
3,000,000
3,000,000
Reference
(i)
(ii)
(iii)
(iv)
(v)
Date of
Approval
17-Oct-18
17-Oct-18
10-Nov-16
24-Nov-21
24-Nov-21
Share price
at approval
date
$0.11
$0.11
$0.14
$0.064
$0.064
Vesting Price
$0.165
$0.22
$0.28
$0.10
$0.165
(i)
Performance Condition
The closing price of Shares being 50% or more above the price at the date of shareholder approval for a
period of 10 consecutive trading days.
(ii) The closing price of Shares being 100% or more above the price at the date of shareholder approval for a
period of 10 consecutive trading days.
(iii) The closing price of Shares being 100% or more above the price at the date of shareholder approval for a
period of 10 consecutive trading days.
(iv) The closing price of the Shares being 50% or more above the price at the date of shareholder approval or
AUD$0.10 whichever is the greater, in the Company for a period of 10 consecutive trading days.
(v) The closing price of the Shares being 100% or more above the price at the date of approval or AUD$0.165
whichever is the greater, in the Company for a period of 10 consecutive trading days.
Fair value of options granted
The fair value at grant date is determined using a binomial 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.
The model inputs for options granted during the year ended 30 June 2022 included:
(a) Performance rights are granted for no consideration and vest based on the conditions noted above
(b) exercise price: $nil
(c) grant date: 24 November 2021
(d) expiry date: 31 January 2025
(e) share price at grant date: $0.064
(f) expected price volatility: 100%
(g) expected dividend yield: 0%
(h) risk-free interest rate: 1.44%
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for
any expected changes to future volatility due to publicly available information.
The following table shows the number, movements and vesting price of performance rights for the 2022 year.
Date of Approval
17 October 2018
17 October 2018
10 November 2016
24 November 2021
24 November 2021
Vesting Price
$0.165
$0.22
$0.28
$0.10
$0.165
1/07/2021
2,225,000
2,225,000
2,275,000
Issued
-
-
-
- 3,000,000
- 3,000,000
6,000,000
6,725,000
Exercised
-
-
-
-
-
-
Expired
-
-
-
-
-
-
30/06/2022
2,225,000
2,225,000
2,275,000
3,000,000
3,000,000
12,725,000
The following table shows the number, movements and vesting price of performance rights for the 2021 year.
Date of Approval
17 October 2018
17 October 2018
10 November 2016
Vesting Price
$0.165
$0.22
$0.28
1/07/2020
2,475,000
2,475,000
2,275,000
7,225,000
Issued
-
-
-
-
Exercised
Expired
30/06/2022
-
-
-
-
250,000
250,000
-
500,000
2,225,000
2,225,000
2,275,000
6,725,000
48
Notes to the financial statements (continued)
Note 17 Share based payments (continued)
Tlou Energy Limited – Annual Report 2022
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transaction recognised during the year were as follows:
Performance rights
Consolidated
June 2022
$
June 2021
$
232,200
232,200
-
-
The weighted average remaining contractual life of performance rights outstanding at the end of the period is 2.41
years (2021: 3.26 years).
Note 18.
Commitments
Exploration expenditure:
To maintain an interest in the exploration tenements in which it is involved, the consolidated entity is required to meet
certain conditions imposed by the various statutory authorities granting the exploration tenements or that are imposed
by the joint venture agreements entered into by the consolidated entity. These conditions can include proposed
expenditure commitments. The timing and amount of exploration expenditure obligations of the consolidated entity
may vary significantly from the forecast based on the results of the work performed, which will determine the
prospectivity of the relevant area of interest. Subject to renewal of all prospecting licences, the consolidated entity's
proposed expenditure obligations which are not provided for in the financial statements are as follows:
Minimum expenditure requirements
●
●
not later than 12 months
between 12 months and 5 years
Consolidated
June 2022
$
451,575
165,103
616,678
June 2021
$
438,647
761,157
1,199,804
Contract Assets:
The consolidated entity also has entered into a contract to construct a transmission line for approximately BWP 60m
(~$7m). Of this expected total, $948,446 has been capitalised at 30 June 2022. Refer Note 10 for further details
49
Notes to the financial statements (continued)
Note 19.
Financial instruments
Tlou Energy Limited – Annual Report 2022
Overview
The consolidated entity's principal financial instruments comprise receivables, payables, cash and term deposits. The
main risks arising from the consolidated entity's financial assets are interest rate risk, foreign currency risk, credit risk
and liquidity risk.
This note presents information about the consolidated entity's exposure to each of the above risks, its objectives,
policies, and processes for measuring and managing risk. Other than as disclosed, there have been no significant
changes since the previous financial year to the exposure or management of these risks.
The consolidated entity holds the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Convertible notes
Derivatives
Consolidated
June 2022
$
June 2021
$
7,875,025
424,220
8,299,245
633,921
7,263,643
763,753
8,661,317
6,385,384
267,258
6,652,642
221,447
-
-
221,447
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk,
price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management
program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the consolidated entity. The consolidated entity uses different methods to measure different
types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign
exchange and other price risks and ageing analysis for credit risk.
Key risks are monitored and reviewed as circumstances change (e.g. acquisition of new entity or project) and policies
are created or revised as required. The overall objective of the consolidated entity's financial risk management policy
is to support the delivery of the consolidated entity's financial targets whilst protecting future financial security. During
the current year the consolidated entity has entered into a foreign exchange forward contract to mitigate its foreign
exchange risk. Given the nature and size of the business and uncertainty as to the timing and amount of cash inflows
and outflows, the consolidated entity does not enter into any other derivative transactions (apart from its foreign
exchange forward contract) to mitigate the financial risks. In addition, the consolidated entity's policy is that no trading
in financial instruments shall be undertaken for the purpose of making speculative gains. As the consolidated entity's
operations change, the Directors will review this policy periodically going forward.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. The Board reviews and agrees policies for managing the consolidated entity's financial risks as
summarised below. These policies include identification and analysis of the risk exposure of the consolidated entity
and appropriate procedures, controls, and risk limits.
Risk management is carried out by senior finance executives (finance) under policies approved by the Board of
Directors. Finance identifies, evaluates, and hedges financial risks within the consolidated entity's operating units
where appropriate.
50
Tlou Energy Limited – Annual Report 2022
Notes to the financial statements (continued)
Note 19 Financial instruments (continued)
(a) Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a
future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The
consolidated entity is also exposed to earnings volatility on floating rate instruments.
A forward business cash requirement estimate is made, identifying cash requirements for the following period
(generally up to one year) and interest rate term deposit information is obtained from a variety of banks over a variety
of periods (usually one month up to six-month term deposits) accordingly. The funds to invest are then scheduled in
an optimised fashion to maximise interest returns.
Interest rate sensitivity
A sensitivity of 1% interest rate has been selected as this is considered reasonable given the current market
conditions. A 1% movement in interest rates at the reporting date would have increased (decreased) equity and profit
or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency
rates, remain constant.
Consolidated - 30 June 2022
Cash and cash equivalents
Consolidated - 30 June 2021
Cash and cash equivalents
Profit or loss
Equity
1% increase
$
1% decrease
$
1% increase
$
1% decrease
$
78,750
(78,750)
78,750
(78,750)
63,854
(63,854)
63,854
(63,854)
Interest rate risk on other financial instruments is immaterial.
(b) Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The
Board's approach to managing liquidity is to ensure, as far as possible, that the consolidated entity will always have
sufficient liquidity to meet its obligations when due.
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The consolidated entity
manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and liabilities. This is based on the undiscounted cash
flows of the financial liabilities based on the earliest date on which they are required to be paid. At the end of the
reporting period the consolidated entity held cash of $7,875,025 (2021: $6,385,384).
The following table details the remaining contractual maturity for non-derivative financial liabilities.
Consolidated - 30 June 2022
Trade and other payables
Convertible notes & derivatives
Consolidated - 30 June 2021
Trade and other payables
Within
Between
1 Year
$
577,391
696,153
1 - 5 years
$
56,530
10,341,158
Total
Contractual
Cash Flows
$
633,921
11,037,311
Carrying
Amount
$
633,921
8,027,396
148,294
73,153
221,447
221,447
51
Tlou Energy Limited – Annual Report 2022
Notes to the financial statements (continued)
Note 19 Financial instruments (continued)
(c) Foreign exchange risk
As a result of activities overseas, the consolidated entity's consolidated statement of financial position can be affected
by movements in exchange rates. The consolidated entity also has transactional currency exposures. Such exposures
arise from transactions denominated in currencies other than the functional currency of the relevant entity.
The consolidated entity's exposure to foreign currency risk primarily arises from the consolidated entity's operations
overseas. Foreign exchange risk arises from future commercial transactions and recognised financial assets and
financial liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using
sensitivity analysis and cash flow forecasting.
During the current year the consolidated entity has entered into a foreign exchange forward contract to mitigate its
foreign exchange risk. Apart from this contract the consolidated entity’s policy is to generally convert its local currency
to Pula, Rand, or US dollars at the time of transaction. The consolidated entity, has on rare occasions, taken the
opportunity to move Australian dollars into foreign currency (ahead of a planned requirement for those foreign funds)
when exchange rate movements have moved significantly in favour of the Australian dollar, and management
considers that the currency movement is extremely likely to move back in subsequent weeks or months. Therefore,
the opportunity has been taken to lock in currency at a favourable rate to the consolidated entity. This practice is
expected to be the exception, rather than the normal practice.
The consolidated entity’s exposure to foreign currency risk at the reporting date, expressed in Australian dollars, was
as follows:
2022
USD
A$
2022
BWP
A$
2022
ZAR
A$
2022
GBP
A$
2021
USD
A$
2021
BWP
A$
2021
ZAR
A$
2021
GBP
A$
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Net Financial Instruments
6,143,514
-
339,500
389,727
- (443,622)
285,605
6,143,514
20,969
1,188,501
-
-
-
-
20,969
1,188,501
26,105
31,605
- 264,594
- (55,520)
240,679
26,105
26,107
5,771,868
-
-
-
-
26,107
5,771,868
Foreign currency rate sensitivity
Based on financial instruments held at 30 June 2022, had the Australian dollar strengthened/weakened by 10% the
consolidated entity’s profit or loss and equity would be impacted as follows:
2022
Dollar (US)
Pula (Botswana)
Rand (South Africa)
Pound (UK)
2021
Dollar (US)
Pula (Botswana)
Rand (South Africa)
Pound (UK)
Profit or loss
Equity
10%
Increase
$
(614,351)
(28,561)
(2,097)
(118,850)
10%
Decrease
$
614,351
28,561
2,097
118,850
10%
Increase
$
(614,351)
(28,561)
(2,097)
(118,850)
(2,611)
(24,068)
(2,611)
(577,187)
2,611
24,068
2,611
577,187
(2,611)
(24,068)
(2,611)
(577,187)
10%
Decrease
$
614,351
28,561
2,097
118,850
2,611
24,068
2,611
577,187
52
Notes to the financial statements (continued)
Note 19 Financial instruments (continued)
(c) Foreign exchange risk (continued)
Forward foreign exchange rates
Tlou Energy Limited – Annual Report 2022
As noted above the consolidated entity has entered into foreign exchange forward contracts to mitigate its foreign
exchange risk. The maturity and settlement amounts of the consolidated entity’s outstanding forward foreign exchange
contracts at the reporting date were as follows:
Buy Pula (BWP)
Maturity:
0 – 3 months
3 – 6 months
6 – 12 months
Sell US Dollars
2022
USD$
679,488
2,652,635
1,632,602
2021
USD$
-
-
-
The valuation of the forward exchange contract was based on a market reference rate of 12.43BWP compared to a
strike price of 11.6BWP. Based on the financial instruments held as at 30 June 2022, had the Pula weakened/
strengthened by 10% against the US dollar with all other variables held constant, the movement in the value of the
forward foreign exchange contract would not have been material to the consolidated entity’s financial statements.
(d) Credit risk
Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. This arises principally from cash and cash equivalents and trade and other
receivables. The consolidated entity’s exposure and the credit ratings of its counterparties are continuously monitored
by the Board of Directors.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as
summarised in the table above.
Credit Risk Exposures
Trade and other receivables
Trade and other receivables comprise primarily of VAT and GST refunds due. Where possible the consolidated entity
trades with recognised, creditworthy third parties. The receivable balances are monitored on an ongoing basis. The
consolidated entity’s exposure to expected credit losses is not significant.
Cash and cash equivalents
The consolidated entity has a significant concentration of credit risk with respect to cash deposits with Westpac
Banking Corporation, First National Bank Botswana, and First National Bank South Africa. However, significant cash
deposits are invested across banks to mitigate credit risk exposure to a particular bank. AAA rated banks are used
where possible and non-AAA banks are utilised where commercially attractive returns are available.
53
Notes to the financial statements (continued)
Key Management Personnel
Note 20.
Tlou Energy Limited – Annual Report 2022
Key management personnel comprise directors and other persons having authority and responsibility for planning,
directing and controlling the activities of the consolidated entity.
Key management personnel compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share based payments
Consolidated
June 2022
$
626,196
71,847
-
June 2021
$
538,866
58,323
40,332
698,043
637,521
232,200
930,243
-
637,521
Note 21.
Auditors' Remuneration
During the year the following fees were paid or payable for services provided by the auditor of the consolidated entity:
Audit services
Auditing or reviewing the financial statements - BDO Australia
Auditing or reviewing the financial statements - BDO Botswana
Non-audit services - BDO Australia
Tax consulting and compliance services
Total
Note 22.
Contingent Liabilities
The Directors are not aware of any contingent liabilities (2021: nil).
Consolidated
June 2022
$
June 2021
$
48,675
34,580
9,575
92,830
49,250
27,819
13,900
90,969
54
Tlou Energy Limited – Annual Report 2022
Notes to the financial statements (continued)
Related Party Transactions
Note 23.
Parent entity
The legal parent entity is Tlou Energy Limited.
Subsidiaries
Interests in subsidiaries are set out in note 26.
Transactions with related parties
The following transactions occurred with related parties:
Payment for goods and services:
Office rent paid to The Gilby McKay Alice Street Partnership, a director-related entity of
Anthony Gilby.
There were no amounts payable as at 30 June 2022 (2021: Nil).
Consolidated
2022
$
2021
$
12,900
12,000
Note 24.
Segment Reporting
Reportable Segments
Operating segments are identified based on internal reports that are regularly reviewed by the executive team to
allocate resources to the segment and assess its performance.
The Company currently operates in one segment, being the exploration, evaluation and development of Coalbed
Methane resources in Southern Africa.
Segment revenue
As at 30 June 2022 no revenue has been derived from its operations (2021: nil).
Segment assets
Segment non-current assets are allocated to countries based on where the assets are located as outlined below:
Botswana
Australia
June 2022
$
June 2021
$
51,147,251
1,966
51,149,217
50,321,772
4,382
50,326,154
55
Notes to the financial statements (continued)
Note 25.
Cash Flow Information
Tlou Energy Limited – Annual Report 2022
Consolidated
June 2022
$
June 2021
$
Reconciliation of cash flow from operations
Loss for the period
Depreciation
Share-based payments
Impairment charge - exploration and evaluation assets
Fair value (gain)/loss on financial instruments
Capitalised interest
Net exchange differences
(4,329,116)
547,217
232,200
166,054
690,272
241,917
43,997
Changes in operating assets and liabilities, net of the effects of purchase and disposal of subsidiaries:
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade payables and accruals
Increase/(decrease) in other payables
Decrease/(increase) in prepayments
Increase/(decrease) in provisions
(56,631)
113,596
(15,997)
(5,053)
2,932
(2,368,612)
Refer to Notes 13 and 14 for non-cash investing or financing activities during the year.
(2,054,237)
597,189
-
-
-
-
(25,915)
(60,459)
(26,336)
-
85,481
61,626
(1,422,651)
Note 26.
Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1.
Name of entity
Country of incorporation
Class of
shares
Equity holding %
Tlou Energy Botswana (Proprietary) Ltd
Botswana
Ordinary
June 2022
100
June 2021
100
Technoleads International Inc
Tlou Energy Exploration (Proprietary)
Limited
Sable Energy Holdings (Barbados) Inc
Tlou Energy Resources (Proprietary)
Limited
Copia Resources Inc
Tlou Energy Corp Services Botswana
(Proprietary) Limited
Madra Holdings (Barbados) Inc
Tlou Energy Solutions (Proprietary) Limited
Pula Holdings Inc
Tlou Energy Generation Proprietary Limited
Barbados
Botswana
Barbados
Botswana
Barbados
Botswana
Barbados
Botswana
Barbados
Botswana
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
N/A
N/A
Pula Holdings Inc and Tlou Energy Generation Proprietary Limited were incorporated during the year. These
companies have not yet traded.
56
Notes to the financial statements (continued)
Note 27.
Matters subsequent to the end of the financial year
Tlou Energy Limited – Annual Report 2022
There has not been any matter or circumstance, other than that referred to in this report and disclosed in the financial
statements or notes thereto, that has arisen since the end of the period, that has significantly affected, or may
significantly affect, the operations of the consolidated entity, the results of these operations, or the state of affairs of
the consolidated entity in future financial years.
Note 28.
Parent entity disclosures
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Contributed equity
Share based payment
Accumulated losses
Total equity
Loss for the period
Total comprehensive income
Parent
June 2022
$
June 2021
$
7,650,332
30,255,800
37,906,131
1,000,468
7,331,243
8,331,711
29,574,420
6,381,260
30,218,134
36,599,394
263,935
-
263,935
36,335,459
106,763,925
1,157,804
(78,347,309)
29,574,420
106,763,927
925,604
(71,354,072)
36,335,459
(6,993,237)
(6,993,237)
(2,124,228)
(2,124,228)
Commitments, Contingencies and Guarantees of the Parent Entity
The Parent Entity has no commitments for the acquisition of property, plant and equipment, no contingent assets,
contingent liabilities or guarantees at reporting date.
57
Tlou Energy Limited – Annual Report 2022
Directors' declaration
In the Directors' opinion:
•
•
•
•
•
the attached financial statements and notes thereto comply with the Corporations Act 2001, the Australian
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements;
the attached financial statements and notes thereto comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes thereto give a true and fair view of the consolidated entity's
financial position as at 30 June 2022 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
the remuneration report as set out in the directors’ report for the year ended 30 June 2022 comply with section
300A of the Corporations Act 2001; and
The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the Directors
Anthony Gilby
Director
Brisbane
19 September 2022
58
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Tlou Energy Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Tlou Energy Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2022, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial report,
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:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
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 Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
59
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. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Carrying value of exploration and evaluation assets
Key audit matter
How the matter was addressed in our audit
Refer to note 7 in the financial report.
The Group carries exploration and evaluation
assets as at 30 June 2022 in relation to the
application of the Group’s accounting policy for
exploration and evaluation assets.
The recoverability of exploration and evaluation
asset is a key audit matter due to:
•
•
The significance of the total balance; and
The level of procedures undertaken to
evaluate management’s application of the
requirements of AASB 6 Exploration for and
Evaluation of Mineral Resources (‘AASB 6’) in
light of any indicators of impairment that
may be present.
Our procedures included, but were not limited
to the following:
•
•
•
•
Obtaining evidence that the Group has valid
rights to explore in the areas represented by
the capitalised exploration and evaluation
expenditure by obtaining supporting
documentation such as license agreements
and also considering whether the Group
maintains the tenements in good standing
Making enquiries of management with
respect to the status of ongoing exploration
programs in the respective areas of interest
and assessing the Group's cashflow budget
for the level of budgeted spend on
exploration projects and held discussions
with directors of the Group as to their
intentions and strategy
Reviewing the current status of the asset to
assess whether the classification of the
projects as exploration and evaluation assets
continues to be valid.
Enquiring of management, reviewing ASX
announcements and reviewing directors'
minutes to ensure that the Group had not
decided to discontinue activities in any
applicable areas of interest and to assess
whether there are any other facts or
circumstances that existed to indicate
impairment testing was required.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
60
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2022, but does not include the
financial report and the 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.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has 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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
61
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 18 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of Tlou Energy Limited, for the year ended 30 June 2022,
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.
BDO Audit Pty Ltd
T R Mann
Director
Brisbane, 19 September 2022
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
62
Tlou Energy Limited – Annual Report 2022
Corporate Governance Statement
The Directors (the “Board”) of Tlou Energy Limited (“Tlou Energy” or “the Company”) are committed to the
implementation of the highest standards of corporate governance. In determining what these standards should be, the
Board references guidance and supports, where appropriate, the 4th edition of the Corporate Governance Principles
and Recommendations (“4th Edition Recommendations or ASX Recommendations”) established by the ASX Corporate
Governance Council (the “Council”).
The Company complies with the corporate governance regime of Australia, being its country of incorporation. In addition,
the Directors acknowledge the importance of the guidelines set out in the QCA Guidelines for Smaller Quoted
Companies. They therefore intend to comply with the QCA Guidelines so far as is appropriate having regard to the size
and nature of the Company and taking into account that it is an Australian company listed on the ASX which complies
with existing ASX Recommendations.
This statement outlines the key aspects of Tlou Energy’s governance framework and practices. The charters, policies
and procedures are reviewed regularly and updated to comply with the law and best practice. This statement contains
specific information and discloses the extent to which the Company intends to or is able to follow the 4th Edition
Recommendations. The charters and policies of the Company can be viewed on Tlou Energy’s website at
www.tlouenergy.com (“website”).
The Council’s recommendations are not prescriptive and, if certain recommendations are not appropriate for the
Company given its circumstances, it may elect not to adopt that particular practice in limited circumstances. The
Company believes that during the reporting period ending 30 June 2022 its practices are taking into account the size
and makeup of the Company is largely consistent with those of the 4th Edition Recommendations and where they do not
follow a recommendation this statement identifies those that have not been followed and details reasons for non-
adherence. Even where there is a deviation from the recommendations the Company continues to review and update
its policies and practices in order that it keeps abreast of the growth of the Company, the broadening of its activities,
current legislation and good practice.
This Corporate Governance statement reports on the main practices of Tlou Energy and is current as at the 7 September
2022 and has been approved by the Board of Directors.
Role of the Board (Lay solid foundations for management and oversight)
The Board is responsible for ensuring that the Company is managed effectively as well as demonstrating leadership
and defining the Company’s strategic objectives. Given the size of the Company and the Board, the Board undertakes
an active role in the management of the Company.
The Board's role and the Company’s Corporate Governance practices are continually being reviewed and updated to
reflect the Company’s circumstances and growth. The Board has adopted a Charter which sets out the responsibilities
of the Board, its structure and governance, responsibility for approving the Company’s statement of values and ensuring
that the code of conduct to underpin the desired culture within the entity, as well as the matters expressly reserved to
the Board and those delegated to management. A copy of the Charter is available on the Company’s website.
The Board is responsible for determining the strategic direction and objectives of the Company and overseeing
management’s implementation of this strategy and the achievements against these.
(ASX Recommendation 1.1)
63
The Board of Directors
The Board is currently comprised of five (5) Directors. Details of the Directors who held office during the year under
review are namely:
Tlou Energy Limited – Annual Report 2022
Name of Director
Board Membership
Date of Appointment
Martin McIver
Anthony Gilby
Gabaake Gabaake
Colm Cloonan
Hugh Swire
Non-Executive Chairman
Managing Director
Executive Director
Finance Director
Non-Executive Director
16 September 2010
23 April 2009
11 March 2015
11 February 2016
22 June 2017
The skills, experience and expertise relevant to the position of each Director are set out in the Directors’ Report of this
Annual Report. Prior to the appointment of a person, or putting forward to shareholders a candidate for election, as a
director, the Company undertakes checks which it believes are appropriate to verify a director’s character, experience,
educations, criminal record and bankruptcy history. The Company will ensure that all material information in its
possession relevant to a shareholder’s decision to elect or re-elect a director is provided to shareholder in the Company’s
Notice of Annual General Meeting.
(ASX Recommendation 1.2)
Each executive director and senior executive of Tlou Energy has an agreement in writing with the Company which sets
out the key terms and conditions of their appointment including their duties, rights and responsibilities. There are also
Letters of Appointment between the Company and all of the non-executive directors. Each of these letters of
appointment are with the director personally to ensure that the director or senior executive is personally accountable to
the listed entity for any breach of the agreement. These agreements contain provisions that amongst other matters
include:
• An obligation on the director to disclose his/her interests and any matters which could affect the director’s
independence;
• a requirement to comply with key corporate policies, including the entity’s code of conduct, its anti-bribery and
•
corruption policy and its trading policy;
the requirement to notify the Company of, or to seek its approval before accepting, any new role that could impact
upon the time commitment expected of the director or give rise to a conflict of interest;
• details of the Company’s policy on when directors may seek independent professional advice at the expense of the
entity;
indemnity and insurance arrangements;
•
• ongoing rights of access to corporate information; and
• ongoing confidentiality obligations
(ASX Recommendation 1.3)
Company Secretary
The Company Secretary is directly accountable to the Board through the Chairman who the Company Secretary has a
direct line of reporting to. The Company Secretary is responsible for advising the Chairman and the Board to manage
the day to day governance framework of the Company. The responsibilities of the Company Secretary are contained in
the Board Charter a copy of which is available on the Company’s website. The decision to appoint or remove the
Company Secretary must be made or approved by the Board.
(ASX Recommendation 1.4)
Diversity Policy
The Company is committed to creating a fair and inclusive work environment that embraces diversity and recognises its
contribution to the Company’s commercial success. Where possible it endeavours to recruit staff from within Botswana.
As the Company has a relatively small staff at present, the Board does not believe that any benefit would be obtained
setting measurable objectives for achieving gender diversity and has not done so. Neither is the Company a ‘relevant
employer’ under the Workplace Gender Equality Act.
A copy of the Company’s Diversity Policy can be found on the Company’s website.
(ASX Recommendation 1.5)
64
Tlou Energy Limited – Annual Report 2022
Improvement in Board processes and effectiveness is a continuing objective, and the purpose of the annual Board
evaluation is to identify ways to improve performance and effectiveness of the Board and its committees. The Board
has appointed the Chairman, which it believes is the most suitably qualified to carry out the task, as the person
responsible for conducting an annual review of the Board’s performance.
This process involves the Chairman circulating to members of the Board a detailed questionnaire on performance
indicators and collating the data from the same before discussing with each member of the Board and reviewing
performance indicators such as time engaged on Company business, so as to assess the effectiveness of processes
structure and contributions made by individual directors.
The Managing Director assesses, annually or as necessary, the performance of all key executives. Both qualitative and
quantitative measures will be used consistent with performance targets set annually by the Managing Director in
consultation with those executives. The Managing Director reports to the Remuneration and Nomination Committee on
their performance and the Remuneration and Nomination Committee will then consider any changes to remuneration
and the establishment of new performance targets.
During the reporting period, a review of the Boards performance was carried out by the Chairman.
(ASX Recommendation 1.6)
The Board will assess annually or as necessary the performance of the Chief Executive Officer/Managing Director
benchmarking his performance against the role description in the employment contract and general industry standards
expected of a Managing Director carrying on that role. The Board regularly evaluates management’s performance
against various criteria and requires senior executives to address the Board on execution of strategy and associated
issues. The Chief Executive Officer reviews the performance of the senior executives annually. Theses evaluations take
into account matters such as the achieving of the Company’s objectives and reaching of performance criteria.
An executive management review has been carried out for the current reporting period.
(ASX Recommendation 1.7)
Structure of Board to be Effective and Add Value
The Board comprises two non-executive Directors, including the Chairman, and three executive Directors including the
Managing Director. The names of the Directors of the Company in office at the date of this report or through the year
under review and their qualifications are set out in the section of the Annual Report headed “Directors’ Report”.
The composition and size of the Board is determined so as to provide the Company with a broad base of industry,
business, technical, administrative, financial and corporate skills and experience considered necessary to achieve the
strategic objectives of the Company taking into consideration the size of the Company and the nature of its current
operations.
The Board has established a Remuneration and Nomination Committee which reviews Board membership. This
includes considering what other skills that might be necessary for the Company to reach its strategic objectives. The
Committee is now constituted with two independent non-executive directors and is chaired by an independent director
which satisfies ASX Recommendation 2.1 in those respects but does not meet the minimum 3 member criteria due to
the passing of Linah Mahalo who was the Board’s third independent non-executive director. When a replacement
director is appointed, the Board envisages that the person appointed will be an independent non-executive director,
who will be able to fill this vacancy.
The Board is however of the view that the Committee as it currently exists adequately and successfully fulfills this role,
obviating any urgent need to fill the role.
A copy of the Remuneration and Nominations Committee Charter is located on the Company’s website.
The current Committee’s members, and the number of times that they have met throughout the reporting period and the
member’s attendance at those meetings is recorded in the section of the 2022 Annual Report headed “Directors Report”.
(ASX Recommendation 2.1)
65
Tlou Energy Limited – Annual Report 2022
Independence
The Board considers that, fundamentally, the independence of Directors is based on their capacity to put the best
interests of the Company and its shareholders ahead of all other interests, so that Directors are capable of exercising
objective independent judgment.
When evaluating candidates, the Board has regard to the potential for conflicts of interest, whether actual or perceived,
and the extent or materiality of these in the ongoing assessment of director independence. In this regard the Board has
regard to the definition of "independence" in the 4th Edition Recommendations. The Board is of the view that the
existence of one or more of the relationships in the definition will necessarily result in the relevant Director not being
able to be treated as independent, particularly given the criteria outlined above, and in those cases the Company will
seek to implement additional safeguards to ensure independence. An overall review of these considerations is
conducted by the Board to determine whether individual Directors are independent.
Additional policies and practices, such as Directors not being present during discussions or decision making on matters
in which they have or could be seen to potentially have a material conflict of interest, as well as Directors being excluded
from taking part in the appointment of third party service providers where the Director has an interest, provide further
separation and safeguards to independence. The Board has adopted materiality thresholds in relation to independence,
which are contained in the Board Charter and summarised below.
ASX Recommendation 2.4 requires that a majority of the Board to be independent Directors. In addition, ASX
Recommendation 2.5 requires the Chairman of the Company to be independent. The Council defines ‘independence’
as being a non-executive director who is not a member of management and who is free from any business or other
relationship that could materially interfere with or could reasonably be perceived to materially interfere with the
independent exercise of their judgment. Based on this definition, two of the Directors could not be considered
independent by virtue of them being either executives, substantial shareholders of the Company or Directors or Officers
of Companies that are substantial shareholders of the Company.
The Chairman (Martin McIver) and High Swire are both considered as independent non-executive directors as they both
fall within the Council’s definition of ‘independence’ as being non-executive directors who are not members of
management and who are free from any business or other relationship that could materially interfere with or could
reasonably be perceived to materially interfere with the independent exercise of their judgment.
Notwithstanding that the 4th Edition Recommendations in respect to the composition of the Board are not strictly able to
be followed (that being the majority of the Board should be independent and non-executives) the Company believed
that it had achieved a sufficient balance before the sad passing of Linah Mohohlo, with 3 independent non-executive
directors on the Board, especially given its history and the formation of the Board reflects certain founding members.
The Company looks to restore that balance, but it has proved impractical at this juncture to restore the equilibrium or
have a majority of independent Directors.
While this is the desire of the Board it takes the view that the interests of the Shareholders are at this time best served
with the Board's present composition and remains committed to monitoring the situation as the operations and size of
the Company evolves and appoint at the appropriate time an appropriately qualified independent director/s as the
opportunities and necessity arise.
(ASX Recommendation 2.4 and 2.5)
If a Board vacancy becomes available it will be the responsibility of the Remuneration and Nomination Committee to
identify the skills, experience and diversity that will best complement the Board and will then embark on a process to
identify a candidate who can best meet those criteria. A skills matrix has been developed and adopted by the Board to
help assess the relevant criteria of candidates. The Directors believe the skill base of the current Directors is appropriate
for the Company given its size and stage of development.
Detailed below are the professional skills and experience that that Company will and has used to assess the relevant
criteria for candidates for appointment to the Board.
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Tlou Energy Limited – Annual Report 2022
Board Skills Matrix
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
• Accounting & Audit.
• ASX Board Membership Experience.
• Business Management.
• Strategic Planning.
• Subsurface Knowledge.
• Drilling & Completions Construction & Project Mgmt.
• Human Resources.
• Operational Experience and HSE
• Corporate Governance & Ethics.
• Corporate Finance.
• Government & Gov Relations (Botswana).
• Legal Public Affairs & Communications.
• Management Systems & Risk Management
• Merger & Acquisitions & Corporate.
• External Shareholder Engagement Political Acumen.
• Industry Stakeholder Engagement.
• Social Licence to Operate.
• Foreign Country Operating Experience
(ASX Recommendation 2.2)
Given the size of the Company there is no formal induction process for new Directors, nor does it have a formal
professional development program for existing Directors. The Board does not consider that a formal induction program
is necessary given the current size and scope of the Company’s operations.
Rather any new Director will be provided with a personalised induction which will be dependent upon the skills and
experience that any new Director might possess. Any new Director induction will include comprehensive meetings with
senior management and the provision of relevant materials such as all the Company’s policies and procedures as well
as instruction in relation to these.
All Directors are expected to maintain the skills required to effectively discharge their obligations and are encouraged
to undertake continuing professional education such as industry seminars and approved education courses.
(ASX Recommendation 2.6)
Board Charter
The Board operates in accordance with the broad principles set out in its Charter which is regularly reviewed and
updated by the Board. It has also adopted a written Code of Conduct which establishes guidelines for its conduct. The
purpose of the Code is to ensure that Directors and Executives act honestly, responsibly, legally and ethically and in
the best interests of the Company. A copy of the Board Charter can be viewed in the Company’s website.
Conflicts of Interest
In accordance with the Corporations Act 2001 and the Company’s Constitution, Directors must keep the Board advised
on an ongoing basis, of any interest that may lead to a conflict with the interests of the Company. Where the Board
believes that there is a significant or material conflict, the Director concerned shall be excluded from all discussions and
access to Board papers and the like and shall not be present at any Directors meeting during the consideration or vote
on such a matter.
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Tlou Energy Limited – Annual Report 2022
Independence of Professional Advice
The Board has determined that individual Directors have the right to seek independent professional advice in connection
with any of their duties and obligations as Directors of the Company. Before a Director may obtain that advice at the
Company’s expense, the Director must obtain the approval of the Chairman who will not unreasonably withhold that
consent. If appropriate any advice received will be made available to the full Board. No member of the Board availed
him or herself of this entitlement during the year under review.
Committees
Audit Committee, Risk Committee and Remuneration & Nomination Committee
The Board delegates specific responsibilities to various Board Sub-Committees. The Board has established the
following standing committees:
• An Audit Committee, which is responsible for overseeing the external and internal auditing functions of the
Company’s activities;
• A Risk Committee, which comprises representatives of the Board and staff to advise and assist the Board in
assessing risk factors associated with the operation of the Company; and
• A Remuneration & Nomination Committee, which is responsible for making recommendations to the Board on
recruitment and remuneration packages for executives.
The Board has again this year delegated the specific responsibility of overseeing the Company’s audit obligations to the
Audit Committee. The Audit Committee is currently made up of the following members:
• Hugh Swire – Independent Chair
• Martin McIver – Independent Committee Member
• Colm Cloonan – Committee Member
• Anthony Gilby – Committee Member
Instil a Culture of Acting Lawfully, Ethically and Responsibly
The Board maintains high standards of ethical conduct and the CEO is responsible for ensuring that high standards of
conduct are maintained by all staff. The Company’s reputation as an ethical business organisation is critical to its
ongoing success. The Board has adopted a Code of Conduct covering the practices necessary to maintain confidence
in the Company’s integrity, the practices necessary to take into account the Company’s legal obligations and reasonable
expectations of its stakeholders, and the responsibility and accountability of individuals for reporting and investigating
reports of unethical practices. It is not a prescriptive set of rules but rather a practical set of principles giving direction
and reflecting the Company’s approach to business conduct.
The Company in recognition of the importance of ethical and responsible decision making has adopted a Corporate
Code of Conduct which sets out ethical standards and a Code of Conduct to which all Directors, and Senior Executives
will adhere whilst conducting their duties. The CEO is responsible for bringing to the attention of the Board any material
breaches of the code.
(ASX Recommendation 3.1)
68
The Code of Conduct for Director and Senior Executives forms part of this Corporate Code of Conduct. It provides as
follows: -
Tlou Energy Limited – Annual Report 2022
All Directors and Senior Executives will: -
1. Actively promote the highest standards of ethics and integrity in carrying out their duties for the Company;
2. Disclose any actual or perceived conflicts of interest of a direct or indirect nature of which they become aware
and which they believe could compromise in any way the reputation or performance of the Company;
3. Respect confidentiality of all information of a confidential nature which is acquired in the course of the
Company’s business and not disclose or make improper use of such confidential information to any person
unless specific authorisation is given for disclosure or disclosure is legally mandated;
4. Deal with the Company’s suppliers, contractors, competitors and each other with the highest level of honesty,
fairness and integrity and to observe the rule and spirit of the legal and regulatory environment in which the
Company operates;
5. Report any breach of this code of conduct or other inappropriate or unethical conduct to the appropriate authority
within the Group; and
6. This Code of Conduct is in addition to the Code of Conduct for all employees which has been adopted by the
Board of the Company.
The Company is committed to increasing shareholder value and aims to ensure its shareholders are fully informed as
to the true financial position and performance of the Group through timely and accurate disclosure of information and
risk management practices and exemplary compliance with the continuous disclosure regime. A copy of the Code of
Conduct is available at the Company’s website.
(ASX Recommendation 3.1 and 3.2)
The Company has adopted in compliance of ASX Listing Rule 12.12 a Policy for Trading in Company Securities which
is binding on all Directors, senior management, officers, employees and consultants of the Company. The purpose of
this policy is to provide a brief summary of the law on insider trading and other relevant laws, set out the restrictions on
dealing in the Company’s securities by people who work for or are associated with Company and assist in maintaining
market confidence in the integrity of dealings in Tlou Energy securities. The Policy is posted on the Company’s website
to ensure that there is public confidence and understanding of the Company’s policies governing trading by “potential
insiders”.
All persons covered by the Policy may not deal in the securities of the Company without first seeking and obtaining a
written acknowledgement from the Chairman (or in his absence the Company Secretary) or the Company Secretary (or
in his absence the Managing Director) prior to any trade, at which time they must confirm that they are not in possession
of any unpublished price-sensitive information. The Company Secretary maintains a register of notifications and
acknowledgements given in relation to trading in the Company’s securities. The policy was reviewed during the year to
ensure that it aligns with the requirements of the ASX Listing Rules and the requirements of other regulatory regimes
under which the Company operates (including in respect of its AIM quotation, the AIM Rules for Companies and the
Market Abuse Regulations).
The Company has adopted both a Whistleblower Policy and Anti-Bribery and Corruption Policy copies of which are
available on the Company’s website. These provide inter-alia that any material incidents that are reported under it are
referred to the Board for its consideration and if necessary, action.
(ASX Recommendations 3.3 and 3.4)
Safeguard the Integrity of Corporate Reports
In accordance with ASX Recommendation 4.1 the Board has had established for all of the financial year under review
an Audit Committee with a Charter that sets out the roles, responsibilities, composition, structure and membership
requirements.
69
The primary objective of the Committee is to assist the Board to discharge its responsibilities with regard to:
Tlou Energy Limited – Annual Report 2022
• Monitoring the integrity of the financial statements of the Company, reviewing significant financial reporting
judgements;
• Reviewing the Company’s internal financial control system;
• Monitoring and reviewing the effectiveness of the Company’s internal audit function (if any);
• Monitoring and reviewing the external audit function including matters concerning appointment and
remuneration, independence and non-audit services; and
• Performing such other functions as assigned by law, the Company’s constitution, or the Board.
Structure of the Audit Committee and Charter
ASX Recommendation 4.1 states that the audit committee should have at least 3 members consisting only of non-
executive directors, a majority of which should be independent with the Chair of the Committee being one of the
independent directors who is not the chair of the Company.
During the reporting period, the Committee appointed by the Board did not comply with this recommendation as it
comprised then and now of two non-executive Directors and two executive Directors, with the chair of the Committee
being an independent Director as prescribed by the ASX Recommendations. Not all of the members of the Audit
Committee were non-executive, but those that were non-executives are considered independent.
Colm Cloonan and Anthony Gilby are members of the Committee who are executive directors. Hugh Swire, who is an
independent non-executive director, is the current Chair of the Committee. Martin McIver is the other Committee member
who is an independent non-executive director.
Each member of the Audit Committee has an appropriate knowledge of the Company’s affairs and has the financial and
business expertise to effectively discharge the duties of the Committee. The members of the Audit Committee by virtue
of their professional background experience and personal qualities are well qualified to carry out the functions of the
Audit Committee.
The members of the Committee have direct access to any employee, the auditors and financial and legal advisers
without management present. The Committee meets as often as is required but no less than twice a year.
The Committee Chair is obliged to report any significant issues arising from the Committee Meetings at the next meeting
of the Board and a copy of the minutes of the Audit Committee meetings are provided to the Board.
The Directors report contained in the Company’s annual report to shareholders is to contain a dedicated section that
describes the role of the Audit Committee and what action it has taken.
The role of the Audit Committee is to: -
(a) monitor the integrity of the financial statements of the Company, by reviewing significant financial reporting
(b)
judgements;
review the effectiveness of the Company’s internal financial control system and, unless expressly addressed
by a separate Risk Committee or by the Board itself, risk management systems;
(c) monitor and review the effectiveness of the Company’s internal audit function;
(d) monitor and review the external audit function including matters concerning appointment and remuneration,
independence and non-audit services;
perform such other functions as assigned by law, the Company’s constitution, or the Board;
approve the corporate governance section of the Company’s Annual Report relating to the Committee and
its responsibilities; and
review compliance with legal and regulatory requirements.
(e)
(f)
(g)
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Tlou Energy Limited – Annual Report 2022
The Audit Committee keeps minutes of its meetings and includes them for review at the following Board Meeting. The
Audit Committee members’ attendance at meetings as compared to total meetings held is set out in the Directors’ Report
contained in the Annual Report.
As a matter of practice the Chief Executive Officer and the Chief Financial Officer are required to make declarations in
accordance with section 295A of the Corporations Act that the Company’s financial reports present a true and fair view
in all material respects of the Company’s financial condition and operational results and are in accordance with relevant
accounting standards, and to provide assurance that the declaration is founded on a sound system of risk management
and internal control, and that the system is operating effectively in all material respects.
(ASX Recommendation 4.2)
The external auditors attend the committee meetings at least twice a year and on other occasions where circumstances
warrant as well as being available at the Company’s AGM to answer shareholders questions about the conduct of the
audit and the preparation and content of the audit report.
The only periodic finance-based reports that the Company releases each year are the Full Year and Half Year accounts
along with the quarterly Appendix 5B’s. The half year and full year accounts are audited and signed off by the Company’s
independent external Auditors. While the quarterly Appendix 5B’s are prepared internally, they are done so utilising the
same accounting principles and accounts on which the audited half year and full year accounts are prepared and
released. Copies of the Quarterly reports are also reviewed by the Auditors as part of the half year and full year audits.
Additionally, the Quarterly reports are circulated to the Board as a whole before their release at which time the Board
as a whole are invited to comment or raise any questions in respect to the same. These reports are released with the
authority of the Board.
(ASX Recommendation 4.3)
Make Timely and Balanced Disclosure
The Company appreciates the considerable importance of communications with Shareholders and the market as a
whole. The Company’s communication strategy requires communication with shareholders and investors in an open
regular and timely manner so that the shareholders and investors have sufficient information to make informed
investment decisions on the operations and results of the Company.
The strategy provides for the use of systems that ensure regular and timely release of information about the Company
to shareholders.
Methods of communication currently employed include:
• Shareholder Updates
• ASX Announcements
• Quarterly Reports
• Half Yearly Reports
• Annual Reports; and
• Shareholder presentations
Continuous Disclosure
The Company is a “disclosing entity” pursuant to section 111AR of the Corporations Act and, as such, complies with the
continuous disclosure requirements of Chapter 3 of the ASX Listing Rules and section 674 of the Corporations Act. In
addition, the Company is subject to disclosure obligations in respect of the other markets to which it is admitted to trading
which includes inter alia the AIM Rules for Companies and the Market Abuse Regulations. Subject to the applicable
exceptions contained in these regulations, the Company is required to disclose to the ASX, BSE and via a regulatory
news service in the United Kingdom any information concerning the Company which is not generally available and which
a reasonable person would expect to have a material effect on the price or value of the Shares.
The Company has adopted an updated Continuous Disclosure Policy in compliance with ASX Recommendation 5.1
and ASX Guidance Note 8: Continuous Disclosure. A copy of the policy can be found on the Company’s website.
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Tlou Energy Limited – Annual Report 2022
Each director, employee and consultant engaged by the Company is provided with a copy of the policy while impressing
upon them during their onboarding and induction the importance of the principles behind the policy and its application
to them in that role.
The Company Secretary has primary responsibility for discharging the Company's continuous disclosure obligations to
the ASX. All officers and employees must immediately notify the Company Secretary of any material information which
may need to be disclosed under Listing Rule 3.1-3.1B. Where uncertainty arises as to the meeting of continuous
disclosure obligations, the Company Secretary may seek external legal and professional advice.
Under the Company’s policy the Board receives a copy of all material market announcement immediately after they
have been made if not beforehand.
(ASX Recommendation 5.2)
The Officers of the Company are committed to:
•
•
Encouraging prompt disclosure of any material information which may need to be disclosed under Listing Rule
3.1-3.1B; and
Promoting an understanding of the importance of the continuous disclosure regime throughout the Company.
The Company uses its website www.tlouenergy.com as its primary communication tool for distribution of the annual
report, market announcements and media disclosures. External communication which may have a material effect on
the price or value of the Company’s securities will not be released unless it has been announced previously to the ASX,
BSE and via a regulatory news service in the United Kingdom.
Effective participation by Shareholders is encouraged at general meetings and procedures have been designed to
facilitate this including online proxy voting and the ability of stakeholders to subscribe to receive copies of
announcements and reports that are released by the Company.
The Policy is also designed to ensure that equality of information among investors is maintained and applies regardless
of whether the presentation contains material new information required to be disclosed under listing rule 3.1 through
ensuring that copies of all substantive presentations are released to the Market on the ASX Platform.
(ASX Recommendations 5.1 and 5.3)
Respect the Rights of Security Holders
The Company keeps shareholders and other interested parties informed of performance and major developments via
communications through its website. This includes details of the Governance framework adopted by the Company
including
https://tlouenergy.com/corporate_governance/ (ASX Recommendation 6.1)
the Corporate Governance Polices and Charters, which
is available at:
copies of
The Company has a Shareholder Communications and Engagement Policy that outlines the processes followed to
ensure communication with shareholders and the investment community is effective, consistent and adheres to the
principles of continuous disclosure. This is one of the policies available on the Governance page of the Company’s
website.
(ASX Recommendation 6.2)
The policy regarding shareholder communication and engagement sets out the processes the Company has in place to
facilitate and encourage the participation of shareholders and other investors at meetings and to engage with
management. These include encouraging shareholders to attend the AGM and allowing them to lodge a proxy vote
online if they are unable to attend the meeting.
(ASX Recommendation 6.3)
The Company considers that communicating with shareholders by electronic means is an efficient way to distribute
information in a timely and convenient manner. Therefore, its website contains a function to allow interested parties to
subscribe to receive electronic notification of public releases and other relevant material concerning the Company and
its activities. Where appropriate and considered by the Board to be substantive, material or contentious, Resolutions at
the Company’s general meeting will be conducted by Poll rather than a show of hands. The Board considers that it is
not necessary, or the cost justified to conduct all resolutions in this manner.
(ASX Recommendations 6.4 and 6.5)
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Tlou Energy Limited – Annual Report 2022
Recognise and Manage Risk
The Board is responsible for the oversight of the Company’s risk management. The responsibility and control of risk
management is overseen by the Managing Director, with matters delegated to the appropriate level of management
within the Company with the Managing Director being responsible for assuring the systems are maintained and complied
with.
The Company has established a Risk Committee that is focused on ensuring that the Company maintains an effective
system of internal control and risk management. The Committee’s structure, roles and responsibilities are detailed in
the Risk Committee Charter.
Flowing from this, the Company has adopted a Risk Management Policy that governs the Company’s approach to
managing financial and non-financial risks.
The members of the Risk Committee are appointed by the Board, two of which are to be Board Members. Company
personnel are required to attend Risk Committee meetings as and when requested.
Specific functions of the Risk Committee are to: -
(f)
(d)
(e)
(a)
(b)
(c)
review and oversee the Company's risk profiles as developed and reported by management;
identify material business risks and monitor emerging risks and changes in the Company's risk profile;
monitor and review the risk management performance of the Company, including conducting specific
investigations where deemed necessary;
review any legal matters which could significantly impact the Company's risk management and internal
control systems, and any significant compliance and reporting issues, including any recent internal regulatory
compliance reviews and reports;
review the effectiveness of the compliance function at least annually, including the system for monitoring
compliance with laws and regulations and the results of management's investigations and follow-ups
(including disciplinary action) of any fraudulent acts or non-compliance;
be satisfied that all regulatory compliance matters have been considered in the preparation of the Company's
official documents;
review the findings of any examinations by regulatory agencies and oversee all liaison activities with
regulators;
review and discuss media releases, ASX announcements and any other information provided to analysts;
review corporate legal reports of evidence of a material violation of the Corporations Act, the ASX Listing
Rules or breaches of fiduciary duties;
review the Company's insurance strategy, including the coverage and limits of the insurance policies, in order
to, if thought fit, recommend to the Board for approval; and
promote an awareness of a risk based culture in the balance of pursuit of business objectives whilst
managing risks.
(ASX Recommendation 7.1)
(h)
(i)
(g)
(k)
(j)
The Risk Committee meets whenever necessary, but no less than three times per year, and keeps minutes of its
meetings which are included for review at the following Board Meeting.
The Company has a qualified Compliance and Risk Manager who has been engaged to oversee the design and
implementation of the risk control programme. The Company’s Risk Management Policy requires the Board, being
guided by the Risk Committee to at least annually undertake a risk review to determine if the existing risk framework is
satisfactory considering the material risks faced by the Company.
The Board with the assistance of the Risk Committee has completed a review of the Company’s risk management
framework during the year under review and determined that the risk management framework that was in place was
satisfactory for the present needs of the Company and that it continues to be sound and that the Company is operating
with due regard to the risk appetite set by the board.
(ASX Recommendation 7.2)
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Tlou Energy Limited – Annual Report 2022
The Company does not have a formal internal audit function. However, it has adopted a number of internal controls
such as identifying key risks in a Risk Register and managing activities within a budget and operational plan.
Management led by the Chief Financial Officer periodically undertakes an internal review of financial systems and
processes and where systems are considered to require improvement these systems are developed. Delegations of
Authority are reviewed annually by the Audit Committee.
The ongoing mitigation and management of financial and operational risks are standing agenda items of the Audit and
Risk Committees. The Chief Executive Officer and the Chair of the Audit Committee are responsible for reporting to the
Board on a regular basis in relation to whether the Company’s material business risks are being managed effectively by
the existing management and internal controls systems.
(ASX Recommendation 7.3)
The Company undertakes gas exploration activities and as such faces inherent risks to its business, including economic,
environmental and social sustainability risks which may materially impact the Company’s ability to create or preserve
value for shareholders over the short, medium or long term. The Board is regularly briefed by management as well as
keeping itself abreast of possible material exposure to risks that the Company may face. The Company considers that
its activities are focused in Botswana on the generation of energy, which in turn will help drive economic growth in the
low carbon economy through displacement of carbon intensive coal and diesel with power generation using gas, solar
and hydrogen having an enormous potential role to play as the country develops.
Of core importance to the Company is safety, which it considers a priority not only in respect to its employees and
contractors but also to the community and environment in which it operates. The Company believes that if these matters
are priorities then they will act as drivers for value to shareholders. The Company has in place policies and procedures,
including a risk management framework, to help manage these risks.
(ASX Recommendation 7.4)
Remunerate Fairly and Responsibly
The Board has established a Remuneration & Nomination Committee. There is no separate Remuneration Committee.
Given the size of the Board, the Directors have previously determined that the non-executive Directors would execute
the functions of a Remuneration & Nomination Committee and have adopted a Remuneration and Nomination Charter.
The Board has agreed that the function of the Remuneration & Nomination Committee will be constituted by a majority
of independent non-executive directors.
The Board does not believe that any advantage would be achieved at this juncture taking into account the size of the
Company and the Board to have a separately constituted Remuneration Committee to carry out this function.
The non-executive members of the Board acting in their capacity as a Committee is tasked with ensuring that the
Company has remuneration policies and practices which enable it to attract and retain Directors and executives who
will best contribute towards achieving positive outcomes for Shareholders.
The Company complies with the guidelines for executive remuneration packages and non-executive Director
Remuneration as recommended in the ASX Recommendations.
The ASX Listing Rules and the Constitution require that the maximum aggregate amount of remuneration to be allocated
among the non-executive Directors be approved by the shareholders in a general meeting. In proposing the maximum
amount of consideration by shareholders, and in determining the allocation, the Remuneration Committee will take into
account the time demands made on Directors and such factors as fees paid to non-executive Directors in comparable
Australian companies. A meeting of shareholders held 10 July 2012 saw a resolution passed approving a pool of no
more than $500,000 for this purpose.
The names of the members of the Remuneration & Nomination Committee and their attendances at the meetings of the
Committee (if held) are set out in the Directors Report which forms a part of the Company’s Annual Report. The
remuneration paid to Directors and senior executives is shown in the Remuneration Report contained in the Directors’
Report, which includes details on the Company’s remuneration policies. There are no termination and retirement benefits
for non-executive Directors other than statutory superannuation entitlements.
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Tlou Energy Limited – Annual Report 2022
(ASX Recommendation 8.1)
The Company’s policies and practices regarding the remuneration of non-executive Directors, executive Directors and
senior executives is set out in the Remuneration & Nominations Committee Charter and in the Remuneration Report
contained in the 2022 Annual Report.
A copy of the Remuneration & Nomination Committee Charter is available on the Company’s website.
(ASX Recommendation 8.2)
The Company has an equity-based remuneration scheme. The Company’s Policy for Trading in the Company’s
Securities does not specifically prohibit Directors entering into transactions or arrangements which would limit the
economic risk of unvested entitlements.
However, all dealings in the Company’s Securities do need to be first approved by the Company.The Securities Trading
Policy is available on the Company’s website.
(ASX Recommendation 8.3)
Approved by the Board
7 September 2022
75
Tlou Energy Limited – Annual Report 2022
Additional Information
1.
Shareholder Information
The shareholder information set out below was applicable as at 9 September 2022 and relates to shares held on the
ASX, AIM and BSE.
2.
Ordinary Share Capital
600,205,289 fully paid ordinary shares.
3.
Number of Equity Holders
Ordinary Share Capital held by 799 shareholders.
4.
Voting Rights
In accordance with the Company's Constitution, for a show of hands, every shareholder present in person or by a
proxy, attorney or representative of a shareholder has one vote and for a poll, every shareholder present in person or
by a proxy, attorney or representative has in respect of fully paid shares, one vote for every share held. No class of
option holder or performance rights holder has a right to vote, however the shares issued upon exercise of options or
performance rights will rank pari passu with the then existing issued fully paid ordinary shares.
5.
Distribution of Shareholdings
Holdings
No. of
Holders
Units
% of Issued
Ordinary
Capital
1
1,001
5,001
10,001
50,001
100,001
- 1,000
- 5,000
- 10,000
- 50,000
- 100,000
- maximum
51
30
81
203
109
325
799
9,678
101,959
649,333
5,160,125
8,573,697
585,710,497
600,205,289
0.0%
0.0%
0.1%
0.9%
1.4%
97.6%
100.0%
6.
Substantial Shareholders
The following information is extracted from the Company’s Register of Substantial Shareholders:
FNB Nominees (Pty) Ltd Re: AG BPOPF Equity
Investor Group – Anthony Gilby
Ordinary
Fully Paid
Shares Held
47,230,769
34,489,580
% of Issued
Ordinary Capital
7.87%
5.75%
76
7.
The 20 Largest Holders of Ordinary Shares
FNBB Nominees Re: Vunani BPOPF
Hargreaves Lansdown (Nominees) Limited <15942>
Interactive Investor Services Nominees Limited
Hargreaves Lansdown (Nominees) Limited
Jim Nominees Limited
Vidacos Nominees Limited
Gilby Super Pty Ltd
HSDL Nominees Limited
Barclays Direct Investing Nominees Limited
Mitchell Family Investments (Qld) Pty Ltd
Citicorp Nominees Pty Limited
Kabila Investments Pty Limited
Sixth Erra Pty Ltd
Lawshare Nominees Limited
Interactive Investor Services Nominees Limited
Gilby Super Pty Ltd
Hargreaves Lansdown (Nominees) Limited
Interactive Investor Services Nominees Limited
BNP Paribas Noms Pty Ltd
HSDL Nominees Limited
Total
Balance of register
Grand total
8.
Restricted Securities
There are no restricted securities at the date of this report.
Tlou Energy Limited – Annual Report 2022
Ordinary Fully
Paid Shares Held
47,230,769
35,391,165
32,143,415
27,522,027
21,434,053
15,327,478
15,299,570
14,161,423
14,136,477
14,050,014
13,149,034
12,953,399
12,117,872
10,863,682
10,826,678
10,287,791
9,292,222
8,851,002
7,892,531
7,121,392
340,051,994
260,153,295
600,205,289
% of Issued
Ordinary Capital
7.87%
5.90%
5.36%
4.59%
3.57%
2.55%
2.55%
2.36%
2.36%
2.34%
2.19%
2.16%
2.02%
1.81%
1.80%
1.71%
1.55%
1.47%
1.31%
1.19%
56.66%
43.34%
100%
9.
Interests in Prospecting Licences (PL) and Mining Licence (ML)
As at the date of this Report, Tlou Energy Limited had an interest in or is awaiting renewal of the following licences:
Licence
PL 1/2004
PL 3/2004
PL 37/2000
PL 237/2014
PL 238/2014
PL 239/2014
PL 240/2014
PL 241/2014
PL 011/2019
ML 2017/18L
Region
Lesedi Project (Botswana)
Lesedi Project (Botswana)
Lesedi Project (Botswana)
Mamba Project (Botswana)
Mamba Project (Botswana)
Mamba Project (Botswana)
Mamba Project (Botswana)
Mamba Project (Botswana)
Boomslang Project (Botswana)
Lesedi Project (Botswana)
interest % *
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Operator
Tlou Energy Botswana Pty Ltd
Tlou Energy Botswana Pty Ltd
Tlou Energy Botswana Pty Ltd
Tlou Energy Botswana Pty Ltd
Tlou Energy Botswana Pty Ltd
Tlou Energy Botswana Pty Ltd
Tlou Energy Botswana Pty Ltd
Tlou Energy Botswana Pty Ltd
Tlou Energy Botswana Pty Ltd
Tlou Energy Botswana Pty Ltd
* The interest shown in each of the licences represents the percentage that Tlou Energy Limited holds in the corporate
holder of the licence.
77