8 Feb 2011 09:47
OILEX LTD ABN 50 078 652 632 CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT For the half-year ended 31 December 2010 CONTENTS Directors' Report 1Auditor's Independence Declaration 3
Condensed Consolidated Statement of Comprehensive Income 4
Condensed Consolidated Statement of Financial Position 5Condensed Consolidated Statement of Changes in Equity 6Condensed Consolidated Statement of Cash Flows 7
Notes to the Condensed Consolidated Interim Financial Report 8
Directors' Declaration 14Independent Review Report 15
The Directors present their report together with the interim financial report of the condensed consolidated entity, being Oilex Ltd (the "Company") and its controlled entities (the "Group") for the six months ended 31 December 2010 and the review report thereon.
DIRECTORS
The directors of the Company at any time during the interim period and until the date of this report are detailed below. All directors were in office for this entire period.
Mr Max Dirk Jan Cozijn Non-Executive Chairman
Dr Bruce Henry McCarthy Managing Director
Mr Raymond George Barnes Technical Director
Mr Ben Clube Finance Director
Mr Laxmi Lal Bhandari Non-Executive Director
Mr Ronald Miller Non-Executive Director
REVIEW OF OPERATIONS
Financial Performance
The Group incurred a consolidated loss after income tax of $8,497,879 for the half-year (31 December 2009: loss of $7,057,668). The loss is mainly due to $2,463,286 incurred on exploration expenditure which largely relate to geological studies undertaken in India, a write down of capitalised development assets of $477,754 and share based payment transactions totalling $2,553,744. Cash and cash equivalents held by the Group increased in the half year by $3,282,816 to $20,091,911 (30 June 2010: cash and cash equivalents $16,809,095). The net increase in cash and cash equivalents takes into account the placement of shares on the AIM market of the London Stock Exchange which raised A$9.5 million gross in December 2010.
Operations
Oilex Ltd is a dual listed (ASX and AIM) oil and gas exploration and production company with a diversified portfolio of interests in India, Australia, Timor-Leste and Indonesia. The Company's current focus is on:
* Evaluating the potential of the Cambay PSC Eocene tight reservoirs. * Drilling an exploration well on the WA-388-P permit offshore Australia in the Intra Mungaroo channel zone. * Acquiring processing and interpreting a further 140 sq km 3D seismic survey in the northern part of the JPDA 06-103 contract area located in the Timor Sea. * New opportunity identification and review.
The main events for the Company during the period were:
* Reserve and Contingent Resource Estimates prepared and released for Cambay PSC Eocene "tight" reservoirs. * Detailed design and planning for Cambay PSC Eocene "tight" reservoirs proof of concept well. * Revision of the existing Cambay Field Crude Offtake Sales Agreement resulting in $728,333 being included in revenue as at 31 December 2010. * A placement of shares to raise A$9.5 million gross occurred in December 2010. * WA-388-P farm-out agreement concluded with Apache Northwest Pty Ltd resulting in Oilex holding 8.4% (30 June 2010: 14%) and being carried for its share of the first exploration well (up to an agreed cap) and the associated well test costs (also up to an agreed cap). * Successful negotiations with the Autoridade Nacional Do Petroleo ("ANP"), the JPDA Designated Authority, to vary the Production Sharing Contract with the fourth commitment well to be at the discretion of the Operator if the third well is unsuccessful. * Relinquishment of Block 56 in Oman.
Further details are contained within releases made by the Company over this period.
Significant Events After Balance Date
At a General Meeting held 7 February 2011 shareholders approved the grant of 2,000,000 unlisted $0.30 options and 2,000,000 unlisted $0.37 options to India Hydrocarbons Limited an advisor to Oilex Ltd.
Shares issued on exercise of options within the period from 31 December 2010 to date of this report totalled 1,200,000.
CORPORATE MATTERS
Capital Structure
On 15 December Oilex Ltd issued 30 million shares on the AIM Market of the London Stock Exchange at 20 pence (AUD $0.32) per share and as at 31 December 2010 the company had total issued capital of 250,074,885 ordinary shares.
During the six months ended 31 December 2010 Oilex issued 24,575,000 unlisted options. As at 31 December 2010 there were a total of 45,375,000 unlisted options exercisable at prices of between $0.30 and $2.75 and 440,000 performance rights.
At 31 December 2010, Oilex retained cash of $20,091,911.
LEAD AUDITOR'S INDEPENDENCE DECLARATION
The lead auditor's independence declaration is set out on page 3 and forms part of the Directors' Report for the six months ended 31 December 2010.
Signed in accordance with a resolution of the Board of Directors.
Mr B H McCarthy Managing DirectorMr B ClubeFinance DirectorWest PerthWestern Australia8 February 2011
Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of Oilex Ltd
I declare that, to the best of my knowledge and belief, in relation to the review for the half-year ended 31 December 2010 there have been:
i. no contraventions of the auditor independence requirements as set out in
the Corporations Act 2001 in relation to the review; and
ii. no contraventions of any applicable code of professional conduct in
relation to the review. KPMGBrent SteedmanPartnerPerth, WA8 February 2011
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 DECEMBER 2010 Note 31 December 2010 31 December 2009 $ $ Continuing operations Revenue 870,985 724,133 Cost of sales Production costs (167,209) (313,326) Inventory movement (2,377) (36,498)
Amortisation of development assets 7 (4,851) (301,609)
Total cost of sales (174,437) (651,433) Gross profit 696,548 72,700 Other income - 8,332 Employee benefits expense (185,398) (398,332) Depreciation expense (97,456) (218,747) Exploration expenditure (including (2,463,286) 861,057recovery of past costs) Impairment of exploration and - (4,266,207)evaluation expenditure Impairment of development assets 7 (477,754) (833,052) Well abandonment (11,928) - Administration expense (684,841) (250,967) Share based payments (2,553,744) (890,797) Other expenses (60,939) (312,226) Results from operating activities (5,838,798) (6,228,239) Finance income 143,579 60,968 Finance costs (30) (2,127) Foreign exchange loss (2,802,630) (888,270) Net finance income/(expense) (2,659,081) (829,429) Loss before income tax (8,497,879) (7,057,668) Income tax expense - - Loss for the period (8,497,879) (7,057,668) Other comprehensive income Foreign currency translation (2,684,501) (2,560,500)difference Other comprehensive (loss)/income (2,684,501) (2,560,500)for the period, net of income tax Total comprehensive loss for the (11,182,380) (9,618,168)period Earnings per share Basic loss per share (cents per (3.81) (3.73)share) Diluted loss per share (cents per (3.81) (3.73)share)
The condensed notes on pages 8 to 13 are an integral part of the condensed consolidated interim financial report.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2010 Note 31 December 2010 30 June 2010 $ $ Current assets Cash and cash equivalents 20,091,911 16,809,095 Trade and other receivables 2,747,879 1,465,103 Prepayments 138,246 132,285 Inventories 1,141,310 1,466,357 Total current assets 24,119,346 19,872,840 Non-current assets Exploration and evaluation 6 19,944,401 23,281,236 Property, plant and equipment 468,326 561,730 Development assets 7 - 542,673 Total non-current assets 20,412,727 24,385,639 Total assets 44,532,073 44,258,479 Current liabilities Trade and other payables 3,791,163 3,269,527 Employee benefits 130,276 143,670 Provisions - 71,344 Total current liabilities 3,921,439 3,484,541 Non-current liabilities Provisions 2,243,295 2,712,492 Total non-current liabilities 2,243,295 2,712,492 Total liabilities 6,164,734 6,197,033 Net assets 38,367,339 38,061,446 Equity Issued capital 129,093,362 120,158,833 Reserves 11,648,246 13,024,917 Accumulated losses (102,374,269) (95,122,304) Total equity 38,367,339 38,061,446
The condensed notes on pages 8 to 13 are an integral part of the condensed consolidated interim financial report.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 DECEMBER 2010
Attributable to Equity Holders of the Company Issued Option Foreign Accumulated Total Equity Capital Reserve Currency Losses Translation Reserve $ $ $ $ $ Balance at 1 July 110,734,909 12,819,214 5,511,137 (89,766,636) 39,298,6242009 Total Comprehensive (loss)/income for the period Profit or loss - - - (7,057,668) (7,057,668) Other comprehensive income Foreign currency - - (2,560,500) (2,560,500)translation differences Total other - - (2,560,500) - (2,560,500)comprehensive income Total - - (2,560,500) (7,057,668) (9,618,168)comprehensive (loss)/ income for the period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Shares issued 10,120,000 - - - 10,120,000 Capital raising (689,604) - - - (689,604)costs Transfer on - (28,000) - 28,000 -exercise of options or performance rights Transfers on - (2,753,273) - 2,753,273 -forfeit of options Share-based - 890,797 - - 890,797payment transactions Total transactions 9,430,396 (1,890,476) - 2,781,273 10,321,193with owners Balance at 31 120,165,305 10,928,738 2,950,637 (94,043,031) 40,001,649December 2009 Balance at 1 July 120,158,833 9,139,884 3,885,033 (95,122,304) 38,061,4462010 Total Comprehensive (loss)/income for the period Profit or loss - - - (8,497,879) (8,497,879) Other comprehensive income Foreign currency - - (2,684,501) - (2,684,501)translation differences Total other - - (2,684,501) - (2,684,501)comprehensive income Total - - (2,684,501) (8,497,879) (11,182,380)comprehensive (loss)/ income for the period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Shares issued 9,459,246 - - - 9,459,246 Capital raising (524,717) - - - (524,717)costs Transfer on - - - - -exercise of options or performance rights Transfers on - (1,245,914) - 1,245,914 -forfeit of options Share-based - 2,553,744 - - 2,553,744payment transactions Total transactions 8,934,529 1,307,830 - 1,245,914 11,488,273with owners Balance at 31 129,093,362 10,447,714 1,200,532 (102,374,269) 38,367,339December 2010
The condensed notes on pages 8 to 13 are an integral part of the condensed consolidated interim financial report.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 DECEMBER 2010 31 December 2010 31 December 2009 $ $ Cash flows from operating activities Cash receipts from customers - 786,286 Payments to suppliers and employees (972,354) (1,307,630) Cash outflows from operations (972,354) (521,344) Interest received 181,564 43,843 Net cash used in operating activities (790,790) (477,501) Cash flows from investing activities Advances from/(to) joint ventures 35,375 29,059 Payments for/(recovery of) exploration and (3,094,579) 426,792evaluation net Proceeds from sale of assets - 29,488 Acquisition of property, plant and equipment (30,071) (119,348)
Net cash (used in)/from investing activities (3,094,668) 365,991
Cash flows from financing activities Proceeds from issue of share capital 9,459,246 10,120,000 Payment for share issue costs (505,545) (689,604) Net cash from financing activities 8,953,701 9,430,396 Net increase in cash held 5,073,636 9,318,886 Cash and cash equivalents at 1 July 16,809,095 10,506,379
Effect of exchange rate fluctuations on cash held (1,790,820) (672,066)
Cash and cash equivalents at 31 December 20,091,911 19,153,199
The condensed notes on pages 8 to 13 are an integral part of the condensed consolidated interim financial report.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2010
1. REPORTING ENTITY
Oilex Ltd (the "Company") is a company domiciled in Australia. The condensed consolidated interim financial report of the Company as at and for the six months ended 31 December 2010 comprises the Company and its subsidiaries (together referred to as the "Group" and individually as "Group Entities") and the Group's interest in associates and jointly controlled entities. Oilex Ltd is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange ("ASX") and on the AIM Market of the London Stock Exchange. The Group is primarily involved in the exploration, evaluation, development and production of hydrocarbons.
The consolidated annual financial report of the Group as at and for the year ended 30 June 2010 is available upon request from the Company's registered office at Level 2, 50 Kings Park Road, West Perth, Western Australia 6005 or at www.oilex.com.au.
2. BASIS OF PREPARATION(a) Statement of Compliance
The condensed consolidated interim financial report is a general purpose condensed financial report which has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.
The condensed consolidated interim financial report does not include all of the notes and information required for a full annual financial report and accordingly should be read in conjunction with the consolidated annual financial report of the Group as at and for the year ended 30 June 2010 and any public announcements made by Oilex Ltd during the period ended 31 December 2010.
This condensed consolidated interim financial report was approved by the Board of Directors on 8 February 2011.
(b) Going Concern
The Directors believe that it is appropriate to prepare the financial statements on a going concern basis. As at 31 December 2010, the Group's current assets exceeded current liabilities by $20,197,907 and the Group has cash and cash equivalents of $20,091,911. The Directors are satisfied that the value of the Group's assets can be realised through further evaluation, development and production or alternatively through asset sale or farm down. The Directors are also satisfied that the Company has adequate plans in place in order that its funding requirements in the foreseeable future can be met and that the Company is progressing with these plans accordingly.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied by Oilex in this condensed consolidated interim financial report are the same as those applied by the Group in its consolidated financial report as at and for the year ended 30 June 2010.
4. ESTIMATES
The preparation of an interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing this condensed consolidated interim financial report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report as at and for the year ended 30 June 2010.
5. OPERATING SEGMENTS
The Group has identified its operating segments based upon the internal management reports that are reviewed and used by the executive management team in assessing performance and that are used to allocate the Groups resources.
India Australia JPDA (1) Six months 2010 2009 2010 2009 2010 2009 ended 31 December $ $ $ $ $ $ Revenue External 870,985 724,133 - - - -revenue (2) Reportable (1,392,092) (5,454,151) (49,334) (146,268) (45,827) 2,342,305segment profit/ (loss) before income tax Net finance income Foreign exchange (loss) /gain Deferred tax expense Loss for the period India Australia JPDA (1) Segment assets 31 Dec 30 June 31 Dec 30 June 31 Dec 30 June at 31 December 2010 2010 2010 2010 2010 2010 $ $ $ $ $ $ Segment assets 13,742,462 15,185,651 99,519 68,309 413,295 1,305,598 Indonesia Unallocated Consolidated Six months 2010 2009 2010 2009 2010 2009 ended 31 December $ $ $ $ $ $ Revenue External - - - - 870,985 724,133revenue (2) Reportable (4,767) (7,122) (4,346,778) (2,963,003) (5,838,798) (6,228,239)segment profit /(loss) before income tax Net finance 143,549 58,841income Foreign (2,802,630) (888,270)exchange (loss)/gain Deferred tax - -expense Loss for the (8,497,879) (7,057,668)period Indonesia Unallocated Consolidated Segment assets 31 Dec 30 June 31 Dec 30 June 31 Dec 30 June at 31 December 2010 2010 2010 2010 2010 2010 $ $ $ $ $ $
Segment assets 8,727,951 10,553,611 21,548,846 17,145,310 44,532,073 44,258,479
There were no significant inter-segment transactions during the year.
(1) Joint Petroleum Development Area.
(2) Revenue includes $728,333 brought to account upon finalisation of the Cambay Field Crude Offtake Sales Agreement.
6. EXPLORATION AND EVALUATION 31 December Year Ended 2010 30 June 2010 $ $ Exploration and evaluation Opening balance 23,281,236 31,261,621 Expenditure capitalised 716,339 327,564 Transfer to development expenditure - (1,662,560) Currency translation differences (4,053,174) (1,414,801) 19,944,401 28,511,824 Impairment of exploration and evaluation expenditure - (5,230,588) Closing balance 19,944,401 23,281,2367. DEVELOPMENT ASSETS 31 December Year Ended 2010 30 June 2010 $ $ Cost Opening balance 1,787,962 - Transfer from exploration - 1,662,560 Acquisitions - 14,894
Effect of movements in foreign exchange rates (309,692) 110,508
Closing balance 1,478,270 1,787,962 Amortisation and Impairment Losses Opening balance 1,245,289 - Impairment of development assets 477,754 833,052 Amortisation charge for the year 4,851 353,946 Currency translation differences (249,624) 58,291 Closing balance 1,478,270 1,245,289 Carrying amounts Opening balance 542,673 - Closing balance - 542,6738. SHARE BASED PAYMENTS
The Company has an established share option program that entitles directors, key management personnel and advisors to purchase shares in the Company. The terms and conditions of the share option program are disclosed in the consolidated financial report as at and for the year ended 30 June 2010. In the six months ended 31 December 2010 further grants on similar terms were made to directors and advisors.
The Company also has established an Employee Performance Rights Plan, approved by shareholders in 2006, which entitles employees to options and performance rights. The terms and conditions of the Plan are disclosed in the consolidated financial report as at and for the year ended 30 June 2010. No further grants were made in the six months ended 31 December 2010.
The basis of measuring fair value of options and performance rights granted is consistent with that disclosed in the consolidated financial report as at and for the year ended 30 June 2010.
The terms and conditions of the grants made during the six months ended 31 December 2010 are as follows:
Grant Date Number of Vesting Exercise Contractual Instruments Conditions Price Life of Options OPTIONS Key Management Personnel - Directors 10 November 2010 12,375,000 Vest $0.30 2 years immediately 10 November 2010 4,375,000 Vest $0.37 4 years immediately Key Management Personnel - Executives 10 November 2010 1,600,000 Vest $0.30 2 years immediately 10 November 2010 1,600,000 Vest $0.37 4 years immediately 16 November 2010 325,000 Vest $0.30 2 years immediately 16 November 2010 325,000 Vest $0.37 4 years immediately Employees 10 November 2010 487,500 Vest $0.30 2 years immediately 10 November 2010 487,500 Vest $0.37 4 years immediately Financiers and Advisors 15 September 2010 3,000,000 Vest $0.30 2 years immediately Total Options 24,575,000 During the six months ended 31 December 2010, the following options lapsedunexercised and performance rights were forfeited due to service conditions notbeing met:Grant Date Number of Expiry Date Exercise Instruments Price OPTIONS Key Management Personnel - Executives 31 July 2006 775,000 31 July 2010 $0.90 18 January 2007 400,000 31 January $2.50 2011 Financiers and Advisors 10 October 2006 500,000 31 October $2.00 2010 Total Options 1,675,000 PERFORMANCE RIGHTS Key Management Personnel- Executives 11 January 2007 25,000 1 July 2011 - Total Performance 25,000 Rights Total Options and 1,700,000 Performance Rights
As at 31 December 2010 Oilex Ltd had 45,375,000 unlisted options exercisable at prices of between $0.30 and $2.75 and 440,000 performance rights on issue.
8. SHARE BASED PAYMENTS (CONTINUED)
Fair value of options granted during the six months ended 31 December 2010 has been determined using the following assumptions:
Options Fair value at measurement date $0.09 to $0.11 $0.13 to $0.15 Share price $0.21 to $0.25 $0.22 to $0.25 Exercise price $0.30 $0.37 Expected volatility 90% to 100% 90% to 91% Option life 2 years 4 years Expected dividends - - Risk-free interest rate 4.50% - 4.75% 4.75%The fair value of the options is calculated at the date of grant using theBlack-Scholes Model.9. EQUITY SECURITIES ISSUED 2010 2009 Number of Number of Shares Shares Issue of share capital 30,000,000 44,000,000 Exercise of employee performance rights - 20,000 30,000,000 44,020,000
On 15 December Oilex Ltd issued 30 million shares on the AIM Market of the London Stock Exchange at 20 pence (AUD $0.32) per share.
2010 $ Number of Issued Capital Shares Number of shares on issue 1 July 2010 220,074,885 120,158,833 Issue of share capital Allotment 30,000,000 9,459,246 Capital raising costs (524,717) Number of shares on issue 31 December 2010 250,074,885 Issued Capital as at 31 December 2010 129,093,362
10. CONTINGENCIES
(a) PT Sumatera Persada Energi (SPE) has notified Oilex (West Kampar) Limited (OWK) of a claim filed on 16 November 2010 by SPE in an Indonesian court in which SPE is seeking damages from OWK for alleged defamation arising out of correspondence in November 2008 that provided BPMigas (the Indonesian petroleum regulatory authority) with information relating to SPE's performance as operator. The claim is substantially the same as the claim which SPE commenced against OWK in early 2010 and which OWK was advised in October 2010 SPE had withdrawn. No information has been provided in relation to how the damages claimed for costs and damage to SPE's reputation have been quantified. OWK rejects the allegations in the claim and if necessary will vigorously oppose the claim.
(b) In June 2010 Oilex requested an extension to its Good Standing Agreement (GSA) with the Australian Government on behalf of the Joint Venture partners for exploration permit EPP27 which the Joint Venture previously relinquished with the Australian Government's approval. Oilex's monetary share of the GSA is $2,101,225. In July 2010, the Australian Government agreed to extend the GSA until the conclusion of the 2011 Australian Offshore Petroleum Exploration Release.
11. RELATED PARTIES
Arrangements with related parties continue to be in place. For details of these arrangements, refer to the consolidated annual financial report of the Group as at and for the year ended 30 June 2010.
12. EXPENDITURE COMMITMENTS
Exploration and Evaluation Expenditure Commitments
In order to maintain current rights of tenure to exploration permits, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various state and national governments. These obligations are subject to renegotiation when application for an exploration permit is made and at other times.
The exploration and evaluation expenditure commitments below represent commitments made to the relevant government authorities respective joint venture participants and to third party service providers. These obligations are not provided for in the financial report.
The Group's share of these commitments is estimated as follows:
31 December 30 June 2010 2010 Within one year 2,568,590 7,907,252
One year or later and no later than five years 12,196,381 14,747,325
14,764,971 22,654,577
Financial commitments for subsequent periods are contingent upon future exploration results and can not be estimated. These obligations are subject to renegotiation upon expiry of the exploration leases.
13. SUBSEQUENT EVENTS
At a General Meeting held 7 February 2011 shareholders approved the grant of 2,000,000 unlisted $0.30 options and 2,000,000 unlisted $0.37 options to India Hydrocarbons Limited an advisor to Oilex Ltd. Using the Black-Scholes Model the fair value of the options has been calculated at the date of grant as $1,229,854.
Shares issued on exercise of options within the period from 31 December 2010 to date of this report totalled 1,200,000.
The financial effect of the above events have not been brought to account at balance date.
DIRECTORS' DECLARATION
In the opinion of the Directors of Oilex Ltd (the "Company"):
1. the financial statements and notes set out on pages 4 to 13, are in
accordance with the Corporations Act 2001 including:
a. giving a true and fair view of the Group's financial position entity as at
31 December 2010 and of its performance for the six month period ended on
that date; and
b. complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001; and
2. there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable.
Signed in accordance with a resolution of the Directors.
Dr B H McCarthy Managing Director Mr B ClubeFinance DirectorWest Perth,Western Australia8 February 2011KPMG
Independent auditor's review report to the members of Oilex Ltd
Report on the financial report
We have reviewed the accompanying interim financial report of Oilex Ltd, which comprises the condensed consolidated statement of financial position as at 31 December 2010, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, notes 1 to 13 comprising a summary of significant accounting policies and other explanatory information and the directors' declaration of the Group comprising the company and the entities it controlled at the half-year's end or from time to time during the half-year.
Directors' responsibility for the interim financial report
The directors of the company are responsible for the preparation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the interim financial report that is free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group's financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Oilex Ltd, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Oilex Ltd is not in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and
(b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
KPMGBrent SteedmanPartnerPerth, WA8 February 2011
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