29 Sep 2016 07:00
29 September 2016
Red Emperor Resources NL ("Red Emperor")
Annual Report for the Year Ending 30 June 2016
Please see below extracts from the Company's annual report for the year ending 30 June 2016 (the "Annual Report"), being:
· Extracts from the Directors' Report
· Consolidated Statement of Comprehensive Income
· Consolidated Statement of Financial Position
· Consolidated Statement of Cash Flows
A copy of the entire Annual Report will be sent to shareholders and is available on the Company's website - www.redemperorresources.com
The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No. 596/2014, and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
For further information please visit www.redemperorresources.com or contact:
Red Emperor
Greg Bandy +61 8 9212 0102
Grant Thornton UK LLP
Philip Secrett/Jen Clarke/Jamie Barklem +44 20 7383 5100
Directors Report
The Directors present their report for Red Emperor Resources NL ("Red Emperor", "Red Emperor" or "the Company") and its subsidiaries ("the Group") for the year ended 30 June 2016.
DIRECTORS
The names of the Company's Directors in office during the year and until the date of the Annual Report are as follows. Mr. Greg Bandy (Managing Director)
Mr. Jason Bontempo (Non-Executive Director)
Mr. Nathan Rayner (Non-Executive Director)
INTERESTS IN THE SECURITIES OF THE COMPANY
As at the date of the Annual Report, the interests of the Directors in the securities of Red Emperor Resources NL are:
Director | Ordinary Shares | Options - exercisable at $0.055 each on or before 31-Dec-17 |
Greg Bandy | 1,000,000 | - |
Jason Bontempo | - | - |
Nathan Rayner | - | 3,500,000 |
RESULTS OF OPERATIONS
The Company's net loss after taxation attributable to the members of Red Emperor for the year to 30 June 2016 was $9,034,572 (2015: $19,723,800).
DIVIDENDS
No dividend was paid or declared by the Company during the year and up to the date of the Annual Report.
CORPORATE STRUCTURE
Red Emperor Resources NL is a company limited by shares, which is incorporated and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
The principal activity of the Company during the financial year was oil and gas exploration.
REVIEW OF OPERATIONS
Philippines (SC 55)
Red Emperor announced in August 2015 that the Hawkeye-1 exploration well was drilled to the planned total depth of 2,920m with the top reservoir intersected at 2,710m. The well proved the existence of hydrocarbons in SC55, however the hydrocarbon size discovered was at the low end of expectations and not likely to be economic to develop. Hawkeye-1 was plugged and abandoned. The drilling program was executed smoothly, ahead of schedule and significantly under budget with Red Emperor having paid a total of approximately AU$4.8m for its 15% equity proportion.
The Company announced during the year that the Joint Venture (JV) had formally received approval from the Philippines Department of Energy for a two-year moratorium, until 23 December 2017, on required work activity under Service Contract 55. During the moratorium period, the consortium will conduct specialised geophysical studies in the area surrounding the Hawkeye Prospect, which encountered gas shows when it was drilled last year. Although the Hawkeye well did not encounter gas in commercial quantities, it proved the presence of an active petroleum system in the contract area that hosts the "Cinco Prospect" as well as several other leads.
As announced previously, Otto Energy Limited (ASX: OEL) has advised the JV of its intention to exit the Block SC 55 as part of its strategy to focus on its North American assets. Red Emperor intends to have its full, proportionate interest be assigned and as a result its working interest will increase from 15% to 37.5%.
Georgia
Red Emperor, a 20% shareholder of Strait Oil and Gas Limited (Strait), was advised that the Georgian Government had confirmed the validity of the Production Sharing Contract (PSC) across Block VIa and the ability for Strait to access existing gas pipeline infrastructure, free of taxes. This important confirmation paves the way for ongoing sales negotiations with a potential purchaser of the PSC to continue. Red Emperor is not involved in these negotiations and can provide no certainty as to the likelihood of a successful outcome. Due diligence by both parties remains ongoing.
Corporate
In July 2015, the Company, through its London broker, Brandon Hill Capital, and its Australian broker, 708 Capital, placed 65,750,000 new ordinary shares at 4 pence (A$0.08) per share to raise £2.63 million (A$5.26 million) before expenses. Proceeds from the capital raising and existing cash resources were used to fund the drilling activities in the Philippines.
The Company also issued 4,320,000 unlisted options, exercisable at $0.08 each on or before 2 July 2018 as part consideration to advisors of the Company for capital raising fees associated with the July 2015 Share Placement.
Red Emperor reviewed a number of new opportunities with both its Australian and UK advisers respectively during the year. Whilst none of the projects reviewed resulted in a transaction, the Board remains committed to finding suitable new asset(s) to compliment the Company's current portfolio while oil & gas prices remain subdued.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Group during the financial year, other than as set out in the annual report.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
There have been no other significant events subsequent to the end of the financial year to the date of the annual report.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Group will continue its investment in resource projects with the object of identifying commercial resources. The Company intends to pursue acquisition and investment opportunities to secure new projects in the natural resources sector.
Greg Bandy
Managing Director
Perth, Western Australia
29 September 2016
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2016
Note | 30 June 2016 $ | 30 June 2015 $ | |
Continuing Operations | |||
Interest received | 3 | 239,406 | 338,059 |
Employee and director benefits expense | (265,950) | (274,858) | |
Professional and Consultants | (570,771) | (301,157) | |
ASX and AIM and share registry fees | (83,731) | (113,661) | |
Travel expenditure | (72,799) | (119,284) | |
Impairment expense | (7,711,110) | (19,355,434) | |
Gain on derivative liability | 12 | - | 783 |
Realised gain on investment | 8 | - | 320,000 |
Realised Foreign exchange gain | 28,341 | - | |
Unrealised Foreign exchange (loss)/gain | (423,331) | 14,632 | |
Share based payment expense | 21(a) | (30,934) | (57,519) |
Other expenses | (143,693) | (175,361) | |
Loss before income tax | (9,034,572) | (19,723,800) | |
Income tax expense | 4 | - | - |
| |||
Net loss for the year | (9,034,572) | (19,723,800) | |
Other comprehensive loss | |||
Items that may be reclassified to profit or loss | |||
Other comprehensive loss | 13,938 | (356) | |
Other comprehensive income for the year net of tax | 13,938 | (356) | |
Total comprehensive loss for the year | (9,020,634) | (19,724,156) | |
Loss per share | |||
Basic loss per share (cents) | 19 | (2.13) | (6.77) |
Diluted loss per share (cents) | 19 | N/A | N/A |
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. | |||
Consolidated Statement of Financial Position as at 30 June 2016
Note | 2016 $ | 2015 $ | |
Current Assets | |||
Cash and cash equivalents | 5 | 11,715,540 | 12,494,427 |
Trade and other receivables | 6 | 33,415 | 618,316 |
Assets held for sale | 7 | - | 3,000,000 |
Total Current Assets | 11,748,955 | 16,112,743 | |
Non-Current Assets | |||
Financial assets at fair value through profit and loss | 8 | 400 | 400 |
Investment accounted for using the equity method | 9 | - | - |
Exploration and evaluation expenditure | 10 | - | - |
Total Non-Current Assets | 400 | 400 | |
Total Assets | 11,749,355 | 16,113,143 | |
Current Liabilities | |||
Trade and other payables | 11 | 69,946 | 819,254 |
Derivative financial liability | 12 | - | - |
Total Current Liabilities | 69,946 | 819,254 | |
Total Liabilities | 69,946 | 819,254 | |
Net Assets | 11,679,409 | 15,293,889 | |
Equity | |||
Issued capital | 13 | 57,329,505 | 52,167,148 |
Reserves | 14 | 4,096,879 | 3,839,144 |
Accumulated losses | 15 | (49,746,975) | (40,712,403) |
Total Equity | 11,679,409 | 15,293,889 | |
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. | |||
Consolidated Statement of Changes in Equity for the year ended 30 June 2016
Issued capital $ | Accumulated losses $ | Foreign exchange translation reserve $ | Share based payments reserve $ | Total $ | |
Balance at 1 July 2014 | 49,646,733 | (20,988,603) | (28,405) | 3,831,386 | 32,461,111 |
Total comprehensive loss for the year | |||||
Loss for the year | - | (19,723,800) | - | - | (19,723,800) |
Other Comprehensive Loss | - | - | (356) | - | (356) |
Total comprehensive loss for the year | - | (19,723,800) | (356) | - | (19,724,156) |
Transactions with owners in their capacity as owners | |||||
Issue of shares | 3,475,965 | - | - | - | 3,475,965 |
Share based payments | 21,000 | - | - | 36,519 | 57,519 |
Cost of issue | (976,550) | - | - | - | (976,550) |
Balance at 30 June 2015 | 52,167,148 | (40,712,403) | (28,761) | 3,867,905 | 15,293,889 |
Balance at 1 July 2015 | 52,167,148 | (40,712,403) | (28,761) | 3,867,905 | 15,293,889 |
Total comprehensive loss for the year | |||||
Loss for the year | - | (9,034,572) | - | - | (9,034,572) |
Other Comprehensive Loss | - | - | 13,938 | - | 13,938 |
Total comprehensive loss for the year | - | (9,034,572) | 13,938 | - | (9,020,634) |
Transactions with owners in their capacity as owners | |||||
Issue of shares | 5,763,718 | - | - | - | 5,763,718 |
Share based payments | - | - | - | 30,934 | 30,934 |
Cost of issue | (601,361) | - | - | 212,863 | (388,498) |
Balance at 30 June 2016 | 57,329,505 | (49,746,975) | (14,823) | 4,111,702 | 11,679,409 |
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows for the year ended 30 June 2016
Note | 2016 $ | 2015 $ | |
Cash flows from operating activities | |||
Payments to suppliers and employees | (1,113,641) | (1,020,479) | |
Interest received | 239,406 | 338,059 | |
Finance cost | 28,341 | (1,705) | |
Net cash used in operating activities | 5 | (845,894) | (684,125) |
Cash flows from investing activities | |||
Payments for purchase of equities | - | (182,299) | |
Payments for exploration and evaluation | (5,119,286) | (365,705) | |
Refund of Hawkeye-1 well costs | 397,822 | - | |
Proceeds from sale of equities | - | 798,279 | |
Payments for investment in associate | - | (59,140) | |
Net cash (used in) / provided by investing activities | (4,721,464) | 191,135 | |
Cash flows from financing activities | |||
Proceeds from issue of shares and options | 5,600,300 | 2,802,618 | |
Payment of share issue costs | (388,498) | (136,550) | |
Net cash provided by financing activities | 5,211,802 | 2,666,068 | |
Net (decrease) / increase in cash and cash equivalents | (355,556) | 2,173,078 | |
Cash and cash equivalents at beginning of year | 12,494,427 | 10,321,349 | |
Effects of exchange rate changes on cash and cash equivalents | (423,331) | - | |
Cash and cash equivalents at the end of the year | 5 | 11,715,540 | 12,494,427 |
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. | |||