Tlou Energy Regulatory News (TLOU)

Tlou Energy Limited

("Tlou" or "the Company")

Final Results

Tlou Energy Limited, the AIM, ASX and BSE listed company focused on delivering power in Botswana and Southern Africa through the development of coal bed methane (CBM) projects, is pleased to announce its 2019 results.

Highlights

·; Production wells drilled successfully and now producing sustained gas flows at the Lesedi CBM project;

·; Environmental approval secured for the Company's planned downstream development, all environmental approvals are now in place to commence commercial development;

·; The Company has been selected as a preferred bidder for a CBM gas-to-power proposal in Botswana.

The Annual Report and Consolidated Financial Statements for the year ended 30 June 2019 are available on the Company's website http://tlouenergy.com/reports.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

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For further information regarding this announcement please contact:

Chairman's letter

Dear Shareholders,

We have made excellent progress towards establishing ourselves as a key power player in Botswana, culminating in May 2019 on receiving written confirmation from the government of Botswana that we have been chosen as a preferred bidder for the development of a Coal Bed Methane (CBM) gas-to-power plant in Botswana. This was a key target during the year, as we work towards our goal of becoming a regional power provider in southern Africa through the development of our CBM assets.

We are privileged to have the support of the forward-thinking government of Botswana, which announced in 2016 that CBM, a relatively clean source of energy and more competitively priced than solar and diesel, is to be included as part of the country's forward plan to combat power deficiency.

In October 2018, the Company submitted its proposal for development of a pilot CBM gas-to-power project in response to the Request for Proposal (RFP) issued by the Ministry of Mineral Resources, Green Technology and Energy Security. The submission, which was assessed on eligibility, technical and financial criteria, outlined a staged development commencing with up to 10MW of power generation and included the required connection into Botswana's national power distribution network. With the Company selected as a preferred bidder for this project, Tlou is now in the final stage of the process, being negotiations with the government on a Power Purchase Agreement (PPA) ahead of commencing the development work.

The Company has also received environmental approval for up to 20MW of CBM power generation including the drilling of 200 production pods, a 66 kV Transmission Line and a Solar Farm up to 20MW. With this approval, the Company has the required environmental approvals to commence commercial development.

During the last 12 months, Tlou has completed a work program including drilling of two dual lateral development wells in the Lesedi project. The wells (Lesedi 3 and 4) are located adjacent to the proposed central gas gathering and power generation facility and are currently producing gas.

In April 2019, the Company successfully completed targeted private placements to sophisticated investors in Botswana and Australia. Following the placements, local ownership increased significantly, with the Botswana Public Officers Pension Fund (BPOPF) now the Company's largest shareholder.

This has been a highly active year for Tlou, following confirmation that the Company has been chosen as a preferred bidder for the development of the one of the first commercial CBM gas-to-power projects in Botswana, approval of the required Environmental Impact Statement and the successful drilling of two dual lateral development wells. We look forward to another successful year ahead.

With CBM development not previously established in Botswana, Tlou is pioneering CBM development in the region. Successful results from Tlou's projects could potentially impact a whole new CBM basin and be a significant boost not only for Tlou, but for the whole region.

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

Managing Director's Report

Dear Shareholders,

Tlou Energy has made significant advancements over the year adding to the number of milestones reached to date which include:

·; Established the first Independently Certified Gas Reserves in Botswana with enough 2P gas already in place to complete the currently proposed 10MW power project;

·; Flowed gas from the Selemo Pilot for approximately 2 years;

·; Generated electricity from the Selemo Pilot gas for several months;

·; Awarded the first Mining Licence for CBM gas in the country;

·; Obtained upstream environmental approval for over 200 production wells, water handling, seismic, gas gathering pipelines and a gas processing facility;

·; Successfully acquired the first seismic program in the country specifically targeting CBM gas;

·; Successfully completed two gas production pods (Lesedi 3 & 4) in 1H19, safely and on budget;

·; Considerably reduced well cost over time;

·; Obtained downstream environmental approval for 20MW of gas fired power generation coupled with 20MW of solar plus a transmission line to connect to the grid;

·; Numerous wells drilled since Tlou operations commenced adding to a database comprising over 100 wells;

·; Tlou has a 100% owned project over approximately 9,300Km2, with enormous scope for gas Reserve expansion;

·; The Company has built an experienced in-county operational workforce;

·; Landholder agreements are either in-place or being finalised;

·; Botswana investors (Pension Funds) are now the largest shareholder group in the Company aligning the country's interest with that of the broader shareholder base;

·; Experienced and diverse board.

The principal remaining risks for the Company are achieving a commercial gas flow from the recently drilled development wells and finalising Power Purchase Agreement (PPA) negotiations.

At the time of writing, a stabilised gas flow from Lesedi 3 and Lesedi 4 has been achieved. It is anticipated that, based on industry norms, the stabilised gas flow from the Lesedi wells should increase with time until a peak is reached.

PPA negotiations with the government are progressing and will remain confidential until the government is in a position to make an announcement.

If everything goes according to plan, shareholders can look forward to further gas flow rate updates from Lesedi 3 & 4, drilling at the Mamba project area, finalisation of the PPA, agreement of a development financing package potentially from Botswana based investors or debt financiers, seismic acquisition, an anticipated gas Reserve upgrade and commencement of the downstream power generation development.

Yours faithfully,

Anthony (Tony) Gilby

Managing Director

Directors' report

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Tlou Energy Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at 30 June 2019.

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:

Dividends

There were no Dividends recommended or paid during the financial year.

Principal activities

The principal activity of the consolidated entity is the exploration and evaluation of assets in Botswana to identify and develop Coalbed Methane (CBM) natural gas resources suitable for gas-to-power generation. No revenue from this activity 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

During the year ended 30 June 2019, 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 income tax amounted to $3,216,695 (30 June 2018: $2,810,730). The loss for the year is in line with expectations, with the Company being an exploration entity that has not yet commenced revenue generation.

Gas-to-Power Tender

The Company was invited by Botswana's Ministry of Mineral Resources Green Technology and Energy Security ('the Ministry') to submit a response under a Request for Proposal (RFP) for Development of CBM fuelled power plants in Botswana as an Independent Power Producer (IPP).

This proposal is for the development of CBM fuelled power plants up to 100MW. A successful RFP process can assist in the development of a new CBM gas industry in the country and create a new market for Tlou's independently certified gas reserves and contingent gas resources.

The Company submitted its proposal on 10 October 2018. The RFP submission was assessed based on eligibility, technical and funding criteria. The Company successfully passed these criteria with the process now at the final stage, aimed at agreeing a Power Purchase Agreement (PPA). These PPA negotiations are confidential and are being led by the government of Botswana.

Tlou's submission outlined a staged development commencing with up to 10MW of generation as well as outlining project feasibility, proposed field development, installation of power generation facilities and supply of power into the grid in Botswana. Upon successful completion of the initial project, the Company would look to expand further.

Once an initial development is completed, Tlou Energy's gas field will be connected to the regional grid, thereby opening the possibility for the Company to provide power across the region, via the Southern African Power Pool (SAPP).

Development well drilling program

The Company drilled two development wells in the Lesedi project area during the year. The wells were drilled as 'dual lateral pods', comprising a single vertical production well intersected by two lateral wells. These pods are designated 'Lesedi 3' and 'Lesedi 4'.

The drilling program was completed, having been carried out efficiently and safely as a result of the excellent work of the Company's field personnel. The pods are located adjacent to the Company's proposed central gas gathering and power generation facility.

The Lesedi gas production pods are performing strongly. Water rates in both pods continues to decline as planned, with both Lesedi 3 & 4 having successfully commenced flowing sustained rates of gas. As with most new CBM developments this rate is anticipated to steadily increase over the coming months, leading to a peak gas flow rate.

Downstream Environmental Impact Statement approval

Botswana's Department of Environmental Affairs (DEA) has approved the Environmental Impact Statement (EIS) for up to 20MW of CBM power generation including the drilling of up to 200 production pods, a 66kV Transmission Line and a Solar Farm up to 20MW. In 2018 the Company commenced work on its application for an EIS for downstream development (power generation and transmission). The Company already has approval in place for its upstream activities (development drilling and exploration).

Downstream EIS approval is a major achievement as it is the final environmental authorisation required to move the Lesedi CBM Project through to commercialisation. The EIS is for all the specified project activities in the Company's application, is valid for 30 years and provides the Company the flexibility to rapidly expand power generation activities.

Funds raised

In April 2019, the Company successfully completed targeted private placements to sophisticated investors in Botswana and Australia ('Placements'). The Placements raised approximately A$4.1 million before costs. Following the Placements, the Botswana Public Officers Pension Fund (BPOPF) are now the Company's largest shareholder.

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 and expected results of operations

The Company has drilled pilot development wells in the Lesedi project area. These wells are currently producing CBM. 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 CBM project. At the date of this report it is not yet known if the gas rates from these wells will prove to be sufficient for commercial development of the project.

The Company is in negotiations with the government of Botswana in relation to the purchase of electricity from Tlou's Lesedi project. This would provide an ideal path to market for Tlou's gas. While ideal, it is not the only option available to the Company, as there are other potential off-takers available in the region. Negotiations with government are confidential and further updates will be provided when and if an agreement is reached.

No guarantee can be given in relation to the results of the Company's operations, gas flows or government negotiations. However, the electricity market in southern Africa continues to suffer from chronic shortage of supply, so development of gas and gas-fired power in the region remains a very attractive commercial option.

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.

Information on Directors

Martin McIver MBA

Special Responsibilities Non-Executive Chairman

Member of the Audit Committee

Member of the Risk Committee

Chairman of the Nomination & Remuneration Committee

Interest in Shares and options 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 the Workpac group. During the past three years, Martin has not served as a Director of any other ASX listed companies.

Anthony Gilby B.Sc. (First Class Honours)

Special Responsibilities Managing Director and Chief Executive Officer

Member of the Audit Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 21,701,789 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.

Gabaake Gabaake M.Sc.

Special Responsibilities Executive Director

Member of the Risk Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 330,857 Ordinary Shares

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 FCCA

Special Responsibilities Finance Director

Member of the Audit Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 1,081,112 Ordinary Shares

750,000 Performance Rights

Experience

Colm Cloonan is the Company's Finance Director. 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 very 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.

Hugh Swire BA (Hons)

Special Responsibilities Non-Executive Director

Chair of the Risk Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 4,560,092 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 regularly 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.

Linah Mohohlo MA Finance & Investments, BA Economics

Special Responsibilities Non-Executive Director

Chair of the Audit Committee

Member of the Nomination & Remuneration Committee

Interest in Shares and options 500,000 Performance Rights

Experience

Ms Linah Kelebogile Mohohlo, is the former Governor of the Bank of Botswana, a position she held from 1999 to 2016. Ms Mohohlo joined the Bank of Botswana in 1976, and served in several capacities including Board Secretary, Deputy Director of Research, Director of the Financial Markets and Deputy Governor, before being appointed Governor.

Ms Mohohlo was a member of the Commission for Africa and the Africa Progress Panel, a group of ten distinguished individuals who advocate at the highest levels for equitable and sustainable development in Africa. Along with her contacts and expertise in the banking and finance sectors, Ms Mohohlo brings to Tlou Energy significant experience from the mining industry in Botswana having been a board member of both Debswana Diamond Company and Diamond Trading Company Botswana.

Ms Mohohlo holds a Bachelors Degree in Economics from The George Washington University (Washington DC), a Masters Degree in Finance and Investments from the University of Exeter (UK) and a Diploma in Accounting and Business Studies from the University of Botswana.

During the past three years, Ms Mohohlo has not served as a Director of any other ASX listed companies.

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. Performance incentives are generally only 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. Performance incentives are generally only paid once predetermined key performance indicators have been met.

·; 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 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.

Key management personnel during the financial year ended 30 June 2019

Directors

Martin McIver Non-Executive Chairman

Anthony Gilby Managing Director and Chief Executive Officer

Gabaake Gabaake Executive Director

Colm Cloonan Finance Director

Hugh Swire Non-Executive Director

Linah Mohohlo Non-Executive Director

Executives

Solomon Rowland Company Secretary

There were no other key management personnel of the consolidated entity during the financial year ended 30 June 2019.

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 following table:

Benefits and Payments for the year ended 30 June 2019

During the 2019 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.

Benefits and Payments for the year ended 30 June 2018

* Appointed 12 July 2017

During the 2018 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 Managing Director and Chief Executive Officer

Term of Agreement: Mr Gilby's services are provided in a personal capacity. The agreement has no fixed term. Based on the agreed rate the estimated contracted annual cost to the Company is approximately $578,000. Mr Gilby continues to waive 25% of his current contracted rate, so the cost for the reporting period is approximately $433,000.

Termination Benefit: No termination benefit is payable if terminated for cause.

Termination Notice: 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.

Solomon Rowland Company Secretary

Term of Agreement: Mr Rowland's services are provided in a personal capacity. The agreement has no fixed term.

Base Fee: Based on the contracted rate during the reporting period and taking account of adjustments for industry standards and CPI, the annual cost to the Company was approximately $200,000.

From 1 July 2019 Mr Rowlands annual salary is ~$230,000.

Termination Benefit: No termination benefit is payable if terminated for cause.

Termination Notice: The Company may give the Company Secretary six months' notice of its intention to terminate the Agreement.

Gabaake Gabaake Executive Director

Term of Agreement: Mr Gabaake's services are provided in a personal capacity. The agreement has no fixed term.

Base Fee: Based on the contracted rate during the reporting period and taking account of adjustments for industry standards and CPI, Botswana severance benefits payable during the year, the annual cost to the Company was approximately $184,000.

From 1 July 2019 Mr Gabaake's annual salary is ~$167,747.

Termination Benefit: No termination benefit is payable if terminated for cause.

Termination Notice: The Company may give the Executive Director six months' notice of its intention to terminate the Agreement.

Colm Cloonan Finance Director

Term of Agreement: Mr Cloonan's services are provided in a personal capacity. The agreement has no fixed term.

Base Fee: Based on the contracted rate during the reporting period and taking account of adjustments for industry standards and CPI, the annual cost to the Company was approximately $282,000.

From 1 July 2019 Mr Cloonan's annual salary is ~$288,137.

Termination Benefit: No termination benefit is payable if terminated for cause.

Termination Notice: 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 as follows:

Performance rights

Performance Rights are linked to the share price performance of the Company, ensuring alignment with the interests of the Company's shareholders. The Performance Rights issued to key management personnel are split into Tranches of 250,000 shares. 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 2019 are as set out below:

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.

Relationship between remuneration and Company performance

The factors that are considered to affect shareholder return during the last five years is summarised below:

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 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 2019 financial year.

Other transactions with key management personnel

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.

(End of Remuneration Report)

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 19 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 2019, and the number of meetings attended by each Director are listed below. The Nomination & Remuneration committee comprises the full board.

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.

Issued performance rights at the date of this report are as follows:

Shares issued on the exercise of options

Other than those disclosed in the table above there were no ordinary shares of Tlou Energy Limited issued during the year ended 30 June 2019 on the exercise of options 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.

Indemnity and insurance of auditor

The consolidated entity has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the consolidated entity or any related entity against a liability incurred by the auditor.

During the financial year, the consolidated entity has not paid a premium in respect of a contract to insure the auditor of the consolidated entity or any related entity.

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 is included in the annual report which is available on the Company's website http://tlouenergy.com/reports.

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.

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, 27 August 2019

2019 Annual Reserves Statement

Tlou Energy Limited is pleased to present its Annual Reserves Statement for the period ending 30 June 2019. SRK Consulting (Australasia) Pty Ltd ('SRK') upgraded the Company's reserves during the prior reporting period. There has been no adjustment to the net gas reserves and contingent resources of the Company since the 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.

Having conducted a review of its gas reserves and resources position during the reporting period and satisfying itself that there was no new data that might materially increase 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 2019:

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 2019 and comparative petroleum reserves certified at 30 June 2018.

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 2019 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 so as 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 2019 as against the previous year. The net 2C and 3C contingent resources did not increase from the 2018 year to the 2019 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 2019 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 of 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. Dr. McConachie 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.

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).

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2019

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

as at 30 June 2019

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 2019

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 2019

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

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 25.

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 the exploration and evaluation of assets in Southern Africa to identify and develop CBM resources. No revenue from this activity has been earned to date, as the consolidated entity is still in the exploration and evaluation stage.

Currency

The financial report is presented in Australian dollars, rounded to the nearest dollar, which is the functional currency of the parent entity.

Authorisation of financial report

The financial report was authorised for issue on 27 August 2019.

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.

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 Australian dollars 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.

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 companies, such as Tlou Energy Limited, find it necessary on a regular basis to raise additional cash funds for future exploration activity and meet other necessary corporate expenditure. The Company has recently completed a capital raising 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.

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.

Accounting Polices

(a) Principles of consolidation

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.

(b) Revenue recognition

Interest

Interest revenue 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 revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

(c) Impairment of non-financial assets

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.

(d) Goods and Services Tax ('GST') and other similar taxes

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.

(e) Comparative figures

When required by accounting standards comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(f) New Accounting Standards and Interpretations

The consolidated entity has adopted all new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2018. The consolidated entity did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.

A number of new or amended standards became applicable for the current reporting period and the group had to change its accounting policies as a result of adopting the following standards:

·; AASB 9 Financial Instruments; and

·; AASB 15 Revenue from Contracts with Customers.

The impact of the adoption of these standards and the new accounting policies are disclosed below. The other standards did not have any impact on the group's accounting policies and did not require retrospective adjustments.

AASB 15 Revenue from Contracts with Customers - Impact of adoption

The group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018. In accordance with the transition provisions in AASB 15, the group has adopted the new rules retrospectively however there was no material impact on the amounts disclosed previously and as a result there has been no restatement required as a result of reclassification or remeasurement and no change to the previously disclosed accounting policies.

AASB 9 Financial Instruments - Impact of adoption

AASB 9 replaces the provisions of AASB 139 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.

The adoption of AASB 9 Financial Instruments from 1 July 2018 resulted in changes in accounting policies. The new accounting policies are set out in note below. In accordance with the transitional provisions in AASB 9, comparative figures have not been restated.

(i) Classification and Measurement

On 1 July 2018 (the date of initial application of AASB 9), the Group's management has assessed which business models apply to the financial assets held by the group and has classified its financial instruments into the appropriate AASB 9 categories. There were no changes to the classification and measurement of financial assets.

(ii) Impairment of financial assets

The Group has one type of financial asset that is subject to AASB 9's new expected credit loss model, being trade and other receivables.

The group was required to revise its impairment methodology under AASB 9. There was no material impact of the change in impairment methodology on the group's accumulated losses and equity.

While cash and cash equivalents are also subject to the impairment requirements of AASB 9, there was no material impairment loss identified.

AASB 9 Financial Instruments - Accounting policies applied

Classification

From 1 July 2018, 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 entity'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.

Debt instruments

Subsequent measurement of debt instruments depends on the group's business model for managing the asset and the cash flow characteristics of the asset. The Group's financial assets (cash and cash equivalents and trade and other receivables) are under this measurement category:

·; Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.

Impairment

From 1 July 2018, 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

(g) New Standards and Interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2019 reporting periods. The consolidated entity has decided against early adoption of these standards. The consolidated entity's assessment of the impact of these new standards and interpretations is set out below:

AASB 16: Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.

The main changes introduced by the new Standard include:

§ recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets);

§ depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components;

§ variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date;

§ by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead account for all components as a lease; and

§ additional disclosure requirements.

The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. The only item considered to be an operating lease is the lease or office space. The amount of this lease is not considered material, so no change will be recognised in the financial statements in relation to this standard.

Note 2. Critical accounting judgements, estimates and assumptions

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, liabilities, contingent liabilities, revenue and expenses. 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 has to rely on the same business test. As at 30 June 2019 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.

Note 3. Expenses

Note 4. Income Tax

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.

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.