TIDMJPRL
RNS Number : 3263L
Jupiter Energy Ltd
30 September 2016
ANNUAL REPORT
FOR THE YEARED 30 JUNE 2016
CORPORATE INFORMATION
Jupiter Energy Limited
ABN 65 084 918 481
Directors
Geoffrey Gander (Executive Chairman/Chief Executive Officer)
Baltabek Kuandykov (Non-Executive Director)
Scott Mison (Executive Director)
Alexey Kruzhkov (Non-Executive Director)
Group Secretary
Scott Mison
Registered Office & Principal Place of Business
Ground Floor, 10 Outram Street
West Perth WA 6005
PO Box 1282
Western Australia 6872
Telephone +61 8 9322 8222
Facsimile +61 8 9322 8244
Email info@jupiterenergy.com
Website www.jupiterenergy.com
Solicitors
Steinepreis Paganin
Level 4,
16 Milligan Street
Perth WA 6000
Auditors
Ernst & Young
11 Mounts Bay Road
Perth WA 6000
Bankers
National Australia Bank Ltd
UB13.03, 100 St Georges Terrace
Perth WA 6000
Nomad
finnCap Ltd
60 New Broad St
London, EC2M 1JJ
United Kingdom
Share Registry
Computershare Investor Services Pty Ltd
Level 2, 45 St George's Terrace
Perth WA 6000
Telephone 1300 557 010 (only within Australia)
+61 8 9323 2000
Facsimile +61 8 9323 2033
Website www.computershare.com
Stock Exchange Listing
Jupiter Energy Limited shares are listed on the Australian
Securities Exchange under the code JPR, on the AIM Market under the
code JPRL and on the Kazakh Stock Exchange (KASE) under the code
AU_JPRL.
Contents of Financial Report
Chairman's
Letter................................................................................................................................................................
1
Directors' Report
.................................................................................................................................................................
2
Remuneration Report
......................................................................................................................................................
11
Corporate Governance Statement
................................................................................................................................
22
Auditor Independence Declaration
...............................................................................................................................
28
Consolidated Jupiter Energy Limited Financial Statements
Consolidated Statement of Comprehensive
Income.............................................................................................
30
Consolidated Statement of Financial
Position........................................................................................................
31
Consolidated Statement of Cash
Flows...................................................................................................................
32
Consolidated Statement of Changes in Equity
.......................................................................................................
33
Notes to the Consolidated Financial Statements
......................................................................................................
34
Directors'
Declaration.......................................................................................................................................................
72
Independent Audit Report to the members of Jupiter Energy
Limited....................................................................
73
ASX Additional
Information..............................................................................................................................................
75
CHAIRMAN'S LETTER
Dear Shareholder,
I am pleased to present the 2016 Annual Report for Jupiter
Energy Limited ("Jupiter Energy" or "Group").
The past year has been a difficult one for the Group. The global
decline in the price of oil and the flow on effect to Kazakh
domestic oil prices made Jupiter's ability to produce oil on a
cashflow positive basis impossible. This resulted in all the
operational wells located on our permit area remaining shut in for
the entire financial year. In addition, continued funding
constraints meant that there was also no new drilling carried out
during the same period.
As a result of this inactivity, the Group operated on a "Care
& Maintenance" basis throughout the year and continued to be
supported by its major shareholder with debt funding being provided
as required.
On a more positive note, Jupiter Energy announced on 19
September 2016 that it had been successful in extending its
Exploration Licence for a further three years (to 29 December
2019). With this three year Exploration Licence extension now
secured, the Group hopes to return to domestic oil production as
soon as the Trial Production Licences for the Akkar East and West
Zhetybai oilfields have been renewed and Kazakh domestic oil prices
improve.
As part of the three year extension of the Exploration Licence,
the Group has submitted a Work Program to the Kazakh authorities
for approval and this program covers the 2017, 2018 and 2019
calendar years. The Board is now working to ensure funding will be
in place to carry out that program, commencing in early 2017.
The focus of the three year Work Program will be on both
exploration and appraisal drilling as well as to start the building
of the requisite infrastructure to allow the Akkar East oilfield to
move into its Full Field Development phase - a key step in the
Group achieving the first sale of export oil.
The Board remains confident in the prospectivity of the licence
area and furthermore that the two oilfields that have already been
discovered on our permit area can be commercially developed into
significant producers.
I look towards 2017 with renewed confidence and may I take this
opportunity to thank all our employees and shareholders for their
continued support over the past twelve months and encourage
shareholders to attend the Annual General Meeting to be held in
Perth on 4 November 2016.
Sincerely
Geoff Gander
Chairman/CEO
DIRECTORS' REPORT
Your Directors submit their report for the year ended 30 June
2016.
DIRECTORS
The names and details of the Group's Directors in office during
the financial year and until the date of this report are as
follows. Directors were in office for this entire period unless
otherwise stated.
Names, qualifications experience and special
responsibilities
Geoffrey Anthony Mr Gander graduated from the
Gander (53) B.Com University of Western Australia
Executive Chairman/CEO in 1984 where he completed
Appointed 27 January a Bachelor of Commerce Degree.
2005
Mr Gander was involved in the
identification and purchase
of the Block 31 licence in
Kazakhstan and has driven the
development of the business
there since 2007. He is currently
responsible for the overall
Operational Leadership of the
Company as well as Investor
Relations and Group Corporate
Development.
Other Current Directorships
of Listed Companies
None
Former Directorships of Listed
Companies in last three years
None
Baltabek Kuandykov Mr Kuandykov has considerable
(68) experience in the oil and gas
industry in the region, having
Non-Executive Director served as President of Kazakhoil
Appointed 5 October (predecessor of the Kazakh
2010 State oil company KazMunaiGas).
He was also seconded by the
Kazakh Government to work with
Chevron Overseas Petroleum
on CIS projects. Mr Kuandykov
also has extensive government
experience in Kazakhstan, having
served as Deputy Minister of
Geology, Head of the Oil and
Gas Directorate at the Ministry
of Geology, and was Deputy
Minister of Energy and Fuel
Resources.
Other Current Directorships
of Listed Companies
None
Former Directorships of Listed
Companies in last three years
None
Scott Adrian Mison Mr Mison holds a Bachelor of
(40) B.Bus, CA, Business degree, is a Member
ACSA Executive Director of the Institute of Chartered
Appointed 31 January Accountants in Australia and
2011 Company Secretary Chartered Secretaries Australia.
Appointed 29 May Mr Mison has over 17 years'
2007 experience in finance and corporate
compliance within Australia,
UK, Central Asia and USA. He
is also CFO / Company Secretary
of Rift Valley Resources Ltd.
Mr Mison is also a board member
of Wheelchair Sports WA Inc.
a not for profit organisation.
Other Current Directorships
of Listed Companies:
None
Former Directorships of Listed
Companies in last three years:
1-Page Limited and IDM International
Ltd
DIRECTORS' REPORT (continued)
Alexey Kruzhkov
(49) Mr Kruzhkov holds an Engineering
Degree and an MBA and has over
Non-Executive Director 10 years' experience working
Appointed 29 August in the investment industry,
2016 focusing primarily on organisations
involved in Oil & Gas, Mining
and Real Estate. He has served
as a Director on the Boards
of companies listed in Canada
and Norway. He is a board member
and part of the of the executive
team of Waterford Investment
and Finance Limited and resides
in Cyprus. He holds British
and Russian citizenships.
Other Current Directorships
of Listed Companies
None
Former Directorships of Listed
Companies in last three years
None
Alastair Beardsall Mr Beardsall has been involved
(62) in the oil industry for more
than 30 years starting in 1980
Non-Executive Director with Schlumberger, the oil-field
Appointed 5 October services company. From 1992
2010 he began working for independent
Resigned: 31 May oil companies, with increasing
2016 responsibility for specific
exploration, development and
production ventures. Between
2003 and 2009, he was Executive
Chairman of Emerald Energy
plc; Emerald grew, from a market
capitalisation of less than
GBP8 million, until in October
2009 Emerald was acquired by
Sinochem Resources UK Limited,
in a transaction that valued
Emerald at GBP532 million.
Other Current Directorships
of Listed Companies None Former
Directorships of Listed Companies
in last three years
Sterling Energy Plc - (AIM)
Gulfsands Petroleum Plc (AIM)
Interests in the shares and options of the Company and related
bodies corporate
At the date of this report, the interest of the Directors in the
shares of Jupiter Energy Limited were:
Director Number of
ordinary
shares
------------- ----------
G Gander 811,112
B Kuandykov -
S Mison 391,238
A Kruzhkov -
In compliance with Corporations Law, none of the Directors'
shareholdings in the Company is subject to hedging. Each Director
must disclose any changes via formal ASX, AIM and KASE announcement
without delay. Any changes in Directors' shareholdings are also
confirmed at each Board meeting.
DIRECTORS' REPORT (continued)
CORPORATE STRUCTURE
Jupiter Energy Limited is a company limited by shares that is
incorporated and domiciled in Australia. Jupiter Energy Limited's
consolidated financial report incorporates the entities that it
controlled during the financial year, which are outlined in Note 28
of the financial statements.
PRINCIPLE ACTIVITIES
The principal activities of the consolidated entity during the
course of the financial year included:
-- Exploration for oil and gas in Kazakhstan: and
-- Appraisal, development and production of oil and gas properties in Kazakhstan.
EMPLOYEES
The consolidated entity employed 5 employees as at 30 June 2016
(2015: 21 employees).
DIVIDS
No dividends in respect of the current or previous financial
year have been paid, declared or recommended for payment.
FINANCIAL REVIEW
Operating Results
The consolidated loss for the year after income tax was
$10,474,870 (2015: $10,982,261).
Review of Financial Condition
At the end of the 2016 financial year, cash resources were
$663,446 (2015: $1,613,560). These accounts have been prepared on a
going concern basis, predicated on the Group's ability to raise
additional cash in order to finance its proposed work programme and
general and administrative costs for the next 12 months. The Board
is currently progressing a number of financing options including
seeking the requisite waivers for an equity raising and/or the
issue of debt finance.
Assets decreased to $47,557,046 (2015: $76,897,616) and equity
decreased to $3,711,245 (2015: $41,654,900). The decrease is a
direct result of the devaluation of the Kazakh Tenge currency
during the year.
CAPITAL RAISING / CAPITAL STRUCTURE
Funding and Capital Management:
As at 30 June 2016, the Group had 153,377,693 listed shares
trading under the ASX ticker "JPR", the AIM ticker "JPRL" and the
KASE ticker "AU_JPRL".
The Group announced on 3 June 2016 that it had reached agreement
with its Convertible Note holders to re-finance the 12,400,000
Convertible Notes with a total value of US$20,800,753
(A$28,037,543) (including accrued interest) into Promissory Notes
with a repayment date of 1 July 2018.
The key terms for the new Promissory Notes are:
-- Unsecured
-- Effective 31 May 2016
-- Repayable on 1 July 2018
-- Interest rate of 15% pa
-- Interest will accrue and be repayable with the principal
DIRECTORS' REPORT (continued)
-- Lenders can elect to be repaid if there is a change of
control in Jupiter Energy Limited or Jupiter Energy Pte Ltd or
there is a change in control of the ownership of the Block 31
Licence
The Convertible Notes and all accrued interest were due for
repayment on 20 September 2016.
The Group also advised that its major shareholder Waterford had
agreed to re-finance its Promissory Note that as at 31 May 2016,
amounted to US$8,633,333 (A$11,636,956) in principal with accrued
interest of US$1,250,894 (A$1,686,092) totalling
US$9,914,227(A$13,323,048) into a new Promissory Note with the
following key terms:
-- Unsecured
-- Effective 31 May 2016
-- Repayable on 1 July 2018
-- Interest rate of 15% pa
-- Interest will accrue and be repayable with principal
-- Lender can elect to be repaid if there is a change of control
in Jupiter Energy Limited or Jupiter Energy Pte Ltd or there is a
change in control in contract 2275 covering the Block 31
Licence
The previous Promissory Note and all accrued interest was due
for repayment on 1 July 2016.
During the year Waterford also agreed to put in place a new
Framework Funding Agreement that made a further US$5,000,000
(including accrued interest) available to the Group by way of a new
US$5,000,000 (A$6,739,550) Promissory Note. As at 30 June 2016, the
Group had drawn down US$744,989 (A$1,004,178) (including accrued
interest) under this new Framework Agreement.
The new Funding Agreement will fund the Group's operations
whilst it continues to finalise long term funding arrangements for
the development of its Block 31 licence area in Kazakhstan.
The funding arrangement will be the same as the previous one,
namely that the Group will request monthly drawdowns against the
maximum US$5,000,000 amount and the drawdowns will be based on an
agreed Care & Maintenance budget.
Based on the current budgeted cashflow requirements, this new
funding arrangement will provide the Group with sufficient working
capital for the next 12 months based on its current Care &
Maintenance budget.
The key terms of the new Framework Agreement with Waterford
are:
-- Effective 24 May 2016
-- Drawdowns will roll into a Promissory Note
-- Promissory Note is repayable on 1 July 2018
-- Interest rate of 15% pa
-- Interest will accrue and be repayable with principal
-- Lender can elect to be repaid if there is a change of control
in Jupiter Energy Limited or Jupiter Energy Pte Ltd or there is a
change in control in contract 2275 covering the Block 31
Licence
The Group is still reviewing its ongoing funding requirements
for 2017 and beyond, to enable the Group to carry out its 2017-2019
Work Program and develop Block 31 to the stage where export oil
sales are being achieved and further development of the field is
self-funding. In addition, the Group may look to take on additional
exploration acreage. Funding options may include the further issue
of new equity, reserve based debt, convertible debt or a
combination of these and other funding instruments.
DIRECTORS' REPORT (continued)
Once the appropriate funding has been secured, the further
development of both the Akkar East and West Zhetybai fields, and in
particular building of the topside infrastructure on Akkar East
including a processing facility and gas separation plant, will be
accelerated.
Based on management forecasts, the Group has sufficient working
capital, including its access to the remaining funding under the
Waterford Funding Framework, for 12 months from the signing date of
this report based on its current Care & Maintenance budget. The
Group continues to seek a longer term funding package that will
enable the commencement of the 2017-2019 Work Program and for
on-going working capital.
On 29 June 2016, the Ministry of Energy gave permission to the
Company (a Waiver) to raise equity via the issue of new shares.
Summary of share options on issue:
At the date of this report, there were no share options on
issue.
OPERATING REVIEW
This section provides details on the operations for the period
from 1 July 2015 to 30 June 2016 ("the financial year"). Events
that occurred post 30 June 2016 are covered in the "Subsequent
Events" section.
Review of Operations:
The financial year saw little operational progress with
restricted funding and uneconomic domestic oil prices both
negatively impacting the further development of the Block 31
licence area. The restricted funding was partially attributable to
the refusal of the Kazakh Ministry of Energy to issue a Waiver and
meant that the Group was not able to take on any additional
exploration acreage.
Production Report/Status of Well Licences:
The Group announced on 19 February 2015, as a result of the
material reduction in world oil prices at the beginning of 2015,
the sales price being achieved for domestic oil in Kazakhstan fell
to levels that made oil production from Block 31 cashflow
negative.
The Group therefore ceased production in February 2015 from its
producing Akkar East wells (J-51 and J-52) and the wells remained
shut in during the entire Review Period. The Group continues to
monitor local pricing and believes that production may recommence
during early 2017 but is unable to give any guarantee that this
will occur in that timeframe.
Production - Akkar East (J-51, J-52, J-53 and Well 19):
During the financial year, no oil was produced from the Akkar
East J-51 and J-52 wells under their respective Trial Production
Licences (TPL's). These two wells are located on the northern
section of the permit and are part of the Akkar East oilfield.
The J-53 well, which is also located on the Akkar East oilfield,
was shut in for the entire financial year, awaiting further
remedial work before potentially coming back onto production. This
work will be carried out when the appropriate funding and approvals
are in place.
Well 19, which is also located on the Akkar East oilfield,
awaits a completion and testing program before it goes onto
production. Further work on Well 19, including an acid stimulation,
will not take place until the requisite funding for the work is in
place and the Group is ready to return to domestic oil
production.
No oil was produced from Well 19 during the financial year.
DIRECTORS' REPORT (continued)
Production - Akkar North [East Block] (J-50 well):
The Group advised shareholders on 28 November 2014 that the
application to extend the TPL for well J-50 located on the Akkar
North (East Block) was being held by the Kazakh Committee of
Geology pending resolution of the allocation of reserves associated
with the well.
The J-50 well has been shut in since 29 December 2014 (the date
at which the last Trial Production licence expired).
The underlying issue delaying the TPL renewal is the demand by
the Committee of Geology that Jupiter Energy reach agreement with
its neighbour MangistauMunaiGas (MMG) over the division of reserves
associated with both companies' share of the Akkar North
accumulation. Jupiter Energy has been in dialogue with MMG on this
issue for some time but has been unable to reach formal agreement
with MMG with respect to the division of Akkar North reserves or
another form of settlement of the matter.
The Group continues to try and bring this long running dispute
to a conclusion. An application for an extension to the Akkar North
(East Block) TPL will be submitted if and when an agreement has
been reached with MMG. The three year exploration licence extension
allows for this TPL to continue until 29 December 2019 on the basis
that the division of reserves dispute has been resolved and the TPL
has been approved by the relevant Kazakh authorities.
Extension of Trial Production Licences - Akkar East oilfield
(J-51, J-52, J-53 and Well 19):
During the financial year, the Group was granted extensions to
the TPL's on the Akkar East oilfield for the J-51, J-52, J-53 and
#19 wells and these extensions run until 29 December 2016. The
Group also received its emission permits for these wells for the
2016 calendar year meaning that the wells had all the required
approvals to operate under trial production during 2016.
The three year Exploration Licence extension and the associated
extension of various TPL's discussed in the "Subsequent Events"
section of this review, explains the expected extension of the
Akkar East TPL's to 29 December 2019.
Status of West Zhetybai Wells (J-55, 58, 59):
J-58 and J-59 both had their respective 2016 TPL's approved
during the year. The wells are both currently suspended due to the
low domestic oil prices. It should be noted that in order to get
the J-58 and J-59 wells ready for Trial Production, the appropriate
surface production infrastructure must be put in place for both the
wells. This equipment will need to be purchased and funding is not
available at this time to complete the acquisition of the equipment
required.
When funding is in place and domestic oil prices have recovered,
the forward plan is for the J-58 well to be put on production from
the T(2) B horizon, and J-59 will be used to test the potential of
the shallow Jurassic horizon discovered during the drilling of the
well, before being completed for production from the T(2) B
horizon.
Further remedial work will need to be carried out on J-55 to
determine if commercial production can be established from this
well and this work will require the requisite funding and separate
approvals from the relevant Kazakh authorities.
The three year Exploration Licence extension and the associated
extension of various TPL's discussed in the "Subsequent Events"
section of this review, explains the expected extension of the West
Zhetybai TPL's to 29 December 2019.
Drilling Report:
No drilling activity took place during the year.
Oil Production and Revenues:
There was no oil production during the year. Approximately
108,500 barrels of oil were produced during the 2014/15 Financial
Year.
DIRECTORS' REPORT (continued)
Revenues from oil sales in this financial year amounted to $A
Nil (2014/15 Financial Year: $ 3,660,000).
Corporate Restructure:
As a result of the ceasing of domestic oil production, the Group
restructured its Aktau operations with a significant reduction in
staff in early 2015.
The focus on costs continued during the year with further
reductions in staff numbers at the beginning of 2016 as well as a
further reduction in office space. A total of approximately
US$2,400,000 was removed from of the annual operating costs during
the financial year.
Directors have deferred their Directors' Fees since February
2015 and will continue to do so until such time that the Group has
an improved cashflow position.
Restaffing Operations:
An integrated operating team that has proven in-country
experience as well as the capacity to operate major assets is a
critical component to success in Kazakhstan. The building of such a
team over the past few years has been a majority priority.
Unfortunately a number of staff were made redundant as a result of
the shutdown of field operations in February 2015 and others were
offered part time roles at that time. Reductions in staff continued
during the financial year. Once the Group is ready to resume trial
production, these positions will again be filled with past
employees given priority to apply for roles.
The Board is confident that the Group will be well prepared for
continued growth when required.
2015 Annual General Meeting:
The 2016 AGM will be held in Perth on Friday 04 November 2016
and all shareholders are encouraged to attend. A Notice of Meeting
outlining business to be covered at the 2016 AGM will be mailed to
shareholders in early October 2016.
The 2015 Annual General Meeting (AGM) was held in Perth on
Friday 06 November 2015 and all Resolutions were passed.
Subsequent Events:
On 19 September 2016 the Group announced that it had signed
Addendum 7 to Contract 2275 which confirmed that the Ministry of
Energy had agreed to a three (3) year extension to the Exploration
Licence taking the Exploration Period through to 29 December 2019.
The 3 year extension is based on the Group maintaining its current
acreage and the Ministry of Energy indicated that if the Group did
proceed with the North East and South East land extensions that are
being considered, then a further one (1) year extension (to 29
December 2020) could be available.
The three year licence extension is a positive step forward and
will allow the Group to undertake further work on the Akkar East
and West Zhetybai oilfields, further de-risking the current State
Accepted preliminary oil reserves on both oilfields.
The Group is now working on getting its proposed three year Work
Program (2017-2019) approved by the Kazakh Regulatory Authorities.
As part of the Work Program submission, Trial Production Licences
extensions for the Akkar East and West Zhetybai oilfields for the
period to 29 December 2019 will also be applied for. Currently the
Trial Production Licences approved for the Akkar East and West
Zhetybai oilfields both end on 29 December 2016 but if successful,
the licences will be extended to 29 December 2019.
The Group believes that the timeframe for these approvals is the
end of 2016 and should culminate in a further addendum to Contract
2275 (Addendum 8) being signed.
DIRECTORS' REPORT (continued)
There are no further "Subsequent Events" to report prior to the
release of this report.
Summary:
During the 2015/16 Financial Year the Group continued to endure
a frustrating operating environment in Kazakhstan with progress
inhibited by a combination of numerous lengthy approval processes,
the protracted negotiations with MMG and restricted funding
partially attributable to the refusal of the Kazakh Ministry of
Energy to issue a Waiver. The dramatic fall in world oil prices and
the knock on effect this has had on domestic oil prices in
Kazakhstan has also impacted the business and production remains
shut in from all wells until domestic oil prices improve to a level
that makes oil production from Block 31 cashflow positive.
The dramatic fall in global oil prices has also had a material
impact on the willingness of the equity markets to fund junior
explorers and as such even though the Kazakh authorities have
recently issued the Group with approval to raise fresh equity, in
the short term, the ability to raise the required equity to fund
the Block 31 development in the current market environment is
uncertain.
These frustrations aside, since acquiring an exploration permit
in 2008, independent reserve reports continue to confirm that that
Jupiter has now discovered two sizeable oilfields with significant
reserves and resources. In addition, oil production has moved from
zero at the beginning of 2011 to over 230,000 barrels for calendar
year 2014, with 2014 calendar year revenues reaching A$8,750,000
(US$7,568,000).
The goal of developing Jupiter Energy into a full cycle E&P
Group with a meaningful production profile and sizeable 2P reserves
base remains the key objective for the Board and Management and the
Group remains confident of continuing to make progress towards
achieving this goal during the period 2017-2019.
DIRECTORS' REPORT (continued)
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Except as otherwise set out in this report, the Directors are
unaware of any significant changes in the state of affairs or
principal activities of the consolidated entity that occurred
during the financial year.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Directors will continue to pursue oil and gas exploration
and production opportunities in the Republic of Kazakhstan.
As Jupiter Energy Limited is listed on the Australian Stock
Exchange, London's AIM Market (AIM) and the Kazakh Stock Exchange
(KASE), it is subject to the continuous disclosure requirements of
the ASX Listing Rules, the AIM Rules and the KASE Rules for
Companies which require immediate disclosure to the market of
information that is likely to have a material effect on the price
or value of Jupiter Energy Limited's securities.
ENVIRONMENTAL REGULATION
The consolidated entity is committed to achieving the highest
standards of environmental performance. Standards set by the
Government of Kazakhstan are comprehensive and highly regulated.
The consolidated entity strives to comply not only with all Kazakh
government regulations, but also maintain worldwide industry
standards.
To maintain these high standards the Group is committed to a
locally developed environmental monitoring programme. This
monitoring programme will continue to expand as and when new
regulations are implemented and adopted in Kazakhstan.
HEALTH & SAFETY
The Group has developed a comprehensive Health and Safety policy
for its operations in Kazakhstan and has the appropriate personnel
in place to monitor the performance of the Group with compliance
under this policy. The Group outsources many of its key drilling
functions and as part of any contract entered into with third
parties, a commitment to Health & Safety and a demonstrated
track record of success in this area is a key performance indicator
in terms of deciding on which companies will be contracted.
DIRECTORS' REPORT (continued)
MEETINGS OF DIRECTORS
The number of meetings of the Directors held during the year and
the number of meetings attended by each Director was as
follows:
Board of Directors
-----------------------
Number Number
attended eligible
to attend
------------------- ---------- -----------
Current Directors
------------------- ---------- -----------
G Gander 4 4
------------------- ---------- -----------
B Kuandykov 4 4
------------------- ---------- -----------
S Mison 4 4
------------------- ---------- -----------
Resigned Director
------------------- ---------- -----------
A Beardsall 4 4
------------------- ---------- -----------
Committee membership
Due to the small number and geographical spread of the
Directors, it was determined that the Board would undertake all of
the duties of properly constituted Audit & Compliance and
Remuneration Committees.
Competent Persons Statements
General
Keith Martens, BSc Geology and Geophysics, with over 35 years'
oil & gas industry experience, is the qualified person who has
reviewed and approved the technical information contained in this
report. Keith Martens has no material interest in the Group.
Kazakh State Approved Reserves
The information in this report which relates to the C1 and C2
Block 31 reserve estimations is based on information compiled by
Reservoir Evaluation Services LLP ("RES"), a Kazakh based oil &
gas consulting Group that specialises in oil & gas reserve
estimations. RES has used the Kazakh Reserve classification system
in determining their estimations. RES has sufficient experience
which is relevant to oil & gas reserve estimation and to the
specific permit in Kazakhstan to qualify as competent to verify the
information pertaining to the C1 and C2 reserve estimations. RES
has given and not withdrawn its written consent to the inclusion of
the C1 and C2 reserve estimations in the form and context in which
they appear in this report. RES has no financial interest in the
Group.
REMUNERATION REPORT (Audited)
This remuneration report outlines the Director and executive
remuneration arrangements of the Group in accordance with the
requirements of the Corporations Act 2001 and its Regulations. For
the purposes of this report, key management personnel (KMP) of the
Group are defined as those persons having authority and
responsibility for planning, directing and controlling the major
activities of the Group, directly or indirectly, including any
Director (whether executive or otherwise) of the parent Company,
and includes the two executives in the Group.
For the purposes of this report, the term 'executive'
encompasses the chief executive, senior executives, general
managers and secretaries of the Group.
Details of key management personnel
(i) Directors
Geoff Gander Chairman / CEO (Executive)
Alastair Beardsall Director (Non-Executive) - Resigned
31 May 2016
Baltabek Kuandykov Director (Non-Executive)
Scott Mison Director / CFO / Company Secretary
(Executive)
Alexey Kruzhkov was appointed to the board on 29 August
2016.
There were no other changes after reporting date and before the
date the financial report was authorised for issue.
Remuneration Philosophy
The remuneration policy of the Group has been designed to align
Directors and executives interests with the shareholder and
business objectives by providing a fixed remuneration component and
offering long term incentives based on a key performance area -
with a focus to the material improvement in share price
performance. The Board of the Group believes the remuneration
policy to be appropriate to attract and retain the best executives
and Directors to run and manage the Group, as well as create goal
congruence between Directors, executives and shareholders.
The Board's policy for determining the nature and amount of
remuneration for Board members and senior executives of the Group
is as follows:
* The remuneration policy, setting the terms and conditions for
the executive directors and other senior executives, was developed
by the Board after a review of similar listed and unlisted
companies with activities in overseas jurisdictions and taking into
account the experience and skill set required to successfully
develop operations in these jurisdictions from early stage
development. The Group does not have a remuneration committee. The
Board is of the opinion that due to the size of the Group, the
functions performed by a Remuneration Committee can be adequately
handled by the full Board.
* All executives receive a base salary (which is based on
factors such as length of service and experience), superannuation,
fringe benefits and performance incentives.
* The Board reviews executive packages annually by reference to
the Group's performance, executive performance and comparable
information from industry sectors and other listed companies in
similar industries.
Executives are eligible to participate in the Group's long term
Performance Rights plan.
REMUNERATION REPORT (Audited) (continued)
The executive Directors receive a superannuation guarantee
contribution as required by the government which is currently 9.5%,
and do not receive any other retirement benefits.
The remuneration paid to Directors and executives is valued at
the cost to the Group and expensed. Shares given to Directors and
executives are valued as the difference between the market price of
those shares and the amount paid by the Director or executive.
Options are valued using the Black & Scholes methodology.
Performance Rights are valued using a hybrid employee share option
model. The hybrid model incorporates a trinomial option valuation
and a Monte Carlo simulation.
Remuneration Structure
Non-Executive Director Remuneration
Objective
The Board seeks to set aggregate remuneration at a level which
provides the Group with the ability to attract and retain directors
of the highest calibre, whilst incurring a cost which is acceptable
to shareholders.
Structure
The Board policy is to remunerate non-executive directors at
market rates for comparable companies 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
subject to approval by shareholders at the Annual General Meeting.
Total remuneration for all non-executive Directors, is not to
exceed $350,000 per annum as approved by shareholders at the Annual
General Meeting held on 15 November 2010. Fees for non-executive
Directors are not linked to performance of the Group. Non-executive
Directors are also encouraged to hold shares in the company.
Each Director receives a fee for being a Director of the Group.
Directors who are called upon to perform extra services beyond the
director's ordinary duties may be paid additional fees for those
services.
Executive Remuneration
Objective
The Group aims to reward executives with a level and mix of
remuneration commensurate with their position and responsibilities
within the Group so as to:
- reward executives for Group, business unit and individual performance;
- align the interests of executives with those of shareholders;
- link reward with the strategic goals and performance of the Group; and
- ensure total remuneration is competitive by market standards.
REMUNERATION REPORT (Audited) (continued)
Structure
In determining the level and make-up of executive remuneration,
the Board reviews remuneration packages provided by similar listed
and unlisted companies with activities in overseas jurisdictions
and taking into account the experience and skill set required to
successfully develop operations in these jurisdictions from early
stage development as well as the salary levels of local workers in
that jurisdiction. It is the Board's policy that employment
contracts are entered into with the Chief Executive Officer and all
key management personnel.
Fixed Remuneration
The fixed remuneration of executives is comprised of a base
salary and superannuation. The fixed remuneration of executives is
reviewed annually.
Variable remuneration - Short Term Incentives (STI)
The Group operates a STI program for its Kazakh based employees,
which is based on a cash bonus subject to the attainment of clearly
defined Branch and individual measures.
Actual STI payments awarded to each employee depends on the
extent to which specific targets are met. The targets consist of a
number of key performance indicators (KPIs) covering financial and
non-financial Branch and individual measures of performance.
Directors are not eligible for participation in the STI
program.
Variable Remuneration - Long Term Incentives (LTI)
Objective
The objectives of long term incentives are to:
- align executives remuneration with the creation of shareholder wealth;
- recognise the ability and efforts of the Directors, employees
and consultants of the Group who have contributed to the success of
the Group and to provide them with rewards where deemed
appropriate;
- provide an incentive to the Directors, employees and
consultants to achieve the long term objectives of the Group and
improve the performance of the Group; and
- attract persons of experience and ability to employment with
the Group and foster and promote loyalty between the Group and its
Directors, employees and consultants.
Structure
Long term incentives granted to Directors and senior executives
are delivered in the form of Performance Rights, issued under the
Performance Rights Plan. There were no performance rights issued
during the current financial year or prior financial year.
Group Performance
Due to the current embryonic stage of the Group's growth it is
not appropriate at this time to evaluate the Group's financial
performance using generally accepted measures such as EBITDA and
profitability; this assessment will be developed over the next few
years.
REMUNERATION REPORT (Audited) (continued)
The following information provides a summary of Jupiter Energy's
financial performance for the last five years:
2016 2015 2014 2013 2012
$ $ $ $ $
Revenue - 3,896,359 7,586,442 5,778,057 1,063,086
Loss before income
tax (10,474,870) (10,982,261) (2,547,271) (4,885,829) (4,295,102)
Earnings per
share (cents) (6.81) (7.16) (1.66) (3.25) (3.70)
Last share price
at Balance Date 0.25 0.25 0.40 0.55 0.415
Market capitalisation 38.3m 38.3m 61.4m 82.7m 48.2m
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives
Table 1: Remuneration for the year ended 30 June 2016
Short--term benefits Post--employment Share--based
benefits payment
-------------
Cash Remuneration Performance
salary consisting related
and of
Consulting Cash Super-- Performance Performance
Name fees bonus Other annuation Rights Total Rights
$ $ $ $ $ $ % %
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
Non--executive
director
A Beardsall
(a) 36,667* - - - - 36,667 - -
B Kuandykov
(b) 122,223* - - - - 122,223 - -
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
Total
non-executive
directors 158,890 - - - - 158,890
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
Executive
directors
G Gander (c) 372,251* - 163,106 40,333 - 575,690 - -
S Mison (d) 108,000* - - - - 108,000 - -
Total
executives 480,251 - 163,106 40,333 - 683,690
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
Totals 639,141 - 163,106 40,333 842,580
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
*Directors fees from February 2015 have been deferred until such
time that at least US$5,000,000 in new equity is raised or
alternatively the Group sells the Block 31 licence and receives the
funds associated with that sale.
(a): Resigned 31 May 2016. Directors Fees of A$36,667 have been
deferred.
(b): Fees relate to Non Executive Director fee of US$40,000
(A$54,787) and Consulting Fees from 1 February 2016 to 30 June 2016
of US$50,000 (A$67,436). Director fees of US$40,000 (A$54,787) have
been deferred.
During the year, further consulting fees of A$40,599 (2015:
A$144,096) were accrued and paid under normal terms and conditions
to Meridian Petroleum LLP, of which Mr. Kuandykov is a director,
for the provision of geological services at normal commercial
rates.
(c): Directors Fees of A$40,000 have been deferred. Other of
A$163,106 relates to living expenses covering cost of
apartment/office in London as per service agreement.
(d): Fees relate to CFO / Company Secretary (A$78,000) and
Director Fees (A$30,000). The Directors fees of A$30,000 have been
deferred.
Table 2: Remuneration for the year ended 30 June 2015
Short--term benefits Post--employment Share--based
benefits payment
-------------
Cash Remuneration Performance
salary consisting related
and Cash of
Consulting bonus Super-- Performance Performance
Name fees (c) Other annuation Rights Total Rights
$ $ $ $ $ $ % %
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
Non--executive
director
A Beardsall 40,000* - - - 21,107 61,107 34.54% 34.54%
B Kuandykov
(d) 49,900* - - - 21,107 71,007 29.73% 29.73%
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
Total
non-executive
directors 89,900 - - - 42,214 132,114
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
Executive
directors
G Gander (a) 332,350* - 151,682 48,333 21,107 553,472 3.81% 3.81%
S Mison (b) 130,000* 17,000 - 1,900 4,855 153,755 3.16% 14.21%
Total
executives 462,350 17,000 151,682 50,233 25,962 707,227
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
Totals 552,250 17,000 151,682 50,233 68,176 839,341
---------------- ------------ ------ ------- ---------------- ------------ ------- ------------- -------------
*Directors fees from February 2015 have been deferred until such
time that at least US$5,000,000 in new equity is raised or
alternatively the Group sells the Block 31 licence and receives the
funds associated with that sale.
(a): Other relates to living expenses covering cost of
apartment/office in London as per service agreement.
(b): Fees relate to CFO / Company Secretary (A$90,000) and
Director Fees (A$40,000).
(c): The cash bonus to Mr Mison was for the period 1 July 2014
to 30 June 2015. Under his service agreement, he is entitled a cash
bonus every six months to a maximum of A$15,000 per six months. The
performance criteria were to ensure full compliance with ASX, AIM
and KASE and sign off of debt funding package. The % of bonus
granted was 56%, with 44% being forfeited. This is determined at
the board's discretion.
(d): During the year, consulting fees of $144,096 (2014:
$144,584) were accrued and paid under normal terms and conditions
to Meridian Petroleum LLP, of which Mr. Kuandykov is a director,
for the provision of geological services at normal commercial
rates.
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives (continued)
Compensation Options: Granted and vested during the year ended
30 June 2016
During the 2016 and 2015 year, there were no options granted. No
options, listed or unlisted, were exercised during the year.
Shares issued on Exercise of Compensation Options
There were no shares issued on the exercise of compensation
options during the financial years ended 30 June 2016 or 30 June
2015.
Performance Rights
During the year, there were no performance rights granted.
During the 2015 year, 8,075,000 performance rights expired
unvested.
Compensation Performance Rights: Granted and vested during the
year ended 30 June 2016
During the 2016 and 2015 year, there were no performance rights
vested and no additional performance rights were granted.
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives (continued)
Shareholdings
The number of shares in the Company held by each Key Management
Personnel of Jupiter Energy Limited during the financial year,
including their personally-related entities, is set out below:
2016 Balance Net Change Balance
1 July Granted On Exercise Other 30 June
2015 as Remuneration of Options 2016
Directors
G Gander 3,147,224 - - (2,336,112) 811,112
A Beardsall 1,250,000 - - - 1,250,000*
B Kuandykov - - - - -
S Mison 391,238 - - - 391,238
*Mr Beardsall resigned on 31 May 2016. This was the balance at
time of resignation.
2015 Balance Net Change Balance
1 July Granted On Exercise Other 30 June
2014 as Remuneration of Options 2015
Directors
G Gander 3,147,224 - - - 3,147,224
A Beardsall 1,250,000 - - - 1,250,000
B Kuandykov - - - - -
S Mison 391,238 - - - 391,238
Executives
K Martens - - - - -
Performance Rights Holdings
The number of Performance Rights in the Company held by each
Director of Jupiter Energy Limited and each of the specified
Executives of the consolidated entity during the financial year,
including their personally-related entities, is set out below:
There were no performance rights held by any Directors during
2016.
2015 Balance Granted Rights Net Change Balance Not Vested Vested
at beg as Remune-ration Exercised Other at end & Not & Exercisable
of period of period Exercisable
1 July 30 June
2014 2015
----------- ------------------ ----------- ------------ ----------- ------------- ---------------
Directors
G Gander 2,500,000 - - (2,500,000) - - -
A Beardsall 2,500,000 - - (2,500,000) - - -
B Kuandykov 2,500,000 - - (2,500,000) - - -
S Mison 575,000 - - (575,000) - - -
Option Holdings
There were no options held by, granted to or exercised by Key
Management Personnel during the financial years ended 30 June 2016
or 30 June 2015.
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives (continued)
Service agreements
Remuneration and other terms of employment for the Executive
Chairman/CEO, Company Sec/CFO, and all other key management
positions held in Kazakhstan have been formalised in service
agreements. The main provisions of the agreements in relation to
Directors holding management roles are set out below.
Geoff Gander, Executive Chairman (Effective - 30 May 2016)
Base Terms
-- This agreement was effective from 30 May 2016 and has no set term.
-- Base Salary of GBP200,000 (A$360,000) including Director Fees
and the current Superannuation Levy of 9.5%.
-- Living expenses of GBP 85,000 (A$155,000) per year, covering
the cost of an apartment/office in London.
-- Director fees of A$3,333 per month (included in Base Salary
figure above), deferred until such time that at least US$5,000,000
in new equity is raised or alternatively the Group sells the Block
31 licence and receives the funds associated with that sale.
The termination provisions are as follows:
Notice period Payment in
lieu of notice
-------------------------- -------------- ----------------
Contractor - initiated 1 month 12 months
termination with
reason or for Contractor
incapacitation
-------------------------- -------------- ----------------
Company - initiated 12 months 12 months
termination without
reason
-------------------------- -------------- ----------------
Company - initiated None None
termination for
serious misconduct
-------------------------- -------------- ----------------
Contractor - initiated 12 months 12 months
termination without
reason
-------------------------- -------------- ----------------
Contractor - initiated 30 days 12 months
termination with
reason
-------------------------- -------------- ----------------
Scott Mison, CFO / Company Secretary / Executive Director
(Effective - 1 June 2015)
Base Terms
-- This agreement is effective from 1 June 2015. The term is on a rolling month basis.
-- CFO / Company Secretary Fees of $6,500 per month.
-- Director fees of $2,500 per month, deferred until such time
that at least US$5,000,000 in new equity is raised or alternatively
the Group sells the Block 31 licence and receives the funds
associated with that sale.
The termination provisions are as follows:
Notice period Payment in
lieu of notice
----------------------- -------------- ----------------
Contractor - initiated 1 or 3 months 1 or 3 months
termination with
reason
----------------------- -------------- ----------------
Contractor - initiated 3 months 3 months
termination without
reason
----------------------- -------------- ----------------
Termination for None None
serious misconduct
----------------------- -------------- ----------------
Contractor - initiated 1 or 3 months None
termination
----------------------- -------------- ----------------
End of Remuneration Report (Audited)
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group has entered into Deeds of Indemnity with the
Directors, indemnifying them against certain liabilities and costs
to the extent permitted by law.
The Group has also agreed to pay a premium in respect of a
contract insuring the Directors and Officers of the Group against
certain liabilities and costs to the extent permitted by law. Full
details of the cover and premium are not disclosed as the insurance
policy prohibits the disclosure.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Group has agreed to
indemnify its auditors, Ernst & Young Australia, as part of the
terms of its audit engagement agreement against claims by third
parties arising from the audit (for an unspecified amount). No
payment has been made to indemnify Ernst & Young during or
since the financial year.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate
behaviour and accountability, the Directors of Jupiter Energy
Limited adhere to strict principles of corporate governance. The
Group's corporate governance statement is included on page 21 of
this annual report.
AUDITOR INDEPENCE
The Directors received the declaration included on page 27 of
this annual report from the auditor of Jupiter Energy Limited.
NON-AUDIT SERVICES
There were no non-audit services provided by the entity's
auditors, Ernst & Young during the year.
This report has been made in accordance with a resolution of the
Directors.
G A Gander
Director
Perth, Western Australia
30 September 2016
CORPORATE GOVERNANCE STATEMENT
In recognising the need for the highest standards of corporate
behaviour and accountability, the Directors of Jupiter Energy
adhere to strict principles of corporate governance.
The Board of Directors of Jupiter Energy Limited is responsible
for the overall corporate governance of the consolidated entity,
guiding and monitoring the business and affairs of Jupiter Energy
on behalf of the shareholders by whom they are elected and to whom
they are accountable.
The Group's corporate governance principles and policies are
structured with reference to the Corporate Governance Councils best
practice recommendations, which are as follows:
Principle 1. Lay solid foundations for management and oversight
Principle 2. Structure the Board to add value
Principle 3. Act ethically and responsibly
Principle 4. Safeguard integrity in corporate reporting
Principle 5. Make timely and balanced disclosure
Principle 6. Respect the rights of shareholders
Principle 7. Recognise and manage risk
Principle 8. Remunerate fairly and responsibly
The Board's Corporate Governance Charter includes procedures for
compliance with the ASX Listing Rules continuous disclosure
requirements, trading in the Group's securities, the management of
risk, and a Code of Conduct. Jupiter Energy's corporate governance
practices were in place throughout the year ended 30 June 2016.
BOARD OF DIRECTORS
Role of the Board
In general, the Board is responsible for, and has the authority
to determine, all matters relating to the policies, practices,
management and operations of the Group. It is required to do all
things that may be necessary to be done in order to carry out the
objectives of the Group.
Without intending to limit this general role of the Board, the
principal functions and responsibilities of the Board include the
following:
-- To set the strategic direction for the Group and monitor progress of those strategies;
-- Establish policies appropriate for the Group;
-- Monitor the performance of the Group, the Board and management;
-- Approve the business plan and work programmes and budgets;
-- Authorise and monitor investment and strategic commitments;
-- Review and ratify systems for health, safety and
environmental management; risk and internal control; codes of
conduct and regulatory compliance;
-- Report to shareholders, including but not limited to, the
Financial Statements of the Group; and
-- Take responsibility for corporate governance.
CORPORATE GOVERNANCE STATEMENT (continued)
Composition of the Board
To add value to the Group the Board has been formed so that it
has effective composition, size and commitment to adequately
discharge its responsibilities and duties given its current size
and scale of operations.
The names of Directors of the Group in office at the date of
this statement are set out in the Directors' Report. Information
regarding Directors' experience and responsibilities are included
in the Directors' Report section of this Annual Report.
The number of Directors is specified in the Constitution of the
Group as a minimum of three up to a maximum of ten.
The preferred skills and experiences for a Director of the Group
include:
-- Exploration for oil and gas accumulations;
-- Development and production operations of hydrocarbon accumulations;
-- Financing of operations;
-- Business Development; and
-- Public Group financial reporting and administration.
Chairman of the Board
The Chairman of the Board should be a Non-Executive Director and
the Chairman will be elected by the Directors. Mr. Geoff Gander,
however is an Executive Chairman and is not independent. Given his
skills, experience and knowledge of the Group, the Board considers
that it is appropriate for him to be Chairman.
Independent Directors
The Board considers that a Director is independent if that
Director complies with the following criteria:
-- Apart from Director's fees and shareholding, independent
Directors should not have any business dealings which could
materially affect their independent judgment;
-- Must not have been in an Executive capacity in the Group in the last 3 years;
-- Must not have been in an advisory capacity to the Group in the last 3 years;
-- Must not be a significant customer or supplier for the Group;
-- Must not be appointed through a special relationship with a Board member;
-- Must not owe allegiance to a particular group of shareholders
which gives rise to a potential conflict of interest;
-- Must not hold conflicting cross Directorships; and
-- Must not be a substantial shareholder or a nominee of a
substantial shareholder (as defined under section 9 of the
Corporations Act).
Using the ASX Best Practice Recommendations on the assessment of
the independence of Directors, the Board considers that of a total
of four Directors, only one is considered independent.
Mr. Geoff Gander is an Executive Chairman of the Group and is
not considered to be independent. However, his experience and
knowledge of the Group makes his contribution to the Board such
that it is appropriate for him to remain on the Board.
Mr. Baltabek Kuandykov is an independent Non-Executive Director
of the Group. His oil industry experience, especially within
Kazakhstan, makes his contribution to the Board significant.
Mr. Scott Mison is an Executive Director / CFO / Company
Secretary of the Group and is not considered to be independent.
However, his experience and knowledge of the Group makes his
contribution to the Board such that it is appropriate for him to
remain on the Board.
CORPORATE GOVERNANCE STATEMENT (continued)
Retirement and Rotation of Directors
Retirement and rotation of Directors are governed by the
Corporations Act 2001 and the Constitution of the Company. Each
year one third Directors must retire and offer themselves for
re-election. Any casual vacancy filled will be subject to
shareholder vote at the next Annual General Meeting of the
Company.
Independent Professional Advice
Each Director has the right to seek independent professional
advice at the Group's expense after consultation with the Chairman.
Once received the advice is to be made immediately available to all
Board members.
Access to Employees
Directors have the right of access to any employee. Any employee
shall report any breach of corporate governance principles or Group
policies to a Director and/or Company Secretary/CFO who shall
remedy the breach. If the breach is not rectified to the
satisfaction of the employee, they shall have the right to report
any breach to an independent Director without further reference to
senior managers of the Group.
Insurance
The Directors review the requirements for insurance cover for
the associated risks for its field operations, including drilling,
production and storage of hydrocarbons and other activities and
procures insurance cover at levels and costs they feel are
appropriate.
Directors and officers insurance for Directors will be arranged
by the Company at the Company's expense.
Share Ownership
Directors are encouraged to own Company shares.
Board Meetings
The following points identify the frequency of Board Meetings
and the extent of reporting from management at the meetings:
-- A minimum of four meetings are to be held per year;
-- Other meetings will be held as required, meetings can be held by telephone link; and
-- Information provided to the Board includes all material
information on: operations, budgets, cash flows, funding
requirements, shareholder movements, broker activity in the
Company's securities, assets and liabilities, disposals, financial
accounts, external audits, internal controls, risk assessment, new
venture proposals, and health, safety and environmental (HSE)
reports.
The number of Directors' meetings and the number of meetings
attended by each of the Directors of the Company during the
financial year are set out in the Directors' Report.
Board Performance Review
There was no evaluation conducted during the financial year.
CORPORATE GOVERNANCE STATEMENT (continued)
Other Areas for Board Review
-- Reporting to shareholders and the market to ensure trade in
the Company's securities takes place in an efficient, competitive
and informed market; and
-- Insurance, both corporate and joint venture related insurances.
Board Committees
Audit Committee
The Company does not have an audit committee. The Board is of
the opinion that due to the size of the Group, the functions
performed by an audit committee can be adequately handled by the
full Board.
The CEO and the CFO declare in writing to the Board that the
Group's financial statements for the year ended 30 June 2016
present a true and fair view, in all material aspects, of the
Group's financial condition and operational results and are in
accordance with relevant accounting standards. This representation
is made by the CEO and the CFO prior to the Director's approval of
the release of the annual and six monthly accounts. This
representation is made after enquiry of, and representation by,
appropriate levels of management.
A non-executive Director meets with the Auditors without
Executives present to go through the financial statements prior to
sign off on the accounts.
Jupiter Energy Limited has requested the external auditors to
attend the annual general meeting to be available to answer
shareholders questions regarding the audit.
Nomination Committee
The Company does not have a nomination committee. The Board is
of the opinion that due to the size of the Group, the functions
performed by a nomination committee can be adequately handled by
the full Board.
Remuneration Committee
The Group does not have a remuneration committee. The Board is
of the opinion that due to the size of the Group, the functions
performed by a remuneration committee can be adequately handled by
the full Board.
Remuneration levels for Directors, Secretaries, Senior
Executives of the Group, and relevant group Executives of the
consolidated entity ("the Directors and Senior Executives") are
competitively set to attract and retain appropriately qualified and
experienced Directors and Senior Executives.
The remuneration structures explained below are designed to
attract suitably qualified candidates, reward the achievement of
strategic objectives, and achieve the broader outcome of creation
of value for shareholders. The remuneration structures take into
account:
-- the capability and experience of the Directors and Senior Executives;
-- the Directors and Senior Executives ability to control the relevant segment/s' performance;
-- the consolidated entity's performance including:
o the consolidated entity's earnings;
o the growth in share price and returns on shareholder
wealth
-- the amount of incentives within each Directors and Senior Executives remuneration
For details of remuneration paid to Directors and officers for
the financial year please refer to the Directors' Report on page
16.
CORPORATE GOVERNANCE STATEMENT (continued)
Risk Management
The risks involved in oil and gas exploration Group and the
specific uncertainties for the Group continue to be regularly
monitored and the full Board of the Company meets on an annual
basis to formally review such risks. All proposals reviewed by the
Board include a consideration of the issues and risks of the
proposal.
The potential exposures, including financial, reputation, and
HSE, with running the Group have been managed by the Board and
senior management in Kazakhstan who together have significant
broad-ranging industry experience.
Additionally, it is the responsibility of the Board to assess
the adequacy of the Group's internal control systems and that its
financial affairs comply with applicable laws and regulations and
professional practices. The CEO and the CFO declare in writing to
the Board that the financial reporting risk management and
associated compliance controls have been assessed and found to be
operating efficiently and effectively. This representation is made
by the CEO and CFO prior to the Director's approval of the release
of the annual and six monthly accounts. This representation is made
after enquiry of, and representation by, appropriate levels of
management.
PROMOTION OF ETHICAL AND RESPONSIBLE DECISION-MAKING
Code of Conduct
The goal of establishing the Jupiter Energy Limited as a
significant Australian-based petroleum exploration and production
Company is underpinned by its core values of honesty, integrity,
common sense and respect for people. The Group desires to remain a
good corporate citizen and appropriately balance, protect and
preserve all stakeholders' interests.
The Board has adopted a Code of Conduct for Directors and
employees of the Group. The Company's goal of achieving above
average wealth creation for our shareholders should be enhanced by
complying with this Code of Conduct which provides principles to
which Directors and employees should be familiar and to which they
are expected to adhere and advocate.
It is the responsibility of the Board to ensure the Group
performs under this Code and for its regular review.
Diversity
The Board has not adopted a separate diversity policy, however
is committed to workplace diversity and recognizes the benefits
arising from recruitment, development and retention of talented,
diverse and motivated workforce. The Group is not of a sufficient
size to justify measurable objectives at this stage. As at 30 June
2016, there were four women in the Groups workforce, one of which
held key executive positions.
Trading in Company Securities by Directors, officers and
employees
Trading of shares is covered by, amongst other things, the
Corporations Act, the ASX Listing Rules, the AIM Listing Rules and
the KASE Listing Rules. The Board has established a Securities
Trading Policy that establishes strict guidelines as to when a
Director, officer or an employee can deal in Company shares. The
policy prohibits trading in the Company's securities whilst the
Directors, officer or employee is in the possession of price
sensitive information.
For details of shares held by Directors and Officers please
refer to the Directors' Report on page 3.
CORPORATE GOVERNANCE STATEMENT (continued)
SHAREHOLDER COMMUNICATION
The Board aims to ensure that shareholders and the general
investing community have equal access to the Company's
information.
The Company has policies and procedures that are designed to
ensure compliance with ASX, AIM and KASE Listing Rules disclosure
requirements and to ensure accountability at a senior management
level for that compliance. This disclosure policy includes
processes for the identification of matters that may have material
effect on the price of the Company's securities, notifying them to
the ASX and posting them on the Company's website.
The Group also has a strategy to promote effective communication
with shareholders and encourage effective participation at general
meetings through a policy of open disclosure to shareholders,
regulatory authorities and the broader community of all material
information with respect to the Group's affairs including, but not
limited to:
-- the activities of the Group;
-- Conflicts of interest and related party transactions;
-- Executive remuneration;
-- The grant of options and details of Share Option and Performance Rights Plans;
-- The process for performance evaluation of the Board, its
committees, individual Directors and key managers;
-- The link between remuneration paid to Directors and
Executives and corporate performance; and
-- The use of clear and concise text in all communications.
The following information is communicated to shareholders and
available on the Company web site (www.jupiterenergy.com):
-- The Annual Report and notices of meetings of shareholders;
-- Quarterly reports reviewing the operations, activities and financial position of the Group;
-- All documents that are released to the ASX, AIM and KASE are
made available on the Company's website; and
-- All other information on the Company's website is updated on an ongoing basis.
AUDITORS INDEPENCE DECLARATION
[INSERT AUDITORS INDEPENCE DECLARATION]
Financial Statements
FOR THE YEARED 30 JUNE 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2016
Note Consolidated
2016 2015
$ $
Revenue - 3,896,359
Cost of sales - (3,478,951)
------------- --------------------
Gross profit - 417,408
------------- --------------------
Foreign exchange loss (1,101,692) (4,468,778)
Gain on extinguishment
of convertible notes 17 282,672 -
(Loss) / Gain on derivative
financial instrument (54) 227,788
General and administrative
costs 4 (3,635,152) (3,238,047)
Impairment - (787,046)
------------- --------------------
Operating loss (4,454,226) (7,848,675)
Finance income 20,687 28,198
Finance costs (6,041,331) (3,161,784)
------------- --------------------
Loss before tax (10,474,870) (10,982,261)
Income tax expense 5 - -
------------- --------------------
Loss after income tax (10,474,870) (10,982,261)
Other comprehensive (loss)/income
to be reclassified to
profit or loss in subsequent
periods net of tax
Foreign currency translation (27,468,783) 12,738,847
------------- --------------------
Total comprehensive (loss)/income
for the period (37,943,653) 1,756,586
============= ====================
Earnings per share for
loss attributable to
the ordinary equity holders
of the Group:
Basic loss per share
(cents) 24 (6.81) (7.16)
Diluted loss per share
(cents) 24 (6.81) (7.16)
The consolidated statement of comprehensive income is to be read
in conjunction with the notes of the financial statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Note Consolidated
2016 2015
$ $
ASSETS
Current Assets
Cash and cash equivalents 6 663,446 1,613,560
Trade and other receivables 7 24,064 78,051
Other current assets 8 67,459 122,110
Inventories 9 17,886 68,535
------------- --------------
Total Current Assets 772,855 1,882,256
------------- --------------
Non-Current Assets
Trade and other receivables 7 2,787,367 4,842,743
Oil and gas properties 10 14,976,550 24,399,029
Plant and equipment 11 417,142 967,247
Exploration and evaluation
expenditure 12 28,215,402 44,166,103
Other financial assets 13 387,732 640,238
------------- --------------
Total Non-Current Assets 46,784,193 75,015,360
------------- --------------
Total Assets 47,557,048 76,897,616
------------- --------------
Current Liabilities
Trade and other payables 14 755,133 1,280,749
Deferred revenue 15 - 60,111
Derivative liability 17 - 1,612
Total Current Liabilities 755,133 1,342,472
------------- --------------
Non-current Liabilities
Provisions 16 154,442 527,827
Other financial liabilities 17 42,936,226 33,372,417
------------- --------------
Total Non-Current Liabilities 43,090,668 33,900,244
------------- --------------
Total Liabilities 43,845,801 35,242,716
------------- --------------
Net Assets 3,711,247 41,654,900
============= ==============
Equity
Contributed equity 18 85,633,935 85,633,935
Share based payment reserve 19 5,764,014 5,764,014
Foreign currency translation
reserve 19 (26,303,650) 1,165,133
Accumulated losses (61,383,052) (50,908,182)
------------- --------------
Total Equity 3,711,247 41,654,900
============= ==============
The consolidated statement of financial position is to be read
in conjunction with the notes of the financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2016
Note Consolidated
2016 2015
$ $
Cash flow from operating
activities
Receipts from customers - 3,952,759
Payments to suppliers and
employees (3,478,686) (7,870,285)
Interest received 20,687 28,198
Net cash flows (used in)
operating activities 26 (3,457,999) (3,889,328)
------------ --------------
Cash flows from investing
activities
Payments for exploration
and evaluation expenditure (279,759) (5,519,880)
Net Cash flows (used in)
investing activities (279,759) (5,519,880)
------------ --------------
Cash flows from financing
activities
Proceeds from unsecured
loan 2,803,474 9,141,370
Net cash flows from financing
activities 2,803,474 9,141,370
------------ --------------
Net (decrease) in cash
held (934,284) (267,838)
Effects of exchange rate
changes (15,830) 596,040
Cash at beginning of the
year 1,613,560 1,285,358
------------ --------------
Cash at end of the year 6 663,446 1,613,560
------------ --------------
The statement of cash flows is to be read in conjunction with
the notes of the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2016
Share Foreign
Based Currency
Contributed Payment Translation Accumulated
Note Equity Reserve Reserve Losses Total
$ $ $ $ $
---------------------- ------- ------------ ----------- -------------- -------------- -------------
CONSOLIDATED
As at 1 July 2014 85,633,935 5,695,838 (11,573,714) (39,925,921) 39,830,138
Loss for the period - - - (10,982,261) (10,982,261)
Other comprehensive
income 19 - - 12,738,847 - 12,738,847
------------ ----------- -------------- -------------- -------------
Total comprehensive
income - - 12,738,847 (10,982,261) 1,756,586
Transactions by
owners recorded
directly in equity:
Share based payments - 68,176 - - 68,176
------- ------------ ----------- -------------- -------------- -------------
At 30 June 2015 85,633,935 5,764,014 1,165,133 (50,908,182) 41,654,900
As at 1 July 2015 85,633,935 5,764,014 1,165,133 (50,908,182) 41,654,900
Loss for the period - - - (10,474,870) (10,474,870)
Other comprehensive
loss 19 - - (27,468,783) - (27,468,783)
------- ------------ ----------- -------------- -------------- -------------
Total comprehensive
loss - - (27, 468,783) (10, 474,870) (37,943,653)
Transactions by
owners recorded
directly in equity:
Share based payments - - - - -
At 30 June 2016 85,633,935 5,764,014 (26,303,650) (61,383,052) 3,711,247
------- ------------ ----------- -------------- -------------- -------------
The statements of changes in equity are to be read in
conjunction with the notes of the financial statements.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
----------------------------------------------------------------------------------------------------------------------
1 CORPORATE INFORMATION
The financial report of Jupiter Energy Limited
for the year ended 30 June 2016 was authorised
for issue in accordance with a resolution of the
directors on 30 September 2016.
Jupiter Energy Limited is a Company limited by
shares incorporated in Australia whose shares are
publicly traded on the Australian Stock Exchange,
on London's AIM Market (as CDI's) and on the Kazakh
Stock Exchange. Jupiter Energy Limited is a for
profit entity.
The nature of the operations and principal activities
of the Group are described in the Directors Report
on pages 2 to 11 of this report.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
The financial report is a general purpose financial
report, which has been prepared in accordance with
the requirements of the Corporations Act 2001,
Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards
Board. The financial report has also been prepared
on a historical cost basis except for certain financial
instruments measured at fair value. The financial
report is presented in Australian dollars.
The amounts contained within this report have been
rounded to nearest $1 (where rounding is applicable)
under the option available to the Company under
ASIC Corporations (Rounding in Financial/Directors'
Report) Instrument 2016/191.
Going Concern
The consolidated financial statements have been
prepared on a going concern basis with the Directors
of the opinion that the Group can meet its obligations
as and when they fall due.
At 30 June 2016 the Group has a current net asset
position of $17,720 (30 June 2015: current asset
position of $539,784).
Based on current forecasts, the Group has sufficient
working capital, including its access to the remaining
funding under the Waterford Funding Framework,
for the 12 months from the signing date of this
report based on its current Care & Maintenance
budget. The Group is reviewing its ongoing funding
requirements for 2017 and beyond, to enable the
Company to carry out its 2017-2019 Work Program
and develop Block 31 to the stage where export
oil sales are being achieved and further development
of the field is self-funding. Funding options may
include the further issue of new equity, reserve
based debt, convertible debt or a combination of
these and other funding instruments.
The Directors, after consultation with the major
shareholders and debt providers, are confident
of being able to raise the required capital, but
note that financing has not been secured at the
date of this report and that the recommencement
of production is dependent on a recovery in the
Kazakh domestic oil price which is in turn linked
to an overall recovery in world oil prices. Should
the Group not achieve the matters set out above,
there is uncertainty whether the Group would continue
as a going concern and therefore whether it would
realise its assets and extinguish its liabilities
in the normal course of business and at the amounts
stated in the financial report. The financial report
does not include adjustments relating to the recoverability
or classification of the recorded assets amounts
nor to the amounts or classification of liabilities
that might be necessary should the Group not be
able to continue as a going concern.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
(b) Statement of compliance
The financial report complies with Australian Accounting
Standards as issued by the Australian Accounting
Standards Board and International Financial Reporting
Standards (IFRS) as issued by the International
Accounting Standards Board.
From 1 July 2015, the Group has adopted the following
Standards and Interpretations, mandatory for annual
periods beginning on 1 July 2015. Adoption of these
standards and interpretations did not have any
significant effect on the financial position or
performance of the Group:
AASB 2013-9 - Amendments to Australian Accounting
Standards - Conceptual Framework, Materiality and
Financial Instruments
AASB 2015-3 - Amendments to Australian Accounting
Standards arising from the Withdrawal of AASB 1031
Materiality
AASB 2015-4 - Amendments to Australian Accounting
Standards - Financial Reporting Requirements for
Australian Groups with a Foreign Parent
Australian Accounting Standards and Interpretations that have
recently been issued or amended but are not yet effective have not
been adopted by the Group for the annual reporting period ending 30
June 2016. These are outlined in the following table.
Reference Title Summary Application Impact on Application
date of Group date for
standard financial Group
report
============ =============== ================================================================= ============ =========== ============
AASB 9 Financial AASB 9 (December 2014) is a new standard which replaces AASB 1 January The group 1 July 2018
Instruments 139. This new version supersedes 2018 has not
AASB 9 issued in December 2009 (as amended) and AASB 9 (issued yet
in December 2010) and includes determined
a model for classification and measurement, a single, the
forward-looking 'expected loss' impairment financial
model and a substantially-reformed approach to hedge accounting. impact of
AASB 9 is effective for annual periods beginning on or after 1 the
January 2018. However, the change.
Standard is available for early adoption. The own credit changes
can be early adopted in isolation
without otherwise changing the accounting for financial
instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for
classification and measurement of
financial assets compared with the requirements of AASB 139.
There are also some changes made
in relation to financial liabilities.
The main changes are described below.
------------ --------------- ----------------------------------------------------------------- ------------ ----------- ------------
AASB 9 Financial Financial assets 1 January The group 1 July 2018
(continued) Instruments a. Financial assets that are debt instruments will be 2018 has not
classified based on (1) the objective yet
of the entity's business model for managing the financial determined
assets; (2) the characteristics the
of the contractual cash flows. financial
b. Allows an irrevocable election on initial recognition impact of
to present gains and losses on investments the
in equity instruments that are not held for trading in change.
other comprehensive income. Dividends
in respect of these investments that are a return on
investment can be recognised in profit
or loss and there is no impairment or recycling on
disposal of the instrument.
c. Financial assets can be designated and measured at fair
value through profit or loss at
initial recognition if doing so eliminates or
significantly reduces a measurement or recognition
inconsistency that would arise from measuring assets or
liabilities, or recognising the gains
and losses on them, on different bases.
Financial liabilities
Changes introduced by AASB 9 in respect of financial
liabilities are limited to the measurement
of liabilities designated at fair value through profit or
loss (FVPL) using the fair value
option.
Where the fair value option is used for financial
liabilities, the change in fair value is
to be accounted for as follows:
The change attributable to changes in credit risk are
presented in other comprehensive income
(OCI)
The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that
was caused by changes in the credit
risk of liabilities elected to be measured at fair value.
This change in accounting means
that gains or losses attributable to changes in the
entity's own credit risk would be recognised
in OCI. These amounts recognised in OCI are not recycled
to profit or loss if the liability
is ever repurchased at a discount.
Impairment
The final version of AASB 9 introduces a new expected-loss
impairment model that will require
more timely recognition of expected credit losses.
Specifically, the new Standard requires
entities to account for expected credit losses from when
financial instruments are first recognised
and to recognise full lifetime expected losses on a more
timely basis.
Hedge accounting
Amendments to AASB 9 (December 2009 & 2010 editions and
AASB 2013-9) issued in December 2013
included the new hedge accounting requirements, including
changes to hedge effectiveness testing,
treatment of hedging costs, risk components that can be
hedged and disclosures.
Consequential amendments were also made to other standards
as a result of AASB 9, introduced
by AASB 2009-11 and superseded by AASB 2010-7, AASB
2010-10 and AASB 2014-1 - Part E.
AASB 2014-7 incorporates the consequential amendments
arising from the issuance of AASB 9
in Dec 2014.
AASB 2014-8 limits the application of the existing
versions of AASB 9 (AASB 9 (December 2009)
and AASB 9 (December 2010)) from 1 February 2015 and
applies to annual reporting periods beginning
on after 1 January 2015.
------------ --------------- ----------------------------------------------------------------- ------------ ----------- ------------
AASB 15 Revenue from AASB 15 Revenue from Contracts with Customers replaces the 1 January The group 1 July 2018
Contracts with existing revenue recognition standards 2018 has not
Customers AASB 111 Construction Contracts, AASB 118 Revenue and related yet
Interpretations (Interpretation determined
13 Customer Loyalty Programmes, Interpretation 15 Agreements for the
the Construction of Real financial
Estate, Interpretation 18 Transfers of Assets from Customers, impact of
Interpretation 131 Revenue-Barter the
Transactions Involving Advertising Services and Interpretation change.
1042 Subscriber Acquisition
Costs in the Telecommunications Industry). AASB 15 incorporates
the requirements of IFRS 15
Revenue from Contracts with Customers issued by the
International Accounting Standards Board
(IASB) and developed jointly with the US Financial Accounting
Standards Board (FASB).
AASB 15 specifies the accounting treatment for revenue arising
from contracts with customers
(except for contracts within the scope of other accounting
standards such as leases or financial
instruments).The core principle of AASB 15 is that an entity
recognises revenue to depict
the transfer of promised goods or services to customers in an
amount that reflects the consideration
to which the entity expects to be entitled in exchange for those
goods or services. An entity
recognises revenue in accordance with that core principle by
applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance
obligations in the contract
(e) Step 5: Recognise revenue when (or as) the entity satisfies
a performance obligation
AASB 2015-8 amended the AASB 15 effective date so it is now
effective for annual reporting
periods commencing on or after 1 January 2018. Early application
is permitted.
AASB 2014-5 incorporates the consequential amendments to a
number Australian Accounting Standards
(including Interpretations) arising from the issuance of AASB
15.
AASB 2016-3 Amendments to Australian Accounting Standards -
Clarifications to AASB 15 amends
AASB 15 to clarify the requirements on identifying performance
obligations, principal versus
agent considerations and the timing of recognising revenue from
granting a licence and provides
further practical expedients on transition to AASB 15.
------------ --------------- ----------------------------------------------------------------- ------------ ----------- ------------
AASB 2015-1 Amendments to The subjects of the principal amendments to the Standards 1 January The group 1 July 2016
Australian are set out below: 2016 has not
Accounting yet
Standards - AASB 5 Non-current Assets Held for Sale and Discontinued determined
Annual Operations: the impact
Improvements * Changes in methods of disposal - where an entity of the
to Australian reclassifies an asset (or disposal group) directly change.
Accounting from being held for distribution to being held for
Standards sale (or visa versa), an entity shall not follow the
2012-2014 guidance in paragraphs 27-29 to account for this
Cycle change.
AASB 7 Financial Instruments: Disclosures:
* Servicing contracts - clarifies how an entity should
apply the guidance in paragraph 42C of AASB 7 to a
servicing contract to decide whether a servicing
contract is 'continuing involvement' for the purposes
of applying the disclosure requirements in paragraphs
42E-42H of AASB 7.
* Applicability of the amendments to AASB 7 to
condensed interim financial statements - clarify that
the additional disclosure required by the amendments
to AASB 7 Disclosure-Offsetting Financial Assets and
Financial Liabilities is not specifically required
for all interim periods. However, the additional
disclosure is required to be given in condensed
interim financial statements that are prepared in
accordance with AASB 134 Interim Financial Reporting
when its inclusion would be required by the
requirements of AASB 134.
AASB 119 Employee Benefits:
* Discount rate: regional market issue - clarifies that
the high quality corporate bonds used to estimate the
discount rate for post-employment benefit obligations
should be denominated in the same currency as the
liability. Further it clarifies that the depth of the
market for high quality corporate bonds should be
assessed at the currency level.
AASB 134 Interim Financial Reporting:
* Disclosure of information 'elsewhere in the interim
financial report' - amends AASB 134 to clarify the
meaning of disclosure of information 'elsewhere in
the interim financial report' and to require the
inclusion of a cross-reference from the interim
financial statements to the location of this
information.
------------ --------------- ----------------------------------------------------------------- ------------ ----------- ------------
AASB 2015-2 Amendments to The Standard makes amendments to AASB 101 Presentation of 1 January The group 1 July 2016
Australian Financial Statements arising from 2016 has not
Accounting the IASB's Disclosure Initiative project. The amendments are yet
Standards - designed to further encourage determined
Disclosure companies to apply professional judgment in determining what the impact
Initiative: information to disclose in the of the
Amendments to financial statements. For example, the amendments make clear change.
AASB that materiality applies to the
101 whole of financial statements and that the inclusion of
immaterial information can inhibit
the usefulness of financial disclosures. The amendments also
clarify that companies should
use professional judgment in determining where and in what order
information is presented
in the financial disclosures.
------------ --------------- ----------------------------------------------------------------- ------------ ----------- ------------
AASB 16 Leases The key features of AASB 16 are as follows: 1 January The group 1 July 2019
2019 has not
Lessee accounting yet
* Lessees are required to recognise assets and determined
liabilities for all leases with a term of more than the
12 months, unless the underlying asset is of low financial
value. impact of
the
change.
* Assets and liabilities arising from a lease are
initially measured on a present value basis. The
measurement includes non-cancellable lease payments
(including inflation-linked payments), and also
includes payments to be made in optional periods if
the lessee is reasonably certain to exercise an
option to extend the lease, or not to exercise an
option to terminate the lease.
* AASB 16 contains disclosure requirements for lessees.
Lessor accounting
* AASB 16 substantially carries forward the lessor
accounting requirements in AASB 117. Accordingly, a
lessor continues to classify its leases as operating
leases or finance leases, and to account for those
two types of leases differently.
* AASB 16 also requires enhanced disclosures to be
provided by lessors that will improve information
disclosed about a lessor's risk exposure,
particularly to residual value risk.
AASB 16 supersedes:
(a) AASB 117 Leases
(b) Interpretation 4 Determining whether an Arrangement
contains a Lease
(c) SIC-15 Operating Leases-Incentives
(d) SIC-27 Evaluating the Substance of Transactions Involving
the Legal Form of a Lease
The new standard will be effective for annual periods
beginning on or after 1 January 2019.
Early application is permitted, provided the new revenue
standard, AASB 15 Revenue from Contracts
with Customers, has been applied, or is applied at the same
date as AASB 16.
------------ --------------- ----------------------------------------------------------------- ------------ ----------- ------------
AASB 2016-5 Classification This standard amends to AASB 2 Share-based Payment, 1 January The group 1 July 2018
and clarifying how to account for certain 2018 has not
Measurement of types of share-based payment transactions. The amendments yet
Share-based provide requirements on the accounting determined
Payment for: the
Transactions The effects of vesting and non-vesting conditions on the financial
[Amendments to measurement of cash-settled share-based impact of
AASB 2] payments the
Share-based payment transactions with a net settlement change.
feature for withholding tax obligations
A modification to the terms and conditions of a share-based
payment that changes the classification
of the transaction from cash-settled to equity-settled
------------ --------------- ----------------------------------------------------------------- ------------ ----------- ------------
AASB 2014-3 Amendments to AASB 2014-3 amends AASB 11 Joint Arrangements to provide 1 January The group 1 July 2016
Australian guidance on the accounting for acquisitions 2016 has not
Accounting of interests in joint operations in which the activity yet
Standards - constitutes a business. The amendments determined
Accounting for require: the
Acquisitions (a) the acquirer of an interest in a joint operation in which financial
of Interests the activity constitutes a business, impact of
in as defined in AASB 3 Business Combinations, to apply all of the the
Joint principles on business combinations change.
Operations accounting in AASB 3 and other Australian Accounting Standards
[AASB 1 & AASB except for those principles
11] that conflict with the guidance in AASB 11
(b) the acquirer to disclose the information required by AASB 3
and other Australian Accounting
Standards for business combinations
This Standard also makes an editorial correction to AASB 11.
------------ --------------- ----------------------------------------------------------------- ------------ ----------- ------------
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Basis of consolidation
The consolidated financial statements comprise
the financial statements of Jupiter Energy Limited
and its subsidiaries (as outlined in Note 28).
Control is achieved when the Group is exposed,
or has rights, to variable returns from its involvement
with the investee and has the ability to affect
those returns through its power over the investee.
Specifically, the Group controls an investee if
and only if the Group has:
* Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee);
* Exposure, or rights, to variable returns from its
involvement with the investee; and
* The ability to use its power over the investee to
affect its returns.
When the Group has less than a majority of the
voting or similar rights of an investee, the Group
considers all relevant facts and circumstances
in assessing whether it has power over an investee,
including:
* The contractual arrangement with the other vote
holders of the investee;
* Rights arising from other contractual arrangements;
and
* The Group's voting rights and potential voting
rights.
The Group re-assesses whether or not it controls
an investee if facts and circumstances indicate
that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary
begins when the Group obtains control over the
subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income
and expenses of a subsidiary acquired or disposed
of during the year are included in the statement
of comprehensive income from the date the Group
gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of other comprehensive
income (OCI) are attributed to the equity holders
of the parent of the Group and to the non-controlling
interests, even if this results in the non-controlling
interests having a deficit balance. When necessary,
adjustments are made to the financial statements
of subsidiaries to bring their accounting policies
into line with the Group's accounting policies.
All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions
between members of the Group are eliminated on
consolidation.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as
an equity transaction. If the Group loses control
over a subsidiary, it:
* De-recognises the assets (including goodwill) and
liabilities of the subsidiary;
* De-recognises the carrying amount of any
non-controlling interests;
* De-recognises the cumulative translation differences
recorded in equity;
* Recognises the fair value of the consideration
received;
* Recognises the fair value of any investment retained;
* Recognises any surplus or deficit in profit or loss;
and
Reclassifies the parent's share of components previously
recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required
if the Group had directly disposed of the related
assets or liabilities.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d)
Significant accounting estimates and assumptions
Judgments
In the process of applying the Group's accounting
policies, management has made the following judgments,
which have the most significant effect on the
amounts recognised in the consolidated financial
statements:
Production start date
The group assesses each well to determine when
the well moves into the production stage. This
is when the well is substantially completed and
ready for intended use. The group considers various
criteria in determining the production start date,
including but not limited to, results of well
testing, the ability of the well to sustain ongoing
production, installation of the relevant well
infrastructure and receiving the relevant regulatory
approvals.
When the well moves into the production stage
the capitalisation of certain development costs
ceases and costs incurred are expensed as a production
cost. It also at this point when that the well
commences depreciation. Any proceeds received
from oil sales prior to the production start date
as part of any well testing, are capitalised to
the asset.
Impairment of assets
In determining the recoverable amount of assets
in the absence of quoted markets, judgements are
made in determining events that need to occur
that affect future cash flows.
In the case of the Group's primary asset, Block
31, the over-riding assumption is that Block 31
reaches the point of export production by January
2018. For this to occur the following matters
need to be resolved:
* Financing for construction of processing facilities
and drilling of development wells
* Approval from the Government for construction of
processing facilities and drilling of development
wells and ultimately approving of export status.
* Contracts signed for the engineering, procurement,
installation and commissioning of the processing
facilities and for the drilling of development wells.
* An export license being granted.
* An agreement reached with MangistauMunaiGas(MMG) over
the division of reserves associated with the Akkar
North accumulation
Recognition of deferred tax assets
Judgement is required in determining whether deferred
tax assets are recognised in the statement of
financial
position. Deferred tax assets, including those
arising from unutilised tax losses, require the
Group to assess the likelihood that the Group
will generate sufficient taxable earnings in future
periods, in order to utilise recognised deferred
tax assets. Judgment is also required in respect
of the application of existing tax laws in each
jurisdiction.
Assumptions about the generation of future taxable
profits depend on management's estimates of future
cash flows. These estimates of future taxable
income are based on forecast cash flows from operations
(which are impacted by production and sales volumes
oil prices, reserves, operating costs, closure
and rehabilitation costs, capital expenditure,
and other capital management transactions). To
the extent that future cash flows and taxable
income differ significantly from estimates, the
ability of the Group to realise the net deferred
tax assets recorded at the reporting date could
be impacted.
In addition, future changes in tax laws in the
jurisdictions in which the Group operates could
limit the ability of the Group to obtain tax deductions
in future periods.
Estimates and assumptions
The key assumptions concerning the future and
other key sources of estimation uncertainty at
the reporting date that have a significant risk
of causing a material adjustment to the carrying
amounts of assets and liabilities within the next
financial year, are described below. The Group
based its assumptions and estimates on parameters
available when the consolidated financial statements
were prepared. Existing circumstances and assumptions
about future developments, however, may change
due to market change or circumstances arising
beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
Exploration and evaluation
The Group's accounting policy for exploration
and evaluation is set out in note 2(f). The application
of this policy necessarily requires management
to make certain judgements, estimates and assumptions
as to future events and circumstances, in particular
the assessment of whether economic quantities
of reserves may be found. Any such, estimates
and assumptions may change as new information
becomes available. If, after having capitalised
expenditure under the Group's policy, management
concludes that the Group is unlikely to recover
the expenditure by future exploitation or sale,
then the relevant capitalised amount will be written
off to the profit and loss.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
-------------------------------------------------------------------------
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Provision for restoration
Costs of site restoration are provided over the
life of the field and related facilities from when
exploration commences and are included in the costs
of that stage. Site restoration costs include the
dismantling and removal of plant, equipment and
building structures, waste removal, and rehabilitation
of the site in accordance with clauses of the permits.
Any changes in the estimates for the costs are
accounted on a prospective basis. In determining
the costs of site restoration, there is uncertainty
regarding the nature and extent of the restoration
due to community expectations and future legislation.
Accordingly the costs have been determined on the
basis that the restoration will be completed within
one year of abandoning the site.
Units of production depreciation of oil and gas
properties
Oil and gas properties are depreciated using the
units of production (UOP) method over total proved
and probable hydrocarbon reserves. This results
in a depreciation/amortisation charge proportional
to the depletion of the anticipated remaining production
from the field/well.
Each items' life, which is assessed annually, has
regard to both its physical life limitations and
to present assessments of economically recoverable
reserves of the field at which the asset is located.
These calculations require the use of estimates
and assumptions, including the amount of recoverable
reserves. The calculation of the UOP rate of depreciation
could be impacted to the extent that actual production
in the future is different from current forecast
production based on total proved and probable reserves.
Changes to proved and probable reserves could arise
due to changes in the factors or assumptions used
in estimating reserves, including:
* The effect on proved and probable reserves of
differences between actual commodity prices and
commodity price assumptions; or
* Unforeseen operational issues.
Changes are accounted for prospectively.
Recoverability of oil and gas properties
The Group assesses each asset or cash generating
unit (CGU) (excluding goodwill, which is assessed
annually regardless of indicators) every reporting
period to determine whether any indication of impairment
exists. Where an indicator of impairment exists,
a formal estimate of the recoverable amount is
made, which is considered to be the higher of the
fair value less costs of disposal and value in
use. These assessments require the use of estimates
and assumptions such as long-term oil prices (considering
current and historical prices, price trends and
related factors), discount rates, operating costs,
future capital requirements, decommissioning costs,
exploration potential, reserves operating performance
(which includes production and sales volumes).
These estimates and assumptions are subject to
risk and uncertainty. Therefore, there is a possibility
that changes in circumstances will impact these
projections, which may impact the recoverable amount
of assets and/or CGUs. Management has assessed
Block 31 as being an individual CGU, which is the
lowest level for which cash inflows are largely
independent.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
-------------------------------------------------------------------------
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value measurement
Fair value is determined as the amount that would
be obtained from the sale of the asset in an arm's
length transaction between knowledgeable and willing
parties. Fair value is generally determined as
the present value of estimated future cash flows
arising from the continued use of the assets, which
includes estimates such as the cost of future expansion
plans and eventual disposal, using assumptions
that an independent market participant may take
into account. Cash flows are discounted to their
present value using a discount rate that reflects
current market assessments of the time value of
money and the risks specific to the asset.
(e) Plant and equipment
Plant and equipment is stated at historical cost
less accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost
of replacing parts that are eligible for capitalisation
when the cost of replacing the part is incurred.
Similarly, when each major inspection is performed,
its cost is recognised in the carrying amount of
the plant and equipment as a replacement only if
it is eligible for capitalisation. All other repairs
and maintenance are recognised in profit or loss
as incurred.
Depreciation is calculated on a straight-line basis
over the estimated useful life of the assets as
follows:
* Plant and equipment - over 3 to 10 years
The assets' residual values, useful lives and amortisation
methods are reviewed, and adjusted if appropriate,
at each financial year end.
Disposal
An item of plant and equipment is derecognised
upon disposal or when no further future economic
benefits are expected to be derived from its use
or disposal on a prospective basis.
Any gain or loss arising on derecognition of the
asset (calculated as the difference between the
net disposal proceeds and the carrying amount of
the asset) is included in the profit or loss in
the year the asset is derecognised.
(f) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred
is accumulated in respect of each identifiable
area of interest. These costs are only carried
forward to the extent that they are expected to
be recouped through the successful development
of the area or where activities in the area have
not yet reached a stage that permits reasonable
assessment of the existence of economically recoverable
reserves. A regular review is undertaken of each
area of interest to determine the appropriateness
of continuing to carry forward costs in relation
to that area of interest.
Unsuccessful exploration in the area of interest
is expensed as incurred even if activities in this
area of interest are continuing. Accumulated costs
in relation to an abandoned area are written off
in full to profit or loss in the year in which
the decision to abandon the area is made.
When a discovered oil or gas field enters the development
phase or an individual well is assessed as being
in production (once a trial production licence
is granted) the accumulated exploration and evaluation
expenditure is transferred to oil and gas properties.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
-----------------------------------------------------------------
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Oil and gas properties
Oil and gas properties usually single oil or gas
fields being developed for future production or
which are in the production phase. Where several
individual oil fields are to be produced through
common facilities, the individual oil field and
the associated production facilities are managed
and reported as a single oil and gas asset.
Assets in development
When the technical and commercial feasibility of
an undeveloped oil or gas field has been demonstrated,
the field enters its development phase. The costs
of oil and gas assets in the development phase are
accounted for as tangible assets and include past
exploration and evaluation costs, development drilling
and plant and equipment and any associated land
and buildings.
Producing assets
The costs of oil and gas assets in production are
accounted for as tangible assets and include past
exploration and evaluation costs, pre-production
development costs and the ongoing costs of continuing
to develop reserves for production and to expand
or replace plant and equipment and any associated
land and buildings. Producing assets are depreciated
over total proved and probable reserves on a unit
of production basis.
(h) Impairment of assets
At each reporting date, the Group reviews the carrying
values of its tangible and intangible assets (excluding
goodwill) to determine whether there is any indication
that those assets have been impaired. If such an
indication exists, the recoverable amount of the
asset, being the higher of the asset's fair value
less costs of disposal and value in use, is compared
to the asset's carrying value. Any excess of the
asset's carrying value over its recoverable amount
is expensed to the profit or loss.
(i) Trade and other receivables
Trade receivables, which generally have 30-90 day
terms, are recognised and carried at amortised cost
amount less an allowance for any uncollectible amounts.
An estimate for doubtful debts is made when collection
of the full amount is no longer probable. Bad debts
are written off when identified.
(j) Cash and cash equivalents
Cash and short-term deposits in the balance sheet
comprise cash at bank and in hand and short-term
deposits with an original maturity of three months
or less.
For the purposes of the Cash Flow Statement, cash
and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.
(k) Inventories
Inventories are stated at the lower of cost and
net realisable value. Net realisable value is the
estimated selling price in the ordinary course of
business less the estimated costs of completion
and any estimated selling costs.
Cost includes those costs incurred in bringing each
component of inventory to its present location and
condition.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
------------------------------------------------------------------
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l) Trade and other payables
Trade payables and other payables are carried
at amortised costs and due to their short-term
nature are not discounted. They represent liabilities
for goods and services provided to the Group prior
to the end of the financial year that are unpaid
and arise when the Group becomes obliged to make
future payments in respect of the purchase of
these goods and services. The amounts are unsecured
and are usually paid within 30 days of recognition.
(m) Financial liabilities
Financial liabilities within the scope of AASB
139 are classified as financial liabilities at
fair value through profit or loss, loans and borrowings,
or as derivatives, as appropriate. The Group determines
the classification of its financial liabilities
at initial recognition.
All financial liabilities are recognised initially
at fair value and in the case of loans and borrowings,
plus directly attributable transaction costs and
are either subsequently measured at amortised
cost or fair value through profit or loss. The
Group's financial liabilities include trade and
other payables, loans and borrowings and derivative
financial instruments.
Derivative Financial Instruments
Derivatives are fair valued using appropriate
valuation techniques. Such techniques may include
using recent arm's length market transactions;
reference to the current fair value of another
instrument that is substantially the same; a discounted
cash flow analysis or other valuation techniques.
Fair value movements are recognised in the profit
or loss.
(n) Share-based payment transactions
Share-based compensation benefits are provided
to directors and executives.
Performance Rights
The cost of Performance Rights are measured by
reference to the fair value at the date at which
they are granted. The fair value is determined
using a Monte Carlo methodology, which considers
the incorporation of market based hurdles. Non-market
conditions are not factored into the fair value
of the performance rights at grant date. Probability
factors are assigned to the vesting expense as
to whether non market conditions will be met.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
----------------------------------------------------------------
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o) Revenue recognition
Sales revenue
Revenue is recognised when the significant risks
and rewards of ownership of the goods have passed
to the buyer and revenue can be measured reliably.
Revenue generated during the development stage
of an asset, is offset against the carrying value
of the asset, rather than recognised in the profit
or loss within the statement of comprehensive
income.
Interest
Revenue is recognised as the interest accrues
(using the effective interest method, which is
the rate that exactly discounts estimated future
cash receipts through the expected life of the
financial instrument) to the net carrying amount
of the financial asset.
(p) Convertible Note
A Convertible Note is split into two components:
a debt component and a component representing
the embedded derivatives in the Convertible Note.
The debt component represents the Group's liability
for future interest coupon payments and the redemption
amount. The embedded derivatives represent the
value of the option that note holders have to
convert into ordinary shares in the Company.
(q) Income tax
The consolidated entity adopts the liability method
of tax-effect accounting whereby the income tax
expense is based on the profit adjusted for any
non-assessable or disallowed items.
Deferred tax is accounted for using the liability
method in respect of temporary differences arising
between the tax bases of assets and liabilities
and their carrying amounts in the financial statements.
No deferred income tax will be recognised from
the initial recognition of an asset or liability,
excluding a business combination, where there
is no effect on accounting or taxable profit or
loss.
Deferred tax is calculated at the tax rates that
are expected to apply to the period when the asset
is realised or liability is settled. Deferred
tax is credited in the income statement except
where it relates to items that may be credited
directly to equity, in which case the deferred
tax is adjusted directly against equity.
Deferred income tax assets are recognised to the
extent that it is probable that future tax profits
will be available against which deductible temporary
differences can be utilised.
The amount of benefits brought to account or which
may be realised in the future is based on the
assumption that no adverse change will occur in
income taxation legislation and the anticipation
that the consolidated entity will derive sufficient
future assessable income to enable the benefit
to be realised and comply with the conditions
of deductibility imposed by the law.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
------------------------------------------------------------------------------------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r) Other taxes
Revenues, expenses and assets are recognised net
of the amount of GST or VAT except:
* where the GST or VAT incurred on a purchase of goods
and services is not recoverable from the taxation
authority, in which case the GST or VAT is recognised
as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
* receivables and payables are stated with the amount
of GST or VAT included.
The net amount of GST or VAT recoverable from,
or payable to, the taxation authority is included
as part of receivables or payables in the balance
sheet.
Cash flows are included in the Cash Flow Statement
on a gross basis and the GST or VAT component
of cash flows arising from investing and financing
activities, which is recoverable from, or payable
to, the taxation authority, are classified as
operating cash flows.
Commitments and contingencies are disclosed net
of the amount of GST or VAT recoverable from,
or payable to, the taxation authority.
(s) Contributed equity
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new
shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
------------------------------------------------------------------------------------
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t) Earnings per share
Basic earnings per share is calculated as net
profit attributable to members of the parent,
adjusted to exclude any costs of servicing equity
(other than dividends) and preference share dividends,
divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net
profit attributable to members of the parent,
adjusted for:
* the after tax effect of dividends and interest
associated with dilutive potential ordinary shares
that have been recognised as expenses; and
* other non-discretionary changes in revenues or
expenses during the period that would result from the
dilution of potential ordinary shares;
divided by the weighted average number of ordinary
shares and dilutive potential ordinary shares,
adjusted for any bonus element.
(u) Provisions
Provisions are recognised when the Group has a
present obligation (legal or constructive) as
a result of a past event, it is probable that
an outflow of resources embodying economic benefits
will be required to settle the obligation and
a reliable estimate can be made of the amount
of the obligation.
Where the Group expects some or all of a provision
to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a
separate asset but only when the reimbursement
is virtually certain. The expense relating to
any provision is presented in the income statement
net of any reimbursement.
If the effect of the time value of money is material,
provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects
current market assessments of the time value of
money and, where appropriate, the risks specific
to the liability.
Where discounting is used, the increase in the
provision due to the passage of time is recognised
as a finance cost.
Restoration
Costs of site restoration are provided over the
life of the field or facility from when exploration
commences and are included in the costs of that
stage. Site restoration costs include the dismantling
and removal of plant, equipment and building structures,
waste removal, and rehabilitation of the site
in accordance with clauses of the permits. Such
costs have been determined based on current legal
requirements and technology. In calculating the
provision the future estimated costs are discounted
to present value.
Any changes in the estimates for the costs are
accounted on a prospective basis. In determining
the costs of site restoration, there is uncertainty
regarding the nature and extent of the restoration
due to community expectations and future legislation.
Accordingly the costs have been determined on
the basis that the restoration will be completed
within one year of abandoning the site.
(v) Employee leave benefits
Liabilities for wages and salaries, including
non-monetary benefits, annual leave and accumulating
sick leave expected to be settled wholly within
12 months of the reporting date are recognised
in provisions in respect of employees' services
up to the reporting date. They are measured at
the nominal amounts based on current wage and
salary rates, and include related on-costs. Liabilities
for non-accumulating sick leave are recognised
when the leave is taken and are measured at the
rates paid or payable..
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
------------------------------------------------------------------------------------
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(w) Foreign currency transactions and balances
(i) Functional and presentation currency
Both the functional and presentation currency
of Jupiter Energy Limited and each of its Australian
subsidiaries are Australian dollars ($). The Singapore
subsidiaries' functional currency is United States
Dollars which is translated to the presentation
currency of the Group, being Australian dollars
($). The functional currency of the Branch of
the Singapore subsidiary is Tenge (see below for
consolidated reporting).
(ii) Transactions and balances
Transactions in foreign currencies are initially
recorded in the functional currency by applying
the exchange rates ruling at the date of the transaction.
Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate
of exchange ruling at the reporting date.
Non-monetary items that are measured in terms
of historical cost in a foreign currency are translated
using the exchange rate as at the date of the
initial transaction. Non-monetary items measured
at fair value in a foreign currency are translated
using the exchange rates at the date when the
fair value was determined.
(iii) Translation of Group Companies' functional
currency to presentation currency
The results of the Singapore subsidiaries are
translated into Australian Dollars (presentation
currency of the Group) as at the date of each
transaction. Assets and liabilities are translated
at exchange rates prevailing at reporting date.
Exchange variations resulting from the translation
are recognised in the foreign currency translation
reserve in equity.
On consolidation, exchange differences arising
from the translation of the net investment in
the Singapore subsidiaries and its Branch are
taken to the foreign currency translation reserve.
If a Singapore subsidiary was sold, the proportionate
share of exchange differences would be reclassified
to profit or loss
(x) Segments
An operating segment is a component of an entity
that engages in business activities from which
it may earn revenue and incur expenses (including
revenues and expenses relating to transactions
with other components of the same entity), whose
operating results are regularly reviewed by the
Board of Directors (the chief operating decision
makers) to make decisions about resources to be
allocated to the segment and assess its performance
and for which discrete financial information is
available. Management will also consider other
factors in determining operating segments such
as the existence of a line manager and the level
of segment information presented to the executive
management team.
Operating segments are identified based on the
information provided to the chief operating decision
makers. Currently the Group has only one operating
segment, being the Group.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
---------------------------------------------------------------
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(y) Borrowing costs
Borrowing costs consist of interest and other
costs that an entity incurs in connection with
the borrowing of funds.
Where funds are borrowed specifically to finance
a project, the amount capitalised represents the
actual borrowing costs incurred. Where surplus
funds are available for a short term out of money
borrowed specifically to finance a project, the
income generated from the temporary investment
of amounts is also capitalised and deducted from
the total capitalised borrowing cost. Where the
funds used to finance a project form part of general
borrowings, the amount capitalised is calculated
using a weighted average of rates applicable to
relevant general borrowings of the Group during
the period.
All other borrowing costs are recognised in profit
or loss in the period in which they are incurred.
Even though exploration and evaluation assets
can be qualifying assets, they generally do not
meet the probable economic benefits test and also
are rarely debt funded. Any related borrowing
costs are therefore generally recognised in profit
or loss in the period they are incurred.
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's principal financial instruments comprise
receivables, borrowings, payables, cash and short-term
deposits.
Risk exposures and responses
The main purpose of these financial instruments is to provide
finance for the Group's operations. The Group has various other
financial assets and liabilities such as trade receivables and
trade payables, which arise directly from its operations. The main
risks arising from the Group's financial instruments are cash flow
interest rate risk, liquidity risk, foreign currency risk and
credit risk.
Primary responsibility for identification and control of
financial risks rests with the Board. The Board reviews the risks
identified below, including the setting of limits for trading in
derivatives, hedging cover of foreign currency and interest rate
risk, credit allowances, and future cash flow forecast
projections.
Interest rate risk
The Group's exposure to market risk for changes in interest
rates is only on short term deposits and cash and cash
equivalents.
At balance date, the Group had the following mix of financial
assets and liabilities exposed to interest rate risk:
Consolidated
2016 2015
$ $
Financial Assets
Cash and cash equivalents 663,446 1,613,560
-------- ----------
Net exposure 663,446 1,613,560
======== ==========
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
The following table summarises the sensitivity of the fair value
of the financial instruments held at balance date, if interest
rates had moved, with all other variables held constant, post tax
profit would have been affected as follows:
Consolidated
Post - tax gain / (loss) 2016 2015
$ $
+1% 6,634 16,136
-1% (6,634) (16,136)
Foreign currency risk
The Group has transactional currency exposures. Such exposure
arises from sales or purchases by an operating entity in currencies
other than the functional currency.
At balance date, the Group had the following exposure to United
States Dollars (USD), Great Britain Pound (GBP) and Singapore
Dollars (SGD) foreign currency that is not designated in cash flow
hedges:
Consolidated
2016 2015
$ $
Financial Assets
Cash and cash equivalents
- USD 653,866 1,583,211
- SGD 1,859 1,859
- GBP 3,098 17,164
658,823 1,602,234
Financial Liabilities
Other financial liabilities (42,936,226) (33,372,417)
----------------------------- ------------- -------------
Derivative - (1,612)
------------- -------------
(42,936,226) (33,374,029)
------------- -------------
Net exposure (42,277,403) (31,771,795)
============= =============
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
The following table summarises the sensitivity of financial
instruments held at balance date to movement in the exchange rate
of the Australian dollar to the United States Dollar, with all
other variables held constant. The 5% sensitivity is based on
reasonably possible changes, over a financial year, using the
observed range of actual historical rates for the preceding 5
periods.
Consolidated
Post - tax gain / (loss) 2016 2015
$ $
+5% (2,114,118) (1,557,046)
-5% 2,114,118 1,557,046
Credit risk
Credit risk represents the loss that would be recognised if
counterparties fail to perform as contracted.
Part of the Group's receivables balances are represented by VAT
input tax credits, which are received on a quarterly basis, and
deposits held in trust in respect of leases for office
premises.
With respect to credit risk arising from the financial assets of
the Group, which comprise cash and cash equivalents and trade
receivables, the Group's exposure to credit risk arises from
default of the counter party, with a maximum exposure equal to the
carrying amount of these instruments.
There are no significant concentrations of credit risk within
the Group.
Liquidity Risk
The Group's objective is to maintain a balance between
continuity of funding and flexibility through use of bank
overdrafts, promissory notes, finance leases and hire purchase
contracts.
The contractual maturities of the Group's financial assets and
liabilities are shown in the table below. Undiscounted cash flows
for the respective years are presented. This excludes cash and cash
equivalents and current trade and other receivables.
Consolidated
2016 2015
$ $
Financial Assets
Within one
year - -
After one year
but not more
than five years - -
More than five
years 387,382 630,874
------------- -------------
387,382 630,874
------------- -------------
Financial Liabilities
Within one
year (755,133) (1,612)
After one year
to two years - (11,234,458)
More than two
years (42,936,226) (27,968,013)
------------- -------------
(43,691,359) (39,204,083)
Net Exposure (43,303,977) (38,573,209)
============= =============
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Management and the Board monitor the Group's liquidity on the
basis of expected cash flow. The information that is prepared by
senior management and reviewed by the Board includes monthly and
annual cash flow budgets.
Fair value
The Group uses various methods in estimating the fair value of a
financial instrument. The methods comprise:
Level 1 - the fair value is calculated using quoted prices in
active markets.
Level 2 - the fair value is estimated using inputs other than
quoted prices included in Level 1 that are observable for the asset
or liability, either directly (as prices) or indirectly (derived
from prices).
Level 3 - the fair value is estimated using inputs for the asset
or liability that are not based on observable market data.
All of the Group's other financial liabilities are carried at
amortised cost, with the carrying value approximating the fair
value.
The fair value of the derivative was determined using the level
3 method.
4. GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated
2016 2015
$ $
Administration and compliance
expenses 1,791,817 1,296,936
Employee benefits(1) 822,043 951,064
Superannuation 40,333 50,233
Consulting fees 362,021 186,015
Depreciation and amortisation
expenses 155,873 33,333
Directors fees 199,120 285,502
Legal fees 20,283 104,546
Occupancy expenses 243,662 262,242
Share based payments - 68,176
Total expenses 3,653,152 3,238,047
============ ===========
(1) In 2015, Cost of Sales included $285,000 of
employee benefits.
From February 2015 payment of director fees have
been deferred until such time that at least US$5,000,000
in new equity is raised or alternatively the Group
sells the Block 31 licence and receives the funds
associated with that sale.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
5. TAXATION
Prima facie income tax on operating (loss) is reconciled to the
income tax benefit provided in the financial statements as
follows:
Consolidated
2016 2015
$ $
Prima facie income tax benefit
on operating (loss) at the Australian
tax rate of 30% (2015: 30%) (3,142,461) (3,294,678)
Non-deductible expenditure:
* Effect of tax rates in foreign jurisdictions 143,528 322,384
* Share Based payments - 20,453
1,812,399 -
* Interest expense
Temporary differences and tax
losses not
bought to account as a deferred
tax asset 1,186,534 2,951,841
Income tax expense - -
============= =============
Deferred Income Tax
Deferred income tax at 30 June
relates to the following:
Consolidated - -
------------- -------------
Deferred tax liabilities - -
------------- -------------
Deferred tax assets
Unrealised FX (gain) / loss 2,356,420 (1,028,376)
Unrealised derivative (gain) /
loss 54 (252,627)
Share issue costs - 7,519
Revenue tax losses - Australia 7,111,664 7,383,121
E&E assets 910,468 4,503,790
Provision for impairment - 2,163,087
Deferred tax assets not recognised (10,378,606) (14,651,789)
Deferred tax (income)/expense - -
------------- -------------
Net deferred tax recognised in - -
Balance Sheet
============= =============
The Consolidated Group has tax losses of $24,844,409 (2015:
$23,799,948) that are available indefinitely for offset against
future taxable profits of the companies in which the losses
arose.
The potential deferred tax asset will only be realised if:
(a) The relevant Group derives future assessable income of a
nature and an amount sufficient to enable the asset to be realised,
or the asset can be utilised by another Group in the consolidated
entity in accordance with Division 170 of the Income Tax Assessment
Act 1997;
(b) The relevant Group and/or consolidated entity continues to
comply with the conditions for deductibility imposed by the Law;
and
(c) No changes in tax legislation adversely affect the relevant
Group and/or consolidated entity in realising the asset.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
6. CASH AND CASH EQUIVALENTS
Consolidated
2016 2015
$ $
Cash at bank and in hand 663,446 1,613,560
663,446 1,613,560
======== ==========
The bank accounts are at call and pay interest at a weighted
average interest rate of 0.04% at 30 June 2016 (2015: 0.04%)
7. TRADE AND OTHER RECEIVABLES
Consolidated
2016 2015
$ $
Current
Trade receivables - 66,715
Other debtors 24,064 11,336
24,064 78,051
Non-current
---------- ----------
VAT receivable 2,787,367 4,842,743
========== ==========
The Group's exposure to credit and currency risks is disclosed
in Note 3. The majority of the non-current other debtor balance is
VAT receivable which will be offset against future taxes payable on
oil revenue.
At 30 June 2016, the aging analysis of receivables is as
follows:
Total 0 - 31 - 61 - 90+
30 60 days 90 days
Days days
------ ---------- ------- --------- ------ ----------
2016 2,811,431 24,064 - - 2,787,367
2015 4,920,794 78,051 - - 4,842,743
There are no receivables as at 30 June 2016 that are impaired
(2015: nil)
8. OTHER CURRENT ASSETS
Consolidated
2016 2015
$ $
Prepayment 67,459 122,110
67,459 122,110
======= ========
9. INVENTORIES
Raw materials 17,886 82,351
Crude oil - 3,103
Provision of obsolete items - (16,919)
------- ----------
17,886 68,535
======= ==========
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
10. OIL AND GAS PROPERTIES
Consolidated
$
Cost as at 30 June 2014 21,749,075
Net exchange differences 4,478,843
-------------
Cost as at 30 June 2015 26,227,918
Depletion and impairment as
at 30 June 2014 (1,465,282)
Charge for the year (363,607)
-------------
Depletion and impairment as
at 30 June 2015 (1,828,889)
-------------
Net book value as at 30 June
2015 24,399,029
Cost as at 30 June 2015 26,227,918
Net exchange differences (9,422,479)
-------------
Cost as at 30 June 2016 16,805,439
Depletion and impairment as
at 30 June 2015 (1,828,889)
Charge for the year -
-------------
Depletion and impairment as
at 30 June 2016 (1,828,889)
Net book value as at 30 June
2016 14,976,550
-------------
Year ended 30 June 2016 Consolidated
$
At 1 July 2015 net of accumulated
depreciation 967,247
Additions -
Disposals -
Depreciation charge for the
year (155,873)
Net exchange differences (394,232)
-------------
At 30 June 2016 net of accumulated
depreciation 417,142
-------------
At 30 June 2016
Cost 2,055,094
Accumulated depreciation (1,637,952)
-------------
Net carrying amount 417,142
=============
Year ended 30 June 2015
At 1 July 2014 net of accumulated
depreciation 1,042,507
Additions -
Disposals (23,098)
Depreciation charge for the
year (101,224)
-------------
Net exchange differences 49,062
-------------
At 30 June 2015 net of accumulated
depreciation 967,247
At 30 June 2015
Cost 2,055,094
-------------
Accumulated depreciation (1,087,847)
-------------
Net carrying amount 967,247
=============
11. PLANT AND EQUIPMENT
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
12. EXPLORATION AND EVALUATION EXPITURE
Consolidated
2016 2015
$ $
Exploration expenditure carried
forward:
Exploration and evaluation expenditure
at cost 28,215,402 44,166,103
Movements during the year
Balance at beginning of year 44,166,103 31,986,316
Expenditure incurred during the
year 279,759 5,519,880
Impairment - (787,046)
Foreign exchange translation (16,230,460) 7,446,953
Balance at end of year 28,215,402 44,166,103
============= ==================
Oil sales revenue capitalised into exploration and evaluation
expenditure for the year was $nil (2015: $nil).
In the prior period, Management decided to write-off well NZW 2.
No further work had been planned for this particular well.
13. OTHER FINANCIAL ASSETS
Liquidation fund 387,732 630,874
Other - 9,364
-------- --------
387,732 640,238
-------- --------
The Group has a deposit for the purpose of a Liquidation fund in
the amount of $387,732. The deposit is to be used for land
restoration when required. Under the laws of Kazakhstan, the
deposit must be replenished in the amount of 1% of the annual
investments. The fair value approximates the carrying value.
14. TRADE AND OTHER PAYABLES
Trade creditors 652,938 1,253,357
Accrued expenses 102,195 27,392
755,133 1,280,749
-------- ----------
Trade payables are non-interest-bearing and are normally settled
on 30-day terms.
15. DEFERRED REVENUE
As at 1 July 60,111 844,773
Deferred during - -
the year
Released during
the year - (892,988)
Repaid during the (60,111) -
year
Foreign exchange
translation - 108,326
--------- -----------
At 30 June - 60,111
--------- -----------
The deferred revenue refers to an amount received in advance for
oil sales. As at 30 June 2016, there is 0 tonnes of oil to be
delivered under contracts. (2015: nil)
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
16. PROVISIONS
Consolidated
2016 2015
$ $
Non - current
Provision for rehabilitation 154,442 527,827
-------- --------
154,442 527,827
======== ========
The Group accrues provisions for the forthcoming costs of
rehabilitation of the territory. On the basis of forecasts the cost
of rehabilitation of the oilfield would be $154,442 (2015:
$527,827). The costs are denominated are Tenge. The timing of
rehabilitation is likely to depend on when the field ceases to
produce at economically viable rates which is currently estimated
to be 2044 (2015: 2039). This will depend upon future oil and gas
prices, which are inherently uncertain. The underlining
rehabilitation costs are denominated in Tenge and in calculating
the provision at 30 June 2016 a discount rate of 10.37% (2015:
6.94%) was used.
Movements in rehabilitation provision
2016 2015
$ $
Carrying amount at beginning of
the year 527,827 294,538
Unwinding of discount rate 20,850 24,952
Foreign exchange translation (228,195) 65,025
Provision for the year - 143,312
Re-measurement for changes in estimates(1) (166,040) -
---------- ---------
Carrying amount at the end of year 154,442 527,827
========== =========
(1) Due to a change in the discount rate and the expected timing
of when the rehabilitation activities will be undertaken.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
17. DERIVATIVES AND OTHER FINANCIAL LIABILITIES
Consolidated
2016 2015
$ $
Current
Derivative liability - 1,612
----------- -----------
- 1,612
Non-Current
Promissory notes (unsecured) 42,936,226 9,744,164
Convertible note - 23,628,253
42,936,226 33,372,417
Promissory Notes
On 31 May 2016, the major shareholder Waterford Petroleum
Limited ("Waterford") agreed to re-finance its current Promissory
Note (as originally announced on 7 October 2014 and subsequently
amended on 30 April 2015) that, as at 31 May 2016, amounted to
US$8,633,333 (A$11,636,956) in principal with accrued interest of
US$1,250,894 (A$1,686,092) (total US$9,914,227)(A$13,323,048) into
a new Promissory Note with the following key terms:
-- Unsecured
-- Effective 31 May 2016
-- Repayable on 1 July 2018
-- Interest rate of 15% pa
-- Interest will accrue and be repayable with principal
-- Lender can elect to be repaid if there is a change of control
in Jupiter Energy Limited or Jupiter Energy Pte Ltd or there is a
change in control in contract 2275 covering the Block 31
Licence
The previous Promissory Note and all accrued interest were due
for repayment on 1 July 2016.
On 24 May 2016, the Group and Waterford agreed to put in place a
new Framework Funding Agreement that makes up to a further
US$5,000,000 (including accrued interest) available to the Group by
way of a new US$5,000,000 Promissory Note. This takes the total
facility available under the existing and the new Framework Funding
Agreement to US$15,000,000 (including accrued interest) of which a
further US$5,088,822 (A$6,859,274) can be drawn down on (including
accrued interest). This is in order to fund the Group's operations
whilst it continues to finalise long term funding arrangements for
the development of its Block 31 licence area in Kazakhstan.
The key terms of the new Framework Agreement with Waterford
are:
-- Effective 24 May 2016
-- Drawdowns will roll into a Promissory Note
-- Promissory Note is repayable on 1 July 2018
-- Interest rate of 15% pa
-- Interest will accrue and be repayable with principal
-- Lender can elect to be repaid if there is a change of control
in Jupiter Energy Limited or Jupiter Energy Pte Ltd or there is a
change in control in contract 2275 covering the Block 31
Licence
As at 30 June 2016, US$744,989 (A$1,004,171) has been drawn from
the US$5,000,000 facility.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
US$15.5m Convertible Notes (Series B):
On 3 June 2016, the Group announced it had reached agreement
with its Convertible Note holders to refinance the 12,400,000
Convertible Notes with a total value of approx. US$20,800,000
(including accrued interest) into Promissory Notes with a repayment
date of 1 July 2018.
The key terms for the new Promissory Notes are:
-- Unsecured
-- Effective 31 May 2016
-- Repayable on 1 July 2018
-- Interest rate of 15% pa
-- Interest will accrue and be repayable with the principal
-- Lenders can elect to be repaid if there is a change of
control in Jupiter Energy Limited or Jupiter Energy Pte Ltd or
there is a change in control of the ownership of the Block 31
Licence
The Convertible Notes and all accrued interest were due for
repayment on 20 September 2016. At the date of refinancing the
carrying value of the Convertible Note liability and derivative
liability relating to the conversion option was derecognised and
the new Promissory Notes liability were recognised at fair value. A
gain on extinguishment of A$282,672 was recognised in the profit or
loss being the difference between the fair value of the Promissory
Notes liability and the carrying value of the Convertible Note
liability and derivative liability that was derecognised. As the
Convertible Notes holders and Promissory Notes holders are the same
parties, the refinancing was a non cash transaction. Subsequent to
initial recognition the Promissory Notes are being measured at
amortised cost.
Valuation Techniques of the Convertible Notes
The Notes had an embedded derivative in the form of a call
option for the holder to convert the Notes at US$1.25 into Jupiter
ordinary shares.
The convertible equity feature of the Notes has been separated
from the liability component of the Notes for financial reporting
purposes. The call option to convert the notes into shares did not
meet the definition of an equity instrument, as the exercise price
was denominated in a currency that is different to the Company's
functional currency. The convertible call option was classified as
a Derivative liability and measured at fair value through the
profit or loss.
The Derivative component of the Notes was valued using the Black
Scholes option valuation methodology. The Black Scholes option
valuation methodology calculates the expected benefit from
acquiring the shares outright less the present value of paying the
exercise price for the options at expected exercise date. An input
into the Black Scholes option valuation is the expected share price
volatility over the remaining term of the options. The expected
share price volatility used in the option valuation at reporting
date was 55% which was based on historical share price
volatility.
The fair value of the embedded derivative was sensitive to
changes in share price volatility. The table below outlines the
impact a change in the share price volatility input had on the fair
value of the embedded derivative.
30 June 30 June
2016 2015
$ $
15% increase in volatility - 313,077
15 % decrease in volatility - (231,405)
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
Fair value hierarchy
All financial instruments, such as the Series B Convertible
Notes, for which fair value is recognised or disclosed are
categorised within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair
value measurement as a whole:
Level 1 - Quoted market prices in an active market (that are
unadjusted) for identical assets or liabilities
Level 2 - Valuation techniques (for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable)
Level 3 - Valuation techniques (for which the lowest level input
that is significant to the fair value measurement is
unobservable)
For financial instruments that are recognised at fair value on a
recurring basis, the Group determines whether transfers have
occurred between Levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each
reporting period.
As at 30 June 2016, the Group held the following classes of
financial instruments measured at fair value:
30 June 2016 30 June 2015
Level 3 Level 3
$ $
Derivative financial liabilities
Embedded derivative - 1,612
---------------------------------- -------------- -------------
There were no transfers between Level 1, Level 2 or Level 3 fair
value measurements during the year ended 30 June 2016 (2015:
Nil).
Reconciliation of recurring fair value measurements categorised
within level 3 of the fair value hierarchy
30 June 30 June
2016 2015
$ $
Opening balance (1,612) (229,400)
Fair Value at inception - -
Net unrealised gain recognised in
the profit or loss during the period 1,612 227,788
-------- ----------
Closing balance - (1,612)
-------- ----------
18. CONTRIBUTED EQUITY
Consolidated
2016 2015
$ $
Shares issued and fully
paid
Ordinary shares (a) 85,633,935 85,633,935
85,633,935 85,633,935
=============== ===============
Number Number
(a) Movements in ordinary 2016 2015
share capital:
Balance 30 June 2015 153,377,693 153,377,693
Balance 30 June 2016 153,377,693 153,377,693
--------------- ---------------
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
18. CONTRIBUTED EQUITY (continued)
(b) Movement in performance
rights
Balance as at 30
June 2015 - 8,075,000
Lapsed during year - (8,075,000)
Granted during the - -
year
------------
Balance as at 30 - -
June 2016
------------
Capital risk management
When managing capital, management's objective is
to ensure the entity continues as a going concern
as well as to maintain optimal returns to shareholders
and benefits for other stakeholders. Management
also aims to maintain a capital structure that ensures
the lowest cost of capital available to the entity.
In order to maintain or adjust the capital structure,
the entity may adjust the amount of dividends paid
to shareholders, return capital to shareholders,
issue new shares, enter into joint ventures or sell
assets.
The entity does not have a defined share buy-back
plan.
No dividends were paid in 2016 and none are expected
to be paid in 2017.
The Group is not subject to any externally imposed
capital requirements.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
19. RESERVES
CONSOLIDATED
Foreign Share based Total
currency payments
translation reserve
reserve
$ $ $
At 30 June 2014 (11,573,714) 5,695,838 (5,877,876)
Share based payment - 68,176 68,176
Foreign currency translation 12,738,847 - 12,738,847
------------- ------------ -------------
At 30 June 2015 1,165,133 5,764,014 6,929,147
Share based payment - - -
Foreign currency translation (27,468,783) - (27,468,783
------------- ------------ -------------
At 30 June 2016 (26,303,650) 5,764,014 (20,539,636)
------------- ------------ -------------
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve is used
to record exchange differences arising from the
translation of the financial statements of foreign
subsidiaries.
Share based payments reserve
The share based payments plan reserve is used to
record the value of equity benefits provided to
eligible employees as part of their remuneration.
Refer to note 21 for further details of this plan.
20. KEY MANAGEMENT PERSONNEL AND RELATED PARTY DISCLOSURE
This note is to be read in conjunction with the Remuneration
Report, which is included in the Directors Report on pages 11 to
19.
(a) Key management personnel compensation
Consolidated
2016 2015
$ $
Short-term employee benefits 639,141 569,250
Post-employment benefits 40,333 50,233
Other 163,106 151,682
Share-based payments - 68,176
------- -------
842,580 839,341
======= =======
(b) Transactions between the Group and other related parties
Consultancy fees
During the year, consulting fees of $40,599 (2015: $144,096)
were accrued and paid under normal terms and conditions to Meridian
Petroleum LLP, of which Mr. Kuandykov is a director, for the
provision of geological services at normal commercial rates.
During the year, consulting fees of $211,000 (2015: $146,333)
were accrued and paid under normal terms and conditions to Symdean
Pty Ltd, of which Mr Gander is a director.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
21. SHARE BASED PAYMENTS
Employee Share Option Plan (ESOP) and Performance Rights
Plan
There was no share based payments expense in the income
statement for 2016 (2015: $68,176).
Options
The fair value of the options is estimated at the date of grant
using the Black -Scholes option pricing model.
No options were granted during the year ended 30 June 2016
(2015: Nil).
During the year ended 30 June 2016, no options were exercised
over ordinary shares (2015: Nil).
Performance Rights
The Jupiter Energy Performance Rights Plan was established
whereby Jupiter Energy Limited may, at the discretion of the
Jupiter Energy Limited Board, grant performance rights over
unissued shares of Jupiter Energy Limited to directors, executives,
employees and consultants of the consolidated entity. The rights
are issued for nil consideration, will not be quoted on the ASX,
cannot be transferred and are granted at the discretion of the
Jupiter Energy Board subject to shareholder approval.
The number of performance rights on issue as at 30 June 2016 was
nil.
During the 2015 year, 8,075,000 expired unvested.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
22. COMMITMENTS FOR EXPITURE
Exploration Work Program Commitments
The Group has entered into a subsoil utilisation rights for
petroleum exploration and extraction in Areas 1 and 2 in Mangistau
Oblast in accordance with Contract No. 2272 dated 29 December 2006
with the Ministry of Energy and Mineral Resources of the Republic
of Kazakhstan.
Exploration work program commitments contracted for (but not
capitalised in the accounts) that are payable:
2016 2015
$ $
* not later than one year - 5,118,377
- -
* later than one year but not later than five years
------ ----------
- 5,118,377
======= ==========
23. AUDITORS REMUNERATION
The auditor of Jupiter Energy Limited is Ernst & Young.
Amounts received or due and receivable
by Ernst & Young (Australia) for:
* auditing or reviewing the financial report 78,500 80,000
78,500 80,000
-------- --------
Amounts received or due and receivable
by Ernst & Young (Kazakhstan) for:
* auditing or reviewing the financial report 18,645 78,315
18,645 78,315
-------- --------
Amounts received or due and receivable
by Ernst & Young (Singapore) for:
* auditing or reviewing the financial report 12,477 12,085
--------
12,477 12,085
-------- --------
Total paid to Ernst & Young 109,622 170,400
======== ========
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
24. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share are calculated by dividing the profit /
(loss) attributable to equity holders of the Group by the weighted
average number of ordinary shares outstanding during the
period.
The following reflects the income and data used in the basic and
diluted earnings per share computations:
Consolidated
2016 2015
------------- -------------
Net loss attributable
to ordinary equity holders
of the Parent from continuing
operations (10,474,870) (10,982,261)
Number Number
of shares of shares
Weighted average number
of ordinary shares for
basic and diluted earnings
per share 153,377,693 153,377,693
------------- -------------
There have been no other transactions involving ordinary shares
or potential ordinary shares between the reporting date and the
date of authorisation of these financial statements.
25. SEGMENT REPORTING
Identification of reportable segments
The Group has identified its operating segments based on the
internal reports that are used by the chief operating decision
makers in assessing performance and determining the allocation of
resources.
The Group has identified that it has one operating segment being
related to the activities in Kazakhstan, on the basis that the
operations in Australia relate to running the Corporate Head Office
only.
All significant Oil and Gas and Exploration and evaluation
expenditure are domiciled in Kazakhstan.
Accounting policies and inter-segment transactions
The accounting policies used by the Group in reporting segments
internally are the same as those contained in Note 1 to the
accounts.
Interest revenue is derived in Australia. Non-current assets
relate to capitalised exploration and evaluation expenditure and
oil and gas properties located in Kazakhstan.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
26. STATEMENT OF CASHFLOWS RECONCILIATION
(a) Reconciliation of operating (loss) after income tax to net
cash (used in) operating activities
Consolidated
2016 2015
$ $
Operating (loss) after income
tax: (10,474,870) (10,982,261)
Add/(less) non-cash items:
Depreciation / Depletion 155,873 361,566
Share based payments - 68,176
(Gain) / Loss on derivative 54 (227,788)
Finance costs 6,041,331 3,161,784
Effect of foreign exchange
translation 969,858 4,468,779
Gain on extinguishment(1) (282,672) -
Changes in assets and liabilities:
Decrease/(increase) in receivables 986,236 (430,233)
Decrease/(increase in inventories 50,651 (18,929)
(Increase)/decrease in other
current assets 54,650 146,770
Increase/ (decrease) in deferred
revenue (60,111) (784,662)
Increase/ (decrease) in payables (525,614) 405,531
Decrease/(increase) in provisions (373,385) (58,061)
------------- --------------
Net cash flows from operating
activities (3,457,999) (3,889,328)
============= ==============
(1) Relates to the refinancing of the Convertible Notes, refer
to note 17.
For the purposes of the cash flow statement, cash includes cash
on hand, at banks, and money market investments readily convertible
to cash on hand, net of outstanding bank overdrafts.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
27. EVENTS OCCURING AFTER THE BALANCE SHEET DATE
On 19 September 2016 the Group announced that it had signed
Addendum 7 to Contract 2275 which confirmed that the Ministry of
Energy had agreed to a three (3) year extension to the Exploration
Licence taking the Exploration Period through to 29 December 2019.
The 3 year extension is based on the Group maintaining its current
acreage and the Ministry of Energy indicated that if the Group did
proceed with the North East and South East land extensions that are
being considered, then a further one (1) year extension (to 29
December 2020) could be available.
There have been no other significant events occurring subsequent
to 30 June 2016 apart from those noted above.
28. INFORMATION ON PARENT ENTITY
2016 2015
(a) Information relating to Jupiter $ $
Energy Limited:
Current assets 709,903 1,385,083
Total assets 47,592,924 75,227,570
Current liabilities (409,456) (198,641)
Total liabilities (43,341,521) (33,572,670)
Issued capital 85,633,935 85,633,935
Retained earnings (60,958,761) (49,743,049)
Share based payment reserve 5,764,014 5,764,014
------------- -------------
Total shareholders' equity (4,251,403) 41,654,900
------------- -------------
Profit or (loss) of the parent
entity (19,735,223) (1,756,586)
------------- -------------
Total comprehensive income /
(loss) of the parent entity (19,735,223) (1,756,586)
------------- -------------
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2016
28. INFORMATION ON PARENT ENTITY (continued)
Country Equity Holding
of
incorporation 2016 2015
% %
Name of Entity
Jupiter Energy (Victoria)
Pty Ltd Australia 100 100
Jupiter Biofuels Pty
Ltd Australia 100 100
Jupiter Energy (Kazakhstan)
Pty Ltd Australia 100 100
Jupiter Energy Pte
Ltd Singapore 100 100
Jupiter Energy (Services)
Pte Ltd Singapore 100 100
(b) Details of any guarantees entered into by the parent entity
in relation to the debts of its subsidiaries
There are no guarantees entered into by the parent entity.
(c) Details of any contingent liabilities of the parent
entity
There are no contingent liabilities of the parent entity as at
reporting date.
(d) Details of any contractual commitments by the parent
entity
There are no contractual commitments by the parent entity
29. CONTINGENT LIABILITIES
The Group has no contingent liabilities as at 30 June 2016 (30
June 2015: Nil)
Directors' Declaration
In accordance with a resolution of the directors
of Jupiter Energy Limited, I state that:
1 In the opinion of the directors:
(a) the financial statements and notes of Jupiter
Energy Limited for the financial year ended
30 June 2016 are in accordance with the Corporations
Act 2001, including:
(i) Giving a true and fair view of its financial
position as at 30 June 2016 and performance
for the year ended on that date.
(ii) Complying with Accounting Standards (including
the Australian Accounting Interpretations)
and the Corporations Regulations 2001
(b) The financial statements and notes also comply
with International Financial Reporting Standards,
as disclosed in note 2(b)
(c) Subject to the matter set out in Note 2(a)
there are reasonable grounds to believe that
the Group will be able to pay its debts as
and when they become due and payable.
This declaration has been made after receiving
the declarations required to be made to the Directors
in accordance with section 295A of the Corporations
Act 2001 for the financial year ended 30 June
3 2016.
On behalf of the Board
Geoff Gander
Executive Chairman
Perth, Western Australia
30 September 2016
AUDITORS REPORT
AUDITORS REPORT (continued)
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange
Ltd Listing Rules and not disclosed elsewhere in this report is as
follows.
SHAREHOLDINGS (as at 31 August 2016)
Substantial shareholders
Waterford Petroleum
Limited 45,246,108 29.5%
Arrow Business Limited 30,917,255 20.2%
Central Asian Oil Holdings
Ltd 29,731,484 19.4%
Voting Rights
Each shareholder is entitled to receive notice of and attend and
vote at general meetings of the Group. At a general meeting, every
shareholder present in person or by proxy, representative or
attorney will have one vote on a show of hands and on a poll, one
vote for each share held.
DISTRIBUTION OF EQUITY SECURITY HOLDINGS
Total holders Ordinary
Category Shares
----------------- -------------- ------------
1 - 1,000 436 172,342
1,001 - 5,000 549 1,439,836
5,001 - 10,000 213 1,538,323
10,001 - 100,000 256 6,955,688
100,001 and over 26 143,271,504
Total 1,480 153,377,693
-------------- ------------
The number of shareholders holding less than a marketable parcel
of ordinary shares is 634.
On-market buy back
There is no current on-market buy back.
Securities on Issue
The number of shares issued by the Group are set out below:
Category Number
----------------- ------------
Ordinary Shares 153,377,693
TWENTY LARGEST SHAREHOLDERS
Name of Holder No. of % of Issued
Ordinary capital
Shares
---- ---------------------------------- ------------ ------------
COMPUTERSHARE CLEARING PTY
1. LTD <CCNL DI A/C> 50,008,958 32.61
HSBC CUSTODY NOMINEES (AUSTRALIA)
2. LIMITED 48,354,956 31.53
BNP PARIBAS NOMS PTY LTD
3. <DRP> 29,667,795 19.34
J P MORGAN NOMINEES AUSTRALIA
4. LIMITED 6,829,357 4.45
5. CITICORP NOMINEES PTY LIMITED 2,234,562 1.46
GLENNBROWN PTY LTD <G BROWN
6. FAMILY ACCOUNT> 1,333,334 0.87
MR GEOFFREY ANTHONY GANDER
7. <THE GANDER SUPER A/C> 769,445 0.50
8. MR ATHOL GEOFFREY JAMES 608,148 0.40
9. GOLDEN BOUNTY LIMITED 506,450 0.33
GLENNBROWN PTY LTD <G BROWN
10. FAMILY A/C> 465,000 0.30
MR WARREN GILMOUR + MRS CATHERINE
GILMOUR <W + C GILMOUR SUPER
11. A/C> 282,753 0.18
12. MR ERKIN SVANBAYEV 240,000 0.16
MR SCOTT MISON <THE SCOTT
13. MISON FAMILY A/C> 207,038 0.13
SOUTHAM INVESTMENTS 2003
PTY LTD <WARWICKSHIRE INVESTMENT
14. A/C> 179,511 0.12
MR IAN SHERWOOD LOVE + MRS
15. ANNE MARGARET LOVE 166,667 0.11
DR NEIL TANUDISASTRO + MRS
YANI SUTANIMAN <NEIL & YANI
16. TAN SUPER A/C> 154,667 0.10
R & L EVANS PTY LTD <EVANS
17. FAMILY S/F A/C> 150,000 0.10
18. MR YERKIN SVANBAYEV 150,000 0.10
19. NATIONAL NOMINEES LIMITED 148,335 0.10
DALY SF PTY LTD <DALY SUPER
20. FUND A/C> 146,668 0.10
TOTAL 142,603,644 92.98
"The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014."
FR MMGFLRGVGVZG
(END) Dow Jones Newswires
September 30, 2016 04:39 ET (08:39 GMT)
Grafico Azioni Jupiter Energy (LSE:JPRL)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Jupiter Energy (LSE:JPRL)
Storico
Da Giu 2023 a Giu 2024
