28 Mar 2008 07:00
OILEX LTD CONSOLIDATED INTERIM FINANCIAL REPORT For the half-year ended 31 December 2007 ABN 50 078 652 632 CONTENTS 1) DIRECTORS' REPORT
2) AUDITOR'S INDEPENDENCE DECLARATION
3) CONSOLIDATED INTERIM INCOME STATEMENT
4) CONSOLIDATED INTERIM BALANCE SHEET
5) CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
6) CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
7) CONDENSED NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
8) DIRECTORS' DECLARATION 9) INDEPENDENT REVIEW REPORT DIRECTORS REPORT
The Directors present their report together with the consolidated financialreport of Oilex Ltd (the "Company") and its subsidiaries ("Oilex") for the sixmonths ended 31 December 2007 and the review report thereon.
DIRECTORS
The directors of the Company at any time during or since the end of the interim period are:
Mr Max Dirk Jan Cozijn - Non-Executive Chairman
Dr Bruce Henry McCarthy - Managing Director
Mr Raymond George Barnes - Technical Director
Mr Laxmi Lal Bhandari - Non-Executive Director
REVIEW OF OPERATIONS
Financial Performance
Oilex incurred a consolidated loss of $6,721,880 for the half-year (December 2006: loss of $3,442,105).
Operations
Oilex Ltd is a dual listed company (ASX and AIM) with a diversified portfolio of interests in India, Indonesia, Oman, Timor-Leste and Australia. The Company's current focus is on:
* Development of brownfield opportunities in India * Development of the Pendalian discovery in the West Kampar PSC area, Indonesia * Exploration drilling in Oman
The main highlights for the Company during the period were:
* The Sarha-1 exploration well in Block 56 Oman was spudded on 31 December
2007.
* The 2D seismic survey comprising 1,061 line km in the southwestern part of
Block 56 was completed in November 2007.
* The Pendalian-3 appraisal well in the West Kampar block, Indonesia, was
drilled, tested and suspended as a future oil production well in November
2007.
* A contract to conduct a 3D seismic survey of 1,181 km2 over part of the
WA-388-P permit in the Carnarvon Basin was finalised. Interpretation of the
reprocessed 2D and existing third party seismic data continued. * The Maura 3D seismic survey in the JPDA 06-103 PSC area was awarded to Wavefield Inseis. The survey will cover an area of 1,657 km2 and is expected to commence in the second quarter of 2008.
* A rig has been mobilised to commence a program of 6 wells on Cambay Field,
India and is on site undergoing commissioning operations.
Further details are contained within releases made by the Company over this period.
CORPORATE MATTERSCapital Structure
As at 31 December 2007, Oilex had a total issued capital of 130,083,885 ordinary shares.
In addition there were a total of 39,225,100 unlisted options on issue exercisable at prices of between $0.20 and $2.75.
At 31 December 2007, Oilex retained cash and receivables of approximately $59 million.
LEAD AUDITOR'S INDEPENDENCE DECLARATION
The lead auditor's independence declaration is set out on page 3 and forms part of the Directors' Report for the six months ended 31 December 2007.
This report is signed in accordance with a resolution of the Board of Directors.
M.D.J. Cozijn B.H. McCarthyChairman Managing Director
Dated this 11th day of March 2008
Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of Oilex Ltd
I declare that, to the best of my knowledge and belief, in relation to the audit for the half-year ended 31 December 2007 there have been:
i. no contraventions of the auditor independence requirements as set out in
the Corporations Act 2001 in relation to the review; and
ii. no contraventions of any applicable code of professional conduct in
relation to the review. KPMGB C FullartonPartnerPerth11 March 2008KPMG, an Australian partnership, is part of theKPMG International network.KPMG International is a Swiss cooperative. CONSOLIDATED INTERIM INCOME STATEMENT FOR THE SIX MONTHS ENDED31 DECEMBER 2007 31 December 31 December 2007 2006 $ $ Continuing operations Revenue 217,394 - Employee benefits expense (613,379) (671,887) Depreciation expense (118,169) (57,520) Exploration expenditure (1,220,816) (1,726,436) Production costs (363,602) - Administration expense (1,492,409) (1,207,933) Well abandonment provision - (500,000) Share based payments (3,312,768) (2,217,436) Results from operating activities (6,903,749) (6,381,212) Finance income 1,562,608 503,941 Finance expenses (509,161) (206,140) Foreign exchange loss (871,578) (177,889) Net finance costs 181,869 119,912 LOSS BEFORE INCOME TAX (6,721,880) (6,261,300) Income tax expense - - LOSS FROM CONTINUING OPERATIONS (6,721,880) (6,261,300) Discontinued operation Profit from discontinued operation (net of - 2,819,195tax) LOSS FOR THE PERIOD (6,721,880) (3,442,105) Earnings per share Basic loss per share (cents per share) (5.2)
(4.5)
Diluted loss per share (cents per share) (5.2) (4.5) Continuing operations Basic loss per share (cents per share) (5.2)
(8.2)
Diluted loss per share (cents per share) (5.2)
(8.2)
The consolidated interim income statement is to be read in conjunction with the condensed notes to the consolidated interim financial report.
CONSOLIDATED INTERIM BALANCE SHEET AS AT31 DECEMBER 2007 31 December 30 June 2007 2007 $ $ Current Assets Cash and cash equivalents 51,646,941 66,993,383 Trade and other receivables 7,376,718 4,285,065 Prepayments 6,656 82,315 Inventories 2,501,866 376,704 TOTAL CURRENT ASSETS 61,532,181 71,737,467 Non Current Assets Exploration and evaluation 21,469,612 13,498,334 Property, plant & equipment 1,067,342 747,609 Investments 5,088,291 3,717,631 TOTAL NON CURRENT ASSETS 27,625,245 17,963,574 TOTAL ASSETS 89,157,426 89,701,041 Current Liabilities Trade and other payables 2,860,435 2,364,815 Employee benefits 216,487 155,362 Loans and borrowings 5,000,000 5,000,000 TOTAL CURRENT LIABILITIES 8,076,922 7,520,177 Non Current Liabilities Provisions 1,650,408 1,714,387 Loans and borrowings 5,000,000 5,000,000 TOTAL NON CURRENT LIABILITIES 6,650,408 6,714,387 TOTAL LIABILITIES 14,727,330 14,234,564 NET ASSETS 74,430,096 75,466,477 Equity Issued capital 101,385,375 100,893,697 Reserves 13,790,297 8,596,476 Accumulated losses (40,745,576) (34,023,696) TOTAL EQUITY 74,430,096 75,466,477
The consolidated interim balance sheet is to be read in conjunction with the condensed notes to the consolidated interim financial report.
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS ENDED 31 DECEMBER 2007 Issued Option Asset Foreign Accumulated Total Capital Reserve Revaluation Currency Losses Reserve Translation Equity Reserve $ $ $ $ $ $ Balance at 1 July 36,563,991 2,499,908 - - (19,302,425) 19,761,4742006 Revaluation of - - 185,030 - - 185,030investments Loss for the - - - - (3,442,105) (3,442,105)period Shares issued on 350,000 - - - - 350,000exercise of options Transfer on 202,801 (202,801) - - - -exercise of options Equity-settled 25,827 2,217,436 - - - 2,243,263share based payment transactions Balance at 31 37,142,619 4,514,543 185,030 - (22,744,530) 19,097,662December 2006 Balance at 1 July 100,893,697 7,753,044 330,053 513,379 (34,023,696) 75,466,4772007 Revaluation of - - 1,235,197 - - 1,235,197investments Foreign currency - - - 860,034 - 860,034translation differences Loss for the - - - - (6,721,880) (6,721,880)period Shares issued on 277,500 - - - - 277,500exercise of options Transfer on 214,178 (214,178) - - - -exercise of options Equity-settled - 3,312,768 - - - 3,312,768share based payment transactions
Balance at 31 101,385,375 10,851,634 1,565,250 1,373,413 (40,745,576) 74,430,096 December 2007
The consolidated interim statement of changes in equity is to be read in conjunction with the condensed notes to the consolidated interim financial report.
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWSFOR THE SIX MONTHS ENDED31 DECEMBER 2007 31 December 31 December 2007 2006 $ $
Cash Flows From Operating Activities
Cash receipts from customers - 34,618 Payments to suppliers and employees (2,040,023) (1,961,327) Interest received 1,427,145 463,717 Interest paid (255,001) (265,111) Net Cash Flows Used In Operating Activities (867,879)
(1,728,103)
Cash Flows From Investing Activities
Advances to joint ventures (3,587,727) - Payments for exploration and evaluation (10,284,115)
(4,813,447)
Acquisition of property, plant and equipment (437,902)
(276,695)
Net Cash Flows Used In Investing Activities (14,309,744)
(5,090,142)
Cash Flows From Financing Activities Proceeds from the exercise of options 277,500
350,000
Net Cash Flows From Financing Activities 277,500
350,000
NET DECREASE IN CASH AND CASH EQUIVALENTS (14,900,123)
(6,468,245)
CASH AND CASH EQUIVALENTS AT 1 JULY 66,993,383
21,262,211
Effect of exchange rate fluctuations on cash held (446,319)
-
CASH AND CASH EQUIVALENTS AT 31 DECEMBER 51,646,941
14,793,966
The consolidated interim statement of cash flows is to be read in conjunction with the condensed notes to the consolidated interim financial report.
CONDENSED NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
NOTE 1 - REPORTING ENTITYOilex Ltd (the "Company") is a company domiciled in Australia. The consolidatedinterim financial report of the Company as at and for the six months ended 31December 2007 comprises the Company and its subsidiaries (together referred toas "Oilex") and Oilex's interests in jointly controlled operations.The consolidated annual financial report of Oilex as at and for the year ended30 June 2007 is available upon request from the Company's registered office atLevel 3, 50 Kings Park Road, West Perth, Western Australia 6005 or atwww.oilex.com.au.
NOTE 2 - STATEMENT OF COMPLIANCE
The consolidated interim financial report is a general purpose financial report which has been prepared in accordance with AASB 134: Interim Financial Reporting and the Corporations Act 2001.
The condensed consolidated interim financial report does not include all of theinformation required for a full annual financial report, and should be read inconjunction with the consolidated annual financial report of Oilex as at andfor the year ended 30 June 2007.
This consolidated interim financial report was approved by the Board of Directors on 11th March 2008.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied by Oilex in this consolidated interim financial report are the same as those applied by Oilex in its consolidated financial report as at and for the year ended 30 June 2007.
NOTE 4 - ESTIMATES
The preparation of an interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing this consolidated interim financial report, the significantjudgements made by management in applying Oilex's accounting policies and thekey sources of estimation uncertainty were the same as those that applied tothe consolidated financial report as at and for the year ended 30 June 2007.
NOTE 5 - SEGMENT INFORMATION
Primary Reporting - Geographical Segments
India Australia Oman Timor-Leste Indonesia Discontinued Group and Consolidated Operation Unallocated $ $ $ $ $ $ $ $ Half-year ended 31 December 2007 Segment 217,394 - - - - - - 217,394revenue
Segment (1,204,804) 642,048 (294,903) (232,272) (160,125) -
(5,471,824) (6,721,880)result/ (loss) Half-year ended 31 December 2006 Segment - - - - - - - -revenue Segment (335,522) (391,134) (327,080) (86,582) - 2,819,195 (5,120,982) (3,442,105)result/ (loss)
Oilex operates in one business segment, being the exploration, development and production of hydrocarbons.
NOTE 6 - SHARE BASED PAYMENTS
The Company has an established share option programme that entitles directors,key management personnel and advisers to purchase shares in the Company. Theterms and conditions of the grants made during the year ended 30 June 2007 aredisclosed in the most recent annual financial report. In the six months ended31 December 2007 further grants on similar terms were made to directors andadvisers.The Company also has established an Employee Performance Rights Plan, approvedby shareholders in 2006, which entitles employees to options and performancerights. The terms and conditions of the Plan and grants made during the yearended 30 June 2007 are disclosed in the most recent annual financial report. Inthe six months ended 31 December 2007 further grants of performance rights onsimilar terms were made to employees.The basis of measuring fair value of options and performance rights granted isconsistent with that disclosed in the consolidated financial report as at andfor the year ended 30 June 2007.
The terms and conditions of the grants made during the six months ended 31 December 2007 are as follows:
Grant Date Number of Vesting Contractual Life Instruments Conditions of Options/Rights OPTIONS Directors 22 November 2007 3,900,000 Vest immediately 3 years 22 November 2007 3,900,000 One year of 3 years service Employees 31 August 2007 350,000 One year of 3 years service 31 August 2007 350,000 Two years of 3 years service 31 August 2007 350,000 Three years of 4 years service Advisers 25 July 2007 500,000 One year of 4 years service PERFORMANCE RIGHTS Employees 3 August 2007 125,000 One year of 5 years service 3 August 2007 110,000 Two years of 5 years service 3 August 2007 109,000 Three years of 5 years service 14 October 2007 33,000 One year of 5 years service 14 October 2007 33,000 Two years of 5 years service 14 October 2007 34,000 Three years of 5 years service
The following options and performance rights were forfeited during the six months ended 31 December 2007 due to service conditions not being met:
Grant Date Number of Vesting Contractual Life Instruments Conditions of Options/Rights OPTIONS Key Management Personnel 14 September 2007 250,000 Two years of 3 years service PERFORMANCE RIGHTS Key Management Personnel 11 January 2007 40,000 Two years of 5 years service 11 January 2007 40,000 Three years of 5 years service Employees 11 January 2007 10,000 Two years of 5 years service 11 January 2007 10,000 Three years of 5 years service 3 August 2007 15,000 One year of 5 years service 3 August 2007 15,000 Two years of 5 years service 3 August 2007 15,000 Three years of 5 years service
NOTE 6 - SHARE BASED PAYMENTS (continued)
Fair value of options and performance rights granted during the six months ended 31 December 2007 has been determined using the following assumptions:
Options Fair value at measurement date $0.32 to $0.56 Share price $1.22 to $1.62 Exercise price $1.57 to $2.70 Expected volatility 31.4% to 39.1% Option life 3 to 4 years Expected dividends - Risk-free interest rate 6.25% to 6.75%Performance Rights Fair value at measurement date $1.11 to $1.50 Share price $1.53 to $1.72 Exercise price nil Expected volatility 60% to 90% Effective life 3 to 4 years Expected dividends - Risk-free interest rate 6.3% to 6.6%
NOTE 7 - EQUITY SECURITIES ISSUED
2007 2006 Number of Number of Shares Shares Issue of share capital - 19,566 Exercise of options 700,000 750,000 Total 700,000 769,566NOTE 8 - CONTINGENCIESOilex Ltd has issued guarantees in relation to the exploration and developmentWork Programme in India, the lease of corporate offices in West Perth as wellas credit card guarantees. The Bank Guarantees amount to US$736,000 andA$271,000. An equal amount is held in cash and cash equivalents.
DIRECTORS' DECLARATION
In the opinion of the Directors of Oilex Ltd (the "Company"):
1. the financial statements and notes set out on pages 4 to 11, are in
accordance with the Corporations Act 2001 including:
a. giving a true and fair view of the financial position of the consolidated
entity as at 31 December 2007 and of its performance for the six month
period ended on that date; and
b. complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001; and
2. there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable.
Dated at West Perth this 11th day of March 2008
Signed in accordance with a resolution of the Directors.
Mr M.D.J. Cozijn Dr B.H. McCarthy
Chairman Managing DirectorWest Perth, Western Australia11th March 2008
INDEPENDENT AUDITORS REVIEW REPORT TO THE MEMBERS OF OILEX LTD
Report on the financial report
We have reviewed the accompanying half-year financial report of Oilex Ltd,which comprises the consolidated interim balance sheet as at 31 December 2007,income statement, statement of changes in equity and cash flow statement forthe half-year ended on that date, a statement of accounting policies and otherselected explanatory notes 1 to 8 and the directors' declaration of the Groupcomprising the company and the entities it controlled at the half-year's end orfrom time to time during the half-year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation and fairpresentation of the half-year financial report in accordance with AustralianAccounting Standard AASB 134 Interim Financial Reporting and the CorporationsAct 2001. This responsibility includes designing, implementing and maintaininginternal control relevant to the preparation and fair presentation of thehalf-year financial report that is free from material misstatement, whether dueto fraud or error; selecting and applying appropriate accounting policies; andmaking accounting estimates that are reasonable in the circumstances.
Auditor's responsibility
Our responsibility is to express a conclusion on the half-year financial reportbased on our review. We conducted our review in accordance with AuditingStandard on Review Engagements ASRE 2410 Review of an Interim Financial ReportPerformed by the Independent Auditor of the Entity, in order to state whether,on the basis of the procedures described, we have become aware of any matterthat makes us believe that the half-year financial report is not in accordancewith the Corporations Act 2001 including: giving a true and fair view of theGroup's financial position as at 31 December 2007 and its performance for thehalf-year ended on that date; and complying with Australian Accounting StandardAASB 134 Interim Financial Reporting and the Corporations Regulations 2001. Asauditor of Oilex Ltd, ASRE 2410 requires that we comply with the ethicalrequirements relevant to the audit of the annual financial report.A review of a half-year financial report consists of making enquiries,primarily of persons responsible for financial and accounting matters, andapplying analytical and other review procedures. A review is substantially lessin scope than an audit conducted in accordance with Australian AuditingStandards and consequently does not enable us to obtain assurance that we wouldbecome aware of all significant matters that might be identified in an audit.Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Oilex Ltd is not in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 31 December 2007 and of its performance for the half-year ended on that date; and
(b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
KPMGB C FullartonPartnerPerth11 March 2008
OILEX LTD