consolidated half year report for the half year ended for … · 2016-03-10 · condensed...

ABN: 79 140 110 130

And Controlled Entities

CONSOLIDATED HALF YEAR REPORT

For the Half Year Ended

31 December 2015

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CONTENTS

Jacka Resources Limited and Controlled Entities

CORPORATE DIRECTORY 1

DIRECTORS’ REPORT 2

AUDITOR’S INDEPENDENCE DECLARATION 5

CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER

COMPREHENSIVE INCOME 6

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 7

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 8

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 9

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 10

DIRECTORS’ DECLARATION 21

INDEPENDENT AUDITOR’S REPORT 22

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CORPORATE DIRECTORY

Jacka Resources Limited and Controlled Entities 1

DIRECTORS

Max Cozijn

James Robinson

Neil Fearis

SECRETARY

Stephen Brockhurst

REGISTERED OFFICE

Level 11, London House

216 St Georges Terrace

Perth WA 6000

Telephone: (08) 9481 0389

Facsimile: (08) 9463 6103

PRINCIPAL OFFICE

Level 11 London House, 216 St Georges’ Terrace

Perth WA 6000

BUSINESS OFFICES

C/- Immeuble Blue Center, Bureau No 4

Rue du Lac Constance

Les berges du Lac

1053 Tunis

TUNISIA

C/- PO Box 173

Road Town

Tortola

BRITISH VIRGIN ISLES

C/- 1, Murtala Muhammed Drive (Formerly Bank Road),

Ikoyi, Lagos

NIGERIA

C/ - PO Box 76195

Dar-es-Salaam

TANZANIA

SHARE REGISTRY

Advanced Share Registry Services

150 Stirling Highway

Nedlands WA 6009

Telephone: (08) 9389 8033

Facsimile: (08) 9389 7871

AUDITORS

Bentleys

Level 3, London House

216 St Georges Terrace

Perth WA 6000 For

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DIRECTORS’ REPORT Continued


Your directors submit the financial report of Jacka Resources Limited (“Jacka” or the “Company”) and its

controlled entities (together, the “Group”) for the half year ended 31 December 2015.

DIRECTORS

The names of Directors who held office during the half year are:

Max Cozijn

James Robinson

Neil Fearis

RESULTS

The loss after tax for the half year ended 31 December 2015 was $5,131,604, which includes non-cash

impairments of $4,565,743 (2014: $42,684,160, which included non-cash impairments of $42,582,790).

REVIEW OF OPERATIONS

Operations

Aje Field, Nigeria (Jacka 5.0006% revenue interest, 6.675% contributing interest)

During the period under review, the Aje-4 and Aje-5 production wells located on the OML 113 license,

offshore Nigeria, were successfully completed in the Upper and Lower Cenomanian oil-bearing zones.

Additionally, all key equipment related to the Aje oil field Phase 1 development project was delivered to

Lagos, including the FPSO moorings and turret buoy, the production manifold, the umbilical termination

assembly, and all umbilicals and flowlines.

Rubicon’s Floating Production Storage and Offloading (”FPSO”) vessel, the Front Puffin, is expected to

arrive at the Aje location in early March 2016. The current schedule calls for approximately one month in

order to connect subsea flowlines and the Aje-4 and Aje-5 wells to the FPSO prior to commencement of

production. This initial phase is focused on the production of Cenomanian oil from the Aje-4 and Aje-5

production wells. Initial production is estimated to be at the rate of 10,000 gross barrels of oil per day

(BOPD).

As previously advised, Jacka’s funding for the project is via an arrangement with AIM-listed MX Oil Plc.

(AIM:MXO). Under the terms of that arrangement, Jacka retains an indirect interest in the Aje project through

its shareholding in MXO, which after a recent issue of capital by MXO currently represents a 9.3% interest.

Subsequent to the period end, MXO entered into a call option agreement with GEC Petroleum Development

Company Limited (“GPDC”) of Nigeria whereby GPDC agreed to fund remaining cashcalls for Phase 1

development costs and have the option to acquire MXO’s investment loans in the project and have the right

to acquire the equity investment in the holding companies, for a gross consideration of US$18 million. Should

this option be exercised then Jacka would retain its shareholding in MXO, which would no longer hold an

investment in the Aje project but would have received significant cash consideration.

Bargou Permit, Tunisia (Jacka 15% participating interest)

The 4,616 km2 Bargou Permit is located in the Gulf of Hammamet, offshore northern Tunisia.

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The Joint Venture (Dragon Oil: 55%, Cooper Energy (Operator): 30%, Jacka: 15%) was granted a one-year

extension on the permit in conjunction with a revised work programme commitment which focuses on de-

risking additional hydrocarbon potential already identified on the block. The refocus was a necessary

consequence of the downturn in worldwide oil prices, which increased the minimum economic threshold

field size beyond that which had been achieved by the Hammamet West-3 (“HW3”) discovery. The newly

committed work program requires the acquisition of a 500km2 3D survey in addition to plugging the HW3

discovery well.

The HW3 discovery, located in approximately 60 metres of water 15 kilometres from shore, was drilled and

tested in 2013. At that time, the reported gross 1C contingent resource attributable to the discovery (11.6

MMBO plus 5.3 BCF) exceeded the minimum economic field size (“MEFS”) estimate of 8 to 10 million

barrels of oil. The worldwide decrease in crude oil pricing has resulted in an increase in the MEFS threshold,

rendering the HW3 discovery sub-economic. This has caused the Joint Venture to shift its focus from

delineating the HW3 discovery to proving up additional resources in order to exceed the higher MEFS

hurdles.

During the December quarter, the Joint Venture put the 3D seismic work out to tender. If finalised, seismic

acquisition operations are expected to conclude in March/early April 2016.

Ruhuhu, Tanzania (Jacka 100% participating interest)

The Ruhuhu licence is located in southwest Tanzania and covers an area of 10,343 km2. A wholly-owned

subsidiary of Jacka is the Operator and holds 100% of the petroleum exploration rights to the entire Ruhuhu

Basin and a portion of the Lake Nyasa Rift Basin, which is part of the East African rift system.

As previously advised, a key component of the stated exploration strategy includes farming out the capital-

intensive portions of the work programme. However, the current lack of appetite for early stage exploration

projects has adversely impacted Jacka’s farmout efforts. As a consequence, the Company has curtailed its

operating costs and is seeking to renegotiate its ongoing commitments on this project.

Odewayne Block, Somaliland (Option to acquire 5%)

Jacka retains an option to acquire a 5% participating interest in this block arising from its original farm-in

agreement on the block. That option can be exercised on the earlier of (1) the proposing of a second well in

the Production Sharing Contract (PSC), or (2) the parties entering into the Fifth Period of the PSC.

The Odewayne PSC is currently in its Third Period. However, operations in Somaliland continue to be

delayed by security concerns. Operator Genel Energy is working with the Ministry of Energy and Minerals

to resume operations as soon as practicable.

Qualified Petroleum Reserves and Resource Evaluator Requirements

Pursuant to the requirements of the ASX Listing Rules 5.11, 5.11.1, 5.12 and 5.13, the technical information

provided in this report has been compiled by Mr Ken Charsinsky, an advisor to Jacka Resources Limited. Mr

Charsinsky (M.Sc. Geology) has over 35 years of experience in the exploration for, and appraisal and

development of, petroleum resources and has sufficient relevant experience to qualify as a Qualified

Petroleum Reserves and Resources Evaluator (QPPRE) under ASX Listing Rules. Mr Charsinsky consents

to the inclusion in this report of matters based on information compiled by him in the form and context in

which they appear. Mr Charsinsky is a long-standing member of the AAPG.

Corporate

Given the current state of the global oil markets, the ability of Jacka to access funding support on acceptable

terms is a challenge. In response, the Company has significantly reduced its operating costs and is exploring

various options in order to manage its future funding requirements.

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GOING CONCERN

The consolidated financial statements have been prepared on a going concern basis which contemplates that

the Group will continue to meet its commitments and the realisation of assets and the settlement of liabilities

in the normal course of business.

The ability of the Group to meet both contractual and forecast expenditure will require additional funds

through asset sales or new share issues. Further information is provided in Note 1 (c) of the consolidated

financial statements.

EVENTS SUBSEQUENT TO REPORTING DATE

At 31 December 2015, the market value of the Company’s holding in MX Oil Plc was $1,809,205. At the

date of signing of this report, the market value is $1,037,152.

Subsequent to the period end, MXO entered into a call option agreement with GEC Petroleum Development

Company Limited (“GPDC”) of Nigeria whereby GPDC agreed to fund remaining cashcalls for Phase 1

development costs and have the option to acquire MXO’s investment loans in the project and have the right

to acquire the equity investment in the holding companies, for a gross consideration of US$18 million. Should

this option be exercised then Jacka would retain its shareholding in MXO, which would no longer hold an

investment in the Aje project but would have received significant cash consideration.

There are no other matters or circumstances that have arisen since the end of the half year which significantly

affect, or may significantly affect, the state of affairs or operations of the reporting entity in future financial

periods.

AUDITOR’S DECLARATION OF INDEPENDENCE

The auditor’s independence declaration for the half year ended 31 December 2015 has been received and is

included within the financial statements.

Signed in accordance with a resolution of directors.

____________________

Max Cozijn

Chairman

Perth, 10 March 2016

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To the Board of Directors

Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 As lead audit director for the review of the financial statements of Jacka Resources Limited for the half year ended 31 December 2015, I declare that to the best of my knowledge and belief, there have been no contraventions of: the auditor independence requirements of the Corporations Act 2001 in relation to

the review; and any applicable code of professional conduct in relation to the review.

Yours faithfully

BENTLEYS DOUG BELL CA Chartered Accountants Director Dated at Perth this 10th day of March 2016 F

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER

COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2015


Note Consolidated

31 December

2015

$

Consolidated

31 December

2014

$

Interest revenue 7,116 15,263

Accounting and audit fees (81,694) (113,379)

Compliance fees (61,561) (65,489)

Consultancy fees (71,573) (194,678)

Depreciation (2,431) (2,433) Directors’ remuneration (159,737) (163,632) Exploration and evaluation expenditure impairment 4a (2,304,780) (42,582,790)

Foreign exchange gain/(loss)

Financial asset impairment

3

308,207

(2,260,963)

791,648

-

Insurance (14,843) 23,185 Interest Expense

Legal fees

(111,582)

(18,271)

(83,837)

(4,955)

Loss on sale of investments

Marketing (851)

(5,933)

-

(60,743)

Occupancy (24,777) (35,390) Travel expenses (22,098) (67,500) Other expenses (305,833) (139,430)

Profit/(loss) before income tax benefit (5,131,604) (42,684,160)

Income tax benefit - -

Profit/(loss) for the period

(5,131,604)

(42,684,160)

Other comprehensive income

Other comprehensive income (net of income tax)

Items that may be classified subsequently to profit or loss:

Net unrealised (gain)/loss on available for sale financial

assets

(11,863) 12,638

Total comprehensive income for the period

(5,143,467)

(42,671,522)

Basic loss per share (cents) (1.14) (10.80)

The accompanying notes form part of these financial statements.

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2015


Note Consolidated

31 December

2015

$

Consolidated

30 June

2015

$

ASSETS

Current Assets

Cash and cash equivalents 1,407,795 1,925,675

Trade and other receivables

Assets classified as held for sale

Shares in listed companies

2

3

35,179

24,561,207

1,842,775

872,836

8,561,745

-

Total Current Assets 27,846,956 11,360,256

Non-Current Assets

Plant and equipment - 4,283

Other financial assets 3 - 45,431

Exploration and development expenditure 4 - 2,020,626

Total Non-Current Assets - 2,070,340

Total Assets 27,846,956 13,430,596

LIABILITIES

Current Liabilities

Trade and other payables 5 209,531 593,640

Provisions

Liabilities directly associated with assets classified

as held for sale

2

-

24,561,207

16,055

4,601,216

Total Current Liabilities 24,770,738 5,210,911

Total Liabilities 24,770,738 5,210,911

Net Assets 3,076,218 8,219,685

EQUITY

Issued capital 48,242,893 48,242,893

Reserves 152,829 164,692

Retained profits (45,319,504) (40,187,900)

Total Equity 3,076,218 8,219,685


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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



Consolidated

Entity

Issued

Capital

$

Option

Reserve

$

Revaluation

Reserve

$

Forex

Reserve

$

Accumulated

Losses

$

Total

$

Balance at 1

July 2015

48,242,893

614,905

(2,609)

(447,604)

(40,187,900)

8,219,685

Shares issued

during the

period

-

-

-

-

-

-

Security issue

expenses

-

-

-

-

-

-

Grant of options - - - - - -

Loss for the

period

- - - (5,131,604) (5,131,604)

Other

comprehensive

income (net of

income tax)

-

-

(11,863)

-

-

(11,863)

Total

comprehensive

income for the

period

-

-

(11,863)

-

(5,131,604)

(5,143,467)

Balance at 31

December 2015

48,242,893

614,905

(14,472)

(447,604)

(45,319,504)

3,076,218

Balance at 1

July 2014

46,988,934

614,905

(14,620)

(447,604)

3,918,238

51,059,853

Shares issued

during the

period

-

-

-

-

-

-

Security issue

expenses

(10,019)

-

-

-

-

(10,019)

Grant of options - - - - - -

Loss for the

period

- - - (42,684,160) (42,684,160)

Other

comprehensive

income (net of

income tax)

-

-

12,638

-

-

12,638

Total

comprehensive

income for the

period

-

-

12,638

-

(42,684,160)

(42,671,522)

Balance at 31

December 2014

46,978,915

614,905

(1,982)

(447,604)

(38,765,922)

8,378,312


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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS



Note Consolidated

31 December

2015

$

Inflows/

(Outflows)

Consolidated

31 December

2014

$

Inflows/

(Outflows)

Cash flows from operating activities

Payments to suppliers and employees (339,640) (875,534)

Interest received 7,116 15,263

Interest paid (111,582) (4,955)

Payment for exploration and evaluation expenditure (185,355) (1,295,214)

Payment for development expenditure (10,448,432) (4,047,305)

Net cash used in operating activities

(11,077,893)

(6,207,745)

Cash flows from investing activities

Net cash from investing activities

-

-

Cash flows from financing activities

Payment of share issue costs - (10,019)

Proceeds from borrowings 10,560,013 -

Repayment of borrowings - (300,000)

Net cash provided by/(used in) financing activities

10,560,013

(310,019)

Net decrease in cash held (517,880) (6,517,764)

Cash at beginning of the financial period 1,925,675 10,037,359

Cash and cash equivalents at period end

1,407,795

3,519,595


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1. Basis of Preparation of Half Year Financial Report

a) Reporting entity

Jacka Resources Limited (“Jacka” or the “Company”) is a company domiciled in Australia. The consolidated

interim financial statements of the Company as at and for the half year ended 31 December 2015 comprise

the Company and its controlled entities (together referred to as the “Group”).

The consolidated financial statements of the Group as at and for the year ended 30 June 2015 are available

upon request from the Company’s registered office at Level 11, London House, 216 St Georges Terrace,

Perth WA 6000 or at jackaresources.com.au.

b) Statement of compliance

These consolidated interim financial statements constitute a general purpose financial report and have been

prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting

Standard AASB 134: Interim Financial Reporting. Compliance with AASB134 ensures compliance with

IAS134: Interim Financial Reports. They do not include all of the information required for full annual

financial statements, and should be read in conjunction with the consolidated financial statements of the

Group as at and for the year ended 30 June 2015.

These consolidated interim financial statements were approved by the Board of Directors on 10 March 2016.

The interim financial statements have been prepared in accordance with the accounting policies adopted in

the Group's last annual financial statements for the year ended 30 June 2015. The accounting policies have

been applied consistently throughout the Group for the purposes of preparation of these interim financial

statements.

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian

Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current

half-year.

New and revised Standards and amendments thereof and Interpretations effective for the current half-year

that are relevant to the Group include:

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 Australia Groups with a Foreign Parent’

The adoption of the above standards have not had a material impact on this half year financial report.

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Continued



1. Basis of Preparation of Half Year Financial Report (Continued)

The Group’s financial instruments consist of trade and other receivable and trade and other payables. These

financial instruments are measured at amortised cost, less any provision for non-recovery. The carrying

amount of the financial assets and liabilities approximate their fair value.

The Group’s held for trading financial assets are level-1 financial instruments and valued using the quoted

bid prices from the Australian Securities Exchange as at the reporting date.

c) Going Concern

This half year financial report has been prepared on the going concern basis, which contemplates continuity

of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course

of business. The Group incurred a loss from ordinary activities of $5,131,604 for the half-year ended 31

December 2015 (2014: $42,684,160). This loss included impairment losses on exploration and evaluation

expenditure assets of $2,304,780 and financial asset impairment of $2,260,963. The net working capital

position of the Group at 31 December 2015 was $3,076,218 (30 June 2015: $6,149,345) and the net decrease

in cash held during the half-year was $517,880 (2014: $6,517,764). The Group has firm exploration

commitments payable within the next 12 months of $885,857 and development commitments of $3,283,413.

Development commitments will be funded by MX Oil Plc as described in note 2.

The directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash

flows to meet all commitments and working capital requirements for the 12 month period from the date of

signing this financial report.

The ability of the Group to continue to pay its debts as and when they fall due is principally dependent upon

the Company successfully raising additional share capital, full or partial divestment of assets, containing

expenditure in line with available funding, or ultimately developing one of its oil and/or gas assets. These

conditions indicate a material uncertainty that may cast significant doubt about the ability of the Group to

continue as a going concern.

Notwithstanding the above, the Directors believe it is appropriate to prepare these financial statements on a

going concern basis because:

the Directors have an appropriate plan to raise additional funds as and when it is required. In light

of the Group’s current exploration projects, the Directors believe that the additional capital required

can be raised within the ordinary course of business;

the Company has entered into a transaction to cover its portion of future funding for the ongoing

Aje field development plan (refer note 2). Upon commercial production of the Aje project, funds

forwarded to cover cash calls may be converted into equity in a wholly-owned subsidiary and upon

such conversion control of the subsidiary will vest in a third party, thereby removing this debt

(currently $10.56m) and a further loan of $10.99m as Group liabilities. Should this transaction not

be completed, the Group will be required to investigate alternative funding arrangements to meet

the development commitments of the Aje project;

the Directors believe that full or partial divestment of assets is possible to interested industry parties

that would provide funding for the remainder of the portfolio;

the Directors have an appropriate plan, if required, to divest the Company’s interest in liquid

investments to raise additional funding; and

the Directors have an appropriate plan to contain certain operating and exploration expenditure if

appropriate funding is unavailable.

Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going

concern basis of preparation is appropriate. In particular, given the Group’s history of raising capital to date,

the directors are confident of the Group’s ability to raise additional funds as and when they are required.

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Continued



Should the Group be unable to continue as a going concern it may be required to realise its assets and

extinguish its liabilities other than in the ordinary course of business and at amounts different to those stated

in the financial statements. The financial statements do not include any adjustments relating to the recovery

and reclassification of assets carrying amounts or to the amount and classification of liabilities that might

arise should the Group be unable to continue as a going concern and meet its debts as and when they fall due.

d) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in

presentation for the current financial year. When the Group applies an accounting policy retrospectively,

makes a retrospective restatement or reclassifies items in its financial statements, a statement of financial

position as at the beginning of the earliest comparative period will be disclosed.

2. Assets classified as held for sale

On 14 July 2015 the Company announced that MX Oil PLC (“MXO”), a company listed on the Alternative

Investment Market (“AIM”) in London, would fund Jacka’s portion of the ongoing Aje field development

program and, in return, could acquire Jacka’s economic interest in the Aje field upon the commencement of

commercial production from the field. It is anticipated the commencement of commercial production will

occur within the next 6 months.

In addition, MXO has acquired Jacka’s loans to its Nigerian subsidiary P.R.Oil & Gas Nigeria Limited in

exchange for shares in MXO, thereby providing Jacka with ongoing exposure to the Aje project through its

investment in MXO. Pursuant to this arrangement, on 21 July 2015 Jacka was issued MXO shares to the

value of US$3 million (AU$3,997,124). Jacka’s shareholding initially represented a 11.47% interest in

MXO. Due to further issues of capital, Jacka’s shareholding now represents a 9.3% interest in MXO. Jacka

has not disposed of any of its holding in MXO.

Under the terms of the Joint Operating Agreement governing the Aje project, should the Company (or MXO

on the Company’s behalf) not contribute its share of funding within the prescribed periods, its interest will

effectively be forfeited.

Consolidated

31 December

2015

$

Consolidated

30 June

2015

$

Assets classified as held for sale

Development expenditure 28,709,709 5,067,060

Trade and other receivables (a) - 3,729,528

Asset Retirement Obligation

Accumulated Impairment 918,558

(5,067,060)

871,688

(1,106,531)

24,561,207 8,561,745

Liabilities directly associated with assets classified as held for sale Trade and other payables (a)

Borrowings (b) (2,087,950)

(21,554,699)

(3,729,528)

-

Asset Retirement Rehabilitation (918,558) (871,688)

(24,561,207) (4,601,216)

Net assets classified as held for sale - 3,960,529

Reconconciliation of movements during the period

Assets Classified as held for sale

Balance at beginning of period

Movement in Development expenditure

Movement in trade and other receivables

8,561,745

23,642,649

(3,729,528)

-

5,067,060

3,729,528

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Continued



Movement in Asset Retirement Obligation (c)

Transfer to Shares in Listed Companies (d)

Impairment

46,870

(3,960,529)

-

871,688

-

(1,106,531)

Liabilities directly associated with assets classified as

held for sale

Balance at beginning of period

Movement in Trade and other payables

Movement in Borrowings

24,561,207

(4,601,216)

1,641,578

(21,554,699)

8,561,745

-

(3,729,528)

-

Movement in Asset Retirement Rehabilitation (46,870) (871,688)

(24,561,207) 4,601,216

Net assets classified as held for sale - 3,960,529

(a) These balances relate to funding receivable from MX Oil PLC for cash calls payable received on the

Aje asset subsequent to entering the financing arrangement described above.

(b) Included in this amount are the following loans:

Consolidated

31 December

2015

$

Consolidated

30 June

2015

$

Loan from MX Oil Plc owing by P.R. Oil & Gas Nigeria

Limited, a wholly owned subsidiary of Jacka Resources

Limited (1)

10,994,686 -

Loan from MX Oil Plc owing by Jacka Resources Nigeria

Holdings Limited, a wholly owned subsidiary of Jacka

Resources Limited (2)

10,560,013 -

21,554,699 -

(1) MXO acquired Jacka’s loan to its Nigerian subsidiary P.R.Oil & Gas Nigeria Limited in

exchange for $3 million USD worth of shares in MXO. This loan was assigned to MXO under a

Loan Assignment Deed dated 27 May 2015 and subsequent Assignment and Supplemental Deed

dated 13 July 2015. The loan is repayable on demand, unsecured and interest free.

(2) MXO is funding Jacka’s portion of the ongoing Aje field development program, and, in return,

could gain control of Jacka’s economic interest in the Aje field, upon the commencement of

commercial production from the field. Under the Private Placement Deed dated 27 May 2015,

MXO has elected to classify funds forwarded as an unsecured loan with no interest payable and

such loans only become repayable in the event that commercial production has commenced. The

loan may be converted into equity in Jacka Resources Nigeria Holdings Limited in the case that

commercial production occurs. MXO has funded any and all cash calls required to fund up to the

commencement of commercial production.

(c) These balances relate to corresponding asset retirement assets/liabilities directly related to the Aje

project that is classified as held for sale (refer note 4)

(d) Transfer of value of MXO shares to Other Financial Assets (refer note 3)

(e) At 30 June 2015, Net assets classified as held for sale have been measured at fair value less costs to

sell being AU$3,997,124 in MXO shares less associated costs of $36,595.

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Continued



Consolidated

31 December

2015

$

Consolidated

30 June

2015

$

3. Other financial assets

Available for sale financial assets (level 1) 1,842,775 45,431

1,842,775 45,431

Included in Available for sale financial assets are shares in MX Oil Plc of $1,809,205. An impairment loss of

$2,260,963 has been recognised in relation to the decrease in market value during the period.

Note that the comparative amount was classified as non-current at 30 June 2015.

4. Exploration and development expenditure

Exploration expenditure (a) - 2,020,626

Development expenditure (b) - -

- 2,020,626

(a) Costs carried forward in respect of deferred exploration expenditure:

Exploration at cost

Balance at beginning of period 2,020,626 42,030,976

Exploration expenditure incurred 284,154 2,223,528

Provision for exploration expenditure impairment (c) (2,304,780) (42,233,878)

Balance at end of period - 2,020,626

The ultimate recoupment of the exploration expenditure carried forward is dependent on the successful

development and commercial exploitation and/or sale of the relevant areas of interest, at amounts at least

equal to book value.

(b) Costs carried forward in respect of development expenditure:

Development at cost

Balance at beginning of period - -

Development expenditure incurred - 5,067,060

Transferred to Assets classified as held for sale (note 2) - (5,067,060)

Balance at end of period - -

Asset Retirement Obligation Asset

Balance at beginning of period - -

Recognition of asset retirement obligation asset - 871,688

Transferred to assets classified as held for sale (note 2) - (871,688)

Balance at end of period - -

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(c) Impairment charges

Due to the lack of success in farming out the Ruhuhu Block in Tanzania because of the lack of appetite for early

stage exploration projects, the Company has curtailed its operating costs on this project and with the current

difficulty in the oil market the Company has created a provision for diminuation of 100% against the carrying

value of this project ($2,304,780). The Company is currently seeking to renegotiate its ongoing commitments

on this block.

At 30 June 2015 the Aje Project had transitioned to development stage and the Accounting Standards required

that the asset be assessed for impairment as at transition date, which has resulted in the Company creating a

provision for diminuation in the carrying value of this asset relating to its capitalized exploration expenditure

($20,455,305). At the same date, with the difficulty in the oil market and pricing, the Company also created a

provision for diminuation of 100% against the carrying value of the Bargou Permit, Tunisia ($21,778,573),

while the Company continues to investigate options for economic development.

(d) Joint Operations

The Consolidated entity participated in the following joint operations during the year

Aje Field, Nigeria – 5.006% revenue interest, 6.675% contributing interest

Bargou Permit, Tunisia – 15% participating interest

Odewayne Block, Somaliland – 0% interest with an option to acquire a 5% participating interest).

Consolidated

31 December

2015

$

Consolidated

30 June

2015

$

5. Trade and other payables

Trade and other payables 209,531 593,640

209,531 593,640

6. Commitments

Expenditure commitments

There are office rental, compliance and financial advisory contracts in place. The committed expenditure is:

Within one year 78,900 128,200

One to five years 26,286 200,664

105,186

328,864

Exploration commitments

In the Tunisian permits, the newly committed work program requires the acquisition of a 500km2 3D survey in

addition to plugging the HW3 discovery well before the end of the calendar year.

In Nigeria, the licence is in good standing with no further commitment work required, all work is discretionary

by the Joint Venture.

In Tanzania on the Ruhuhu block, Jacka has signed up to a 4 year exploration phase and the completion of

exploration works is flexible within this timeframe. The Company is in discussions with the Tanzanian

government to renegotiate its ongoing exploration commitments and has suspended in country activity during

negotiations.

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Consolidated

31 December

2015

$

Consolidated

30 June

2015

$

The committed exploration expenditure is:

Within one year 885,857 1,880,220

One to five years 3,184,071 2,623,708

4,069,928

4,503,928

Development commitments

Jacka’s funding for the Aje project, Nigeria is via an arrangement with AIM-listed MX Oil Plc. Upon

commencement of commercial production, under the terms of the Loan Assignment Deed dated 27 May

2015 and subsequent Assignment and Supplemental Deed dated 13 July 2015, MXO could gain control of

Jacka’s economic interest in the Aje project. It is anticipated the commencement of commercial production

will occur within the next 6 months. Jacka’s remaining share of cash calls to anticipated production is

$3,283,413. These costs are to be funded by MXO/GPDC.

7. Contingent liabilities

There are no contingent liabilities as at the date of this report, other than as reported in Note 6 above.

8. Financial reporting by segments

The Consolidated Entity has identified its operating segments based on the internal reports that are provided

to the Board of Directors on a monthly basis. Management has identified the operating segments based on

exploration in the two principal locations of its projects – Australia and Africa.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with

respect to operating segments are determined in accordance with accounting policies that are consistent to

those adopted in the annual financial statements of the Consolidated Entity.

Inter-segment transactions

Inter-segment loans payable and receivable are initially recognised at the consideration received net of

transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not

adjusted to fair value based on market interest rates. This policy represents a departure from that applied to

the statutory financial statements.

Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the

majority of economic value from the asset. In the majority of instances, segment assets are clearly

identifiable on the basis of their nature and physical location.

Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and

the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the

Company as a whole and are not allocated. Segment liabilities include trade and other payables and certain

direct borrowings.

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8. Financial reporting by segments (Continued)

Unallocated items

The following items of revenue, expense, assets and liabilities are not allocated to operating segments as

they are not considered part of the core operations of any segment:

administration and other operating expenses not directly related to a specific segment.

Unless indicated otherwise in the segment assets note, investments in financial assets, deferred tax assets

and intangible assets have not been allocated to operating segments.

Exploration

The exploration segment explores for oil and gas. Segment assets including cash paid to joint venture

partners for the costs associated with the exploration and are reported in this segment.

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Australian

Exploration

$

African Exploration

$

Total

$

31 December 2015

Segment revenue - - -

Segment results - (2,316,672) (2,316,672)

Amounts not included in segment results but reviewed by the Board:

Interest revenue 7,116

Accounting and audit fees (44,633)

Compliance fees (61,314)

Consultancy fees (69,904)

Depreciation (2,431)

Directors’ remuneration

Financial asset impairment

(159,737)

(2,260,963)

Foreign exchange 87,279

Insurance (11,744)

Interest expense (293)

Legal fees

Loan forgiveness

(11,744)

(851)

Marketing (5,932)

Occupancy (24,776)

Travel expenses (12,835)

Other expenses (242,170)

Loss before income tax (5,131,604)

Segment assets - 24,561,207 24,561,207

Unallocated assets:

Cash and cash equivalents

Other financial assets

1,407,795

1,842,775

Trade and other receivables 35,179

Total assets 27,846,956

Segment liabilities - 24,561,207 24,561,207

Unallocated liabilities:

Trade and other payables 209,531

Provisions -

Total liabilities 24,770,738

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Australian

Exploration

$

African

Exploration

$

Total

$

31 December 2014

Segment revenue - - -

Segment results - (42,732,821) (42,732,821)

Amounts not included in segment results but reviewed by the Board:

Interest revenue 15,263

Accounting and audit fees (35,737)

Compliance fees (65,166)

Consultancy fees (187,881)

Depreciation (2,433)

Directors’ remuneration (163,632)

Foreign exchange 791,648

Insurance 23,185

Interest expense (4,955)

Legal fees (50,076)

Marketing (60,743)

Occupancy (35,017)

Travel expenses (37,805)

Other expenses (137,990)

Loss before income tax (42,684,160)

30 June 2015

Segment assets - 10,582,371 10,582,371

Unallocated assets:

Cash and cash equivalents 1,925,675

Trade and other receivables 872,836

Plant and equipment 4,283

Non-Current financial assets 45,431

Total assets 13,430,596

Segment liabilities - 4,628,216 4,628,216

Unallocated liabilities:

Trade and other payables 566,640

Provisions 16,055

Total liabilities 5,210,911

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9. Events subsequent to period end

At 31 December 2015, the market value of the Company’s holding in MX Oil Plc was $1,809,205. At the

date of signing of this report, the market value is $1,037,152.

Subsequent to the period end, MXO entered into a call option agreement with GEC Petroleum

Development Company Limited (“GPDC”) of Nigeria whereby GPDC agreed to fund remaining cashcalls

for Phase 1 development costs and have the option to acquire MXO’s investment loans in the project and

have the right to acquire the equity investment in the holding companies, for a gross consideration of

US$18 million. Should this option be exercised then Jacka would retain its shareholding in MXO, which

would no longer hold an investment in the Aje project but would have received significant cash

consideration.

There are no other matters or circumstances that have arisen since the end of the half year which

significantly affect, or may significantly affect, the state of affairs or operations of the reporting entity in

future financial periods.

10. Interests in controlled entities

The consolidated financial statements incorporate the assets, liabilities and the results of the following

subsidiary in accordance with the accounting policy described in note 1:

Name Country of

incorporation

Class of

share

Equity holding

31

December

2015

30 June

2015

Exmouth Energy Pty Ltd Australia Ordinary 100% 100%

Jacka Tunisia Pty Ltd Australia Ordinary 100% 100%

Jacka Resources Nigeria Holdings

Limited

British Virgin

Islands

Ordinary

100%

100%

PR Oil and Gas Nigeria Limited Nigeria Ordinary 100% 100%

Jacka Resources Africa Limited British Virgin

Islands

Ordinary

100%

100%

Jacka Resources Somaliland Limited

BVI

British Virgin

Islands

Ordinary

100%

100%

Jacka Resources Tanzania Limited British Virgin

Islands

Ordinary

100%

100%

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DIRECTORS’ DECLARATION


The directors of the Company declare that:

1. the financial statements and notes, as set out on pages 6 to 20 are in accordance with the Corporations

Act 2001 and:

a. comply with Accounting Standard AASB 134: Interim Financial Reporting; and

b. giving a true and fair view of the consolidated entity’s financial position as at 31 December

2015 and of its performance for the half year ended on that date.

2. In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to

pay its debts as and when they become due and payable.

This declaration is signed in accordance with a resolution of the Board of Directors.

____________________

Max Cozijn

Chairman

Perth, 10 March 2016

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Independent Auditor’s Review Report To the Members of Jacka Resources Limited We have reviewed the accompanying half-year financial report of Jacka Resources Limited (“the Company”) and Controlled Entities (“the Consolidated Entity”) which comprises the condensed consolidated statement of financial position as at 31 December 2015, the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration of the Consolidated Entity, comprising the Company and the entities it controlled during the half-year. Directors Responsibility for the Half-Year Financial Report The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2015 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of the Consolidated Entity, ASRE 2410 requires that we comply with the ethical requirements 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, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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Independent Auditor’s Review Report To the Members of Jacka Resources Limited (Continued) Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. 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 Jacka Resources Limited and Controlled Entities is not in accordance with the Corporations Act 2001 including: a. Giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2015 and of

its performance for the half-year ended on that date; and b. Complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations

Regulations 2001. Emphasis of Matter Without qualifying our conclusion, we draw attention to Note 1(c) in the half year financial report which indicates that the Consolidated Entity incurred a net loss of $5,131,604 during the half year ended 31 December 2015. This condition, along with other matters as set forth in Note 1(c), indicate the existence of a material uncertainty which may cast significant doubt about the ability of the Consolidated Entity to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the half year financial report.

BENTLEYS DOUG BELL CA Chartered Accountants Director Dated at Perth this 10th day of March 2016

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consolidated half year report for the half year ended for … · 2016-03-10 · condensed...

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