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FSE - Firestone Energy Limited - Half yearly financial statements for 6 months
ended 31 December 2009
FIRESTONE ENERGY LIMITED
(formerly Centralian Minerals Limited)
(Registration number: ABN 058 436 794)
(SA company registration number: 200/023973/10
Share code on the JSE: FSE
Share code on the ASX: FSE
ISIN: AU000000FSE6
("FSE" or "the Company")
ABN 71 058 436 794
Half yearly financial statements for 6 months ended 31 December 2009
These half year financial statements do not include all the notes of the type
normally included in annual financial statements. Accordingly, this report is
to be read in conjunction with the annual financial statements for the year
ended 30 June 2009, and any public announcements made by Firestone Energy Ltd
during the half year reporting period in accordance with the continuous
disclosure requirements of the Corporations Act 2001.
DIRECTORS` REPORT
The Directors present their report together with the consolidated financial
report for the half-year ended 31 December 2009 and the review report thereon.
Directors
The names of the Directors of Firestone Energy Limited throughout the
reporting period and at the date of this report are:
MR John Dreyer
Non-Executive Chairman
MR John Wallington
Managing Director
MR Colin McIntyre (Appointed 17 July 2009)
Non-Executive Director
MR Timothy Tebeila
Non-Executive Director
MS Amanda Matthee
Non-Executive Director
Results of Operations
The net loss from continuing operations for the six months to 31 December
2009, amounted to $1,532,146 (Half year ended 31 December 2008: Net Loss
$283,066).
Review of Operations
As reported to the ASX, the company has concluded a second transaction with
its joint venture partner, Sekoko Coal (Pty) Ltd, which was approved by its
shareholders on 9 September 2009.
The Board is pleased to announce that the pre feasibility study was completed
and approved in January 2010 and the bankable feasibility study is expected to
be completed in the third quarter of 2010. During the half year, the group
raised $25 million to complete the bankable feasibility study.
Post Balance Sheet Date Events
During the half year Utafutaji Trading 75 (Pty) Ltd, a 100% subsidiary of
Lexshell 126 General Trading (Pty) Ltd negotiated to secure the surface rights
of the farm Smitspan, which were then secured on 24 February 2010. Sekoko Coal
(Pty) Ltd, the group`s joint venture partner, hold the exploration right for
Smitspan. The farm was purchased for a total amount of $3,471,850, and a
deposit amounting to $1,177,410 was paid in December 2009. During January a
further deposit of $784,940 was paid. At the date of this report, the
remaining balance of $1,509,500 is payable in two equal instalments in six
monthly intervals from the date of registration, 24 February 2010.
On 28 January 2010 the company signed a third Joint Venture agreement with
Sekoko Coal (Pty) Ltd and Lexshell 126 General Trading (Pty) Ltd, whereby the
company effectively purchase the right to two additional exploration
properties in the South African Waterberg, for a consideration of $2,000,000
and the issue of 200,000,000 shares.
Auditor`s Independence Declaration
A copy of the auditor`s independence declaration as required under Section
307C of the Corporations Act is set out on page 14 and forms part of this
report.
This report is made in accordance with a resolution of directors.
Dated at Perth this 16th day of March 2010
Signed in accordance with a resolution of the Directors.
Colin McIntyre
Director
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Half-Year Ended 31 December 2009
December December 2008
2009
$ $
Continuing operations
Foreign exchange gain 139,983) -)
Interest income 29,189) 51,808)
Occupancy costs (19,371) (74,986)
Legal fees (114,232) (76,411)
Administration costs (1,131,019) (118,563)
Directors fees (125,002) (64,914)
Finance cost (311,694) -
Loss before income tax (1,532,146) (283,066)
Income tax expense - -
Loss from continuing operations (1,532,146) (283,066)
Loss for the half year (1,532,146) (283,066)
Other comprehensive income for the
half year
Foreign currency translation (17,941) -
reserve
Total comprehensive income for the (1,550,087) (283,066)
half year attributable to the
owners of the group
Loss per share
Loss per share on loss from continuing
operations attributable to the ordinary
equity holders of the company
Basic loss per share (cents per share) (0.08) (0.003)
Diluted loss per share (cents per share)
N/a N/a
The above statement of comprehensive income should be read in conjunction with
the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2009
Note December June
2009 2009
$ $
Current assets
Cash and cash 4 1,550,146 1,870,754
equivalents
Trade and other 232,481 30,047
receivables
Prepayments 1,177,410 -
Total current assets 2,960,037 1,900,801
Non-current assets
Property, plant and 33,747 30,454
equipment
Interest in joint 11 71,269,680 19,645,502
venture
Receivables - 179,649
Total non-current 71,303,427 19,855,605
assets
Total assets 74,263,464 21,756,406
Current liabilities
Trade and other 1,122,761 1,914,532
payables
Borrowings - 600,000
Total current 1,122,761 2,514,532
liabilities
Non- current
liabilities
Borrowings 3 7,489,206 -
Total non-current 7,489,206 -
liabilities
Total liabilities 8,611,967 2,514,532
Net assets 65,651,497 19,241,874
Equity
Issued capital 7 62,704,850 14,781,022
Reserves 5,794,857 5,776,916
Accumulated losses (2,848,210) (1,316,064)
Total Equity 65,651,497 19,241,874
The above statement of financial position should be read in conjunction with
the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Half-Year Ended 31 December 2009
Group Issued Accumulated Foreign Share Total
capital losses currency based
$ translat payment $
$ ion reserve
reserve
$ $
Balance at 1 57,819,282 (58,297,793) - 2,590,000 2,111,488
July 2008
Comprehensive
income for
the half year
Loss for the - (283,066) - - (283,066)
half year
Other
comprehensive
income
Total other - - - -
comprehensive
income
Total - (283,066) - - (283,066)
comprehensive
income for
the half year
Transactions
with owners
recorded
directly in
equity
Contributions
by and
distributions
to owners
Equity-based - - - 1,480,000 1,480,000
payments
Issue of 11,335,334 - - - 11,335,334
shares, net
of
transaction
costs
Issue of 1,662,500 - - - 1,662,500
shares
(Option
Conversions)
Reduction of (58,297,793) 58,297,793 - - -
capital
Total (45,299,960) 58,297,793 1,480,000 14,477,833
transactions -
with owners
12,519,322 (283,066) 4,070,000 16,306,256
Balance at 31 -
Dec 2008
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
For the Half-Year Ended 31 December 2009
Group Issued Accumulated Foreign Share Total
capital losses currency based
$ translation payment $
$ reserve reserve
$
$
Balance at 1 14,781,022 (1,316,064) 1,695,271 4,081,645 19,241,874
July 2009
Comprehensive
income for the
half year
Loss for the - (1,532,146) - - (1,532,146)
half year
Other
comprehensive
income
Foreign - - 17,941 - 17,941
currency
translation
Total other - - - 17,941
comprehensive 17,941
income
Total - (1,532,146) 17,941 - (1,514,205)
comprehensive
income for the
half year
Transactions
with owners
recorded
directly in
equity
Contributions
by and
distributions
to owners
Issue of 47,923,828 - - - 47,923,828
shares, net of
transaction
costs
Total 47,923,828 - - - 47,923,828
transactions
with owners
62,704,850 (2,848,210) 1,713,212 4,081,645 65,651,497
Balance at 31
Dec 2009
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Half-Year Ended 31 December 2009
Note
2009 2008
$ $
Cash flows from operating
activities
Loss for the half year (1,532,146) (283,066)
Adjusted for:
Depreciation 6,042) -
Amortisation of transaction 89,206 -
cost
Change in trade and other (22,785) 76,269
receivables
Change in current (1,391,771) -
liabilities
Interest paid 222,488 -
Net cash used in operating (2,628,966) (206,797)
activities
Cash flows from investing
activities
Expenditure to acquire JV (6,362,409) (3,212,938)
interest
Loans repaid by other - 106,496
entities
Payments to acquire fixed (9,335) (21,436)
assets
Sale of office property - 58,104
plant and equipment
Prepayment to acquire fixed (1,177,410) -
property
Net cash used in investing (7,549,154) (3,069,774)
activities
Cash flows from financing
activities
Proceeds from issue of - 1,662,500
shares
Proceeds from the issue of 11,680,000 -
convertible notes
Transaction cost (1,600,000) -
Interest paid (222,488) -
Net cash from financing 9,857,512 1,662,500
activities
Net decrease in cash and (320,608) (1,614,071)
cash equivalents
Cash and cash equivalents 1,870,754 2,169,804
at 1 July
Cash and cash equivalents 4 1,550,146 555,733
at 31 Dec
The above statement of cash flows should be read in conjunction with the
accompanying notes.
Half yearly report for 6 months ended 31 December 2009
1 Basis of preparation of half-year report
These general purpose financial statements for the half-year reporting period
ended 31 December 2009 had been prepared in accordance with Accounting
Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.
These half year financial statements do not include all the notes of the type
normally included in annual financial statements. Accordingly, these financial
statements are to be read in conjunction with the annual report for the year
ended 30 June 2009 and any public announcements made by Firestone Energy Ltd
during the half year reporting period in accordance with the continuous
disclosure requirements of the Corporations Act 2001.
The accounting policies adopted are consistent with those of the previous
financial year and corresponding half year reporting period except as noted
below.
Changes in accounting policy
The following amending Standards have been adopted from 1 July 2009. Adoption
of these Standards did not have any material effect on the financial position
or performance of the Group.
AASB101 (Revised) Presentation of Financial Statements
The revised Standard separates owner and non-owner changes in equity and
requires a statement of comprehensive income to be prepared which discloses
all changes in equity during a period resulting from non-owner transactions.
The Company has elected to present comprehensive income using the single
statement approach.
AASB8 Operating Segments
The Company has applied AASB 8 Operating Segments from 1 July 2009. AASB 8
requires a management approach under which segment information is presented on
the same basis as that used for internal reporting purposes. Operating
segments are now reported in a manner that is consistent with the internal
reporting to the Board of Directors.
AASB3 Business Combinations and AASB 127 Consolidated and Separate Financial
Statements
The adoption of AASB 3 and AASB 127 will change the accounting policy of the
Company for future acquisitions and changes in ownership interests. These
standards are applied prospectively and had no material impact on prior
combinations. The Company has not elected to early adopt any other new
Standards or amendments that are issued but not yet effective.
Basis of consolidation
The consolidated half year financial statements comprise the interim financial
statements of Firestone Energy Ltd (the Company) and its subsidiaries (the
Group) as at 31 December each year.
Subsidiaries are all those entities (including special purpose entities) over
which the Group has the power to govern the financial and operating policies
so as to obtain benefits from their activities. The existence and effect of
potential voting rights that are currently exercisable or convertible are
considered when assessing whether a group controls another entity.
The half year financial statements of the subsidiaries are prepared for the
same reporting period as the Company, using consistent accounting policies.
In preparing the consolidated half year financial statements, all intercompany
balances and transactions, income and expenses and profit and losses resulting
from intra-group transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group and cease to be consolidated from the date on which
control is transferred out of the Group.
Investment in joint venture
The Group`s investment in joint ventures are considered to be jointly
controlled operations.
In respect of its interests in jointly controlled operations, the group
recognise in its financial statements:
- the assets that it controls and the liabilities that it incurs; and
- the expenses that it incurs and its share of the income that it earns
from the sale of goods or services by the joint venture.
December December
2009 2008
$ $
2. Expenses
Legal fees 114,232 76,411
Audit fees 23,233 14,519
Share registry costs 93,639 32,056
Directors fees 125,002 64,914
December June
2009 2009
$ $
3. Borrowings
Convertible notes 7,489,206 -
The above amount is shown net of transaction costs
attributable to the convertible note, and these costs are
amortised over the life of the loan. As at 31 December 2009,
the face value of the liability is $9million.
The total draw down facility is $25 million with a maturity
date of 3 years from the date of issue. The notes can be
converted at any time before the maturity date and bears
interest at a rate of 10% per annum.
4. Cash & Cash Equivalents
Cash at bank 1,550,146 1,870,754
5. Dividends
No dividend has been paid during or is recommended for the
financial period ended 31 December 2009.
December December
2009 2008
$ $
6. Commitments
Operating lease:
No later than 1 year 41,180 51,331
Later than 1 year but not later than 5 54,907 -
years
Total operating lease 96,087 51,331
Surface rights - Smitspan
No later than 1 year 1,539,690 -
Later than 1 year but not later than 5 754,750 -
years
Total surface rights - Smitspan 2,294,440 -
31 December 2008
Shares $
7. Issued capital
Reconciliation of movement in
issued capital attributable to
equity holders of the Company.
(a) Movements in Ordinary
Shares
At 1 July 2008 709,208,879 57,819,282
17 Jul 08 - Options converted 24,000,000 240,000
14 Aug 08 - Options converted 67,500,000 675,000
29 Oct 08 - Issued shares 400,000,000 11,200,000
19 Nov 08 - Options converted 49,750,000 497,500
24 Nov 08 - Issued shares 4,833,325 135,333
24 Dec 08 - Issued shares 22,727,273 250,000
Reduction of capital (58,297,793)
Ordinary shares at end of 1,278,019,477 12,519,322
half
year
(b) Movements in Options
At 1 July 2008 173,750,000) -
Converted as above (171,250,000) -
Options at end of half year 2,500,000) -
31 December 2009
Shares $
7. Issued capital
(Continued)
Reconciliation of movement in
issued capital attributable
to equity holders of the
Company.
(a) Movements in Ordinary
Shares
At 1 July 2009 1,354,951,295 14,781,022
16 Sep - Loan converted 15,172,606 545,000
16 Sep - Loan converted 67,000,000 2,680,000
30 Sep - Issued 868,176,563 43,408,828
30 Sep - Issued 25,000,000 1,250,000
30 Sep - Issued 1,000,000 40,000
Ordinary shares at end of 2,331,300,464 62,704,850
half
year
(b) Movements in Options
At 1 July 2009 262,779,767 4,081,645
Options at end of half year 262,779,767 4,081,645
8. Related Party Transactions
During the period, each of the directors were paid a quarterly director`s fee
of $12,500. In addition to the director`s fee, Mrs A Matthee was paid a salary
of $77,387 and Mr J Wallington was paid a salary of $31,670.
868,176,563 fully paid up shares were issued to Sekoko Coal (Pty) Ltd as part
consideration for the 2nd joint venture transaction with Sekoko Coal (Pty)
Ltd. There was also a cash consideration of $5,139,993.
Other related party transactions continue without significant variation. For
details of these, please refer to the 30 June 2009 financial statements.
9. Events occurring after balance sheet date
During the half year Utafutaji Trading 75 (Pty) Ltd, a 100% subsidiary of
Lexshell 126 General Trading (Pty) Ltd negotiated to secure the surface rights
of the farm Smitspan, which were then secured on 24 February 2010. Sekoko Coal
(Pty) Ltd, the group`s joint venture partner, hold the exploration right for
Smitspan. The farm was purchased for a total amount of $3,471,850, and a
deposit amounting to $1,177,410 was paid in December 2009. During January a
further deposit of $784,940 was paid. At the date of this report, the
remaining balance of $1,509,500 is payable in two equal instalments in six
monthly intervals from the date of registration, 24 February 2010.
10. Contingent Liabilities
The Company does not have any contingent liabilities other than those
previously disclosed.
11. Interest in Joint Venture
As at 31 December 2009, the Company had entered into two Joint Venture
Agreements with Sekoko Coal (Pty) Ltd for a coal project in the Waterberg
locality in South Africa.
11. Interest in Joint Venture (continued)
At the half year, the participation interest is that Checkered Flag (a wholly
owned subsidiary) has a total holding of 30% in the projects relating to the
jointly controlled operation (T1).
At the half year, the participation interest is that Lexshell (a wholly owned
subsidiary) has a total holding of 42% in the projects relating to the jointly
controlled operation (T2).
Half year Year ended
ended Dec June 2009
2009 $
$
Opening balance 19,645,502 -
Acquisition costs 48,548,821 15,619,898
Project costs 3,057,416 2,330,333
Foreign exchange movements 17,941 1,695,271
Closing balance 71,269,680 19,645,502
12. Segment Information
Management has determined that the consolidated group has one reportable
segment, being coal exploration in South Africa. As the company is focused
on mineral exploration, the Board monitors the consolidated group based on
actual versus budgeted exploration expenditure incurred by area of interest.
This internal reporting framework is the most relevant to assist the Board
with making decisions regarding the consolidated group and its ongoing
exploration activities, while also taking into consideration the results of
exploration work that has been performed to date.
Segment information provided to the Board:
December December
2009 2008
$ $
Revenue from external sources - -
Reportable segment loss (258,384) -
Reportable segment assets 71,269,680 16,354,271
A reconciliation of reportable segment loss to operating loss before
income tax is provided as follows:
December December
2009 2008
$ $
Total loss for reportable segment (258,384) -
Unallocated
Foreign exchange gain 139,983) -
Occupancy costs (19,371) (74,986)
Legal fees (114,232) (76,411)
Administration costs (872,634) (118,563)
Directors fees (125,002) (64,914)
Net finance costs (282,506) 51,808
Loss before income tax from continuing (1,532,146) (283,066)
operations
CORPORATE DIRECTORY
DIRECTORS SOLICITORS TO THE COMPANY
John Dreyer Steinepreis Paganin
Non Executive Chairman Level 4
16 Milligan Street
John Wallington PERTH WA 6000
Managing Director
SHARE REGISTRY
Amanda Matthee
Non Executive Director Computershare Investor Services
Level 2, Reserve Bank Building
Colin McIntyre 45 St Georges Terrace
Non Executive Director PERTH WA, 6000
Ph 08 9323 2000
Tim Tebeila Fax 08 9323 2033
Non Executive Director
AUDITORS
COMPANY SECRETARY BDO Audit (WA) Pty Ltd
38 Station Street
Rance Dorrington SUBIACO WA 6008
ASX CODE
REGISTERED OFFICE
"FSE"
Level 1, 63 Hay Street
SUBIACO WA 6008 JSE CODE
Telephone: (08) 9381 2755 "FSE"
Facsimile: (08) 9381 4799
Email:
enquiries@firestoneenergy.net
DIRECTORS` DECLARATION
The Directors of the Company declare that:
1. The consolidated financial statements and notes are in accordance with
the Corporations Act 2001 and:
a. comply with Accounting Standard AASB 134: Interim Financial
Reporting and the Corporations Regulations 2001; and
b. give a true and fair view of the consolidated entity`s financial
position as at 31 December 2009 and of its performance for the half-
year then 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 made in accordance with a resolution of the Board of
Directors.
Colin McIntyre
Director
Dated at Perth this 16th day of March 2010
Sponsor and Corporate Advisor
River Group
Date: 16/03/2010 14:20:01 Supplied by www.sharenet.co.za
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