ALPHA ENERGY HOLDINGS LIMITED (FORMERLY KNOWN AS JK TECH HOLDINGS LIMITED)

Transcription

1 ALPHA ENERGY HOLDINGS LIMITED (FORMERLY KNOWN AS JK TECH HOLDINGS LIMITED) Unaudited Half Year Financial Statement and Dividend Announcement for the Six Months Period Ended 30 September 2015 This announcement has been prepared by the Company and its contents have been reviewed by the Company s sponsor, PrimePartners Corporate Finance Pte. Ltd. (the Sponsor ) for compliance with the Singapore Exchange Securities Trading Limited (the SGX-ST ) Listing Manual Section B: Rules of Catalist. The Sponsor has not verified the contents of this announcement. The Sponsor has also not drawn on any specific technical expertise in its review of this announcement. This announcement has not been examined or approved by the SGX-ST. The Sponsor and the SGX-ST assume no responsibility for the contents of this announcement, including the accuracy, completeness or correctness of any of the information, statements or opinions made or reports contained in this announcement. The contact person for the Sponsor is Mr Lance Tan, Director, Continuing Sponsorship, at 16 Collyer Quay, #10-00 Income at Raffles, Singapore , telephone (65)

2 PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF HALF-YEAR RESULTS 1(a)(i) An income statement and statement of comprehensive income, or a statement of comprehensive income (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year Six months ended 30/9/2015 Group Six months ended 30/9/2014 Increase % Revenue 33,742,705 23,694,051 42% Cost of sales (32,324,092) (21,486,237) 50% Gross profit 1,418,613 2,207,814-36% Other items of income Finance income - 6,348 NM Other income 3,368, ,007 NM Other items of expense Selling and distribution expenses (914,142) (744,830) 23% General and administrative expenses (2,365,627) (2,102,390) 13% Other expenses (1,541,167) (84,553) NM Finance costs (390,756) (107,638) 263% Share of results of associate, net of tax 48,616 (99,894) NM Loss before income tax (375,927) (732,136) -49% Income tax expense - (55,197) NM Loss for the financial period (375,927) (787,333) -52% Other comprehensive (loss)/ income Foreign currency differences on translation of foreign operation (9,534) 527 NM Other comprehensive (loss)/ income for the financial period, net of tax (9,534) 527 NM Total comprehensive loss for the financial period (385,461) (786,806) -51% Loss attributable to owners of the parent (375,927) (787,333) -52% Total comprehensive loss attributable to owners of the parent (385,461) (786,806) -51% Loss per share (in Singapore cents) - Basic (0.13) (0.51) -75% - Diluted (0.13) (0.51) -75% NM Not meaningful Page 2

3 Notes to Consolidated statement of comprehensive income The loss before income tax is arrived at after crediting/(charging): Six months ended 30/9/2015 Group Six months ended 30/9/2014 Increase/ (Decrease) % Foreign exchange gain, net 2,885, ,766 NM Government grants 40,852 83,258-51% Rental income 36,527 - NM Gain on disposal of plant and equipment 5,700 - NM Dividend income 2,219 - NM Depreciation of plant and equipment (106,910) (30,069) 256% Inventories written off (14,007) - NM Allowance for inventory obsolescence (519,797) (11,673) NM Provision for doubtful receivables (598,247) (84,553) 608% Impairment of available-for-sale financial assets (942,920) - NM NM Not meaningful Page 3

4 1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year Group As at 30/9/2015 As at 31/3/2015 (Audited) Company As at 30/9/2015 As at 31/3/2015 (Audited) Non-current assets Exploration and evaluation assets 88,256,106 77,117, Plant and equipment 974, ,407 2,880 1,088 Intangible asset 33,000 33, Investment in subsidiaries - - 4,447,369 4,447,369 Investment in associate 759, ,412 50,000 50,000 Available-for-sale financial assets 9,725,423 10,956,864 1,442,113 2,385,033 Deferred tax assets 203, , Other receivables - 9,068, Current assets 99,951,262 98,966,399 5,942,362 6,883,490 Inventories 7,085,263 5,878, Trade and other receivables 28,542,295 14,371,114 70,858,175 62,634,564 Cash and cash equivalents 3,269,470 7,257,037 1,145,063 5,510,293 38,897,028 27,506,415 72,003,238 68,144,857 Total assets 138,848, ,472,814 77,945,600 75,028,347 Equity Share capital 82,295,142 76,535,142 82,295,142 76,535,142 Reserves 200, , , ,809 Accumulated losses (2,193,890) (1,817,963) (4,809,908) (2,475,425) Total equity 80,301,393 74,926,854 77,682,043 74,256,526 Non-current liabilities Finance lease liabilities 160, , Other payables 1,241,065 22,409, Provision for restoration costs 315, , Current liabilities 1,717,075 22,838, Finance lease liabilities 40,410 31, Bank borrowings 14,595,862 1,872, Trade and other payables 42,193,550 26,802, , ,821 56,829,822 28,707, , ,821 Total liabilities 58,546,897 51,545, , ,821 Total equity and liabilities 138,848, ,472,814 77,945,600 75,028,347 Page 4

5 1(b)(ii) Aggregate amount of group s borrowings and debt securities Amount repayable in one year or less, or on demand As at 30/9/2015 As at 31/3/2015 (Audited) Secured Unsecured Secured Unsecured 14,636,272-1,904,930 - Amount repayable after one year As at 30/9/2015 As at 31/3/2015 (Audited) Secured Unsecured Secured Unsecured 160, ,099 - Details of any collateral The Group s borrowings were secured by corporate guarantees provided by the Company and tax rebates from qualifying capital expenditures at the Mustang Project which are payable by the Alaskan State Government. The Group s finance lease payables are secured by the motor vehicles under the lease with carrying amount of approximately 0.25 million and 0.19 million as at 30 September 2015 and 31 March 2015 respectively. Page 5

6 1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year Six months ended 30/9/2015 Six months ended 30/9/2014 Cash flows from operating activities Loss before income tax (375,927) (732,136) Adjustments for: Allowance for inventory obsolescence 519,797 11,673 Inventories written off 14,007 - Depreciation of plant and equipment 106,910 30,069 Provision for doubtful receivables 598,247 84,553 Gain on disposal of plant and equipment (5,700) - Share based payment transactions - 7,000 Impairment of available-for-sale financial assets 942,920 - Dividend income (2,219) - Finance income - (6,348) Finance costs 390, ,638 Share of results of associates (48,616) 99,894 Operating cash flows before working capital changes 2,140,175 (397,657) Changes in working capital: Inventories (1,740,802) (2,577,212) Trade and other receivables (4,967,130) 452,266 Trade and other payables (13,866,308) 1,758,733 Net cash used in operating activities (18,434,065) (763,870) Cash flows from investing activities Purchase of plant and equipment (129,783) (54,405) Return of capital from available-for-sale investments 606,140 - Purchase of exploration and evaluation assets (3,627,876) (45,810,988) Restricted cash (47,413) - Dividends received 2,219 - Proceeds from disposal of plant and equipment 5,700 - Investment in associate (14,292) - Finance income received - 6,348 Net cash used in investing activities (3,205,305) (45,859,045) Page 6

7 Six months ended 30/9/2015 Six months ended 30/9/2014 Cash flows from financing activities Net proceeds from issuance of shares 5,760,000 63,653,025 Finance costs paid (390,756) (107,638) Proceeds from bank borrowings 12,212, ,247 Repayment of finance lease payables (17,560) (22,760) Net cash from financing activities 17,563,846 63,779,874 Net change in cash and cash equivalents (4,075,524) 17,156,959 Cash and cash equivalents at beginning of financial period 6,258,697 2,242,598 Effects of exchange rate changes on cash and cash equivalents 40, Cash and cash equivalents at end of financial period 2,223,717 19,400,084. Cash and cash equivalents comprise:- Six months ended Six months ended 30/9/ /9/2014 Cash and cash balances 3,268,254 24,636,693 Fixed deposits 1,216 1,001,214 Cash and cash equivalents as per statement of financial position 3,269,470 25,637,907 Less: Restricted cash (1,045,753) (6,237,823) Cash and cash equivalents as per consolidated statement of cash flows 2,223,717 19,400,084 Page 7

8 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year Group Share capital Treasury shares Share option reserve Fair value reserve Foreign currency translation reserve Accumulated losses Total At 1 April ,535,142 (53,191) 250,000-12,866 (1,817,963) 74,926,854 Total comprehensive income for the period Loss for the period (375,927) (375,927) Other comprehensive loss Foreign currency translation differences relating to financial statements of (9,534) - (9,534) foreign operations Total comprehensive loss for the period (9,534) (375,927) (385,461) Transactions with owners, recognised directly in equity Contributions by and distributions to owners Issue of shares 5,760, ,760,000 Total transactions with owners 5,760, ,760,000 At 30 September ,295,142 (53,191) 250,000-3,332 (2,193,890) 80,301,393 Page 8

9 Group Share capital Treasury shares Share option reserve Fair value reserve Foreign currency translation reserve Accumulated losses Total At 1 April ,352,117 (60,191) - - 3,036 (3,071,657) 6,223,305 Total comprehensive income for the period Loss for the period (787,333) (787,333) Other comprehensive income Foreign currency translation differences relating to financial statements of foreign operations Net change in fair value of available-for-sale financial assets , ,729 Total comprehensive income for the period , (787,333) (551,077) Transactions with owners, recognised directly in equity Contributions by and distributions to owners Issue of shares 67,433, ,433,025 Share-based payments - 7, ,000 Total transactions with owners 67,433,025 7, ,440,025 At 30 September ,785,142 (53,191) - 235,729 3,563 (3,858,990) 73,112,253 Page 9

10 Company Share capital Treasury shares Share option reserve Fair value reserve Accumulated losses Total At 1 April ,535,142 (53,191) 250,000 - (2,475,425) 74,256,526 Total comprehensive income for the period Loss for the period (2,334,483) (2,334,483) Other comprehensive income Total comprehensive income for the period (2,334,483) (2,334,483) Transactions with owners, recognised directly in equity Contributions by and distributions to owners Issue of shares 5,760, ,760,000 Total transactions with owners 5,760, ,760,000 At 30 September ,295,142 (53,191) 250,000 - (4,809,908) 77,682,043 At 1 April ,352,117 (60,191) - - (3,623,486) 5,668,440 Total comprehensive income for the period Loss for the period (928,330) (928,330) Other comprehensive income Net change in fair value of available-for-sale financial assets , ,729 Total comprehensive income for the period ,729 (928,330) (692,601) Transactions with owners, recognised directly in equity Contributions by and distributions to owners Issue of shares 67,433, ,433,025 Share-based payments - 7, ,000 Total transactions with owners 67,433,025 7, ,440,025 At 30 September ,785,142 (53,191) - 235,729 (4,551,816) 72,415,864 Page 10

11 1(d)(ii) Details of any changes in the company s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares of the issuer, if any, against total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. Share capital Number of Shares () As at 31 March ,336,065 76,535,142 Add: Exercise of share options 64,000,000 5,760,000 Less: Total number of treasury shares (397,000) (53,191) As at 30 September 2015 (excluding treasury shares) 354,939,065 82,241,951 There were 397,000 treasury shares at 30 September 2015 and 30 September There were 261,000,000 (30 September 2014: 325,000,000) outstanding share options convertible into 261,000,000 (30 September 2014: 325,000,000) shares as at 30 September For details on the share options, please refer to the Company s announcement dated 4 April Save as disclosed above, the Company did not have any treasury shares or convertibles as at 30 September 2015 and 30 September (d)(iii) To show the number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year Company 30/9/2015 Company 31/3/2015 Total number of issued shares (excluding treasury shares) 354,939, ,939,065 Page 11

12 1(d)(iv) A statement showing all sales, transfers, disposals, cancellation and/or use of treasury shares as at the end of the current financial period reported on Not applicable. There were no sales, transfers, disposals, cancellation and/or use of treasury shares during and as at the end of the current financial period reported on. 2. Whether the figures have been audited, or reviewed and in accordance with which standard or practice The figures have not been audited or reviewed by the Company s independent auditors. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter) Not applicable. 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied Save as disclosed in item 5 below, the HY2016 financial results had been prepared using the same accounting policies and methods of computation as presented in the Group s most recently audited financial statements for the financial year ended 31 March If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change The Group has adopted all new and/or revised Singapore Financial Reporting Standards ( FRSs ) and interpretation of FRSs ( INT FRSs ) that are relevant to its operations and effective for the financial period beginning on 1 April 2015, where applicable. The application of these new and/or revised FRSs and INT FRSs did not result in changes in the Group s accounting policies and has no material impact on the financial statements of the Group for the current financial period or prior financial periods. Page 12

13 6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends Group Six months ended 30/9/2015 Six months ended 30/9/2014 Loss for the financial period attributable to owners of the parent () (375,927) (787,333) Weighted number of ordinary shares in issue during the respective financial period 298,791, ,340,879 Basic loss per share (in Singapore cents) (0.13) (0.51) Weighted number of ordinary shares in issue during the respective financial period (after adjusting for share options) Diluted loss per share (in Singapore cents) 298,791, ,340,879 (0.13) (0.51) As the Group was in a loss position in HY2015 and HY2016, share options were not included in the computation of the diluted loss per share because these potential ordinary shares were anti-dilutive. 7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year Net asset value per ordinary share based on issued share capital (in Singapore cents) Number of ordinary shares in issue (excluding treasury shares) As at 30/9/2015 Group As at 31/3/2015 (Audited) As at 30/9/2015 Company As at 31/3/2015 (Audited) ,939, ,939, ,939, ,939,065 Page 13

14 8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. The review must discuss any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors. It must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. Review of the Financial Performance of the Group for the six-months ended 30 September 2015 ( HY2016 ) vs six-months ended 30 September 2015 ( HY2015 ). Review of the Consolidated Income Statement of the Group Revenue increased by approximately million or 42% mainly due to increased sales in systems integration and services segment as the Company managed to secure more leasing projects from government agencies. Cost of sales increased by approximately million or 50% mainly due to the increase in revenue. Included in cost of sales in HY2016 and HY2015 was approximately 0.52 million and 0.01 million respectively of allowance for inventory obsolescence to account for the slow take up rate of the inventories. There was also approximately 0.01 million of inventory written off in HY2016. Gross profit decreased by approximately 0.79 million or 36% and the overall gross profit margin decreased from approximately 9% in HY2015 to 4% in HY2016. The decrease in gross profit and gross profit margin was mainly due to the following:- - allowances for inventory obsolescence and write off of inventories amounting to $0.53 million arising from low take up rate of inventory which the Group sponsored during Sea Games 2015 for publicity purposes. Post-Sea Games promotions are currently being carried out for those sponsored inventory. Further provisions or write-offs might be provided if we are unable to sell the inventory within a reasonable time frame; and - new contracts secured at lower margins within a more competitive operating environment. Other income increased by approximately 3.18 million mainly due to the following:- - exchange gain of approximately 2.89 million arising from re-measurement of US denominated amount owing by a subsidiary, due to the appreciation of the US dollar during the period; and - pursuant to the Charter Agreement executed by the Group with Mustang Operations Centre 1, LLC (MOC1), the Group is entitled to approximately 12.4% of the tax rebates earned by MOC1 for qualifying capital expenditures that MOC1 expends for the construction of Mustang Operations Centre. This Page 14

15 tax rebate entitlement is given in return for the use of Group s infrastructure (Group s share of the 19 acre production pad and gravel road) by MOC1 for the construction of the Mustang Operations Centre. Pursuant thereto, the Group has received approximately 3.97 million, being the Group s share in a tax rebate paid to MOC1 as a result of approximately million of qualifying capital expenditures incurred by MOC1 in the 2014 calendar year. The Group will amortise this tax rebate over the period of receipt (from August 2015) until completion of the construction of the Mustang Operations Centre. As such, approximately 0.44 million was recognised in other income in HY2016. The remaining approximately 3.53 million was classified as deferred income and subject to amortisation over the period till the construction of the Mustang Operations Centre is completed. Besides the above tax rebates, the Group is also entitled to the tax rebates for qualifying capital expenditures associated with drilling operations in the Mustang Project as further elaborated in the review of the financial position below. Such tax rebates are not recognised in the income statement due to differing accounting treatments. Selling and distribution expenses increased by approximately 0.17 million or 23% mainly due to the increase in number of sales staff and sales staff related costs, such as base salaries and CPF contribution. General and administrative expenses increased by approximately 0.26 million or 13% mainly due to the increase in general expenses of approximately 0.20 million which comprised mainly the tender fees paid for tender of projects of approximately 0.23 million. Depreciation of plant and equipment increased by approximately 0.08 million or 256% mainly due to additional plant and equipment from capitalising renovation cost and purchase of furniture and fittings for the office. Other expenses increased by approximately 1.46 million mainly due to the impairment of available-for-sale financial assets of approximately 0.94 million and provision for doubtful receivables of approximately 0.60 million in HY2016. Finance costs increased by approximately 0.28 million or 263% mainly due to facility fees paid for securing the ING credit facility that prefunds tax rebates which the Group is entitled to, in relation to the qualifying capital expenditures incurred for drilling operations in the Mustang Project. The Group accounted for the share of loss of associate of approximately 0.10 million in HY2015, as compared to the share of profit of associates of approximately 0.05 million in HY2016 due to the share of profit of approximately 0.09 million from our new associate company, Brooks Range Petroleum Corporation LLC, net off by the share of loss of associate from Pro-Datech Systems Pte Ltd of approximately 0.04 million. Page 15

16 As a result of the above, the Group had a net loss of approximately 0.38 million in HY2016 as compared to a net loss of approximately 0.79 million in HY2015. Review of the Financial Position of the Group The comparative performance for both the assets and liabilities are based on the financial statements as at 30 September 2015 and 31 March Current assets increased by approximately million mainly due to the increase in: - other receivables by approximately million, from approximately 4.89 million as at 31 March 2015 to approximately million as at 30 September This was mainly due to reclassification of tax rebates recoverable of approximately 9.07 million from non-current assets to current assets. The tax rebate recoverable was in relation to the rebates that the Group is eligible to receive from the Alaskan State Government for qualifying capital expenditures incurred for drilling operations in the Mustang Project; and an additional accrual of approximately 8.83 million of tax rebates due to qualifying capital expenditures undertaken in HY2016; and - inventories by approximately 1.21 million mainly due to additional purchase of stocks for the sponsorship of Sea Games and were subsequently left unsold after the event. Non-current assets increased by approximately 0.98 million mainly due to: - increase in exploration and evaluation assets of approximately million for the Mustang Project, and offset by; and - the reclassification of other receivables from non-current assets to current assets of approximately 9.07 million relating to the tax rebates recoverable from the Alaskan State Government for qualifying capital expenditures incurred for drilling operations in the Mustang Project. Current liabilities increased by approximately million mainly due to: - increase in bank borrowings by approximately million, mainly relating to the drawdown of ING credit facility that prefunds tax rebates the Group is entitled to for qualifying capital expenditures for drilling wells at the Mustang Project; and - increase in trade and other payables by approximately million mainly due to the reclassification from non-current liabilities to current liabilities of other payables relating to the deferred consideration of approximately million due for payment by 31 May 2016 for the Mustang Project and offset by the decrease in trade payables of approximately 6.38 million as a result of payments to suppliers. Page 16

17 Non-current liabilities decreased by approximately million mainly due to decrease in other payables of approximately million which was due to the reclassification of deferred consideration from non-current liability to current liability of approximately million due for payment by 31 May 2016 for the Mustang Project. The Group had a negative working capital of approximately million as at 30 September The Group intends to fund the negative million working capital with the following: - on 11 May 2015, the Group announced it had executed a credit facility with ING Capital, LLC to fund cash tax rebates against qualifying capital expenditures the Group is eligible to receive from the Alaskan State Government. While the Group has drawn down approximately million out of an available amount of approximately 14.0 million from the ING credit facility, the Group is cooperating with the working interest owners in the Mustang Project to satisfy requirements of the terms of the facility to draw down the remaining 1.44 million in available capacity of the facility. The cash tax rebates are anticipated to be paid by the Alaskan State Government by August 2016 and will be used to repay the draw down from this facility; - the Group intends to renegotiate the deferment of the second installment of purchase consideration for the acquisition of the Mustang Project which will be payable by 31 May 2016, amounting to approximately million ; - the sale of available-for-sale investments by the Group; and - the Group is negotiating with a supplier to the Mustang Project for credits against amounts invoiced, currently classified as trade payables of approximately 1.80 million. Review of the Statement of Cash Flows for the Group The Group s cash and cash equivalents decreased by approximately 3.99 million, from approximately 7.26 million as at 31 March 2015 to approximately 3.27 million as at 30 September 2015, which included restricted cash (rehabilitation bonds) of approximately 1.05 million. Net cash used in operating activities of approximately million comprised operating cash inflow before movements in working capital of approximately 2.14 million, primarily adjusted for a net decrease in working capital of approximately million. The net decrease in working capital was largely due to the following: - increase in trade and other receivables of approximately 4.97 million mainly due to recognition of recoverable cash tax rebates; Page 17

18 - increase in inventories of approximately 1.74 million which was mainly attributable to the additional purchase of stocks for the sponsorship of the Sea Games 2015, and - decrease in trade and other payables of approximately million due to payment to suppliers. Net cash used in investing activities of approximately 3.21 million was primarily attributable to the investment in exploration and evaluation assets for the Mustang Project of approximately 3.63 million. Net cash from financing activities of approximately million was mainly due to the net proceeds from issuance of shares from the exercise of share options of 5.76 million and proceeds from bank borrowings of approximately million, mainly relating to draw down from the ING credit facility that prefunds tax rebates the Group is entitled to for qualifying capital expenditures for drilling operations in the Mustang Project. 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results Not applicable as no forecast or prospect statement has been previously disclosed to shareholders. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months Given the persistent low oil price environment, the working interest partners and the Operator of the Mustang Project are reviewing its development plan so as to maximise the value of the project. For our IT business, the labour situation continues to show no signs of improvement. Recruiting and retaining quality and dedicated staff remains one of our biggest challenges. We expect this situation to persist with no visible improvement. 11. If a decision regarding dividend has been made: (a) Whether an interim (final) ordinary dividend has been declared (recommended); and No dividend has been declared or recommended for the current financial period reported on. Page 18

19 (b) (i) Amount per share (cents) Not applicable. (b) (ii) Previous corresponding period (cents) No dividend has been declared or recommended for the previous corresponding financial period. (c) Whether the dividend is before tax, net of tax or tax exempt. If before tax or net of tax, state the tax rate and the country where the dividend is derived. (If the dividend is not taxable in the hands of shareholders, this must be stated). Not applicable (d) The date the dividend is payable Not applicable (e) The date on which Registrable Transfers received by the company (up to 5.00 pm) will be registered before entitlements to the dividend are determined. Not applicable 12. If no dividend has been declared/recommended, a statement to that effect No dividend has been declared or recommended for HY Update on use of proceeds As at the date of this announcement, the net proceeds from the conversion of 64,000,000 share options amounting to 5.76 million in HY2016 has been fully utilised for the financing of exploration and evaluation assets. The use of proceeds was in accordance with the intended use as stated in the Company s announcement dated 4 April Page 19

20 14. Interested Person Transactions Name of interested person Aggregate value of all interested person transactions during the financial period under review (excluding transactions less than 100,000 and conducted under shareholders' mandate pursuant to Rule 920) Aggregate value of all interested person transactions conducted under shareholders' mandate pursuant to Rule 920 (excluding transactions less than 100,000) Lease of office and storage premises from Ang Yew Jin Eugene, the Managing Director of the Company 128,628 Not applicable The Group does not have a general mandate for recurring interested person transactions. ADDITIONAL DISCLOSURE REQUIRED FOR MINERAL, OIL AND GAS COMPANIES 15. Rule 705(6)(a) of the Catalist Listing Manual (i) Use of funds/cash for the past two quarters:- For the quarters ended 30 June 2015 ( 1Q2016 ) and 30 September 2015 ( 2Q2016 ), funds / cash were mainly used for the following activities:- 1Q2016 2Q2016 Land & Rentals $87,190 $16,662 Seismic Costs $143,155 $151,927 Drilling Costs $13,726,058 $2,917,868 Surface Facilities $480,853 - Project Management Fees $766,001 $274,547 Finance Fees and expenses $241,288 - Corporate administrative expenses $436,000 $384,961 Total $15,880,545 $3,745,965 Page 20

21 (ii) Projection on the use of funds/cash for the next immediate quarter, including principal assumptions:- For the next immediate quarter ending 31 December 2015 ( 3Q2016 ), the funds/cash are expected to be used for the following activities:- 3Q2016 Land & Rentals $70,000 Seismic Costs $150,000 Drilling Costs $300,000 Project Management Fees $25,000 Finance Fees and expenses $25,000 Corporate administrative expenses $275,000 Total $845, Rule 705(7) of the Catalist Listing Manual (a) Details of exploration (including geophysical surveys), mining development and/or production activities undertaken by the Company and a summary of the expenditure incurred on those activities, including explanation for any material variances with previous projections, for the period under review. If there has been no exploration, development and/or production activity respectively, that fact must be stated The Proven Reserves at the Mustang Project are within 11 individual fault blocks, each fault block being given a designated name for identification and planning purposes. The Mustang Development Plan has been designed to optimise production from these individual fault blocks by drilling horizontal production wells into each of the fault blocks. In addition, a series of vertical injector wells have been designed to provide pressure support, through the pumping of sea water into the reservoir, to these production wells so as to maximise oil production rates and oil recovery. Pressure support through sea water pumping is a standard form of production recovery enhancement and is used widely on the North Slope, including the neighbouring Kuparuk River project operated by ConocoPhillips and which has produced 2.7 billion barrels of oil from the Kuparuk reservoir. The Mustang and Kuparuk River fields share a lease boundary. This Mustang Project development plan is continually optimised so as to incorporate new technical information and also revised economics as a result of a changing oil price. Prior to the acquisition of an interest in the Mustang Project by the Group in 2014, the North Tarn # 1A well and Mustang #1 well had already been drilled in the first Page 21

22 and second quarter of the calendar year 2012 respectively. Both wells were vertical exploration wells designed to prove the presence of the Kuparuk C reservoir and neither of these wells were production tested. These wells were cased, plugged and were designed to be re-entered at a future date so horizontal sections could be drilled to utilise these wells as production wells. During 2015, the three following wells in the Mustang Project were drilled in order of timing (starting with the earliest): SMU-02 (Lipizzan) designed as a vertical injector well to provide pressure support to the Mustang fault block on commencement of production operations; SMU-03 (Shamrock) designed as a horizontal production well to produce oil from the Shamrock fault block; and SMU-01 (Mustang lateral) a re-entry of the Mustang # 1 well drilled and cased in [second quarter of the calendar year] 2012 to drill a horizontal well to produce oil from the Mustang fault block, with SMU-02 (Lipizzan) providing pressure support. SMU-02 (Lipizzan) Well This was the first well drilled in early 2015 and successfully reached its target depth. The well was completed and cased as planned. SMU-03 (Shamrock) Well This was the second well drilled and successfully reached its target depth. Surface casing was successfully cemented in place however intermediary casing could not be installed due to the encroachment of shale and sand into the well bore, this was caused by higher than anticipated formation pressures. The well was plugged back to the bottom of the surface section. The surface section can be utilised at a later date to re-drill this well. SMU-01 (Mustang lateral) Well In June 2015, an attempt was made to drill a lateral section in the SMU-01 (Mustang) well, utilising the surface and intermediate sections drilled and successfully cased in the second quarter of the calendar year It was the intention to extend the SMU-01 well with a 5,800 foot horizontal (lateral) section and complete it as a horizontal production well. Horizontal drilling operations were not successfully completed as planned due to higher than anticipated formation pressures again being encountered. Page 22

23 Prior to the commencement of the SMU-01 drilling operations described above, the Group s management assessed that there was a high risk that drilling operations would not be successfully completed due to the presence of the high formation pressures that were present in the SMU-03 (Shamrock) well and therefore chose not to participate in the funding of the SMU-01 well. As such, the working interest owners who participated in the SMU-01 well bore sole risk for the financial cost of these drilling operations. As drilling was not successful, the decision not to participate saved the Group approximately 5.0 million. The Operator, Brooks Range Petroleum Corporation LLC, has consulted with third party service providers and determined that the drilling rig should be fitted with managed pressure drilling equipment for future drilling operations. The use of managed pressure drilling is a standard operating practice and is widely used on the North Slope, its installation will allow drilling operations to proceed within high pressure formations such as those encountered at the Mustang Project in The Group continues to evaluate opportunities to acquire additional oil and gas projects, and we are focusing on projects that are in or near production and which have Proven Reserves. (b) Update on its reserves and resources, where applicable, in accordance with the requirements set out in Practice Note 4C, including a summary of reserves and resources as set out in Appendix 7D. The Company has no material updates on the reserves and resources as set out in the Independent Qualified Person s Report dated 14 August Requirement under Rule 705(5) and Rule 705(6)(b) of the SGX-ST Listing Manual Section : Rules of Catalist The Board of Directors of the Company hereby confirms that, to the best of their knowledge, nothing has come to the attention of the Board of Directors of the Company which may render the unaudited half year financial results for the six months financial period ended 30 September 2015 and the above information provided to be false or misleading in any material aspect. Page 23

24 BY ORDER OF THE BOARD Lee Tiong Hock Company Secretary 13 November 2015 Page 24